Document ID: SEC-2014-1230-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2014-07-22T04:00Z

[Federal Register Volume 79, Number 140 (Tuesday, July 22, 2014)]
[Notices]
[Pages 42605-42613]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-17155]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72631; File No. SR-NYSEArca-2014-76]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change as Modified by Amendment No. 1 and Amendment 
No. 2 Proposing To List and Trade Shares of the Cambria Global Momentum 
ETF Under NYSE Arca Equities Rule 8.600

July 16, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b4 thereunder,\3\ notice is hereby 
given that, on July 1, 2014, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. On July 14, the Exchange filed Amendment No. 1 to the 
proposed rule change.\4\ On July 15, the Exchange filed Amendment No. 2 
to the proposed rule change.\5\ The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ Amendment No. 1 replaced and superseded the original filing 
in its entirety.
    \5\ Amendment No. 2 replaces and supersedes Amendment No. 1 in 
its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    1. The Exchange proposes to list and trade shares of the Cambria 
Global Momentum ETF under NYSE Arca Equities Rule 8.600 (``Managed Fund 
Shares''). The text of the proposed rule change is available on the 
Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

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

1. Purpose
    The Exchange proposes to list and trade shares (''Shares'') of the 
following under NYSE Arca Equities Rule 8.600, which governs the 
listing and trading of Managed Fund Shares \6\: Cambria Global Momentum 
ETF (``Fund'').\7\ The Shares will be offered by the Cambria ETF Trust 
(the ``Trust''), a Delaware statutory trust which is registered with 
the Commission as an open-end management investment company.\8\ Cambria 
Investment Management, L.P. (``Cambria'' or the ``Adviser'') will serve 
as the investment adviser of the Fund. SEI Investments Distribution Co. 
(the ``Distributor'') will be the principal underwriter and distributor 
of the Fund's Shares. SEI Investments Global Funds Services (``SEI'') 
will serve as the fund accountant and administrator of the Fund. Brown 
Brothers Harriman & Co. will serve as the Custodian and Transfer Agent 
of the Fund's assets.\9\
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    \6\ A Managed Fund Share is a security that represents an 
interest in an investment company registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a-1) (``1940 Act'') organized as an 
open-end investment company or similar entity that invests in a 
portfolio of securities selected by its investment adviser 
consistent with its investment objectives and policies. In contrast, 
an open-end investment company that issues Investment Company Units, 
listed and traded on the Exchange under NYSE Arca Equities Rule 
5.2(j)(3), seeks to provide investment results that correspond 
generally to the price and yield performance of a specific foreign 
or domestic stock index, fixed income securities index or 
combination thereof.
    \7\ The Commission has previously approved listing and trading 
on the Exchange of a number of actively managed funds under Rule 
8.600, including actively managed funds that operate as asset 
allocation funds or ``funds of funds,'' as described below. See, 
e.g., Securities Exchange Act Release Nos. 71999 (April 23, 2014), 
79 FR 24040 (April 29, 2014) (SR-NYSEArca-2014-19) (order approving 
Exchange listing and trading of four actively-managed asset 
allocation funds of iShares U.S. ETF Trust); Securities Exchange Act 
Release Nos. 57801 (May 8, 2008), 73 FR 27878 (May 14, 2008) (SR-
NYSEArca-2008-31) (order approving Exchange listing and trading of 
twelve actively-managed funds of the WisdomTree Trust); 60460 
(August 7, 2009), 74 FR 41468 (August 17, 2009) (SR-NYSEArca-2009-
55) (order approving listing and trading of Dent Tactical ETF); 
62502 (July 15, 2010), 75 FR 42471 (July 21, 2010) (SR-NYSEArca-
2010-57) (order approving listing and trading of AdvisorShares WCM/
BNY Mellon Focused Growth ADR ETF); 63076 (October 12, 2010), 75 FR 
63874 (October 18, 2010) (SR-NYSEArca-2010-79) (order approving 
listing and trading of Cambria Global Tactical ETF).
    \8\ The Trust will be registered under the 1940 Act. On March 4, 
2014, the Trust filed an amendment to the Trust's registration 
statement on Form N-1A under the Securities Act of 1933 (the ``1933 
Act'') (15 U.S.C. 77a), and under the 1940 Act relating to the Fund 
(File Nos. 333-180879 and 811-22704) (the ``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. 30340 (January 4, 2013) (``Exemptive 
Order''). Investments made by the Fund will comply with the 
conditions set forth in the Exemptive Order.
    \9\ This Amendment No. 2 to SR-NYSEArca-2014-76 replaces SR-
NYSEArca-2014-76 as originally filed and Amendment No. 1 thereto, 
and supersedes such filings in their entirety.
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    Commentary .06 to Rule 8.600 provides that, if the investment 
adviser to the investment company issuing Managed Fund Shares is 
affiliated with a broker-dealer, such investment adviser shall erect a 
``fire wall'' between the investment adviser and the broker-dealer with 
respect to access to information concerning the composition and/or 
changes to such investment company portfolio. In addition, Commentary 
.06 further requires that personnel who make decisions on the open-end 
fund's portfolio composition must be subject to procedures designed to 
prevent the use and dissemination of material nonpublic information 
regarding the open-end fund's portfolio.\10\ Commentary .06 to Rule

[[Page 42606]]

