
[Federal Register Volume 79, Number 185 (Wednesday, September 24, 2014)]
[Notices]
[Pages 57161-57171]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-22671]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73141; File No. SR-NYSEArca-2014-100]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to Listing and Trading of Shares of 
the SPDR SSgA Global Managed Volatility ETF Under NYSE Arca Equities 
Rule 8.600

September 18, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on September 5, 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 and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade shares of the SPDR SSgA 
Global Managed Volatility ETF under NYSE Arca Equities Rule 8.600. 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: \4\ SPDR SSgA Global 
Managed Volatility ETF (``Fund'').\5\
---------------------------------------------------------------------------

    \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-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.
    \5\ The Commission has previously approved listing and trading 
on the Exchange of a number of actively managed funds under Rule 
8.600. See, e.g., 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); 62502 (July 15, 2010), 75 FR 42471 
(July 21, 2010) (SR-NYSEArca-2010-57) (order approving listing and 
trading of AdviserShares 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); 71540 (February 12, 2014), 79 FR 9515 
(February 19, 2014) (SR-NYSEArca-2013-138) (order approving listing 
and trading of shares of the iShares Enhanced International Large-
Cap ETF and iShares Enhanced International Small-Cap ETF).
---------------------------------------------------------------------------

    The Shares will be offered by SSgA Active ETF Trust (the 
``Trust''), which is organized as a Massachusetts business trust and is 
registered with the Commission as an open-end management investment 
company.\6\ SSgA Funds Management, Inc. will serve as the investment 
adviser to the Fund (the ``Adviser'' or ``SSgA FM''). State Street 
Global Markets, LLC (the ``Distributor'') will be the principal 
underwriter and distributor of the Fund's Shares. State Street Bank and 
Trust Company (the ``Administrator'', ``Custodian'' or ``Transfer 
Agent'') will serve as administrator, custodian and transfer agent for 
the Fund.
---------------------------------------------------------------------------

    \6\ The Trust is registered under the 1940 Act. On September 20, 
2012, the Trust filed with the Commission an amendment to its 
registration statement on Form N-1A under the Securities Act of 1933 
(15 U.S.C. 77a) (``Securities Act''), and under the 1940 Act 
relating to the Fund (File Nos. 333-173276 and 811-22542) 
(``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. 29524 (December 13, 2010) (File 
No. 812-13487) (``Exemptive Order'').
---------------------------------------------------------------------------

    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.\7\ Commentary .06 to Rule

[[Page 57162]]

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 a registered broker-dealer but is affiliated with a 
broker-dealer and has implemented a ``fire wall'' with respect to such 
broker-dealer regarding access to information concerning the 
composition and/or changes to the Fund's portfolio. 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.
---------------------------------------------------------------------------

    \7\ 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.
---------------------------------------------------------------------------

Principal Investment Policies
    According to the Registration Statement, the Fund will seek to 
provide competitive long-term returns while maintaining low long-term 
volatility relative to the broad global market. Under normal 
circumstances,\8\ the Fund will invest all of its assets in the SSgA 
Global Managed Volatility Portfolio (the ``Portfolio''), a separate 
series of the SSgA Master Trust with an identical investment objective 
as the Fund. As a result, the Fund will invest indirectly through the 
Portfolio.
---------------------------------------------------------------------------

    \8\ The term ``under normal circumstances'' 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.
---------------------------------------------------------------------------

    The Adviser will utilize a proprietary quantitative investment 
process to select a portfolio of exchange-listed and traded equity 
securities that the Adviser believes will exhibit low volatility and 
provide competitive long-term returns relative to the broad global 
market.\9\ The Portfolio will invest its assets in both U.S. and 
foreign investments. The Portfolio will generally invest at least 80% 
of its net assets in global equity securities and at least 30% of its 
net assets in global equity securities of issuers economically tied to 
countries other than the United States and will generally hold 
securities of issuers economically tied to at least three countries, 
including the United States. The Portfolio may purchase exchange-listed 
and traded common stocks and preferred securities of U.S. and foreign 
corporations.\10\ The Adviser expects to favor securities with low 
exposure to market risk factors and low security-specific risk. The 
Adviser will consider market risk factors to include, among others, a 
security's size, momentum, value, liquidity, leverage and growth. While 
the Adviser will attempt to manage the Fund's volatility exposure to 
stabilize performance, there can be no guarantee that the Fund will 
reach its target volatility. Additionally, the Adviser will implement 
risk constraints at the security, industry, size exposure, and sector 
levels. Through this quantitative process of security selection and 
portfolio diversification, the Adviser expects that the Portfolio will 
be subject to a low level of absolute risk (as defined by standard 
deviation of returns) and thus should exhibit low volatility over the 
long term.
---------------------------------------------------------------------------

    \9\ Volatility is a statistical measurement of the magnitude of 
up and down fluctuations in the value of a financial instrument or 
index over time. Volatility may result in rapid and dramatic price 
swings.
    \10\ Investment in common stock of foreign corporations may also 
be in the form of American Depositary Receipts (``ADRs''), Global 
Depositary Receipts (``GDRs'') and European Depositary Receipts (`` 
EDRs'') (collectively ``Depositary Receipts''). Depositary Receipts 
are receipts, typically issued by a bank or trust company, which 
evidence ownership of underlying securities issued by a foreign 
corporation. For ADRs, the depsitory is typically a U.S. financial 
institution and the underlying securities are issued by a foreign 
issuer. For other Depositary Receipts, the depository may be a 
foreign or a U.S. entity, and the underlying securities may have a 
foreign or a U.S. issuer. Depositary Receipts will not necessarily 
be denominated in the same currency as their underlying securities. 
Generally, ADRs, in registered form, are designated for use in 
European securities markets. GDRs are tradable in the United States 
and in Europe and are designed for use throughout the world. The 
Portfolio may invest in unsponsored Depositary Receipts. The issuers 
of unsponsored Depositary Receipts are not obligated to disclose 
material information in the United States, and, therefore, there may 
be less information available regarding such issuers and there may 
not be a correlation between such information and the market value 
of the Depositary Receipts. Unsponsored Depositary Receipts will not 
exceed 10% of the Fund's not assets.
---------------------------------------------------------------------------

    The Fund is intended to be managed in a ``master-feeder'' 
structure, under which the Fund will invest substantially all of its 
assets in a corresponding Portfolio (i.e., a ``master-feeder''), which 
is a separate 1940 Act-registered mutual fund that has an identical 
investment objective.\11\ As a result, the Fund (i.e., the ``feeder 
fund'') will have an indirect interest in all of the securitites owned 
by the corresponding Portfolio. Because of this indirect interest, the 
Fund's investment returns should be the same as those of the Portfolio, 
adjusted for the expenses of the Fund. In extraordinary instances, the 
Fund reserves the right to make direct investments in securities.
---------------------------------------------------------------------------

