[Federal Register Volume 77, Number 167 (Tuesday, August 28, 2012)]
[Notices]
[Pages 52083-52089]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-21173]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67715; File No. SR-NYSEArca-2012-88]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change To List and Trade Shares of the RiverFront 
Strategic Income Fund Under NYSE Arca Equities Rule 8.600

August 22, 2012.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is 
hereby given that, on August 10, 2012, NYSE Arca, Inc. (the 
``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange 
Commission (the ``Commission'') the

[[Page 52084]]

proposed rule change as described in Items I, II, and III 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 list and trade the following under NYSE 
Arca Equities Rule 8.600 (``Managed Fund Shares''): RiverFront 
Strategic Income 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 Exchange proposes to list and trade shares (``Shares'') of the 
RiverFront Strategic Income Fund (the ``Fund'') under NYSE Arca 
Equities Rule 8.600, which governs the listing and trading of Managed 
Fund Shares \4\ on the Exchange.\5\ The Fund is a series of the ALPS 
ETF Trust (``Trust''), a statutory trust organized under the laws of 
the State of Delaware and registered with the Commission as an open-end 
management investment company.\6\ The Fund will be managed by 
WisdomTree Asset Management, Inc. (``WisdomTree'' or the ``Adviser''). 
RiverFront Investment Group, LLC (``RiverFront'') is the investment 
sub-adviser for the Fund (the ``Sub-Adviser'').
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    \4\ A Managed Fund Share is a security that represents an 
interest in an investment company registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a-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 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); 66321 (February 3, 2012), 77 FR 6850 (February 9, 
2012) (SR-NYSEArca-2011-95) (order approving listing and trading of 
PIMCO Total Return Exchange Traded Fund); 66670 (March 28, 2012), 77 
FR 20087 (April 3, 2012) (SR-NYSEArca-2012-09) (order approving 
listing and trading of PIMCO Global Advantage Inflation-Linked Bond 
Strategy Fund).
    \6\ The Trust is registered under the 1940 Act. On February 23, 
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 the 1940 Act relating to 
the Fund (File Nos. 333-148826 and 811-22175) (the ``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 Adviser under the 1940 Act. See Investment 
Company Act Release No. 28471 (October 27, 2008) (File No. 812-
13458) (``Exemptive Order''). The Fund will be offered in reliance 
upon the Exemptive Order issued to the Adviser.
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    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.\7\ 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. WisdomTree is not 
affiliated with any broker-dealer. RiverFront is affiliated with a 
broker-dealer, Robert W. Baird & Co. Incorporated, and has implemented 
and will maintain a fire wall with respect to such broker-dealer 
regarding access to information concerning the composition and/or 
changes to a portfolio. In the event (a) the Adviser or Sub-Adviser 
becomes newly affiliated with a broker-dealer, or (b) any new adviser 
or sub-adviser becomes affiliated with a broker-dealer, it will 
implement a fire wall with respect to such broker-dealer 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.
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    \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 investment adviser is subject to the 
provisions of Rule 204A-1 under the Advisers Act relating to codes 
of ethics. This Rule requires investment advisers to adopt a code of 
ethics that reflects the fiduciary nature of the relationship to 
clients as well as compliance with other applicable securities laws. 
Accordingly, procedures designed to prevent the communication and 
misuse of non-public information by an investment adviser must be 
consistent with Rule 204A-1 under the Advisers Act. The Exchange 
represents that the Investment Adviser and Sub-Adviser, and their 
respective related personnel, are subject to Investment Advisers Act 
Rule 204A-1. 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.
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RiverFront Strategic Income Fund
    According to the Registration Statement, the investment objective 
of the Fund is to seek total return with an emphasis on income as the 
source of that total return.
    The Fund seeks to achieve its investment objective by investing in 
a global portfolio of fixed income securities of various maturities, 
ratings and currency denominations. The Fund intends to utilize various 
investment strategies in a broad array of fixed income sectors. The 
Fund will allocate its investments based upon the analysis of the Sub-
Adviser of the pertinent economic and market conditions, as well as 
yield, maturity and currency considerations.
    The Fund may purchase fixed income securities issued by U.S. or 
foreign corporations \8\ or financial institutions, including debt 
securities of all types and maturities, convertible securities and 
preferred stocks. The Fund also may purchase securities issued or 
guaranteed by the U.S. Government or foreign governments (including 
foreign states, provinces and municipalities) or