8.600 is similar to Commentary .03(a)(i) and (iii) to NYSE Arca 
Equities Rule 5.2(j)(3); however, Commentary .06 in connection with the 
establishment of a ``fire wall'' between the investment adviser and the 
broker-dealer reflects the applicable open-end fund's portfolio, not an 
underlying benchmark index, as is the case with index-based funds. The 
Adviser is not registered as a broker-dealer or affiliated with a 
broker-dealer. In the event (a) the Adviser or any sub-adviser becomes 
registered as a broker-dealer or newly affiliated with a broker-dealer, 
or (b) any new adviser or sub-adviser is a registered broker-dealer or 
becomes affiliated with a broker-dealer, it will implement a fire wall 
with respect to its relevant personnel or broker-dealer affiliate 
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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    \10\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). As a result, the Adviser and its 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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Principal Investment Policies
    According to the Registration Statement, the Fund will seek to 
preserve and grow capital from investments in the U.S. and foreign 
equity, fixed income, commodity and currency markets, independent of 
market direction. The Fund will be considered a ``fund of funds'' that 
seeks to achieve its investment objective by primarily investing in 
other 1940 Act-registered exchange-traded funds (``ETFs'') and other 
exchange traded products (``ETPs'') including, but not limited to, 
exchange-traded notes (``ETNs''),\11\ exchange traded currency trusts, 
and closed-end funds \12\ (together, ``Underlying Vehicles'') \13\ that 
offer diversified exposure, including inverse exposure, to global 
regions (including emerging markets), countries, styles (i.e., market 
capitalization, value, growth, etc.) and sectors. Under normal market 
conditions,\14\ the Fund will invest at least 80% of its net assets in 
the securities of Underlying Vehicles.
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    \11\ As described in the Registration Statement, ETFs are 
registered investment companies whose shares are exchange-traded and 
give investors a proportional interest in the pool of securities and 
other assets held by the ETF. ETPs are exchange-traded equity 
securities whose value derives from an underlying asset or portfolio 
of assets, which may correlate to a benchmark, such as a commodity, 
currency, interest rate or index. ETFs are one type of ETP. ETNs are 
unsecured and unsubordinated debt securities whose value derives, in 
part, from an underlying asset or benchmark and, in part, from the 
credit quality of the securities' issuer.
    \12\ A closed-end fund is a pooled investment vehicle that is 
registered under the 1940 Act and whose shares are listed and traded 
on a U.S. national securities exchange.
    \13\ For purposes of this filing, the term ``Underlying 
Vehicles'' includes 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); Commodity Futures Trust Shares (as described 
in NYSE Arca Equities Rule 8.204); Managed Fund Shares (as described 
in NYSE Arca Equities Rule 8.600); and closed-end funds. All 
Underlying Vehicles will be listed and traded in the U.S. on a 
national securities exchange. While the Fund may invest in inverse 
ETFs, the Fund will not invest in leveraged (e.g., 2X, -2X, 3X or -
3X) ETFs.
    \14\ The term ``under normal market conditions'' includes, but 
is not limited to, the absence of extreme volatility or trading 
halts in the equity 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.
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    According to the Registration Statement, the Fund will seek to 
preserve and grow capital by producing absolute returns with reduced 
volatility and manageable risk and drawdowns. The Fund will invest in 
Underlying Vehicles spanning all the major world asset classes 
including equities, bonds (including high yield bonds, which are 
commonly referred to as ``junk bonds''), real estate, derivatives, 
commodities, and currencies. The Adviser will actively manage the 
Fund's portfolio utilizing a quantitative strategy with risk management 
controls in an attempt to protect capital. Through Underlying Vehicles, 
the Fund may have exposure to companies in any industry and of any 
market capitalization. Under normal market conditions, the Fund expects 
to invest at least 40% of its net assets, including through investments 
in Underlying Vehicles, in securities of issuers located in at least 
three different countries (including the United States).
    Through Underlying Vehicles, the Fund may invest in shares of real 
estate investment trusts (``REITs''), which are pooled investment 
vehicles that invest primarily in real estate or real estate-related 
loans and trade on a U.S. exchange.
Other Investments
    While, under normal market conditions, the Fund will invest at 
least 80% of its net assets in Underlying Vehicles, as described above, 
the Fund may invest its remaining 20% of net assets in other securities 
and financial instruments, other than Underlying Vehicles, including 
futures contracts, cash and cash equivalents, as described below.
    Exchange-Traded Equity Securities. The Fund may invest in exchange-
traded common stocks. The Fund also may invest in foreign securities by 
purchasing ``Depositary Receipts'', including American Depositary 
Receipts (``ADRs''), European Depositary Receipts (``EDRs'') and Global 
Depositary Receipts (``GDRs'') or other securities convertible into 
securities of issuers based in foreign countries. These securities may 
not necessarily be denominated in the same currency as the securities 
which they represent.\15\
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    \15\ Generally, ADRs, in registered form, are denominated in 
U.S. dollars and are designed for use in the U.S. securities 
markets, GDRs, in bearer form, are issued and designed for use 
outside the United States, and EDRs, in bearer form, may be 
denominated in other currencies and are designed for use in European 
securities markets. ADRs are receipts typically issued by a U.S. 
bank or trust company evidencing ownership of the underlying 
securities. EDRs are European receipts evidencing a similar 
arrangement. GDRs are receipts typically issued by non-United States 
banks and trust companies that evidence ownership of either foreign 
or domestic securities. ADRs may be sponsored or unsponsored, but 
unsponsored ADRs will not exceed 10% of the Fund's net assets.
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    With respect to its exchange-traded equity securities investments, 
the Fund will normally invest in equity securities that are listed and 
traded on a U.S. exchange or in markets that are members of the 
Intermarket Surveillance Group (``ISG'') or parties to a comprehensive 
surveillance sharing agreement with the Exchange. In any case, not more 
than 10% of the net assets of the Fund in the aggregate invested in 
exchange-traded equity securities will consist of equity securities 
whose principal market is not a member of ISG or a market with which 
the Exchange does not have a comprehensive surveillance sharing 
agreement.
    Fixed Income Securities. The Fund may invest in debt and other 
fixed income securities, as described below. Debt and other fixed 
income securities include fixed and floating rate securities of any 
maturity. Fixed rate securities pay a specified rate of interest or 
dividends. Floating rate securities pay a rate that is adjusted 
periodically by reference to a specified index or market rate. Fixed 
and floating rate securities