    \11\ The Adviser represents that, in general, the Portfolio 
(i.e., the master fund) will be where investments will be held, 
which investments will primarily consist of equity securities; and 
may, to a lesser extent, include other investments as described 
under ``Non-Principal Investment Policies'' below. The Fund (i.e., 
the feeder fund) will invest in shares of the Portfolio and will not 
invest in investments described under ``Non-Principal Investment 
Policies'', but may be exposed to such investments by means of the 
Fund's investment in shares of the Portfolio. In extraordinary 
instances, the Fund reserves the right to make direct investments in 
equity securities and other investments.
---------------------------------------------------------------------------

    The Adviser will manage the investments of the Portfolio. Under the 
master-feeder arrangement, and pursuant to the investment advisory 
agreement between the Adviser and the Trust, investment advisory fees 
charged at the Portfolio level will be deducted from the advisory fees 
charged at the Fund level. This arrangement avoids a ``layering'' of 
fees, e.g., the Fund's total annual operating expenses would be no 
higher as a result of investing in a master-feeder arrangement than 
they would be if the Fund pursued its investment objectives directly. 
In addition, the Fund may discontinue investing through the master-
feeder arrangement and pursue its investment objectives directly if the 
Fund's Board of Trustees (``Board'') determines that doing so would be 
in the best interests of shareholders.
    The exchange-listed and traded equity securities in which the 
Portfolio would be permitted to invest will be limited to: (1) equity 
securities that trade in markets that are members of the Intermarket 
Surveillance Group (``ISG'') or are parties to a comprehensive 
surveillance sharing agreement (``CSSA'') with the Exchange or, (2) 
``Actively-Traded Securities'' as defined in Regulation M (``Reg M'') 
under the Act that are traded on U.S. and non-U.S. exchanges with last 
sale reporting.\12\
---------------------------------------------------------------------------

    \12\ Rule 101 under Reg M defines Actively-Traded Securities as 
securities that have an average daily trading volume (``ADTV'') of 
at least $1 million and are issued by an issuer whose common equity 
securities have a public float value of at least $150 million. Rule 
102 includes an analogous definition for actively-traded reference 
securities.
---------------------------------------------------------------------------

    The Portfolio and Fund do not intend to concentrate their 
investments in any particular industry. The Portfolio and Fund will 
look to the Global Industry Classification Standard (``GICS'') Level 3

[[Page 57163]]

(Industries) in making industry determinations.\13\
---------------------------------------------------------------------------

    \13\ GICS classifications can be found on the Standard & Poor's 
Web site at http://www.us.spindices.com/search/?query=gics+map.
---------------------------------------------------------------------------

    The Portfolio may invest in exchange-traded preferred securities. 
Preferred securities pay fixed or adjustable rate dividends to 
investors, and have ``preference'' over common stock in the payment of 
dividends and the liquidation of a company's assets.
Non-Principal Investment Policies
    In certain situations or market conditions, in order to take 
temporary defensive positions, the Fund may (either directly or through 
the Portfolio) temporarily depart from its normal investment policies 
and strategies provided that the alternative is consistent with the 
Fund's investment objective and is in the best interest of the Fund. 
For example, the Fund may hold a higher than normal proportion of its 
assets in cash in times of extreme market stress.
    According to the Registration Statement, in addition to the 
principal investments described above, the Portfolio may invest its 
remaining net assets in other investments, as described below. The 
investment practices of the Portfolio are the same in all material 
respects to those of the Fund.
    The Portfolio may invest in U.S. Government obligations. U.S. 
Government obligations are a type of bond. U.S. Government obligations 
include securities issued or guaranteed as to principal and interest by 
the U.S. Government, its agencies or instrumentalities.\14\
---------------------------------------------------------------------------

    \14\ One type of U.S. Government obligation, U.S. Treasury 
obligations, are backed by the full faith and credit of the U.S. 
Treasury and differ only in their interest rates, maturities, and 
times of issuance. U.S. Treasury bills have initial maturities of 
one-year or less; U.S. Treasury notes have initial maturities of one 
to ten years; and U.S. Treasury bonds generally have initial 
maturities of greater than ten years. Other U.S. Government 
obligations are issued or guaranteed by agencies or 
instrumentalities of the U.S. Government including, but not limited 
to, Federal National Mortgage Association (``Fannie Mae''), the 
Government National Mortgage Association (``Ginnie Mae''), the Small 
Business Administration, the Federal Farm Credit Administration, the 
Federal Home Loan Mortgage Corporation (``FHLMC''), the Federal Home 
Loan Banks, Banks for Cooperatives (including the Central Bank for 
Cooperatives), the Federal Land Banks, the Federal Intermediate 
Credit Banks, the Tennessee Valley Authority, the Export-Import Bank 
of the United States, the Commodity Credit Corporation, the Federal 
Financing Bank, the National Credit Union Administration and the 
Federal Agricultural Mortgage Corporation. Some obligations issued 
or guaranteed by U.S. Government agencies and instrumentalities, 
including, for example, Ginnie Mae pass-through certificates, are 
supported by the full faith and credit of the U.S. Treasury.
---------------------------------------------------------------------------

    The Portfolio may purchase U.S. registered, dollar-denominated 
bonds of foreign corporations, governments, agencies and supra-national 
entities.
    The Portfolio may invest in restricted securities. Restricted 
securities are securities that are not registered under the Securities 
Act, but which can be offered and sold to ``qualified institutional 
buyers'' under Rule 144A under the Securities Act. When Rule 144A 
restricted securities present an attractive investment opportunity and 
meet other selection criteria, the Portfolio may make such investments 
depending on the market that exists for the particular security. The 
Board has delegated the responsibility for determining the liquidity of 
Rule 144A restricted securities that the Portfolio may invest in to the 
Adviser.\15\
---------------------------------------------------------------------------

    \15\ In reaching liquidity decisions, the Adviser may consider 
the following factors: the frequency of trades and quotes for the 
security; the number of dealers wishing 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 in which it trades (e.g., 
the time needed to dispose of the security, the method of soliciting 
offers and the mechanics of transfer) 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) [sic].
---------------------------------------------------------------------------

    The Portfolio may conduct foreign currency transactions on a spot 
(i.e., cash) or forward basis (i.e., by entering into forward contracts 
to purchase or sell foreign currencies).
    The Portfolio may invest in exchange-traded products (``ETPs''), 
including exchange-traded funds (``ETFs'') registered under the 1940 
Act; exchange traded commodity trusts; and exchange-traded notes 
(``ETNs'').\16\
---------------------------------------------------------------------------

    \16\ For purposes of this filing, ETPs include Investment 
Company Units (as described in NYSE Arca Equities Rule 5.2(j)(3)); 
Index-Linked Securities (as described in NYSE Arca Equities Rule 
5.2(j)(6)); Portfolio Depositary Receipts (as described in NYSE Arca 
Equities Rule 8.100); Trust Issued Receipts (as described in NYSE 
Arca Equities Rule 8.200); Commodity-Based Trust Shares (as 
described in NYSE Arca Equities Rule 8.201); Currency Trust Shares 
(as described in NYSE Arca Equities Rule 8.202); Commodity Index 
Trust Shares (as described in NYSE Arca Equities Rule 8.203); and 
Managed Fund Shares (as described in NYSE Arca Equities Rule 8.600). 
The Portfolio may invest in ETFs managed by the Adviser. The Adviser 
may receive management or other fees from the ETPs in which the 
Portfolio or Fund may invest, as well as a management fee for 
managing the Fund. The ETPs all will be listed and traded in the 
U.S. on national securities exchanges.
---------------------------------------------------------------------------