[[Page 52085]]

their agencies and instrumentalities or issued or guaranteed by 
international organizations designated or supported by multiple 
government entities to promote economic reconstruction or development. 
The average maturity or duration of the Fund's portfolio of fixed 
income securities will vary based on the Sub-Adviser's assessment of 
economic and market conditions.
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    \8\ The Fund will invest only in securities that the Adviser or 
Sub-Adviser deems to be sufficiently liquid. While foreign corporate 
debt generally must have $200 million or more par amount outstanding 
and significant par value traded to be considered as an eligible 
investment, at least 80% of issues of foreign corporate debt held by 
the Fund will have $200 million or more par amount outstanding.
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    The Fund may invest in mortgage-backed securities (``MBS'') issued 
or guaranteed by federal agencies and/or U.S. government sponsored 
instrumentalities, such as the Government National Mortgage 
Administration (``Ginnie Mae''), the Federal Housing Administration 
(``FHA''), the Federal National Mortgage Association (``Fannie Mae'') 
and the Federal Home Loan Mortgage Corporation (``Freddie Mac'').\9\ 
The MBS in which the Fund may invest will be either pass-through 
securities or collateralized mortgage obligations (``CMOs'').\10\ The 
Fund may purchase or sell securities on a when issued, delayed delivery 
or forward commitment basis. The Fund may also invest in other fixed 
income investment companies, including exchange-traded funds (``ETFs'') 
\11\ and/or closed-end funds.
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    \9\ A third-party pricing service will be used to value some or 
all of the Fund's MBS.
    \10\ Pass-through securities represent a right to receive 
principal and interest payments collected on a pool of mortgages, 
which are passed through to security holders. CMOs are created by 
dividing the principal and interest payments collected on a pool of 
mortgages into several revenue streams (tranches) with different 
priority rights to portions of the underlying mortgage payments. The 
Fund will not invest in CMO tranches which represent a right to 
receive interest only (``IOs''), principal only (``POs'') or an 
amount that remains after other floating-rate tranches are paid (an 
inverse floater). If the Fund invests in CMO tranches (including CMO 
tranches issued by government agencies) and interest rates move in a 
manner not anticipated by Fund management, it is possible that the 
Fund could lose all or substantially all of its investment.
    \11\ The Fund will not invest in leveraged or leveraged inverse 
ETFs.
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    The Fund may invest without limitation in debt securities 
denominated in foreign currencies and in U.S. dollar-denominated debt 
securities of foreign issuers, including securities of issuers located 
in emerging markets. The Sub-Adviser may attempt to reduce currency 
risk by entering into contracts with banks, brokers or dealers to 
purchase or sell securities or foreign currencies at a future date 
(``forward contracts''). The Fund may enter into foreign currency 
forward and foreign currency futures contracts to facilitate local 
securities settlements or to protect against currency exposure in 
connection with its distributions to shareholders.
    The Fund has not established any credit rating criteria for the 
fixed income securities in which it may invest, and it may invest 
entirely in high yield securities (``junk bonds''). Junk bonds are debt 
securities that are rated below investment grade by nationally 
recognized statistical rating organizations (``NRSROs''), or are 
unrated securities that the Sub-Adviser believes are of comparable 
quality. The Sub-Adviser considers the credit ratings assigned by 
NRSROs as one of several factors in its independent credit analysis of 
issuers.
    According to the Registration Statement, the Fund may also invest 
in money market instruments, including repurchase agreements or other 
funds which invest exclusively in money market instruments, structured 