[[Page 42607]]

may be issued by federal, state, local, and foreign governments and 
related agencies, and by a wide range of private issuers. The Fund's 
investments in debt and other fixed income securities will be limited 
to those described below.
    The Fund may invest in indexed bonds, which are a type of fixed 
income security whose principal value and/or interest rate is adjusted 
periodically according to a specified instrument, index, or other 
statistic (e.g., another security, inflation index, currency, or 
commodity).
    The Fund may invest in securities issued or guaranteed by the U.S. 
Government, its agencies, instrumentalities, and political subdivisions 
\16\; securities issued by foreign governments, their authorities, 
agencies, instrumentalities, and political subdivisions; securities 
issued by supra-national agencies \17\; corporate debt securities; 
master demand notes \18\; Yankee dollar and Eurodollar bank 
certificates of deposit; time deposits; bankers' acceptances; 
commercial paper \19\ and inflation-indexed securities. The Fund may 
invest also in zero coupon securities, which may be issued by a wide 
variety of corporate and governmental issuers.
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    \16\ U.S. Government securities include securities issued or 
guaranteed by the U.S. Government or its authorities, agencies, or 
instrumentalities. Foreign government securities include securities 
issued or guaranteed by foreign governments (including political 
subdivisions) or their authorities, agencies, or instrumentalities 
or by supra-national agencies. Different kinds of U.S. government 
securities and foreign government securities have different kinds of 
government support. For example, some U.S. government securities 
(e.g., U.S. Treasury bonds) are supported by the full faith and 
credit of the U.S. Other U.S. government securities are issued or 
guaranteed by federal agencies or government-chartered or -sponsored 
enterprises but are neither guaranteed nor insured by the U.S. 
government (e.g., debt securities issued by the Federal Home Loan 
Mortgage Corporation (``Freddie Mac''), Federal National Mortgage 
Association (``FNMA'' or ``Fannie Mae''), and Federal Home Loan 
Banks (``FHLBs''). Similarly, some foreign government securities are 
supported by the full faith and credit of a foreign national 
government or political subdivision and some are not.
    \17\ Supra-national agencies are agencies whose member nations 
make capital contributions to support the agencies' activities. 
Examples include the International Bank for Reconstruction and 
Development (the World Bank), the Asian Development Bank, the 
European Coal and Steel Community, and the Inter-American 
Development Bank.
    \18\ The Fund may invest in master demand notes that are 
denominated in U.S. dollars. Master demand notes are demand notes 
that permit the investment of fluctuating amounts of money at 
varying rates of interest pursuant to arrangements with issuers who 
meet the quality criteria of the Fund. The interest rate on a master 
demand note may fluctuate based upon changes in specified interest 
rates, be reset periodically according to a prescribed formula or be 
a set rate. Although there is no secondary market in master demand 
notes, if such notes have a demand future, the payee may demand 
payment of the principal amount of the note upon relatively short 
notice. Master demand notes are generally illiquid and therefore 
subject to a Fund's percentage limitations for investments in 
illiquid securities.
    \19\ Commercial paper consists of short-term promissory notes 
issued by corporations. Commercial paper may be traded in the 
secondary market after its issuance.
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    The Fund may invest in fixed income securities of any credit 
quality, from investment grade securities to high yield securities. 
Investment grade securities are securities rated in one of the four 
highest rating categories by at least two nationally recognized 
statistical rating organizations (``Rating Organizations'') rating that 
security, such as Standard & Poor's Ratings Services (``Standard & 
Poor's'') or Moody's Investors Service, Inc. (``Moody's''), or rated in 
one of the four highest rating categories by one Rating Organization if 
it is the only Rating Organization rating that security, or unrated, if 
deemed to be of comparable quality \20\ by Cambria and traded publicly 
on the world market. The Fund, at the discretion of the Adviser, may 
retain a debt security that has been downgraded below the initial 
investment criteria.\21\
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    \20\ In determining whether a security is of ``comparable 
quality'', the Adviser will consider, for example, whether the 
issuer of the security has issued other rated securities; whether 
the obligations under the security are guaranteed by another entity 
and the rating of such guarantor (if any); whether and (if 
applicable) how the security is collateralized; other forms of 
credit enhancement (if any); the security's maturity date; liquidity 
features (if any); relevant cash flow(s); valuation features; other 
structural analysis; macroeconomic analysis and sector or industry 
analysis.
    \21\ Securities rated lower than Baa by Moody's, or equivalently 
rated by S&P or Fitch, are sometimes referred to as ``high yield 
securities'' or ``junk bonds.''
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    For securities that carry a rating assigned by a Rating 
Organization, Cambria will use the highest rating assigned by the 
Rating Organization to determine a security's credit rating. Commercial 
paper must be rated at least ``A-1'' or equivalent by a Rating 
Organization. Corporate debt obligations must be rated at least ``B-
''or equivalent by a Rating Organization. For securities that are not 
rated by a Rating Organization, Cambria's internal credit rating will 
apply and be subject to equivalent rating minimums.
    Futures. The Fund may invest in futures contracts on indices, 
currencies and commodities. The Fund will trade only futures contracts 
that are listed and traded on a U.S. board of trade. According to the 
Registration Statement, the Fund's investments in futures, will be 
subject to the limits on leverage imposed by the 1940 Act. Section 
18(f) of the 1940 Act and related Commission guidance limit the amount 
of leverage that an investment company, such as the Fund, can obtain.
    Cash and Cash Equivalents. The Fund may temporarily invest a 
portion of its assets in cash or cash equivalents pending other 
investments or to maintain liquid assets required in connection with 
some of the Fund's investments. Cash and cash equivalents include money 
market instruments, such as obligations issued or guaranteed by the 
U.S. Government, its agencies and/or instrumentalities (including 
government-sponsored enterprises), bankers' acceptances, bank 
certificates of deposit, repurchase agreements \22\ and investment 
companies that invest primarily in such instruments (i.e., money market 
funds). The Fund may hold funds in bank deposits in U.S. or foreign 
currency, including during the completion of investment programs.
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    \22\ A repurchase agreement is an agreement under which 
securities are acquired by a Fund from a securities dealer or bank 
subject to resale at an agreed upon price on a later date. The Fund 
may enter into repurchase agreements with banks and broker-dealers.
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    Investments in Other Investment Companies. The Fund may invest in 
the securities of other investment companies to the extent permitted by 
law. The Fund may make significant investments in money market funds. 
In addition, the Trust intends to enter into agreements with 
unaffiliated ETFs that permit such unaffiliated ETFs to sell, and the 
Fund to purchase, the unaffiliated ETFs' shares in excess of the limits 
imposed by Sections 12(d)(1)(A) and (B) of the 1940 Act.
    Temporary Defensive Position. To respond to adverse market, 
economic, political or other conditions, the Fund may invest 100% of 
its total assets, without limitation, in high-quality debt securities 
(i.e., BBB or higher) and money market instruments (as described 
above). The Fund may be invested in these instruments for extended 
periods, depending on Cambria's assessment of market conditions.
Investment Restrictions
    The Fund may invest in the securities of other investment companies 
to the extent that such an investment would be 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.\23\
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    \23\ 15 U.S.C. 80a-12(d)(1).
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    According to the Registration Statement, the Fund will seek to 
qualify for treatment as a Regulated Investment

