[Federal Register Volume 77, Number 137 (Tuesday, July 17, 2012)]
[Notices]
[Pages 42034-42036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-17329]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67401; File No. SR-NYSEArca-2012-68]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to the
AdvisorShares Active Bear ETF
July 11, 2012.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on June 27, 2012, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to reflect a change to the means of achieving
the investment objective applicable to the AdvisorShares Active Bear
ETF (the ``Fund''). The text of the proposed rule change is available
on the Exchange's Web site at www.nyse.com, at the principal office of
the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Commission has approved listing and trading on the Exchange of
shares (``Shares'') of the AdvisorShares Active Bear ETF, a series of
AdvisorShares Trust (the ``Trust''),\4\ under NYSE Arca Equities Rule
8.600, which governs the listing and trading of Managed Fund Shares.
The Shares are offered by the Trust, a statutory trust organized under
the laws of the State of Delaware and registered with the Commission as
an open-end management investment company.\5\ The investment advisor to
the Fund is AdvisorShares Investments, LLC (the ``Adviser''). Ranger
Alternative Management, L.P. is the sub-advisor (``Sub-Adviser'') to
the Fund and the portfolio manager. Foreside Fund Services LLC is the
distributor for the Fund. The Bank of New York Mellon Corporation is
the administrator, custodian, transfer agent and fund accounting agent
for the Fund.
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\4\ See Securities Exchange Act Release No. 63737 (January 19,
2011), 76 FR 4968 (January 27, 2011) (SR-NYSEArca-2010-107) (``Prior
Order''). See also Securities Exchange Act Release No. 63447
(December 7, 2010), 75 FR 77681 (December 13, 2010) (SR-NYSEArca-
2010-107) (``Prior Notice,'' and together with the Prior Order, the
``Prior Release'').
\5\ The Trust is registered under the Investment Company Act of
1940 (15 U.S.C. 80a-1) (``1940 Act''). On September 22, 2010, 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) (``1933 Act''), and under the 1940 Act relating to the Fund
(File Nos. 333-157876 and 811-22110) (the ``Registration
Statement''). The description of the operation of the Trust and the
Fund herein is based on the Registration Statement. In addition, the
Commission has issued an order granting certain exemptive relief to
the Trust under the 1940 Act. See Investment Company Act Release No.
29291 (May 28, 2010) (File No. 812-13677) (``Exemptive Order'').
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In this proposed rule change, the Exchange proposes to reflect a
change to the description of the measures the Sub-Adviser will utilize
to implement the Fund's investment objective.\6\ As reflected in the
Prior Release, the Fund's investment objective is to seek capital
appreciation through short sales of domestically traded equity
securities. The Sub-Advisor seeks to achieve the Fund's investment
objective by short selling a portfolio of liquid mid- and large-cap
U.S. exchange-traded equity securities, exchange-traded funds
(``ETFs'') registered pursuant to the 1940 Act, and exchange-traded
products (``ETPs''), including exchange-traded notes (``ETNs'', and,
collectively with ETFs and ETPs, ``Underlying ETPs'').\7\ In contrast
to ETFs, ETNs and ETPs are not registered pursuant to the 1940 Act.
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\6\ The change described herein will be effective upon filing
with the Commission of another amendment to the Trust's Registration
Statement. See note 5, supra. The Adviser represents that the
Adviser and Sub-Adviser have managed and will continue to manage the
Fund in the manner described in the Prior Release, and will not
implement the change described herein until the instant proposed
rule change is operative.
\7\ The Fund may sell short only equity securities traded in the
U.S. on registered exchanges. The Fund does not purchase or borrow
illiquid securities or securities registered pursuant to Rule 144A
under the 1933 Act.
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The Exchange seeks to make a change to representations made by the
Adviser reflected in the Prior Release, as described below. As stated
in the Prior Notice, the Fund generally targets a composition of 20 to
50 equity short positions, with an average individual position size
which generally ranges between 2-7% of the aggregate portfolio
exposure. Going forward, the Fund generally will target a composition
of 20 to 75 equity short positions, with no change in the aggregate
portfolio exposure size.