notes (notes on which the amount of principal repayment and interest 
payments are based on the movement of one or more specified factors, 
such as the movement of a particular bond or bond index), and, in 
accordance with the Exemptive Order, in swaps, options and futures 
contracts. The Fund may also invest in municipal securities. The Fund 
may invest up to 5% of its assets in MBS (which may include commercial 
mortgage-backed securities (``CMBS'')) or other asset-backed securities 
issued or guaranteed by private issuers. The Fund may also invest in 
money market instruments or other short-term fixed income instruments 
as part of a temporary defensive strategy to protect against temporary 
market declines.
    The Fund may invest in commercial paper and other short-term 
corporate instruments.\12\
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    \12\ Commercial paper consists of short-term promissory notes 
issued primarily by corporations. Commercial paper may be traded in 
the secondary market after its issuance. As of July 31, 2012, the 
amount of commercial paper outstanding (seasonally adjusted) was 
approximately $1000.5 billion. See http://www.federalreserve.gov/releases/CP/default.htm.
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    The Fund may purchase participations in corporate loans. 
Participation interests generally will be acquired from a commercial 
bank or other financial institution (a ``Lender'') or from other 
holders of a participation interest (a ``Participant''). The purchase 
of a participation interest either from a Lender or a Participant will 
not result in any direct contractual relationship with the borrowing 
company (the ``Borrower''). The Fund generally will have no right 
directly to enforce compliance by the Borrower with the terms of the 
credit agreement. Instead, the Fund will be required to rely on the 
Lender or the Participant that sold the participation interest, both 
for the enforcement of the Fund's rights against the Borrower and for 
the receipt and processing of payments due to the Fund under the loans. 
Under the terms of a participation interest, the Fund may be regarded 
as a member of the Participant, and thus the Fund is subject to the 
credit risk of both the Borrower and a Participant. Participation 
interests are generally subject to restrictions on resale. Generally, 
the Fund considers participation interests to be illiquid and therefore 
subject to the Fund's percentage limitations for investments in 
illiquid securities.
    The Fund may invest in securities that have variable or floating 
interest rates which are readjusted on set dates (such as the last day 
of the month or calendar quarter) in the case of variable rates or 
whenever a specified interest rate change occurs in the case of a 
floating rate instrument. Variable or floating interest rates generally 
reduce changes in the market price of securities from their original 
purchase price because, upon readjustment, such rates approximate 
market rates. Accordingly, as interest rates decrease or increase, the 
potential for capital appreciation or depreciation is less for variable 
or floating rate securities than for fixed rate obligations. Many 
securities with variable or floating interest rates purchased by the 
Fund are subject to payment of principal and accrued interest (usually 
within seven days) on the Fund's demand. The terms of such demand 
instruments require payment of principal and accrued interest by the 
issuer, a guarantor and/or a liquidity provider. The Sub-Adviser will 
monitor the pricing, quality and liquidity of the variable or floating 
rate securities held by the Fund.
    The Fund may enter into repurchase agreements, which are agreements 
pursuant to which securities are acquired by the Fund from a third 
party with the understanding that they will be repurchased by the 
seller at a fixed price on an agreed date. These agreements may be made 
with respect to any of the portfolio securities in which the Fund is 
authorized to invest. Repurchase agreements may be characterized as 
loans secured by the underlying securities.
    The Fund 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.