[[Page 42608]]

Company (``RIC'') under the Internal Revenue Code.\24\
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    \24\ 26 U.S.C. 851.
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    The Fund may hold up to an aggregate amount of 15% of its net 
assets in illiquid assets (calculated at the time of investment), 
including Rule 144A securities deemed illiquid by the Adviser \25\ and 
master demand notes, consistent with Commission guidance. The Fund will 
monitor its portfolio liquidity on an ongoing basis to determine 
whether, in light of current circumstances, an adequate level of 
liquidity is being maintained, and will consider taking appropriate 
steps in order to maintain adequate liquidity if, through a change in 
values, net assets, or other circumstances, more than 15% of the Fund's 
net assets are held in illiquid assets. Illiquid assets include 
securities subject to contractual or other restrictions on resale and 
other instruments that lack readily available markets as determined in 
accordance with Commission staff guidance.\26\
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    \25\ In reaching liquidity decisions, the Adviser may consider 
the following factors: the frequency of trades and quotes for the 
security; the number of dealers willing to purchase or sell the 
security and the number of other potential purchasers; dealer 
undertakings to make a market in the security; and the nature of the 
security and the nature of the marketplace trades (e.g., the time 
needed to dispose of the security, the method of soliciting offers, 
and the mechanics of transfer).
    \26\ The Commission has stated that long-standing Commission 
guidelines have required open-end funds to hold no more than 15% of 
their net assets in illiquid securities and other illiquid assets. 
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 
14618 (March 18, 2008), footnote 34. See also, Investment Company 
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 
1970) (Statement Regarding ``Restricted Securities''); Investment 
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio 
security is illiquid if it cannot be disposed of in the ordinary 
course of business within seven days at approximately the value 
ascribed to it by the fund. See Investment Company Act Release No. 
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting 
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act 
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) 
(adopting Rule 144A under the 1933 Act).
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    The Fund's investments will be consistent with the Fund's 
investment objective and will not be used to achieve leveraged returns 
(i.e., 2Xs and 3Xs) of the Fund's broad-based securities market index 
(as defined in Form N-1A).\27\
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    \27\ The Fund's broad-based securities market index will be 
identified in a future amendment to the Registration Statement 
following the Fund's first full calendar year of performance.
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Net Asset Value
    The net asset value (``NAV'') of Shares will be calculated each 
business day by SEI as of the close of regular trading on the New York 
Stock Exchange (``NYSE''), generally 4:00 p.m., Eastern time on each 
day that the NYSE is open. The Fund will calculate its NAV per Share by 
taking the value of its total assets, subtracting any liabilities, and 
dividing that amount by the total number of Shares outstanding, rounded 
to the nearest cent. Expenses and fees, including the management fees, 
will be accrued daily and taken into account for purposes of 
determining NAV.
    When calculating the NAV of the Fund's Shares, investments will 
generally be valued using market valuations. Market valuations are 
generally valuations (i) obtained from an exchange, a pricing service 
or a major market maker (or dealer) or (ii) based on a price quotation 
or other equivalent indication of a value supplied by an exchange, a 
pricing service or a major market maker (or dealer), in each case as 
approved by the Trust's Board of Trustees pursuant to the Trust's 
valuation policies and procedures. Thus, to the extent that the Fund 
uses a pricing vendor approved for the Trust by the Board, whether the 
pricing vendor bases valuations upon dealer quotes, a proprietary 
analysis of the relevant market, matrix pricing, sensitivity analysis, 
a combination of the above or any other means, the price provided by 
the pricing vendor may be considered a market valuation.
    Exchange-traded equity securities, including Underlying Vehicles, 
common stocks and sponsored Depositary Receipts, as well as futures 
contracts, will be valued at the official closing price on their 
principal exchange or board of trade, or, lacking any current reported 
sale at the time of valuation, at the mean of the most recent bid and 
asked quotations on their principal exchange or board of trade. 
Unsponsored Depositary Receipts, fixed income securities (including 
bonds; U.S. Government obligations; corporate debt securities; 
securities issued by foreign governments and supra-national agencies; 
master-demand notes; Yankee dollar and Eurodollar bank certificates of 
deposit; time deposits; bankers' acceptances; commercial paper; 
inflation-indexed securities; zero coupon securities; and money market 
instruments) will be valued at the mean between the most recent bid and 
asked quotations.
    Repurchase agreements will be valued at cost. Fixed-income 
instruments maturing in 60 days or less will be valued at amortized 
cost and those maturing in excess of 60 days will be valued at the 
midpoint of bid and asked quotations. Investments in non-exchange-
traded investment companies (including money market funds) will be 
valued at their NAV.
    Any assets or liabilities denominated in currencies other than the 
U.S. dollar will be converted into U.S. dollars at the current exchange 
rate on the date of valuation as quoted by one or more third parties.
    If a market quotation is not readily available or is deemed not to 
reflect an instrument's market value, the Fund will determine its fair 
value pursuant to policies and procedures approved by the Board. The 
Fund may use fair valuation to price securities that trade on a foreign 
exchange, if any, when a significant event has occurred after the 
foreign exchange closes but before the time at which the Fund's NAV is 
calculated. In such cases, the Fund may use various criteria, including 
an evaluation of U.S. market moves after the close of foreign markets, 
in determining whether a foreign security's market price is reflective 
of market value and, if not, the fair value of the security. In 
general, in determining an instrument's fair value, the Fund may 
consider, among other things, price comparisons among multiple sources, 
corporate actions and news events, other financial indicators. Fair 
value pricing involves subjective judgments. Accordingly, it is 
possible that the fair value determination for an instrument is 
materially different than the value that could be realized upon the its 
sale.
Creation and Redemption of Shares
    According to the Registration Statement, the Fund will sell and 
redeem Shares in aggregations of 50,000 Shares (each, a ``Creation 
Unit'') on a continuous basis through the Distributor, without a sales 
load, at the NAV next determined after receipt of an order in proper 
form on any business day. The size of a Creation Unit is subject to 
change.
    The purchase or redemption of Creation Units from a Fund must be 
effected by or through an ``Authorized Participant'' (i.e., either a 
broker-dealer or other participant in the Continuous Net Settlement 
System of the National Securities Clearing Corporation (``NSCC'') or a 
participant in the Depository Trust Company (``DTC'') with access to 
the DTC system, and who has executed an agreement (``Participant 
Agreement'') with the Distributor that governs transactions in the 
Fund's Creation Units [sic].
    The consideration for a Creation Unit of a Fund will be the ``Fund 
Deposit''. The Fund Deposit will consist of the ``In-Kind Creation 
Basket'' and ``Cash Component'', or an all cash payment (``Cash 
Value''), as determined by