    In addition, the Portfolio may invest in the securities of other 
investment companies, including money market funds and exchange-traded 
closed-end funds, subject to applicable limitations under Section 
12(d)(1) of the 1940 Act.\17\ The Portfolio may invest up to 25% of its 
total assets in one or more ETPs that are qualified publicly traded 
partnerships (``QPTPs'') and whose principal activities are the buying 
and selling of commodities or options, futures, or forwards with 
respect to commodities.\18\ A QPTP is an entity that is treated as a 
partnership for federal income tax purposes, subject to certain 
requirements. If such an ETP fails to qualify as a QPTP, the income 
generated from the Portfolio's investment in the ETP may not comply 
with certain income tests necessary for the Portfolio to qualify as a 
regulated investment company under Subchapter M of the Internal Revenue 
Code.\19\
---------------------------------------------------------------------------

    \17\ The Fund will invest substantially all of its assets in the 
Portfolio. Pursuant to Section 12(d)(1) of the 1940 Act, a fund may 
invest in the securities of another investment company (the 
``acquired company'') provided that the fund, immediately after such 
purchase or acquisition, does not own in the aggregate: (i) more 
than 3% of the total outstanding voting stock of the acquired 
company; (ii) securities issued by the acquired company having an 
aggregate value in excess of 5% of the value of the total assets of 
the fund; (iii) securities issued by the acquired company and all 
other investment companies (other than Treasury stock of the fund) 
having an aggregate value in excess of 10% of the value of the total 
assets of the fund; or (iv) in the case of investment in a closed-
end fund, more than 10% of the total outstanding voting stock of the 
acquired company. The Fund may also invest in the securities of 
other investment companies if such securities are the only 
investment securities held by the Fund, such as through a master-
feeder arrangement. The Fund currently will pursue its investment 
objective through such an arrangement. To the extent allowed by law, 
regulation, the Fund's investment restrictions and the Trust's 
exemptive relief, the Fund may invest its assets in securities of 
investment companies that are money market funds, including those 
advised by the Adviser or otherwise affiliated with the Adviser, in 
excess of the limits discussed above.
    \18\ Examples of such entities are the PowerShares DB Energy 
Fund, PowerShares DB Oil Fund, PowerShares DB Precious Metals Fund, 
PowerShares DB Gold Fund, PowerShares DB Silver Fund, PowerShares DB 
Base Metals Fund, and PowerShares DB Agriculture Fund, which are 
listed and traded on the Exchange pursuant to NYSE Arca Equities 
Rule 8.200.
    \19\ 26 U.S.C. 851.
---------------------------------------------------------------------------

    The Portfolio may invest in exchange-traded shares of real estate 
investment trusts (``REITs'').
    The Portfolio may invest in repurchase agreements with commercial 
banks, brokers or dealers to generate income from its excess cash 
balances and to invest securities lending cash collateral. A repurchase 
agreement is an agreement under which a fund acquires a financial 
instrument (e.g., a security issued by the U.S. government or an agency 
thereof, a banker's acceptance or a certificate of deposit) from a 
seller, subject to resale to the seller at an agreed upon price and 
date (normally, the next business day). A repurchase agreement may be 
considered a loan collateralized by securities. The resale price 
reflects an agreed upon interest rate effective for the period the 
instrument is held by a fund and is

[[Page 57164]]

unrelated to the interest rate on the underlying instrument.
    The Portfolio may enter into reverse repurchase agreements, which 
involve the sale of securities with an agreement to repurchase the 
securities at an agreed-upon price, date and interest payment and have 
the characteristics of borrowing. The securities purchased with the 
funds obtained from the agreement and securities collateralizing the 
agreement will have maturity dates no later than the repayment date. 
Generally the effect of such transactions is that a fund can recover 
all or most of the cash invested in the portfolio securities involved 
during the term of the reverse repurchase agreement, while in many 
cases a fund is able to keep some of the interest income associated 
with those securities.
    In addition to repurchase agreements, the Portfolio may invest in 
short-term instruments, including money market instruments, (including 
money market funds advised by the Adviser), cash and cash equivalents, 
on an ongoing basis to provide liquidity or for other reasons. Money 
market instruments are generally short-term investments that may 
include but are not limited to: (i) Shares of money market funds; (ii) 
obligations issued or guaranteed by the U.S. government, its agencies 
or instrumentalities (including government-sponsored enterprises); 
(iii) negotiable certificates of deposit (``CDs''), bankers' 
acceptances, fixed time deposits and other obligations of U.S. and 
foreign banks (including foreign branches) and similar institutions; 
(iv) commercial paper rated at the date of purchase ``Prime-1'' by 
Moody's or ``A-1'' by Standard & Poor's, or if unrated, of comparable 
quality as determined by the Adviser \20\; (v) non-convertible 
corporate debt securities (e.g., bonds and debentures) with remaining 
maturities at the date of purchase of not more than 397 days and that 
satisfy the rating requirements set forth in Rule 2a-7 under the 1940 
Act; (vi) short-term U.S. dollar-denominated obligations of foreign 
banks (including U.S. branches) that, in the opinion of the Adviser, 
are of comparable quality to obligations of U.S. banks which may be 
purchased by the Portfolio; and (vii) variable rate demand notes.
---------------------------------------------------------------------------

    \20\ Commercial paper consists of short-term, promissory notes 
issued by banks, corporations and other entities to finance short-
term credit needs. These securities generally are discounted but 
sometimes may be interest bearing.
---------------------------------------------------------------------------

Investment Restrictions
    According to the Registration Statement, the Portfolio and the Fund 
will be classified as a ``non-diversified'' investment company under 
the 1940 Act.\21\ A non-diversified classification means that the 
Portfolio or Fund is not limited by the 1940 Act with regard to the 
percentage of its assets that may be invested in the securities of a 
single issuer. This means that the Portfolio or Fund may invest a 
greater portion of its assets in the securities of a single issuer than 
a diversified fund.
---------------------------------------------------------------------------

    \21\ A ``non-diversified company'', as defined in Section 
5(b)(2) of the 1940 Act, means any management company other than a 
diversified company (as defined in Section 5(b)(1) of the 1940 Act).
---------------------------------------------------------------------------

    Although the Portfolio and Fund will be non-diversified for 
purposes of the 1940 Act, the Portfolio and Fund intend to maintain the 
required level of diversification and otherwise conduct its operations 
so as to qualify as a ``regulated investment company'' for purposes of 
the Internal Revenue Code of 1986. \22\
---------------------------------------------------------------------------

    \22\ 26 U.S.C. 851.
---------------------------------------------------------------------------

    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.\23\ 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.\24\
---------------------------------------------------------------------------

    \23\ See note 24, infra.
    \24\ 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).
---------------------------------------------------------------------------