[[Page 52086]]

    The Fund may purchase when-issued securities. Purchasing securities 
on a ``when-issued'' basis means that the date for delivery of and 
payment for the securities is not fixed at the date of purchase, but is 
set after the securities are issued. The payment obligation and, if 
applicable, the interest rate that will be received on the securities 
are fixed at the time the buyer enters into the commitment. The Fund 
will only make commitments to purchase such securities with the 
intention of actually acquiring such securities, but the Fund may sell 
these securities before the settlement date if it is deemed advisable.
    The Fund may not hold more than 15% of its net assets in: (1) 
Illiquid securities (which include participation interests); and (2) 
Rule 144A securities.\13\ 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 securities. Illiquid securities 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.\14\
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    \13\ Rule 144A securities are securities which, while privately 
placed, are eligible for purchase and resale pursuant to Rule 144A. 
According to the Registration Statement, Rule 144A permits certain 
qualified institutional buyers, such as the Fund, to trade in 
privately placed securities even though such securities are not 
registered under the Securities Act.
    \14\ 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 Securities Act).
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    The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.600. The Exchange represents 
that, for initial and/or continued listing, the Fund will be in 
compliance with Rule 10A-3 \15\ under the Exchange Act, as provided by 
NYSE Arca Equities Rule 5.3. A minimum of 100,000 Shares will be 
outstanding at the commencement of trading on the Exchange. The 
Exchange will obtain a representation from the issuer of the Shares 
that the net asset value (``NAV'') and the Disclosed Portfolio will be 
made available to all market participants at the same time.
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    \15\ 17 CFR 240.10A-3.
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    The Fund's investments will be consistent with the Fund's 
investment objective and will not be used to enhance leverage.
    The Fund will not invest in non-US equity securities.
Creation and Redemption of Shares
    Shares may be created and redeemed in ``Creation Unit'' size 
aggregations of 50,000 or multiples thereof. In order to purchase 
Creation Units of the Fund, an investor must generally deposit a 
designated portfolio of securities (the ``Deposit Securities'') (and/or 
an amount in cash in lieu of some or all of the Deposit Securities) and 
generally make a cash payment referred to as the ``Cash Component.'' 
The list of the names and the amounts of the Deposit Securities is made 
available by the Fund's custodian through the facilities of the NSCC 
immediately prior to the opening of business each day of the NYSE Arca. 
The Cash Component represents the difference between the NAV of a 
Creation Unit and the market value of the Deposit Securities. Creations 
and redemptions of Shares may only be made through an Authorized 
Participant, as described in the Registration Statement.
    Shares may be redeemed only in Creation Units at their NAV and only 
on a day the NYSE Arca is open for business. The Fund's custodian will 
make available immediately prior to the opening of business each day of 
the NYSE Arca, through the facilities of the NSCC, the list of the 
names and the amounts of the Fund's portfolio securities that will be 
applicable that day to redemption requests in proper form (``Fund 
Securities''). Fund Securities received on redemption may not be 
identical to Deposit Securities, which are applicable to purchases of 
Creation Units. Unless cash redemptions or partial cash redemptions are 
available or specified for the Fund, the redemption proceeds will 
consist of the Fund Securities, plus cash in an amount equal to the 
difference between the NAV of Shares being redeemed as next determined 
after receipt by the transfer agent of a redemption request in proper 
form, and the value of the Fund Securities (the ``Cash Redemption 
Amount''), less the applicable redemption fee and, if applicable, any 
transfer taxes.\16\
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    \16\ The Fund may, in certain circumstances, allow cash 
creations or partial cash creations but not redemptions (or vice 
versa) if the Sub-Adviser believes it will allow the Fund to adjust 
its portfolio in a manner which is more efficient for shareholders. 
The Fund may allow creations or redemptions to be conducted 
partially in cash only where certain instruments are (i) in the case 
of the purchase of a Creation Unit, not available in sufficient 
quantity for delivery; (ii) not eligible for transfer through either 
the NSCC or DTC; or (iii) not eligible for trading due to local 
trading restrictions, local restrictions on securities transfers or 
other similar circumstances. To the extent the Fund allows creations 
or redemptions to be conducted wholly or partially in cash, such 
transactions will be effected in the same manner for all Authorized 
Participants on a given day except where: (i) Such instruments are, 
in the case of the purchase of a Creation Unit, not available to a 
particular Authorized Participant in sufficient quantity; (ii) such 
instruments are not eligible for trading by an Authorized 
Participant or the investor on whose behalf the Authorized 
Participant is acting; or (iii) a holder of Shares of the Fund would 
be subject to unfavorable income tax treatment if the holder 
receives redemption proceeds in kind. According to the Registration 
Statement, an additional variable charge for cash or partial cash 
creations, and cash or partial cash redemptions, may also be imposed 
to compensate the Fund for the costs associated with buying the 
applicable securities.
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Net Asset Value
    According to the Registration Statement, the NAV per Share of the 
Fund will be computed by dividing the value of the net assets of the 
Fund (i.e., the value of its total assets less total liabilities) by 
the total number of Shares of the Fund outstanding, rounded to the 
nearest cent. Expenses and fees, including without limitation, the 
management and administration fees, will be accrued daily and taken 
into account for purposes of determining NAV. The NAV per Share will be 
calculated by the Fund's custodian and determined as of 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.
    In computing the Fund's NAV, the Fund's debt securities will be 
valued at market value. Market value 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. The 
Fund's debt securities are thus valued by reference to a combination of 
transactions and quotations for the same or other securities believed 
to be comparable in quality, coupon, maturity, type of issue, call 
provisions, trading characteristics and other features deemed to be 
relevant. To the extent the Fund's debt

