
[Federal Register: October 9, 2009 (Volume 74, Number 195)]
[Notices]               
[Page 52288-52292]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09oc09-121]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60773; File No. SR-NYSEArca-2009-83]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change To List and Trade Shares of the Grail American 
Beacon International Equity ETF

October 2, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that, on September 18, 2009, NYSE Arca, Inc. (``NYSE Arca'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III 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

    Pursuant to the provisions of Section 19(b)(1) of the Exchange 
Act,\3\ NYSE Arca, through its wholly-owned subsidiary NYSE Arca 
Equities, Inc. (``NYSE Arca Equities'' or the ``Corporation''), 
proposes to list and trade the following under NYSE Arca Equities Rule 
8.600 (``Managed Fund Shares''): The Grail American Beacon 
International Equity ETF.
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    \3\ 15 U.S.C. 78s(b)(1).
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nyx.com, at the Exchange's principal office 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 the following Managed Fund 
Shares \4\ (``Shares'') under NYSE Arca Equities Rule 8.600: The Grail 
American Beacon International Equity ETF (``Fund'').\5\ The Shares will 
be offered by Grail Advisors' ETF Trust (the ``Trust''), a statutory 
trust organized under the laws of the State of Delaware and registered 
with the Commission as an open-end management investment company.\6\ 
Grail Advisors, LLC (the ``Manager''), a majority-owned subsidiary of 
Grail Partners, LLC, acts as the Fund's investment manager. The Fund is 
subadvised by American Beacon Advisors, Inc. (``ABA''). The Bank of New 
York Mellon Corporation is the administrator, Fund accountant, transfer 
agent and custodian for the Fund. ALPS Distributors, Inc. (the 
``Distributor'') serves as the distributor for the Fund.
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    \4\ 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) (``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.
    \5\ The Commission previously approved listing and trading on 
the Exchange of the following actively managed funds under Rule 
8.600. See Securities Exchange Act Release No. 57619 (April 4, 
2008), 73 FR 19544 (April 10, 2008) (SR-NYSEArca-2008-25) (order 
approving Rule 8.600 and Exchange listing and trading of PowerShares 
Active AlphaQ Fund, PowerShares Active Alpha Multi-Cap Fund, 
PowerShares Active Mega-Cap Portfolio and PowerShares Active Low 
Duration Portfolio); Securities Exchange Act Release No. 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); Securities Exchange Act Release No. 
59826 (April 28, 2009), 74 FR 20512 (May 4, 2009) (SR-NYSEArca-2009-
22) (order approving Exchange listing and trading of Grail American 
Beacon Large Cap Value ETF); Securities Exchange Act Release No. 
60460 (August 7, 2009), 74 FR 41468 (August 17, 2009) (SR-NYSEArca-
2009-55) (order approving Exchange listing and trading of Dent 
Tactical ETF).
    \6\ The Trust is registered under the 1940 Act. On April 29, 
2009, the Trust filed with the Commission pre-effective Amendment 
No. 3 to its registration statement on 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. 333-148082 and 811-22154) 
(``Registration Statement''). The description of the operation of 
the Trust herein is based on the Registration Statement.
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    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 \7\ under the Exchange Act, as provided by 
NYSE Arca Equities Rule 5.3. A minimum of 100,000 Shares 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 net asset value will be calculated daily and that the net 
asset value and the Disclosed Portfolio will be made available to all 
market participants at the same time.
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    \7\ 17 CFR 240.10A-3.
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    Commentary .07 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.\8\ In addition, 
Commentary .07 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. Commentary .07 to 
Rule 8.600 is similar to Commentary .03(a)(i) and (iii) to NYSE Arca 
Equities Rule 5.2(j)(3); however, Commentary .07 in connection

[[Page 52289]]