    Neither the Fund nor the Portfolio will invest in options, futures 
contracts or swaps agreements. The Fund's and Portfolio's investments 
will be consistent with its investment objective and will not be used 
to enhance leverage.
Net Asset Value
    The Fund will calculate net asset value (``NAV'') using the NAV of 
the Portfolio. NAV per Share for the Fund will be computed by dividing 
the value of the net assets of the Portfolio (i.e., the value of its 
total assets less total liabilities) 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. The NAV of the Portfolio will be 
calculated by the Custodian and determined at the close of the regular 
trading session on the New York Stock Exchange (``NYSE'') (ordinarily 
4:00 p.m. Eastern time) on each day that such exchange is open, 
provided that fixed-income assets (and, accordingly, the Portfolio's 
NAV) may be valued as of the announced closing time for trading in 
fixed-income instruments on any day that the Securities Industry and 
Financial Markets Association (or applicable exchange or market on 
which the Portfolio's investments are traded) announces an early 
closing time. Creation/redemption order cut-off times (as described 
further below) may also be earlier on such days.
    In calculating the Portfolio's NAV, the Portfolio's investments 
will generally be valued using market valuations. A market valuation 
generally means a valuation (i) obtained from an exchange, a pricing 
service, or a major market maker (or dealer), (ii) based on a price 
quotation or other equivalent indication of value supplied by an 
exchange, a pricing service, or a major market maker (or dealer) or 
(iii) based on amortized cost. In the case of shares of other funds 
that are not traded on an exchange, a market valuation means such 
fund's published NAV per share. The Adviser may use various pricing 
services, or discontinue the use of any pricing service, as approved by 
the Board of the SSgA Master Trust from time to time. A price obtained 
from a pricing service based on such pricing service's valuation matrix 
may be considered a market valuation. Any assets or liabilities 
denominated in currencies other than the U.S. dollar will be converted 
into U.S. dollars at the current market rates on the date of valuation 
as quoted by one or more sources.
    Common stocks and exchange-traded equity securities (including 
shares of preferred securities, ETPs, closed-end funds, QPTPs, REITs 
and Depositary

[[Page 57165]]

Receipts (other than unsponsored Depositary Receipts traded in the OTC 
market) traded on a national securities exchange generally will be 
valued at the last reported sale price or the official closing price on 
that exchange where the stock is primarily traded on the day that the 
valuation is made. Foreign exchange-traded equities and listed ADRs 
will be valued at the last sale or official closing price on the 
relevant exchange on the valuation date. If, however, neither the last 
sale price nor the official closing price is available, each of these 
securities will be valued at either the last reported sale price or 
official closing price as of the close of regular trading of the 
principal market on which the security is listed.
    Securities of investment companies (other than ETFs registered 
under the 1940 Act), including affiliated funds, money market funds and 
closed-end funds, will be valued at NAV.
    Unsponsored Depositary Receipts, which are traded in the OTC 
market, will be valued at the last reported sale price from the OTC 
Bulletin Board or OTC Link LLC on the valuation date.
    Rule 144A securities, repurchase agreements and reverse repurchase 
agreements will generally be valued at bid prices received from 
independent pricing services as of the announced closing time for 
trading in such instruments. Spot currency transactions will generally 
be valued at bid prices received from independent pricing services 
converted into U.S. dollars at current market rates on the date of 
valuation. Foreign currency forwards normally will be valued on the 
basis of quotes obtained from broker-dealers or third party pricing 
services.
    According to the Adviser, fixed income securities, including U.S. 
Government obligations, U.S. registered, dollar-denominated bonds of 
foreign corporations, governments, agencies and supra-national 
entities, and short-term instruments will generally be valued at bid 
prices received from independent pricing services as of the announced 
closing time for trading in fixed-income instruments in the respective 
market or exchange. In determining the value of a fixed income 
investment, pricing services determine valuations for normal 
institutional-size trading units of such securities using valuation 
models or matrix pricing, which incorporates yield and/or price with 
respect to bonds that are considered comparable in characteristics such 
as rating, interest rate and maturity date and quotations from 
securities dealers to determine current value.
    Any assets or liabilities denominated in currencies other than the 
U.S. dollar will be converted into U.S. dollars at the current market 
rates on the date of valuation as quoted by one or more sources.
    In the event that current market valuations are not readily 
available or such valuations do not reflect current market value, the 
SSgA Master Trust's procedures require the Pricing and Investment 
Committee\25\ to determine a security's fair value if a market price is 
not readily available, in accordance with the 1940 Act. In determining 
such value, the Pricing and Investment Committee may consider, among 
other things, (i) price comparisons among multiple sources, (ii) a 
review of corporate actions and news events, and (iii) a review of 
relevant financial indicators (e.g., movement in interest rates, market 
indices, and prices from the Portfolios' index providers). In these 
cases, the Portfolio's NAV may reflect certain portfolio securities' 
fair values rather than their market prices. Fair value pricing 
involves subjective judgments and it is possible that the fair value 
determination for a security is materially different than the value 
that could be realized upon the sale of the security.
---------------------------------------------------------------------------

    \25\ The Pricing and Investment Committee is subject to 
procedures designed to prevent the use and dissemination of material 
non-public information regarding the Portfolio and the Fund.
---------------------------------------------------------------------------

Creation and Redemption of Shares
    The NAV of Shares of the Fund will be determined once each business 
day, normally 4:00 p.m. Eastern time. Creation Unit sizes will be 
50,000 Shares per Creation Unit. The Trust will issue and sell Shares 
of the Fund only in Creation Units on a continuous basis, without a 
sales load (but subject to transaction fees), at their NAV per Share 
next determined after receipt of an order, on any business day, in 
proper form pursuant to the terms of the authorized participant 
agreement.
    The consideration for purchase of a Creation Unit of the Fund 
generally will consist of either (i) the in-kind deposit of a 
designated portfolio of securities held by the corresponding master 
fund (the ``Deposit Securities'') per each Creation Unit and the Cash 
Component (defined below), computed as described below or (ii) the cash 
value of the Deposit Securities (``Deposit Cash'') and the ``Cash 
Component,'' computed as described below. When accepting purchases of 
Creation Units for cash, the Fund may incur additional costs associated 
with the acquisition of Deposit Securities that would otherwise be 
provided by an in-kind purchaser. Together, the Deposit Securities or 
Deposit Cash, as applicable, and the Cash Component constitute the 
``Fund Deposit,'' which represents the minimum initial and subsequent 
investment amount for a Creation Unit of the Fund. The ``Cash 
Component'' is an amount equal to the difference between the NAV of the 
Shares (per Creation Unit) and the market value of the Deposit 
Securities or Deposit Cash, as applicable. If the Cash Component is a 
positive number (i.e., the NAV per Creation Unit exceeds the market 
value of the Deposit Securities or Deposit Cash, as applicable), the 
Cash Component shall be such positive amount. If the Cash Component is 
a negative number (i.e., the NAV per Creation Unit is less than the 
market value of the Deposit Securities or Deposit Cash, as applicable), 
the Cash Component will be such negative amount and the creator will be 
entitled to receive cash in an amount equal to the Cash Component. The 
Cash Component serves the function of compensating for any differences 
between the NAV per Creation Unit and the market value of the Deposit 
Securities or Deposit Cash, as applicable.
    The Custodian, through the National Securities Clearing Corporation 
(``NSCC''), will make available on each business day, immediately prior 
to the opening of business on the Exchange's Core Trading Session (9:30 
a.m. Eastern time), the list of the names and the required number of 
shares of each Deposit Security or the required amount of Deposit Cash, 
as applicable, to be included in the current Fund Deposit (based on 
information at the end of the previous business day) for the Fund. Such 
Fund Deposit is subject to any applicable adjustments as described in 
the Registration Statement, in order to effect purchases of Creation 
Units of the Fund until such time as the next-announced composition of 
the Deposit Securities or the required amount of Deposit Cash, as 
applicable, is made available.
    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.
    With respect to the Fund, the Custodian, through the NSCC, will 
make available immediately prior to the opening of business on the 
Exchange (9:30 a.m. Eastern time) on each business day, the list of the 
names and share quantities of the Fund's portfolio securities that will 
be applicable (subject to possible amendment or correction) to 
redemption requests