[[Page 42609]]

Cambria to be in the best interest of the Fund. The Cash Component will 
typically include a ``Balancing Amount'' reflecting the difference, if 
any, between the NAV of a Creation Unit and the market value of the 
securities in the ``In-Kind Creation Basket''.
    If the NAV per Creation Unit exceeds the market value of the 
securities in the In-Kind Creation Basket, the purchaser will pay the 
Balancing Amount to the Fund. By contrast, if the NAV per Creation Unit 
is less than the market value of the securities in the In-Kind Creation 
Basket, the Fund will pay the Balancing Amount to the purchaser.
    The Transfer Agent, in a portfolio composition file sent via the 
NSCC, generally will make available on each business day, immediately 
prior to the opening of business on the Exchange (currently 9:30 a.m., 
Eastern time), a list of the names and the required number of shares of 
each security in the In-Kind Creation Basket to be included in the 
current Fund Deposit for each [sic] Fund (based on information about 
the Fund's portfolio at the end of the previous business day) (subject 
to amendment or correction). If applicable, the Transfer Agent, through 
the NSCC, also will make available on each business day, the estimated 
Cash Component or Cash Value, effective through and including the 
previous business day, per Creation Unit.
    The announced Fund Deposit will be applicable, subject to any 
adjustments as described below, for purchases of Creation Units of the 
Fund until such time as the next-announced Fund Deposit is made 
available. From day to day, the composition of the In-Kind Creation 
Basket may change as, among other things, corporate actions and 
investment decisions by Cambria are implemented for the Fund's 
portfolio. The Fund reserves the right to accept a nonconforming (i.e., 
custom) Fund Deposit.
    The Fund may, in its sole discretion, permit or require the 
substitution of an amount of cash ``cash in lieu'') to be added to the 
Cash Component to replace any security in the In-Kind Creation Basket. 
The Fund may permit or require cash in lieu when, for example, the 
securities in the In-Kind Creation Basket may not be available in 
sufficient quantity for delivery or may not be eligible for transfer 
through the systems of DTC. Similarly, the Fund may permit or require 
cash in lieu when, for example, the Authorized Participant or its 
underlying investor is restricted under U.S. or local securities law or 
policies from transacting in one or more securities in the In-Kind 
Creation Basket.\28\
---------------------------------------------------------------------------

    \28\ The Adviser represents that, to the extent the Trust 
effects the creation of Shares in cash, such transactions will be 
effected in the same manner for all Authorized Participants.
---------------------------------------------------------------------------

