[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