[[Page 57166]]

received in proper form (as defined below) on that day (``Fund 
Securities''). Fund Securities received on redemption may not be 
identical to Deposit Securities.
    Redemption proceeds for a Creation Unit will be paid either in-kind 
or in cash or a combination thereof, as determined by the Trust. With 
respect to in-kind redemptions of the Fund, redemption proceeds for a 
Creation Unit will consist of Fund Securities as announced by the 
Custodian on the business day of the request for redemption received in 
proper form plus cash in an amount equal to the difference between the 
NAV of the Shares being redeemed, as next determined after a receipt of 
a request in proper form, and the value of the Fund Securities (the 
``Cash Redemption Amount''), less a fixed redemption transaction fee 
and any applicable additional variable charge as set forth in the 
Registration Statement. In the event that the Fund Securities have a 
value greater than the NAV of the Shares, a compensating cash payment 
equal to the differential will be required to be made by or through an 
authorized participant by the redeeming shareholder. Notwithstanding 
the foregoing, at the Trust's discretion, an authorized participant may 
receive the corresponding cash value of the securities in lieu of the 
in-kind securities value representing one or more Fund Securities.
    The creation/redemption order cut-off time for the Fund is expected 
to be 4:00 p.m. Eastern time. On days when the Exchange closes earlier 
than normal, the Fund may require orders for Creation Units to be 
placed earlier in the day.
Availability of Information
    The Fund's Web site (www.spdrs.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''),\26\ 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 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.\27\
---------------------------------------------------------------------------

    \26\ 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 their service 
providers.
    \27\ 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 for each portfolio 
security or other financial instrument of the Fund and of the Portfolio 
the following information on the Fund's Web site: ticker symbol (if 
applicable), name of security and financial instrument, number of 
shares and dollar value of financial instruments held in the portfolio, 
and percentage weighting of the security and financial instrument in 
the portfolio. The Web site information will be publicly available at 
no charge.
    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. 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. Quotation and last sale information for the 
Shares will be available via the Consolidated Tape Association 
(``CTA'') high-speed line. With respect to U.S. exchange-listed equity 
securities, the intra-day, closing and settlement prices of common 
stocks and exchange-traded equity securities (including shares of 
preferred securities, ETPs, closed-end funds, QPTPs, REITs and U.S. 
exchange-listed Depositary Receipts) will be readily available from the 
national securities exchanges trading such securities, automated 
quotation systems, published or other public sources, or on-line 
information services such as Bloomberg or Reuters. With respect to non-
U.S. exchange-listed equity securities, intra-day, closing and 
settlement prices of common stocks and other equity securities 
(including shares of preferred securities, and non-U.S. Depositary 
Receipts), will be available from the foreign exchanges on which such 
securities trade as well as from major market data vendors. Pricing 
information regarding each asset class in which the Fund or Portfolio 
will invest will generally be available through nationally recognized 
data service providers through subscription arrangements. Quotation 
information from brokers and dealers or pricing services will be 
available for fixed income securities, including U.S. Government 
obligations, U.S. registered, dollar-denominated bonds of foreign 
corporations, governments, agencies and supra-national entities, and 
short-term instruments; unsponsored Depositary Receipts; and spot and 
forward currency transactions held by the Fund and Portfolio. In 
addition, the Indicative Optimized Portfolio Value (``IOPV''),\28\ 
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.\29\ The dissemination of the IOPV, together 
with the Disclosed Portfolio, will allow investors to determine the 
value of the underlying portfolio of the Fund and of the Portfolio on a 
daily basis and to provide a close estimate of that value throughout 
the trading day. Additional information regarding the Trust and the 
Shares,

[[Page 57167]]

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.
---------------------------------------------------------------------------

    \28\ The IOPV calculation will be an estimate of the value of 
the Fund's NAV per Share using market data converted into U.S. 
dollars at the current currency rates. The IOPV price will be based 
on quotes and closing prices from the securities' local market and 
may not reflect events that occur subsequent to the local market's 
close. Premiums and discounts between the IOPV and the market price 
of the Shares may occur. This should not be viewed as a ``real-
time'' update of the NAV per Share of the Fund, which will be 
calculated only once a day.
    \29\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available IOPVs 
taken from CTA or other data feeds.
---------------------------------------------------------------------------

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.\30\ 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 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.
---------------------------------------------------------------------------

    \30\ 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 \31\ under the Act, 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.
---------------------------------------------------------------------------

    \31\ 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.\32\ 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.
---------------------------------------------------------------------------

    \32\ 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, ETPs and certain exchange-traded 
securities underlying the Shares with other markets and other entities 
that are members of the Intermarket Surveillance Group (``ISG''), and 
FINRA, on behalf of the Exchange, may obtain trading information 
regarding trading in the Shares, ETPs and certain exchange-traded 
securities underlying the Shares from such markets and other entities. 
In addition, the Exchange may obtain information regarding trading in 
the Shares, ETPs and certain exchange-traded securities underlying the 
Shares from markets and other entities that are members of ISG or with 
which the Exchange has in place a comprehensive surveillance sharing 
agreement.\33\ FINRA, on behalf of the Exchange, is able to access, as 
needed, trade information for certain fixed income securities held by 
the Fund reported to FINRA's Trade Reporting and Compliance Engine 
(``TRACE'').
---------------------------------------------------------------------------

    \33\ 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.
---------------------------------------------------------------------------

    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
Information Sharing Procedures
    The Commission requires that, in designing a new derivative 
securities product, the self-regulatory organization (``SRO'') 
determine that it has adequate information sharing procedures to detect 
and deter potential trading abuses.\34\ In many, but not all, cases, 
this requirement is met through listing standards that require the 
securities underlying a new derivatives securities product to be listed 
on markets that are members of the Intermarket Surveillance Group 
(``ISG'') or with which the Exchange has a comprehensive surveillance 
sharing agreement (``CSSA''). For example, the generic listing 
standards for options on closed end funds holding foreign stocks, 
options on foreign index ETFs and foreign index options require 
information sharing agreements for the underlying index or portfolio 
securities.\35\ Similarly, the listing standards for stock index 
warrants, contain a specific limitation on the percentage of foreign 
country securities that are not traded on markets that are not subject 
to CSSAs.\36\
---------------------------------------------------------------------------