    To compensate the Trust for costs incurred in connection with 
creation and redemption transactions, investors will be required to pay 
to the Trust a ``Transaction Fee'' as described in the Registration 
Statement.
    According to the Registration Statement, Fund Shares may be 
redeemed only in Creation Units at their NAV next determined after 
receipt of a redemption request in proper form by the Fund through the 
Transfer Agent and only on a business day. The redemption proceeds for 
a Creation Unit will consist of the ``In-Kind Redemption Basket'' and a 
``Cash Redemption Amount'', or an all cash payment (``Cash Value''), in 
all instances equal to the value of a Creation Unit.
    The Cash Redemption Amount will typically include a Balancing 
Amount, reflecting the difference, if any, between the NAV of a 
Creation Unit and the market value of the securities in the In-Kind 
Redemption Basket. If the NAV per Creation Unit exceeds the market 
value of the securities in the In-Kind Redemption Basket, the Fund will 
pay the Balancing Amount to the redeeming investor. By contrast, if the 
NAV per Creation Unit is less than the market value of the securities 
in the In-Kind Redemption Basket, the redeeming investor will pay the 
Balancing Amount to the Fund.
    The composition of the In-Kind Creation Basket will normally be the 
same as the composition of the In-Kind Redemption Basket. Otherwise, 
the In-Kind Redemption Basket will be made available by the Adviser or 
Transfer Agent. The Fund reserves the right to accept a nonconforming 
(i.e., custom) ``Fund Redemption''.
    In lieu of an In-Kind Redemption Basket and Cash Redemption Amount, 
Creation Units may be redeemed consisting solely of cash in an amount 
equal to the NAV of a Creation Unit, which amount is referred to as the 
Cash Value. If applicable, information about the Cash Value will be 
made available by the Adviser or Transfer Agent.
    The right of redemption may be suspended or the date of payment 
postponed: (i) for any period during which the NYSE is closed (other 
than customary weekend and holiday closings); (ii) for any period 
during which trading on the NYSE is suspended or restricted; (iii) for 
any period during which an emergency exists as a result of which 
disposal of the Shares or determination of a Fund's NAV is not 
reasonably practicable; or (iv) in such other circumstances as 
permitted by the Commission.
    The Fund may, in its sole discretion, permit or require the 
substitution of an amount of cash (``cash in lieu'') to be added to the 
Cash Redemption Amount to replace any security in the In-Kind 
Redemption Basket. A Fund may permit or require cash in lieu when, for 
example, the securities in the In-Kind Redemption Basket may not be 
available in sufficient quantity for delivery or may not be eligible 
for transfer through the systems of DTC. Similarly, the Fund may permit 
or require cash in lieu when, for example, the Authorized Participant 
or its underlying investor is restricted under U.S. or local securities 
law or policies from transacting in one or more securities in the In-
Kind Redemption Basket.
    If it is not possible to effect deliveries of the securities in the 
In-Kind Redemption Basket, the Trust may in its discretion exercise its 
option to redeem Shares in cash, and the redeeming beneficial owner 
will be required to receive its redemption proceeds in cash. In 
addition, an investor may request a redemption in cash that a Fund may, 
in its sole discretion, permit. In either case, the investor will 
receive a cash payment equal to the NAV of its Shares based on the NAV 
of Shares of the relevant Fund next determined after the redemption 
request is received in proper form (minus a Transaction Fee, including 
a variable charge, if applicable, as described in the Registration 
Statement).\29\
---------------------------------------------------------------------------

    \29\ The Adviser represents that, to the extent the Trust 
effects the redemption of Shares in cash, such transactions will be 
effected in the same manner for all Authorized Participants.
---------------------------------------------------------------------------

    The Fund may also, in its sole discretion, upon request of a 
shareholder, provide such redeemer a portfolio of securities that 
differs from the exact composition of the In-Kind Redemption Basket, or 
cash in lieu of some securities added to the Cash Component, but in no 
event will the total value of the securities delivered and the cash 
transmitted differ from the NAV. Redemptions of Fund Shares for the In-
Kind Redemption Basket will be subject to compliance with applicable 
federal and state securities laws and the Fund (whether or not it 
otherwise permits cash redemptions) reserves the right to redeem 
Creation Units for cash to the extent that the Trust could not lawfully 
deliver specific securities in the In-Kind Redemption Basket upon 
redemptions or could not do so without

[[Page 42610]]

first registering the securities in the In-Kind Redemption Basket under 
such laws.
    When cash redemptions of Creation Units are available or specified 
for the Fund, they will be effected in essentially the same manner as 
in-kind redemptions. In the case of a cash redemption, the investor 
will receive the cash equivalent of the In-Kind Redemption Basket minus 
any Transaction Fees.
    Additional information regarding creation and redemption procedures 
is included in the Registration Statement.
Availability of Information
    The Fund's Web site (www.cambriafunds.com), which will be publicly 
available prior to the public offering of Shares, will include a form 
of the prospectus for the Fund that may be downloaded. The Fund's Web 
site will include additional quantitative information updated on a 
daily basis, including, for the Fund (1) daily trading volume, the 
prior business day's NAV and the market closing price or mid-point of 
the bid/ask spread at the time of calculation of such NAV (the ``Bid/
Ask Price''),\30\ and a calculation of the premium and discount of the 
closing price or Bid/Ask Price against the NAV, and (2) data in chart 
format displaying the frequency distribution of discounts and premiums 
of the daily closing price or Bid/Ask Price against the NAV, within 
appropriate ranges, for each of the four previous calendar quarters. 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 NAV 
at the end of the business day.\31\
---------------------------------------------------------------------------

    \30\ The Bid/Ask Price of the Fund will be determined using the 
midpoint of the highest bid and the lowest offer on the Exchange as 
of the time of calculation of the Fund's NAV. The records relating 
to Bid/Ask Prices will be retained by the Fund and its service 
providers.
    \31\ Under accounting procedures 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''). 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.
---------------------------------------------------------------------------

    On a daily basis, the Fund will disclose on its Web site the 
following information regarding each portfolio holding, as applicable 
to the type of holding: ticker symbol, CUSIP number or other 
identifier, if any; a description of the holding (including the type of 
holding); the identity of the security, commodity, index or other asset 
or instrument underlying the holding, if any; quantity held (as 
measured by, for example, par value, notional value or number of 
shares, contracts or units); maturity date, if any; coupon rate, if 
any; effective date, if any; market value of the holding; and the 
percentage weighting of the holding in the Fund's portfolio. The Web 
site information will be publicly available at no charge.
    In addition, a basket composition file, which includes the security 
names and share quantities required to be delivered in exchange for the 
Fund's Shares, together with estimates and actual cash components, will 
be publicly disseminated daily prior to the opening of the NYSE via 
NSCC. The basket represents one Creation Unit of the Fund.
    Investors can also obtain the Trust's Statement of Additional 
Information (``SAI''), the Fund's Shareholder Reports, and the Trust's 
Form N-CSR and Form N-SAR, filed twice a year. The Trust's SAI and 
Shareholder Reports are available free upon request from the Trust, and 
those documents and the Form N-CSR and Form N-SAR may be viewed on-
screen or downloaded from the Commission's Web site at www.sec.gov. 
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. Quotation 
and last sale information for the Shares will be available via the 
Exchange proprietary quote and trade services and via the Consolidated 
Tape Association (``CTA'') high-speed line.
    Intra-day price quotations on the securities and other assets held 
by the Fund will be available from major broker-dealer firms. Intra-day 
price information on such assets will also be available through free 
and subscription services that can be accessed by Authorized 
Participants and other investors. For example, pricing information for 
exchange-traded securities (including exchange-traded equity securities 
(such as common stocks and Underlying Vehicles), futures contracts and 
sponsored Depositary Receipts, will be readily available from the Web 
sites of the exchanges or boards of trade trading such securities or 
futures contracts, automated quotation systems, published or other 
public sources, and subscription services such as Bloomberg or Reuters. 
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. Pricing information for unsponsored 
Depositary Receipts, non-exchange-traded investment company securities, 
fixed income securities (including bonds; U.S. Government obligations; 
corporate debt securities; securities issued by foreign governments and 
supra-national agencies; master-demand notes; Yankee dollar and 
Eurodollar bank certificates of deposit; time deposits; bankers' 
acceptances; commercial paper; inflation-indexed securities; and zero 
coupon securities), repurchase agreements, and money market instruments 
will be available through brokers and dealers and/or subscription 
services, such as Markit, Bloomberg and Thompson Reuters.
    In addition, the Intraday Indicative Value (``IIV''),\32\ which is 
the Portfolio Indicative Value as defined in NYSE Arca Equities Rule 
8.600 (c)(3), will be widely disseminated at least every 15 seconds 
during the Exchange's Core Trading Session by one or more major market 
data vendors.\33\ The dissemination of the IIV, together with the 
Disclosed Portfolio, will allow investors to determine the value of the 
underlying portfolio of the Fund and provide a close estimate of that 
value throughout the trading day.
---------------------------------------------------------------------------