[[Page 52087]]

securities, including some or all of the MBS in which the Fund invests, 
will be valued based on price quotations or other equivalent 
indications of value provided by a third-party pricing service, any 
such third-party pricing service may use a variety of methodologies to 
value some or all of the Fund's debt securities to determine the market 
price. For example, the prices of securities with characteristics 
similar to those held by the Fund may be used to assist with the 
pricing process. In addition, the pricing service may use proprietary 
pricing models. Short-term debt securities having a maturity of 60 days 
or less will be generally valued at amortized cost. The Fund's 
securities holdings that are traded on a national securities exchange 
will be valued based on their last sale price. Price information on 
listed securities will be taken from the exchange where the security is 
primarily traded. Other portfolio securities and assets for which 
market quotations are not readily available will be valued based on 
fair value as determined in good faith in accordance with procedures 
adopted by the Fund's Board of Directors.
    According to the Registration Statement, there can be no assurance 
as to whether and/or the extent to which the Shares will trade at 
premiums or discounts to NAV. The deviation risk may be heightened to 
the extent the Fund invests in MBS, as such investments may be 
difficult to value. Because MBS may trade infrequently, the most recent 
trade price may not indicate their true value. As noted above, a third-
party pricing service may be used to value some or all of the Fund's 
MBS. To the extent that market participants question the accuracy of 
the pricing service's prices, there is a risk of significant deviation 
between the NAV and market price of some or all of the MBS in which the 
Fund invests.
Portfolio Indicative Value
    The Portfolio Indicative Value (``PIV'') as defined in NYSE Arca 
Equities Rule 8.600(c)(3) of Shares of the Fund will be widely 
disseminated by one or more major market data vendors at least every 
fifteen seconds during the Exchange's Core Trading Session. To the 
extent the Fund holds securities that are traded in foreign markets, 
the PIV calculations will be based on such foreign market prices and 
may not reflect events that occur subsequent to the foreign market's 
close. As a result, premiums and discounts between the approximate 
value and the market price could be affected. This approximate value 
should not be viewed as a ``real-time'' update of the NAV per Share of 
the Fund because the approximate value may not be calculated in the 
same manner as the NAV, which is computed once a day, generally at the 
end of the business day.
Availability of Information
    The Fund's Web site (www.alpsetfs.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''),\17\ 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.\18\
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    \17\ The Bid/Ask Price of the Fund is determined using the mid-
point 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 its service 
providers.
    \18\ Under accounting procedures followed by the Fund, trades 
made on the prior business day (``T'') will be booked and reflected 
in NAV on the current business day (``T+1''). Accordingly, the Fund 
will be able to disclose at the beginning of the business day the 
portfolio that will form the basis for the NAV calculation at the 
end of the business day.
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    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.
    On a daily basis, the Adviser will disclose for each portfolio 
security and financial instrument of the Fund the following 
information: ticker symbol (if applicable), name of security and 
financial instrument, number of shares, if applicable, 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, intra-day and end-of-day prices for all debt securities or 
other financial instruments held by the Fund will be available through 
major market data vendors and broker-dealers.
    In addition, a basket composition file disclosing the Fund 
Securities, which includes the security names and share quantities 
required to be delivered in exchange for Fund Shares, together with 
estimates and actual cash components, will be publicly disseminated 
daily prior to the opening of the NYSE via the National Securities 
Clearing Corporation. 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 its Form N-
CSR and Form N-SAR, filed twice a year. The Trust's SAI and Shareholder 
Reports are available free upon request from the Trust, and those 
documents and the Form N-CSR and Form N-SAR may be viewed on-screen or 
downloaded from the Commission's Web site at 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 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. In addition, as noted above, the PIV will be widely disseminated 
by one or more major market data vendors at least every 15 seconds 
during the Core Trading Session.\19\ The dissemination of the PIV, 
together with the Disclosed Portfolio, will allow investors to 
determine the value of the underlying portfolio of the Fund on a daily 
basis and will provide a close estimate of that value throughout the 
trading day.
---------------------------------------------------------------------------

    \19\ Currently, it is the Exchange's understanding that several 
major market data vendors widely disseminate PIVs taken from CTA or 
other data feeds.
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    Additional information regarding the Trust and the Shares, 
including investment strategies, risks, creation and redemption 
procedures, fees, portfolio holdings disclosure policies, distributions 
and taxes is included in the Registration Statement.
Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of the Fund.\20\ Trading in Shares of the