    \34\ See, e.g., Securities Exchange Act Release No. 40761 
(December 8, 1998) (S7-13-98) (New Products Release). The New 
Products Release was adopted in 1998 to expand the scope of SRO 
matters that do not constitute proposed rule changes in response to 
the need for flexibility in regulating new derivative securities 
products by developing streamlined filing procedures to ease the 
SROs' regulatory burdens in many circumstances.
    \35\ See, e.g., NYSE Arca Options Rule 5.3(e) (options on 
international closed end funds) (requiring the Exchange to have a 
market information sharing agreement with the primary exchange for 
each of the securities held by the fund or that such fund be 
classified as a diversified fund under Section 5(b) of the 1940 Act 
and that securities of the fund be issued by issuers in five or more 
countries); NYSE Arca Options Rule 5.3(g) (options on ETFs) 
(requiring that non-U.S. component securities of the underlying 
index or portfolio that are not subject to CSSAs not, in the 
aggregate, represent more than 50% of the weight of the index or 
portfolio; that component securities for which the primary market is 
in any one country that is not subject to a CSSA not represent 20% 
or more of the index weight; and that component securities for which 
the primary market is in any two countries not subject to CSSAs not 
represent 33% or more of the index weight); NYSE Arca Options Rule 
5.12 (broad-based index options) (requiring that non-U.S. component 
securities of the index not subject to CSSAs not, in the aggregate, 
represent more than 20% of the index weight).
    \36\ See, e.g., NYSE Arca Equities Rule 8.3 (a)(7) (Listing of 
Currency and Index Warrants) (Foreign Country Securities or American 
Depository Receipts thereon that: (A) are not subject to a 
comprehensive surveillance agreement, and (B) have less than 50% of 
their global trading volume (in dollar value) within the United 
States, shall not, in the aggregate, represent more than 20% of the 
weight of the index, unless such index is otherwise approved for 
warrant or option trading). In addition, see, e.g., Securities 
Exchange Act Release Nos. 31121 (August 28, 1992) (SR-PSE-92-09 and 
SR-PSE-92-10) (order granting accelerated approval of proposed rule 
changes relating to listing index warrants based on the FT-SE 
Eurotrack 200 Index and the Eurotop 100 Index); 30462 (March 11, 
1992) (SR-Amex 91-10, SR-NYSE-91-13, SR-CBOE-91-09, SR-CBOE-91-13) 
(order approving proposed rule changes relating to listing of index 
options and index warrants based on the FT-SE Eurotrack 200 Index); 
28544 October 17, 1990 (SR-Amex-90-08; SR-NYSE-90-36; SR-PHLX-90-25; 
SR-PSE-90-18) (order approving proposed rule changes relating to the 
listing of index warrants based on the CAC-40 Index).

---------------------------------------------------------------------------

[[Page 57168]]

    However, the generic listing standards for ETFs based on foreign 
indexes in NYSE Arca Equities Rule 5.2(j)(3) (Investment Company 
Units), and for closed end funds holding foreign securities do not 
include specific CSSA requirements \37\. Additionally, the American 
Stock Exchange and the New York Stock Exchange proposed and the 
Commission approved the listing or trading pursuant to unlisted trading 
privileges [sic] many foreign index-based ETFs that hold securities 
listed and traded on markets with which the ETF-listing exchange did 
not have CSSAs.\38\
---------------------------------------------------------------------------

    \37\ See, e.g., Securities Exchange Act Release No. 54739 
(November 9, 2006) (SR-Amex-2006-78) (stating that CSSAs are not 
required in connection with listing of ETFs under the generic 
listing criteria of American Stock Exchange Rule 1000A given that 
the [sic] such generic listing criteria otherwise require minimum 
levels of liquidity, concentration and pricing transparency for 
index components).
    \38\ See, e.g., Securities Exchange Act Release Nos. 42748 (May 
2, 2000), 65 FR 30155 (May 10, 2000) (SR-Amex-98-49) (order 
approving listing and trading of six series of World Equity 
Benchmark Shares based on foreign stock indexes); 42786 (May 15, 
2000), 65 FR 33586 (May 24, 2000) (SR-Amex-99-49) (order partially 
approving listing and trading of series of the iShares Trust based 
on foreign stock indexes); 44900 (October 25, 2001), 66 FR 55712 
(November 2, 2001) (SR-Amex-2001-45) (order approving listing and 
trading of seven series of funds of iShares, Inc. based on foreign 
indexes); 36947 (March 8, 1996) (SR-Amex-95-43) (order approving 
listing of Index Fund Shares based on 18 foreign indexes); 52178 
(July 29, 2005) (SR-NYSE-2005-41 (order approving listing of iShares 
MSCI EAFE Growth and iShares MSCI EAFE Value Funds); 52816 (November 
21, 2005) (SR-NYSE-2005-70) (order approving listing of iShares MSCI 
Index Funds). A list of ISG members is available at https://www.isgportal.org/isgPortal/public/members.htm.
---------------------------------------------------------------------------

    The equity securities in which the Portfolio would be permitted to 
invest will be limited to: (1) Equity securities that trade in markets 
that are members of the ISG or are parties to a CSSA with the Exchange 
or, (2) Actively-Traded Securities as defined in Reg M that are traded 
on exchanges with last sale reporting.\39\ The Exchange believes that 
its ability to monitor trading in the Fund would not be impacted by the 
absence of CSSAs with, or ISG membership of, markets on which 
``Actively-Traded Securities'' (as defined in Rule 101(c)(1) of Reg M 
\40\) are listed or traded. Many established and reputable markets are 
not members of ISG.\41\ Such markets have price transparency, 
regulatory surveillance, liquidity, last sale information, as well s 
[sic] numerous other regulatory requirements traditionally associated 
with national securities exchanges in the United States. However, at 
times, local laws, such as privacy laws in France and other European 
nations, preclude markets from becoming ISG members, or would result in 
any CSSA entered into being severely limited with respect to the 
information that can be shared. It is important to note that while some 
exchanges in the European Union may not be ISG members, they do all 
have the obligation to share trading data with their national regulator 
and the national regulators are parties to sharing agreements with each 
other. Therefore, while there may be instances where the exchanges in 
the European Union may not directly share trading data, regulators may 
share information with each other when necessary, to deter and detect 
market manipulation.
---------------------------------------------------------------------------

    \39\ See note 12, supra.
    \40\ 17 CFR 242.101(c)(1).
    \41\ Non-ISG member exchanges include: Abu Dhabi Securities 
Exchange; Athens Exchange; BM&FBOVESPA S.A.; BME Spanish Exchanges; 
Bolsa Mexicana de Valores; Bourse de Luxembourg; Deutsche B[ouml]rse 
AG; Euronext Brussels N.V./S.A.; Euronext Lisbon-Sociedade Gestora 
de Mercados Regulamentados, S.A.; Euronext Paris S.A.; Indonesia 
Stock Exchange; Irish Stock Exchange; Johannesburg Stock Exchange; 
Moscow Exchange; Philippine Stock Exchange; Saudi Stock Exchange; 
Shanghai Futures Exchange; Shenzhen Stock Exchange; SIX Swiss 
Exchange; Stock Exchange of Thailand; Taiwan Futures Exchange; 
Taiwan Stock Exchange; Tel-Aviv Stock Exchange; The Egyptian 
Exchange; Wiener B[ouml]rse AG; Zhengzhou Commodity Exchange.
---------------------------------------------------------------------------