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. Grail Advisors, LLC is affiliated with a broker-
dealer, Grail Securities, LLC, and has implemented a fire wall with 
respect to such broker-dealer regarding access to information 
concerning the composition and/or changes to the portfolio.\9\
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    \8\ 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 investment adviser is 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.
    \9\ The Exchange represents that Grail Advisors, LLC, as the 
investment adviser of the Fund, and each of the sub-advisers of the 
Fund, and their respective related personnel, are subject to 
Investment Advisers Act Rule 204A-1. This Rule specifically requires 
the adoption of a code of ethics by an investment adviser to 
include, at a minimum: (i) Standards of business conduct that 
reflect the firm's/personnel fiduciary obligations; (ii) provisions 
requiring supervised persons to comply with applicable federal 
securities laws; (iii) provisions that require all access persons to 
report, and the firm to review, their personal securities 
transactions and holdings periodically as specifically set forth in 
Rule 204A-1; (iv) provisions requiring supervised persons to report 
any violations of the code of ethics promptly to the chief 
compliance officer (``CCO'') or, provided the CCO also receives 
reports of all violations, to other persons designated in the code 
of ethics; and (v) provisions requiring the investment adviser to 
provide each of the supervised persons with a copy of the code of 
ethics with an acknowledgement by said supervised persons. 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. E-mail from Michael Cavalier, Chief Counsel, 
NYSE Euronext, to Edward Cho, Special Counsel, and Arisa Tinaves, 
Special Counsel, Division of Trading and Markets, Commission, dated 
September 30, 2009.
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    ABA, the Fund's primary sub-adviser, is not affiliated with a 
broker-dealer. In addition, Lazard Asset Management LLC, Templeton 
Investment Counsel, LLC and The Boston Company Asset Management, LLC 
each is a sub-adviser to the Fund and each is affiliated with a broker-
dealer. The sub-advisers have represented that they have implemented a 
fire wall with respect to their respective broker-dealer affiliates 
regarding access to information concerning the composition and/or 
changes to the portfolio.
Description of the Fund
    According to the Registration Statement, the Fund's objective is 
long-term capital appreciation. Ordinarily, at least 80% of the Fund's 
net assets (plus the amount of any borrowings for investment purposes) 
will be invested in common stocks and securities convertible into 
common stocks of issuers based in at least three different countries 
located outside the United States and the Fund will primarily hold 
securities of large capitalization companies that have last sale 
reporting in the countries in which it invests. The Fund will primarily 
invest in countries in the Morgan Stanley Capital International Europe 
Australasia Far East Index (``MSCI EAFE Index''). The MSCI EAFE Index 
is comprised of equity securities of companies from various industrial 
sectors whose primary trading markets are located outside the United 
States. Companies included in the MSCI EAFE Index are selected from 
among the larger capitalization companies in these markets.\10\ The 
Fund considers companies with market capitalizations of more than $1 
billion to be large capitalization companies. Thus, at least 50% of the 
Fund's assets invested in securities of companies will be in companies 
with market capitalizations of more than $1 billion.
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    \10\ The Commission has previously approved the listing and 
trading of funds based on MSCI EAFE Indexes. See, e.g., Securities 
Exchange Act Release Nos. 44700 (August 14, 2001), 66 FR 43927 
(August 21, 2001) (SR-Amex-2001-34) (approving shares of a fund 
based on the MSCI EAFE Index); 52178 (July 29, 2005), 70 FR 46244 
(August 9, 2005) (SR-NYSE-2005-41) (order approving iShares MSCI 
EAFE Growth Index Fund and iShares MSCI EAFE Value Index Fund); 
56592 (October 1, 2007), 72 FR 57364 (October 9, 2007) (SR-Amex-
2007-60) (order approving fund of the Proshares Trust based on the 
MSCI EAFE Index).
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    According to the Registration Statement, the investment sub-
advisers will select stocks that, in their opinion, have most or all of 
the following characteristics (relative to that stock's country, sector 
or industry): Above-average return on equity or earnings growth 
potential, below-average price to earnings or price to cash flow ratio, 
below-average price to book value ratio, and above-average dividend 
yields.
    The investment sub-advisers may consider potential changes in 
currency exchange rates when choosing stocks. Each of the investment 
sub-advisers determines the earnings growth prospects of companies 
based upon a combination of internal and external research using 
fundamental analysis and considering changing economic trends. The 
decision to sell a stock is typically based on the belief that the 
company is no longer considered undervalued or shows deteriorating 
fundamentals, or that better investment opportunities exist in other 
stocks. The Manager and ABA believe that this strategy will help the 
Fund outperform other investment styles over the longer term while 
minimizing volatility and downside risk. An investment sub-adviser may 
trade forward foreign currency contracts or currency futures in an 
attempt to reduce the Fund's risk exposure to adverse fluctuations in 
currency exchange rates.
    The Fund's assets are allocated among one or more investment sub-
advisers by the Manager and/or ABA. With respect to any assets 
allocated to it, each investment sub-adviser has discretion to purchase 
and sell securities in accordance with the Fund's objectives, policies, 
restrictions and more specific policies provided by the Manager and 
ABA.
    According to the Registration Statement, in addition to the 
investment strategies described in the Registration Statement, the Fund 
may invest up to 20% of its total assets in debt securities that are 
investment grade at the time of purchase, including obligations of the 
U.S. Government, its agencies and instrumentalities, corporate debt 
securities, mortgage-backed securities, asset-backed securities, and 
other debt securities, as specified in the Registration Statement. Such 
assets may include non-U.S. debt securities that are rated at the time 
of purchase in one of the three highest rating categories by any Rating 
Organization (as defined in the Registration Statement) or, if unrated, 
are deemed to be of comparable quality by the applicable investment 
sub-adviser and traded publicly on a world market. In addition, 
although not currently anticipated except to reduce the Fund's exposure 
to adverse fluctuations in currency exchange rates, the Fund may use 
options and futures for various purposes, including for hedging and 
investment purposes. In addition, the Fund may purchase or otherwise 
receive warrants or rights, or convertible and non-convertible 
preferred and preference stocks. The Fund may also invest in over-the-
counter options. To the extent consistent with applicable law, the Fund 
may invest in futures contracts on, among other things, financial 
instruments (such as a U.S. government security or other fixed income 
security), individual equity securities (``single stock futures''), 
securities indices, interest rates, currencies, inflation indices, and 
commodities or commodities indices. The Fund's purchase and sale of 
index futures is limited to contracts and exchanges approved by the U. 
S. Commodity Futures Trading Commission.

