Document ID: SEC-2014-1053-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2014-06-25T04:00Z

[Federal Register Volume 79, Number 122 (Wednesday, June 25, 2014)]
[Notices]
[Pages 36118-36120]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-14777]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72436; File No. SR-NYSEArca-2014-70]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to Use of 
U.S. Exchange-Listed Options by the AdvisorShares EquityPro ETF 
(Formerly, the Global Alpha & Beta ETF)

June 19, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 10, 2014, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to reflect a change to the means of achieving 
the investment objective with respect to the AdvisorShares EquityPro 
ETF (formerly, the Global Alpha & Beta ETF). Shares of the 
AdvisorShares EquityPro ETF are currently listed and traded on the 
Exchange. 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 Commission has approved listing and trading on the Exchange of 
shares (``Shares'') of the AdvisorShares EquityPro ETF (formerly, the 
Global Alpha & Beta ETF) (``Fund''), a series of AdvisorShares Trust 
(``Trust'') \3\ under NYSE Arca Equities Rule 8.600, which governs the 
listing and trading of Managed Fund Shares. Shares of the Fund are 
currently listed and traded on the Exchange.
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    \3\ See Securities Exchange Act Release No. 67277 (June 27, 
2012), 77 FR 39554 (July 3, 2012) (SR-NYSEArca-2012-39) (``Prior 
Order''). See also Securities Exchange Act Release No. 66973 (May 
11, 2012), 77 FR 29429 (May 17, 2012) (SR-NYSEArca-2012-39) (``Prior 
Notice,'' and together with the Prior Order, the ``Prior Release'').
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    The Shares are offered by the Trust, which is registered with the 
Commission as an open-end management investment company.\4\ The 
investment advisor to the Fund is AdvisorShares Investments, LLC (the 
``Adviser''). The sub-adviser for the Fund is Elements Financial, PLC 
(the ``Sub-Adviser'').\5\ Neither the Adviser nor the Sub-Adviser is a 
registered broker-dealer or is affiliated with a broker-dealer.
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    \4\ The Trust is registered under the Investment Company Act of 
1940 (15 U.S.C. 80a-1). On January 30, 2012, the Trust filed with 
the Commission Form N-1A under the Securities Act of 1933 (15 U.S.C. 
77a), and under the 1940 Act relating to the Fund (File Nos. 333-
157876 and 811-22110) (``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. 29291) (May 28, 
2010) (File No. 812-13677) (``Exemptive Order'').
    \5\ The Fund's previous sub-adviser was Your Source Financial, 
PLC.
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    In this proposed rule change, the Exchange proposes to reflect a 
change to the means the Adviser will utilize to implement the Fund's 
investment objective to permit investments in U.S. exchange-listed 
options, as described below.
    The Prior Release stated that the Fund's investment objective is 
long-term capital growth.\6\ The Prior Release further stated that the 
Fund will not invest in options contracts, futures contracts, or swap 
agreements.
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    \6\ The change to the Fund's name was reflected in an amendment 
to the Trust's Registration Statement.
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    Going forward, the Adviser wishes to revise this representation to 
state that the Fund may invest up to 10% of the Fund's net assets in 
the following types of options: U.S. exchange-listed index options; 
U.S. exchange-listed individual stock options; or U.S. exchange-listed 
exchange-traded fund (``ETF'') options. All U.S. options exchanges are 
members of the Intermarket Surveillance Group (``ISG''). The Fund may 
seek to invest in options contracts in order to gain market exposure 
and/or to hedge against a market decline.\7\
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    \7\ The changes described herein will be effective contingent 
upon effectiveness of an amendment to the Trust's Registration 
Statement. See supra, note 5. The Adviser represents that the 
Adviser and the Sub-Adviser have managed and will continue to manage 
the Fund in the manner described in the Prior Release, and the Fund 
will not implement the proposed amendment described herein until the 
instant proposed rule change is operative.
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    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

[[Page 36119]]

designed to detect violations of Exchange rules and applicable federal 
securities laws.\8\ 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. The 
Fund's investment in options will not be used to enhance leverage.
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    \8\ 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.
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    FINRA, on behalf of the Exchange, will communicate as needed 
regarding trading in options (in addition to the exchange-traded assets 
referenced in the Prior Release) with other markets and other entities 
that are members of the ISG,\9\ and FINRA, on behalf of the Exchange, 
may obtain trading information regarding trading in options (in 
addition to the exchange-traded assets referenced in the Prior Release) 
from such markets and other entities. In addition, the Exchange may 
obtain information regarding trading in options (in addition to the 
exchange-traded assets referenced in the Prior Release) from markets 
and other entities that are members of ISG or with which the Exchange 
has in place a comprehensive surveillance sharing agreement.
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    \9\ For a list of the current members of ISG, see 
www.isgportal.org.
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    For purposes of calculating net asset value (``NAV'') of Shares of 
the Fund, option contracts will be valued at their most recent sale 
price on the exchange on which they are traded. Quotation and last sale 
information for exchange-listed options will be available via the 
Options Price Reporting Authority.
    The Adviser represents that there is no change to the Fund's 
investment objective. The Fund will continue to comply with all initial 
and continued listing requirements under NYSE Arca Equities Rule 8.600.
    Except for the changes noted above, all other facts presented and 
representations made in the Prior Release remain unchanged.
    All terms referenced but not defined herein are defined in the 
Prior Release.
    The Exchange notes that the Commission has previously approved for 
listing other actively-managed exchange-traded funds that invest in 
U.S. exchange-listed options.\10\
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    \10\ See, e.g., Securities Exchange Act Release No. 67552 
(August 1, 2012), 77 FR 47131 (August 7, 2012) (SR-NYSEArca-2012-55) 
(order approving listing and trading on the Exchange of the STAR 
Global Buy-Write ETF under NYSE Arca Equities rule 8.600).
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2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \11\ 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. The 
Adviser represents that there is no change to the Fund's investment 
objective. The Fund will continue to comply with all initial and 
continued listing requirements under NYSE Arca Equities Rule 8.600. All 
options in which the Fund will invest will be traded on U.S. options 
exchanges, all of which are members of ISG.
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    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices, and is designed 
to promote just and equitable principles of trade and to protect 
investors and the public interest, in that the Adviser represents that 
there is no change to the Fund's investment objective. All options in 
which the Fund will invest will be traded on a U.S national securities 
exchange. The Fund's investment in options will not be used to enhance 
leverage. FINRA, on behalf of the Exchange, will communicate as needed 
regarding trading in options (in addition to the exchange-traded assets 
referenced in the Prior Release) 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 options (in addition to 
the exchange-traded assets referenced in the Prior Release) from such 
markets and other entities. In addition, the Exchange may obtain 
information regarding trading in options (in addition to the exchange-
traded assets referenced in the Prior Release) from markets and other 
entities that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that the Fund will continue to comply with all 
initial and continued listing requirements under NYSE Arca Equities 
Rule 8.600. The Adviser represents that there is no change to the 
Fund's investment objective. Except for the changes noted above, all 
other representations made in the Prior Release remain unchanged.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed changes will 
accommodate continued listing and trading of an issue of Managed Fund 
Shares that, under normal conditions, principally holds large-
capitalization, U.S. exchange-listed equities.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\12\ and Rule 19b-4(f)(6)(iii) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

[[Page 36120]]

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-2014-70 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2014-70. 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 Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available 
for inspection and copying at the principal office of the Exchange. 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-2014-70 and should 
be submitted on or before July 16, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-14777 Filed 6-24-14; 8:45 am]
BILLING CODE 8011-01-P