[[Page 52088]]

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.
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    \20\ See NYSE Arca Equities Rule 7.12, Commentary .04.
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Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the NYSE Arca Marketplace from 4:00 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.
Surveillance
    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products (which include Managed 
Fund Shares) to monitor trading in the Shares. The Exchange represents 
that these procedures are adequate to properly monitor Exchange trading 
of the Shares in all trading sessions and to deter and detect 
violations of Exchange rules and applicable federal securities laws.
    The Exchange's current trading surveillance focuses on detecting 
securities trading outside their normal patterns. When such situations 
are detected, surveillance analysis follows and investigations are 
opened, where appropriate, to review the behavior of all relevant 
parties for all relevant trading violations.
    The Exchange may obtain information via the Intermarket 
Surveillance Group (``ISG'') from other exchanges that are members of 
ISG or with which the Exchange has entered into a surveillance sharing 
agreement.\21\
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    \21\ 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.
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    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its 
Equity Trading Permit (``ETP'') Holders in an Information Bulletin 
(``Bulletin'') of the special characteristics and risks associated with 
trading the Shares. Specifically, the Bulletin will discuss the 
following: (1) The procedures for purchases and redemptions of Shares 
in Creation Units (and that Shares are not individually redeemable); 
(2) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due 
diligence on its ETP Holders to learn the essential facts relating to 
every customer prior to trading the Shares; (3) the risks involved in 
trading the Shares during the Opening and Late Trading Sessions when an 
updated PIV will not be calculated or publicly disseminated; (4) how 
information regarding the PIV is disseminated; (5) the requirement that 
ETP Holders deliver a prospectus to investors purchasing newly issued 
Shares prior to or concurrently with the confirmation of a transaction; 
and (6) trading information.
    In addition, the Bulletin will reference that the Fund is subject 
to various fees and expenses described in the Registration Statement. 
The Bulletin will discuss any exemptive, no-action, and interpretive 
relief granted by the Commission from any rules under the Exchange Act. 
The Bulletin will also disclose that the NAV for the Shares will be 
calculated after 4:00 p.m. Eastern Time each trading day.
2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(5) \22\ that an exchange have rules 
that are designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest. The Sub-
Adviser is affiliated with a broker-dealer and has implemented and will 
maintain a fire wall with respect to such broker-dealer regarding 
access to information concerning the composition and/or changes to a 
portfolio. The Fund will not invest in non-US equity securities. The 
Fund will not invest in leveraged or leveraged inverse ETFs. The Fund's 
investments will be consistent with the Fund's investment objective and 
will not be used to enhance leverage. Quotation and last sale 
information for the Shares will be available via the CTA high-speed 
line. In addition, the PIV, as defined in NYSE Arca Equities Rule 8.600 
(c)(3), will be widely disseminated by one or more major market data 
vendors at least every 15 seconds during the Core Trading Session. 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. 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 Exchange may obtain information via the ISG from other 
exchanges that are members of ISG or with which the Exchange has 
entered into a surveillance sharing agreement. In addition, the 
Exchange has procedures that are adequate to properly monitor Exchange 
trading of the Shares in all trading sessions and to deter and detect 
violations of Exchange rules and applicable federal securities laws.
---------------------------------------------------------------------------

    \22\ 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 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 Exchange 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.
    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 is affiliated with a broker-dealer and has represented 
that it has implemented a fire wall with respect to its broker-dealer 
affiliate regarding access to information concerning the composition 
and/or changes to the portfolio. The Exchange will obtain a 
representation from the issuer of the Shares that the

[[Page 52089]]

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 PIV will be widely disseminated by one or more major market data 
vendors at least every 15 seconds during the Exchange's Core Trading 
Session. 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 ETP 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. In addition, as noted above, investors will 
have ready access to information regarding the Fund's holdings, the 
PIV, 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 PIV, the Disclosed Portfolio, and quotation and last sale 
information for the Shares.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act.

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

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

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve 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 Exchange Act. Comments may be submitted 
by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEArca-2012-88 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-2012-88. 
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 
10:00 a.m. and 3:00 p.m. 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-2012-88 and should be submitted on or before 
September 18, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-21173 Filed 8-27-12; 8:45 am]
BILLING CODE 8011-01-P