[[Page 52290]]

    According to the Registration Statement, the Fund may engage in 
transactions involving the use of interest rate futures; use options on 
futures contracts, interest rate caps, floors, and collars; and 
directly or indirectly use various different types of swaps, such as 
swaps on securities and securities indices, interest rate swaps, 
currency swaps, credit default swaps, commodity swaps, inflation swaps, 
and other types of available swap agreements. The Fund may enter into 
repurchase agreements with banks and broker-dealers. The Fund may 
temporarily invest a portion of its assets in cash or cash items 
pending other investments or to maintain liquid assets required in 
connection with some of the Fund's investments. The Fund may invest in 
pooled real estate investment vehicles. In addition, the Fund may 
invest up to 15% of its net assets in illiquid securities. For this 
purpose, ``illiquid securities'' are securities that the Fund may not 
sell or dispose of within seven days in the ordinary course of business 
at approximately the amount at which the Fund has valued the 
securities. The Fund may invest in the securities of other investment 
companies to the extent permitted by law.
    Under adverse market conditions, the Fund may, for temporary 
defensive purposes, invest up to 100% of its assets in cash or cash 
equivalents, including investment grade short-term obligations. 
Investment grade obligations include securities issued or guaranteed by 
the U.S. Government, its agencies and instrumentalities, as well as 
securities rated in one of the four highest rating categories by at 
least two nationally recognized statistical rating organizations rating 
that security (such as Standard & Poor's Ratings Services or Moody's 
Investors Service, Inc.) or rated in one of the four highest rating 
categories by one rating organization if it is the only organization 
rating that security.
    As stated in the Registration Statement, the following are 
fundamental policies of the Fund: (1) Regarding diversification, the 
Fund may not invest more than 5% of its total assets (taken at market 
value) in securities of any one issuer, other than obligations issued 
by the U.S. Government, its agencies and instrumentalities, or purchase 
more than 10% of the voting securities of any one issuer, with respect 
to 75% of an ETF's total assets; \11\ and (2) regarding concentration, 
the Fund may not invest more than 25% of its total assets in the 
securities of companies primarily engaged in any one industry or group 
of industries provided that: (i) This limitation does not apply to 
obligations issued or guaranteed by the U.S. Government, its agencies 
and instrumentalities; and (ii) municipalities and their agencies and 
authorities are not deemed to be industries.
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    \11\ The diversification standards are included in Section 
5(b)(1) of the 1940 Act. The Fund's fundamental policies may be 
changed with respect to an ETF only by a vote of the holders of a 
majority of the Fund's outstanding voting securities.
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    Creations and redemptions of Fund shares will generally be in-kind, 
with a specified Cash Component, as described in the Registration 
Statement. Authorized Participants or the investors on whose behalf the 
Authorized Participants are acting (``Investors''), however, may 
deliver in connection with creations or receive in connection with 
redemptions cash in lieu of one or more in-kind securities. 
Specifically, in connection with creations (or redemptions), an 
Authorized Participant or Investor may transact in cash, in whole or in 
part, at the sole discretion of the Fund, provided, however, that the 
cash amount delivered (or received) shall not exceed 10% of the value 
of the In-Kind Creation (or Redemption) Basket, unless the Authorized 
Participant or Investor is subject to legal restrictions with respect 
to delivery or receipt of one or more securities in the In-Kind 
Creation (or Redemption) Basket, or the Fund is in a temporary 
defensive position. The Creation Unit size for the Fund is 50,000 
Shares.
Availability of Information
    The Fund's Web site (http://www.grailadvisors.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 reported closing price, NAV and mid-
point of the bid/ask spread at the time of calculation of such NAV (the 
``Bid/Ask Price''),\12\ and a calculation of the premium and discount 
of the Bid/Ask Price against the NAV, and (2) data in chart format 
displaying the frequency distribution of discounts and premiums of the 
daily 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 proposed Rule 8.600(c)(2) that will form the 
basis for the Fund's calculation of NAV at the end of the business 
day.\13\ The Registration Statement provides that the Fund's portfolio 
holdings are publicly disseminated each day the Fund is open for 
business through its internet Web site. 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, is publicly 
disseminated daily prior to the opening of the NYSE via the National 
Securities Clearing Corporation (``NSCC''). The basket represents one 
Creation Unit of the Fund. The Web site information will be publicly 
available at no charge.
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    \12\ The Bid/Ask Price of the Fund is determined using 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.
    \13\ 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.
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    On a daily basis, the Fund will disclose on the Fund's Web site for 
each portfolio security or other financial instrument of the Fund the 
following information: ticker symbol (if applicable), name of security 
or financial instrument, number of shares or dollar value of financial 
instruments held in the portfolio, and percentage weighting of the 
security or financial instrument in the portfolio.
    The NAV of the Fund will normally be determined as of the close of 
the regular trading session on the New York Stock Exchange (ordinarily 
4 p.m. Eastern time) on each business day.
    Investors can also obtain the Trust's Statement of Additional 
Information (``SAI''), the Fund's Shareholder Reports, and its 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 http://www.sec.gov. 
Information regarding market price and trading volume of the Shares is 
and will be continually available on a real-time basis throughout the 
day on brokers' computer screens and other electronic services. 
Information regarding the previous day's closing price and trading 
volume information will be published daily in the financial section of 
newspapers. Quotation and last sale information for the Shares will be 
available via the Consolidated Tape Association (``CTA'')