    \32\ The IIV is an approximate per Share value of the Fund's 
portfolio holdings, which is disseminated every fifteen seconds 
throughout the trading day by one or more market data vendors. The 
IIV will be based on the current market value of the Fund's 
``Disclosed Portfolio'' as defined in Rule 8.600(c)(2). The IIV does 
not necessarily reflect the precise composition of the current 
portfolio of securities held by the Fund at a particular point in 
time. The IIV should not be viewed as a ``real-time'' update of the 
NAV of the Fund because the approximate value may not be calculated 
in the same manner as the NAV. The quotations for certain 
investments may not be updated during U.S. trading hours if such 
holdings do not trade in the U.S., except such quotations may be 
updated to reflect currency fluctuations.
    \33\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available IIVs 
taken from CTA or other data feeds.
---------------------------------------------------------------------------

    Additional information regarding the Trust and the Shares, 
including investment strategies, risks, creation and redemption 
procedures, fees, portfolio holdings disclosure policies, distributions 
and taxes is included in the Registration Statement. All terms relating 
to the Fund that are referred to, but not defined in, this proposed 
rule change are defined in the Registration Statement.
Trading Halts
    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.\34\ Trading in Shares of the Fund 
will be halted if the circuit breaker parameters in NYSE Arca Equities 
Rule

[[Page 42611]]

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. These may include: (1) The extent to 
which trading is not occurring in the securities and/or the financial 
instruments comprising the Disclosed Portfolio of the Fund; or (2) 
whether other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present. Trading in the 
Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), which 
sets forth circumstances under which Shares of the Fund may be halted.
---------------------------------------------------------------------------

    \34\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------

Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the NYSE Arca Marketplace from 4:00 a.m. to 8:00 p.m. Eastern Time in 
accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late 
Trading Sessions). The Exchange has appropriate rules to facilitate 
transactions in the Shares during all trading sessions. As provided in 
NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price 
variation (``MPV'') for quoting and entry of orders in equity 
securities traded on the NYSE Arca Marketplace is $0.01, with the 
exception of securities that are priced less than $1.00 for which the 
MPV for order entry is $0.0001.
    The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.600. The Exchange represents 
that, for initial and/or continued listing, the Fund will be in 
compliance with Rule 10A-3 under the Act,\35\ as provided by NYSE Arca 
Equities Rule 5.3. A minimum of 100,000 Shares for the Fund will be 
outstanding at the commencement of trading on the Exchange. 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.
---------------------------------------------------------------------------

    \35\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Surveillance
    The Exchange represents that trading in the Shares will be subject 
to the existing trading surveillances, administered by the Financial 
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange, 
which are designed to detect violations of Exchange rules and 
applicable federal securities laws.\36\ The Exchange represents that 
these procedures are adequate to properly monitor Exchange trading of 
the Shares in all trading sessions and to deter and detect violations 
of Exchange rules and federal securities laws applicable to trading on 
the Exchange.
---------------------------------------------------------------------------

    \36\ FINRA surveils trading on the Exchange pursuant to a 
regulatory services agreement. The Exchange is responsible for 
FINRA's performance under this regulatory services agreement.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations.
    FINRA, on behalf of the Exchange, will communicate as needed 
regarding trading in the Shares, Underlying Vehicles, other exchange-
traded equity securities, and futures with other markets and other 
entities that are members of the ISG, and FINRA, on behalf of the 
Exchange, may obtain trading information regarding trading in the 
Shares and Underlying Vehicles, other exchange-traded equity 
securities, and futures from such markets and other entities. In 
addition, the Exchange may obtain information regarding trading in the 
Shares, Underlying Vehicles, other exchange-traded equity securities, 
and futures from markets and other entities that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement.\37\ FINRA, on behalf of the Exchange, is able to 
access, as needed, trade information for certain fixed income 
securities held by the Funds [sic] reported to FINRA's Trade Reporting 
and Compliance Engine (``TRACE'').
---------------------------------------------------------------------------