    As the global marketplace has evolved and become more 
interconnected, an issuer's securities may be traded on multiple 
markets. For example, thanks to harmonized European legislation, and 
especially the ``Prospectus Directive'' of the Markets in Financial 
Instruments Directive (``MiFID''),\42\ issuers wishing to raise capital 
in the European Union may take advantage of ``passporting'' their 
prospectus, which allows an issuer to use one prospectus and raise 
capital across the European Economic Area (EEA).\43\ One of the 
consequences of this single prospectus is that an issuer's securities 
can and often do trade across several markets in the EEA, some of which 
may be ISG members and others may not.
---------------------------------------------------------------------------

    \42\ Information regarding the Prospectus Directive is available 
from the European Commission at http://ec.europa.eu/
internalmarket/securities/prospectus/indexen.htm.
    \43\ See The Forum of European Securities Commissions [FESCO], A 
``European Passport'' For Issuers at 4-8, Fesco/99-098e (May 10, 
2000), available at http://www.esma.europa.eu/system/files/
99098e.PDF.
---------------------------------------------------------------------------

    Additionally, MiFID, introduced in 2007, contains a transaction 
reporting requirement, under which various markets and trading firms 
are required to submit transaction reports to an ``Approved Reporting 
Mechanism''.
    MiFID also makes it possible for any transferable security that has 
been admitted to trading on a regulated market of an ``EU Member 
State'' to be admitted to trading on other Member States' regulated 
markets or on any other trading venues. As a result, it is difficult to 
predict where the liquidity in any particular security will primarily 
reside. Moreover, the MiFID best execution requirement,\44\ may require 
an executing broker to trade on markets that are not ISG members. These 
developments would make it challenging for the Fund to limit the 
trading of foreign securities on markets that are members of ISG or 
with which the Exchange has a CSSA.
---------------------------------------------------------------------------

    \44\ See, generally, The Committee of European Securities 
Regulators [CESR], Best Execution Under MiFID; Questions and 
Answers, CESR/07-320 (May 2007), available at http://www.cmvm.pt/
CMVM/Cooperacao%20Internacional/DocsESMACesr/
Documents/07320.pdf (MiFID's best execution regime requires 
investment firms to take all reasonable steps to obtain the best 
possible result for their clients, taking into account price, costs, 
speed, likelihood of execution and settlement, size, nature or any 
other consideration relevant to order execution. CESR considers this 
requirement to be of a general and overarching nature.); see also 
The Committee of European Securities Regulators (CESR), Best 
Execution Under MiFID; Public Consultation, CESR/07-050b (February 
2007), available at http://www.esma.europa.eu/system/files/
07050b.pdf; Financial Services Authority (FSA), 
Implementing MiFID's Best Execution Requirement (May, 2006), 
available at http://www.fsa.gov.uk/pubs/discussion/
dp0603.pdf.
---------------------------------------------------------------------------

    In addition, the Exchange believes that it is not necessary to its 
ability to detect and deter manipulation in Shares of the Fund for 
equity securities in which the Fund invests to be listed and traded on 
markets that are members of ISG or with which the Exchange has a CSSA, 
provided that such equity securities are Actively-Traded Securities. As 
the Commission noted in adopting Reg M, Actively-Traded Securities are 
less likely to be manipulated because the costs of such manipulation is 
high, aberrations in price are more likely to be discovered and quickly 
corrected, and generally are traded on market [sic] with high levels

[[Page 57169]]

of transparency and surveillance. For this reason, Actively-Traded 
Securities were excepted from the prophylactic provisions of Rule 101 
of Reg M \45\ and, thus, would not be subject to the restrictions 
imposed upon distribution participants or issuers and selling security 
holders during the restricted period, as those terms are defined in Reg 
M.
---------------------------------------------------------------------------

    \45\ Rule 102 similarly excepts from its provisions, actively-
traded reference securities.
---------------------------------------------------------------------------

    As the Commission recognized in adopting Reg M, detection of 
manipulation of Actively-Traded Securities is aided substantially by 
the widespread coverage by analysts, news outlets, investors and other 
market participants around the world of these securities.\46\ This 
close scrutiny and increased transparency of the secondary markets 
means that unusual market activity is likely to be observed and quickly 
corrected.
---------------------------------------------------------------------------

    \46\ See Release Nos. 33-7375; 34-38067; IC 22412: International 
Series Release Nos. 1039; File No. S7-11-96 (62 FR 520, January 3, 
1997) (Anti-manipulation Rules concerning Securities Offerings), at 
62 FR 527.
---------------------------------------------------------------------------

    Further, as also noted by the Commission in adopting Reg M, because 
the costs associated with manipulating an Actively-Traded Security will 
be higher, the likelihood of manipulation of Actively-Traded Securities 
is low. This potential for improper activity in an Actively-Traded 
Security to be used to manipulate, or otherwise impact, trading in the 
Shares of the Fund is further diluted by the fact that a single 
Actively-Traded Security represents only part of the value of the Fund. 
This limited impact is guaranteed by diversification requirements 
applicable to the Fund in the Exchange's listing rules and the Internal 
Revenue Code, which requires certain diversification to qualify as a 
regulated investment company (``RIC'').\47\
---------------------------------------------------------------------------

    \47\ See 26 U.S.C. 851.
---------------------------------------------------------------------------

    The Exchange also notes that other provisions of the securities 
laws encourage disparate treatment for active, large capitalization 
securities. In its no action letter \48\ to FINRA in 2012 regarding 
Rule 15c3-1 under the Act (the ``Net Capital Rule'') \49\, the 
Commission expanded the universe of foreign equity securities that were 
deemed to have a ready market \50\. Similar to the exemptions afforded 
Actively-Traded Securities, the beneficial attributes of liquidity and 
size were once again acknowledged and formed the basis for the 
Commission's interpretation of this fundamental customer protection 
provision of the securities laws.\51\
---------------------------------------------------------------------------