[[Page 52291]]

high-speed line. In addition, the Portfolio Indicative Value, as 
defined in NYSE Arca Equities Rule 8.600 (c)(3), will be disseminated 
by the Exchange at least every 15 seconds during the Core Trading 
Session through the facilities of CTA. The dissemination of the 
Portfolio Indicative Value, together with the Disclosed Portfolio, will 
allow investors to determine the value of the underlying portfolio of 
the Fund on a daily basis and to provide a close estimate of that value 
throughout the trading day.
    Additional information regarding the Shares and the Fund, 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.\14\ 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. These may include: (1) The 
extent to which trading is not occurring in the securities comprising 
the Disclosed Portfolio and/or the financial instruments 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.
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    \14\ See NYSE Arca Equities Rule 7.12, Commentary .04.
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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 a.m. to 8 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. The minimum 
trading increment for Shares on the Exchange will be $0.01.
Surveillance
    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products (which include Managed 
Fund Shares) to monitor trading in the Shares. 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 applicable federal securities laws.
    The Exchange's current trading surveillance focuses on detecting 
securities trading outside their normal patterns. 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.
    The Exchange may obtain information via the Intermarket 
Surveillance Group (``ISG'') from other exchanges that are members of 
ISG.\15\ In addition, the Exchange also has a general policy 
prohibiting the distribution of material, non-public information by its 
employees.
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    \15\ For a list of the current members of ISG, see http://
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 and the Exchange may not have in place comprehensive 
surveillance sharing agreements with such markets.
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Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its 
ETP 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 ETP 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 is disseminated; (5) the requirement that ETP Holders deliver a 
prospectus to investors purchasing newly issued Shares prior to or 
concurrently with the confirmation of a transaction; and (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 Exchange 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
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(5) \16\ 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 
Exchange believes that the proposed rule change 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.
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    \16\ 15 U.S.C. 78f(b)(5).
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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 Exchange Act.

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

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

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

    Within 35 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 the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

[[Page 52292]]

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 Exchange 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2009-83 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-2009-83. This 
file number should be included on the subject line if e-mail 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 inspection 
and copying in the Commission's Public Reference Room, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of the filing will also be available for 
inspection and copying at NYSE Arca's principal office. 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-2009-83 and should 
be submitted on or before October 30, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-24353 Filed 10-8-09; 8:45 am]

BILLING CODE 8011-01-P