    \37\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio for the Fund may trade on markets that are 
members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    Not more than 10% of the net assets of the Fund in the aggregate 
invested in exchange-traded equity securities will consist of equity 
securities whose principal market is not a member of ISG or a market 
with which the Exchange does not have a comprehensive surveillance 
sharing agreement.
    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
Information Bulletin
    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: (1) The 
procedures for purchases and redemptions of Shares in Creation Unit 
aggregations (and that Shares are not individually redeemable); (2) 
NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence 
on its Equity Trading Permit Holders to learn the essential facts 
relating to every customer prior to trading the Shares; (3) 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; (4) how information regarding the 
Portfolio Indicative Value and the Disclosed Portfolio is disseminated; 
(5) 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 (6) trading 
information.
    In addition, the Bulletin will reference that the Fund is subject 
to various fees and expenses described in the Registration Statement. 
The Bulletin will discuss any exemptive, no-action, and interpretive 
relief granted by the Commission from any rules under the Act. The 
Bulletin will also disclose that the NAV for the Shares will be 
calculated after 4:00 p.m. Eastern Time each trading day.
2. Statutory Basis
    [Insert Section 3(b) from Form 19b-4.] [sic] The basis under the 
Act for this proposed rule change is the requirement under Section 
6(b)(5) \38\ 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.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in NYSE Arca Equities Rule 
8.600. The Exchange has in place surveillance procedures that are 
adequate to properly monitor trading in

[[Page 42612]]

the Shares in all trading sessions and to deter and detect violations 
of Exchange rules and applicable federal securities laws. The Adviser 
is not registered as a broker-dealer or affiliated with a broker-
dealer. The Fund's investments will be consistent with its investment 
objective and will not be used to enhance leverage. FINRA, on behalf of 
the Exchange, will communicate as needed regarding trading in the 
Shares, Underlying Vehicles, other exchange-traded equity securities, 
and futures with other markets and other entities that are members of 
the ISG, and FINRA, on behalf of the Exchange, may obtain trading 
information regarding trading in the Shares and Underlying Vehicles, 
other exchange-traded equity securities, and futures from such markets 
and other entities. In addition, the Exchange may obtain information 
regarding trading in the Shares, Underlying Vehicles, other exchange-
traded equity securities, and futures from markets and other entities 
that are members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement. All Underlying Vehicles 
in which the Fund invests will be listed and traded in the U.S. on a 
national securities exchange. With respect to its exchange-traded 
equity securities investments, the Fund will normally invest in equity 
securities that are listed and traded on a U.S. exchange or in markets 
that are members of the ISG or parties to a comprehensive surveillance 
sharing agreement with the Exchange. All futures contracts in which the 
Fund will invest will be traded on a U.S. board of trade. Not more than 
10% of the net assets of the Fund in the aggregate invested in 
exchange-traded equity securities will consist of equity securities 
whose principal market is not a member of ISG or a market with which 
the Exchange does not have a comprehensive surveillance sharing 
agreement. FINRA, on behalf of the Exchange, is able to access, as 
needed, trade information for certain fixed income securities held by 
the Funds [sic] reported to FINRA's TRACE.
    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 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. In addition, a large amount of 
information is publicly available regarding the Fund and the Shares, 
thereby promoting market transparency. The Fund's portfolio holdings 
will be disclosed on its Web site daily after the close of trading on 
the Exchange and prior to the opening of trading on the Exchange the 
following day. Moreover, the IIV will be widely disseminated by one or 
more major market data vendors at least every 15 seconds during the 
Exchange's Core Trading Session. 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 that will form the basis for the Fund's calculation of NAV at 
the end of the business day. 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. Quotation and last sale information for the Shares 
will be available via the Exchange proprietary quote and trade services 
and via the CTA high-speed line. Intra-day price quotations on the 
securities and other assets held by the Fund will be available from 
major broker-dealer firms. Intra-day price information on such assets 
will also be available through free and subscription services that can 
be accessed by Authorized Participants and other investors. For 
example, pricing information for exchange-traded securities (including 
exchange-traded equity securities (such as common stocks and Underlying 
Vehicles), futures contracts and sponsored Depositary Receipts, will be 
readily available from the Web sites of the exchanges or boards of 
trade trading such securities or futures contracts, automated quotation 
systems, published or other public sources, and subscription services 
such as Bloomberg or Reuters. 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. Pricing 
information for unsponsored Depositary Receipts, non-exchange-traded 
investment company securities, fixed income securities (including 
bonds; U.S. Government obligations; corporate debt securities; 
securities issued by foreign governments and supra-national agencies; 
master-demand notes; Yankee dollar and Eurodollar bank certificates of 
deposit; time deposits; bankers' acceptances; commercial paper; 
inflation-indexed securities; and zero coupon securities), repurchase 
agreements, and money market instruments will be available through 
brokers and dealers and/or subscription services.
    The Web site for the Fund will include a form of the prospectus for 
the Fund and additional data relating to NAV and other applicable 
quantitative information. Moreover, 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. Trading in Shares of the Fund will 
be halted if the circuit breaker parameters in NYSE Arca Equities Rule 
7.12 have been reached or because of market conditions or for reasons 
that, in the view of the Exchange, make trading in the Shares 
inadvisable, and trading in the Shares will be subject to NYSE Arca 
Equities Rule 8.600(d)(2)(D), which sets forth circumstances under 
which Shares of the Fund may be halted. The proposed rule change is 
designed to perfect the mechanism of a free and open market and, in 
general, to protect investors and the public interest in that it will 
facilitate the listing and trading of an additional type of actively-
managed exchange-traded product that will enhance competition among 
market participants, to the benefit of investors and the marketplace. 
As noted above, the Exchange has in place surveillance procedures 
relating to trading in the Shares and may obtain information via ISG 
from other exchanges that are members of ISG or with which the Exchange 
has entered into a comprehensive surveillance sharing agreement. In 
addition, as noted above, investors will have ready access to 
information regarding the Fund's holdings, the IIV, the Disclosed 
Portfolio, and quotation and last sale information for the Shares.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change will facilitate the listing and trading of an 
additional type of actively-managed exchange-traded product that will 
principally hold equity securities and that will enhance competition 
among market participants, to the benefit of investors and the 
marketplace.

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.

[[Page 42613]]

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2014-76 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-2014-76. 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-2014-76 and should be submitted on or before 
August 12, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\39\
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    \39\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-17155 Filed 7-21-14; 8:45 am]
BILLING CODE 8011-01-P