    \48\ See Letter from Michael A. Macchiaroli, Associate Director, 
Division of Trading and Markets (``Division''), Commission, to Grace 
B. Vogel, Executive Vice President, FINRA (November 28, 2012) (the 
``Ready Market No-Action Letter'') available at http://www.sec.gov/divisions/marketreg/mr-noaction/2012/finra-112812.pdf.
    \49\ The primary purpose of the Net Capital Rule is to protect 
customers and other market participants from broker-dealer failures 
by ensuring that broker-dealers maintain sufficient liquid assets to 
satisfy their liabilities and to provide a cushion in excess of 
liabilities to cover select risks in the event of liquidation. The 
Net Capital Rule enhances investor/customer confidence in the 
financial integrity of broker-dealers and the securities market.
    \50\ Paragraph (c)(11)(i) of the net capital rule states that 
the term ``ready market'' shall include ``a market in which there 
exists independent bona fide offers to buy and sell so that a price 
reasonably related to the last sales price or current bona fide 
competitive bid and offer quotations can be determined for a 
particular security almost instantaneously and where payment will be 
received in settlement of a sale at such price within a relatively 
short time conforming to trade custom.'' The ready market 
designation implies that for the purposes of broker-dealer net 
capital calculations, securities with such a designation held by the 
broker-dealer would be subject to a 15% haircut as opposed to a 100% 
haircut for non-marketable securities.
    \51\ In the Ready Market No Action Letter, the Division stated 
that it would not recommend enforcement action to the Commission if 
a broker-dealer treats an equity security of a foreign issuer as 
having a ready market under Rule 15c3-1(c)(11) and subject to 
haircuts under paragraph (c)(2)(vi)(J), if the following conditions 
are met: (1) The security is listed for trading on a foreign 
securities exchange located within a country that is recognized on 
the FTSE World Index, where the security has been trading on that 
exchange for at least the previous 90 days; (2) Daily quotations for 
both bid and ask or last sale prices for security provided by the 
foreign securities exchange on which the security is traded are 
continuously available to broker-dealers in the United States, 
through an electronic quotation system; (3) The median daily trading 
volume (calculated over the preceding 20 business day period) of the 
foreign equity security on the foreign securities exchange on which 
the security is traded is either at least 100,000 shares or 
$500,000; and (4) The aggregate unrestricted market capitalization 
in shares of such security exceeds $500 million over each of the 
preceding 10 business days.
---------------------------------------------------------------------------

    Permitting the Fund to invest in Actively-Traded Securities, even 
if they trade on markets that are not member of ISG, will allow 
investors to benefit from the Fund's portfolio managers' expertise as 
well as potentially reducing costs to shareholders. Investing directly 
in Actively-Traded Securities would, in many cases, be a less expensive 
alternative than other investments used by the Fund's portfolio 
managers when they are restricted to trading in markets that are 
members of ISG or with which the Exchange has a CSSA. For example, 
investing in international index ETFs \52\ is a common way fund 
managers provide investors with exposure to regions whose markets are 
not members of ISG. These international index ETFs can be a less 
efficient and less targeted proxy for direct investment in foreign 
security components of those indexes. The fees imbedded in such ETFs 
would be borne directly by a fund and indirectly by investors in shares 
of a fund. Thus, the ability of the Fund to directly invest in 
Actively-Traded Securities listed or traded on markets that may not be 
members of ISG or with which the Exchange has a CSSA would be a less 
expensive alternative for the Fund's portfolio managers, which lower 
costs to the benefit of shareholders of the Fund.
---------------------------------------------------------------------------

    \52\ As noted above, international index ETFs are listed under 
NYSE Arca Equities Rule 5.2(j)(3), which does not include a 
requirement that index components trade on markets that are members 
of ISG or with which the Exchange has a CSSA.
---------------------------------------------------------------------------

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
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \53\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
to promote just and

[[Page 57170]]

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.
---------------------------------------------------------------------------

    \53\ 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 the Shares in all trading 
sessions and to deter and detect violations of Exchange rules and 
applicable federal securities laws. The Adviser has implemented a 
``fire wall'' with respect to its affiliated broker-dealer regarding 
access to information concerning the composition and/or changes to the 
Fund's portfolio. In addition, the Trust's Pricing and Investment 
Committee has implemented procedures designed to prevent the use and 
dissemination of material, non-public information regarding the 
Portfolio and the Fund. FINRA, on behalf of the Exchange, will 
communicate as needed regarding trading in the Shares, ETPs and certain 
exchange-traded securities underlying the Shares 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, ETPs and certain exchange-traded securities underlying the 
Shares from such markets and other entities. In addition, the Exchange 
may obtain information regarding trading in the Shares, ETPs and 
certain exchange-traded securities underlying the Shares from markets 
and other entities that are members of ISG or with which the Exchange 
has in place a CSSA. FINRA, on behalf of the Exchange, is able to 
access, as needed, trade information for certain fixed income 
securities held by the Fund reported to FINRA's TRACE. 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. The ETPs held by the Fund 
will be traded on U.S. national securities exchanges and will be 
subject to the rules of such exchanges, as approved by the Commission. 
Neither the Fund nor the Portfolio will invest in options, futures 
contracts or swaps agreements. The Fund's and Portfolio's investments 
will be consistent with its investment objective and will not be used 
to enhance leverage.
    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 IOPV will be widely disseminated by one or 
more major market data vendors at least every 15 seconds during the 
Exchange's Core Trading Session. The exchange-listed and traded equity 
securities in which the Portfolio would be permitted to invest will be 
limited to: (1) Equity securities that trade in markets that are 
members of the ISG or are parties to a CSSA with the Exchange or, (2) 
Actively-Traded Securities as defined in Reg M that are traded on U.S. 
and non-U.S. exchanges with last sale reporting. 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, and quotation and last sale information will be 
available via the CTA high-speed line. 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 intra-day, closing and settlement prices of the portfolio 
securities are also readily available from the national securities 
exchanges trading such securities, automated quotation systems, 
published or other public sources, or on-line information services such 
as Bloomberg or Reuters. In addition, as noted above, investors will 
have ready access to information regarding the Fund's holdings, the 
IOPV, the Disclosed Portfolio, and quotation and last sale information 
for the Shares.
    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 IOPV, the Disclosed Portfolio, and quotation and last sale 
information for the Shares. The exchange-listed and traded equity 
securities in which the Portfolio would be permitted to invest will be 
limited to: (1) equity securities that trade in markets that are 
members of the ISG or are parties to a CSSA with the Exchange or, (2) 
Actively-Traded Securities as defined in Reg M that are traded on U.S. 
and non-U.S. exchanges with last sale reporting. The Exchange believes 
that the requirements described above applicable to non-U.S. equities, 
namely the requirements that non-U.S. equity securities be Actively-
Traded Securities as defined in Reg M, and that they trade in markets 
with last sale reporting, will provide an additional choice for 
investors who desire exposure to non-U.S. equities by an issue of 
Managed Fund Shares greater than that currently permitted by Managed 
Fund Shares issues, while also providing for minimum liquidity 
thresholds relating to ADTV and public float.

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 
actively-managed exchange-traded

[[Page 57171]]

product that will principally hold U.S. and non U.S. equity securities 
and that will enhance competition among market participants, to the 
benefit of investors and the marketplace. The Exchange believes that 
the requirements described above applicable to non-U.S. equities, 
namely the requirements that non-U.S. equity securities be Actively-
Traded Securities as defined in Reg M, and that they trade in markets 
with last sale reporting, will provide an additional choice for 
investors who desire exposure to non-U.S. equities by an issue of 
Managed Fund Shares greater than that currently permitted by Managed 
Fund Shares issues, while also providing for minimum liquidity 
thresholds relating to ADTV and public float.

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 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate 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-2014-100 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-2014-100. 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-2014-100 and should 
be submitted on or before October 15, 2014.
---------------------------------------------------------------------------

    \54\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\54\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-22671 Filed 9-23-14; 8:45 am]
BILLING CODE 8011-01-P