The Adviser represents that the purpose of this change is to
provide additional flexibility to the Sub-Adviser to meet the Fund's
investment objective by providing a limited increase in the number of
equity short positions in the Fund's portfolio. Such an increase will
permit the Fund to include a broader range of market sectors in the
mid- and large-cap equity securities and Underlying ETPs in which the
Fund invests, and will further the Fund's objective to seek capital
appreciation.
The Adviser represents that there is no change to the Fund's
investment objective. The Fund will continue to comply with all initial
and continued listing requirements under NYSE Arca Equities Rule 8.600.
[[Page 42035]]
Except for the change noted above, all other facts presented and
representations made in the Rule 19b-4 \8\ filing underlying the Prior
Release remain unchanged, including representations regarding
implementation of ``fire walls'' by any additional Fund advisers and
sub-advisers affiliated with a broker-dealer, and equity securities and
Underlying ETPs in which the Fund invests.
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\8\ 17 CFR 240.19b-4.
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All terms referenced but not defined herein are defined in the
Prior Release.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \9\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
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\9\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will continue to be listed and traded on the Exchange pursuant
to the initial and continued listing criteria in NYSE Arca Equities
Rule 8.600. The Fund may sell short only liquid equity securities and
Underlying ETPs traded in the U.S. on registered exchanges. The Fund
does not purchase or borrow illiquid securities or securities
registered pursuant to Rule 144A under the 1933 Act. The Fund will
continue to comply with all initial and continued listing requirements
under NYSE Arca Equities Rule 8.600.
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 Adviser represents that there is no change to the Fund's
investment objective. The Adviser represents that the purpose of this
change is to provide additional flexibility to the Sub-Adviser to meet
the Fund's investment objective by providing a limited increase in the
number of equity short positions in the Fund's portfolio, which will
permit the Fund to include a broader range of market sectors in the
mid- and large-cap equity securities and Underlying ETPs in which the
Fund invests, and will further the Fund's objective to seek capital
appreciation.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that the Fund may sell short only liquid equity
securities and Underlying ETPs traded in the U.S. on registered
exchanges. The Adviser represents that the purpose of this change is to
provide additional flexibility to the Sub-Adviser to meet the Fund's
investment objective. Except for the change noted above, all other
representations made in the Rule 19b-4 filing underlying the Prior
Release remain unchanged.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule does not (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate if consistent with the protection of
investors and the public interest, provided that the self-regulatory
organization has given the Commission written notice of its intent to
file the proposed rule change at least five business days prior to the
date of filing of the proposed rule change or such shorter time as
designated by the Commission, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). The Commission notes that the
Exchange has satisfied the five-day pre-filing notice requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing.
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\12\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission notes that, under the proposal, the Fund will target
a composition of 20 to 75 equity short positions, versus the current
target composition of 20 to 50 equity short positions. Thus, the Sub-
Advisor to the Fund would have the flexibility to include a broader
range of market sectors in the mid- and large-cap equity securities and
Underlying ETPs in selecting the Fund's investments, while continuing
to seek capital appreciation.
The Commission notes that, except for the changes stated herein,
all other representations made in the Prior Release remain unchanged.
In addition, the Fund will continue to comply with all initial and
continued listing requirements under NYSE Arca Equities Rule 8.600.
For the foregoing reasons, the Commission believes that the
proposed change does not raise novel or unique regulatory issues that
should delay the implementation of the Fund's proposed changes. In
addition, the Commission believes it is consistent with the protection
of investors and the public interest to waive the 30-day operative
delay, as a waiver would allow the Sub-Advisor the flexibility to
invest in ways it believes will result in greater returns for
investors, with the continued goal of seeking capital appreciation,
without undue delay.\13\ Accordingly, the Commission waives the 30-day
operative delay requirement.
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\13\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File
[[Page 42036]]
Number SR-NYSEArca-2012-68 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2012-68. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Section, 100 F Street
NE., Washington, DC 20549. Copies of the filing will also be available
for inspection and copying at the NYSE's principal office and on its
Internet Web site at www.nyse.com. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NYSEArca-2012-68 and should be submitted on or before
August 7, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17329 Filed 7-16-12; 8:45 am]
BILLING CODE 8011-01-P