80 FR 9301 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding the AdvisorShares WCM/BNY Mellon Focused Growth ADR ETF's Holdings of Non-U.S. Equity Securities

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 34 (February 20, 2015)

[Federal Register Volume 80, Number 34 (Friday, February 20, 2015)]
[Notices]
[Pages 9301-9304]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-03516]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74271; File No. SR-NYSEArca-2015-06]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Regarding the 
AdvisorShares WCM/BNY Mellon Focused Growth ADR ETF's Holdings of Non-
U.S. Equity Securities

February 13, 2015.
    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 February 3, 2015, 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.
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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 change a representation regarding the 
AdvisorShares WCM/BNY Mellon Focused Growth ADR ETF's holdings of non-
U.S. equity securities. Shares of the WCM/BNY Mellon Focused Growth ADR 
ETF have been approved for listing and trading on the Exchange 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 Commission has approved a proposed rule change relating to 
listing and trading on the Exchange of shares (``Shares'') of the 
AdvisorShares WCM/BNY Mellon Focused Growth ADR ETF (the ``Fund'') 
under NYSE Arca Equities Rule 8.600,\4\ which governs the listing and 
trading of Managed Fund Shares.\5\ The Fund's Shares are currently 
listed and traded on the Exchange under NYSE Arca Equities Rule 8.600.
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    \4\ See Securities Exchange Act Release No. 62502 (July 15, 
2010), 75 FR 42471 (July 21, 2010) (SR-NYSEArca-2010-57) (the 
``Prior Order''). The notice with respect to the Prior Order was 
published in Securities Exchange Act Release No. 62344 (June 21, 
2010), 75 FR 37498 (June 29, 2010) (``Prior Notice'' and, together 
with the Prior Order, the ``Prior Release'').
    \5\ 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.
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    The Shares are offered by AdvisorShares Trust (the ``Trust''), a 
statutory trust organized under the laws of the State of Delaware and 
registered with the Commission as an open-end management investment 
company.\6\ The investment adviser to the Fund is AdvisorShares 
Investments, LLC (the ``Adviser''). WCM Investment Management (``WCM'') 
is the sub-adviser and portfolio manager to the Fund (``Sub-Adviser'').
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    \6\ The Trust is registered under the 1940 Act. On November 1, 
2014, 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) and 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, in part, on the Registration Statement. In addition, the 
Commission has issued an order granting certain exemptive relief to 
the Trust under the1940 Act. See Investment Company Act Release No. 
29291 (May 28, 2010) (File No. 812-13677) (``Exemptive Order'').
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    According to the Registration Statement, and as stated in the Prior 
Release the Fund's investment objective is long-term capital 
appreciation above international benchmarks such as the BNY Mellon 
Classic ADR Index and the MSCI EAFE Index. WCM seeks to achieve the 
Fund's investment objective by selecting a portfolio of U.S. traded 
securities of non-U.S. organizations included in the BNY Mellon Classic 
ADR Index. The BNY Mellon Classic ADR Index predominantly includes 
American Depositary Receipts (``ADRs'') and in addition includes other 
Depositary Receipts (``DRs''), which include Global Depositary Receipts 
(``GDRs''), Euro Depositary Receipts (``Euro DRs'') and New York Shares 
(``NYSs'').\7\
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    \7\ According to the Registration Statement, DRs, which include 
ADRs, GDRs, Euro DRs and NYSs, are negotiable securities that 
generally represent a non-U.S. company's publicly traded equity or 
debt. Depositary Receipts may be purchased in the U.S. secondary 
trading market. They may trade freely, just like any other security, 
either on an exchange or in the over-the-counter market. Although 
typically denominated in U.S. dollars, Depositary Receipts can also 
be denominated in Euros. Depositary Receipts can trade on all U.S. 
stock exchanges as well as on many European stock exchanges.
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    According to the Prior Release, WCM employs a team approach through 
Investment Strategy Group, consisting of four senior investment 
professionals (the ``Portfolio Managers''). This team establishes 
portfolio guidelines for sector and industry analysis and develops the 
Fund's portfolio. The Portfolio Managers analyze the major trends in 
the global economy in order to identify those economic sectors and

[[Page 9302]]

industries that are most likely to benefit. According to the 
Registration Statement, typical themes incorporated in the Portfolio 
Managers' investment process include demographics, global commerce, 
outsourcing, the growing global middle class and the proliferation of 
technology. A portfolio strategy is then implemented that will best 
capitalize on these investment themes and subsequent expected growth of 
the underlying assets. The Fund's portfolio will typically have fewer 
than 30 companies. All buy and sell decisions are made by the Portfolio 
Managers. The Fund will under normal circumstances have at least 80% of 
its total assets invested in ADRs. The Fund also may invest in other 
equity securities, including common and preferred stock, warrants, 
convertible securities and master limited partnerships. As stated in 
the Prior Release, the Fund's portfolio will consist primarily of ADRs 
and the Fund will not invest in non-U.S. equity securities outside of 
U.S. markets.
    According to the Prior Release, the composition of the Fund's 
portfolio, on a continual basis, will be subject to the following: (1) 
Component stocks that in the aggregate account for at least 90% of the 
weight of the portfolio each shall have a minimum market value of at 
least $100 million; \8\ (2) component stocks that in the aggregate 
account for at least 70% of the weight of the portfolio each shall have 
a minimum global monthly trading volume of 250,000 shares, or minimum 
global notional volume traded per month of $25,000,000, averaged over 
the last six months; (3) a minimum of 20 component stocks of which the 
most heavily weighted component stock shall not exceed 25% of the 
weight of the portfolio, and the five most heavily weighted component 
stocks shall not exceed 60% of the weight of the portfolio; and (4) 
each non-U.S. equity security underlying ADRs held by the Fund will be 
listed and traded on an exchange that has last sale reporting.
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    \8\ This criterion is applied based on market value of 
securities of the non-U.S. equity securities underlying ADRs held by 
the Fund.
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    As noted above, the Prior Release states that the Fund will not 
invest in non-U.S. equity securities outside of U.S. markets. The 
Exchange proposes to amend such statement in the Prior Release to 
provide that, going forward, the Fund may invest in securities outside 
of U.S. markets, and that not more than 10% of the net assets of the 
Fund in the aggregate invested in equity securities (excluding non-
exchange-traded investment company securities) shall consist of equity 
securities whose principal market is not a member of the Intermarket 
Surveillance Group (``ISG'') or is a market with which the Exchange 
does not have a comprehensive surveillance sharing agreement. The 
Exchange notes that the Commission has previously approved similar 
percentage limitations for other funds listed on the Exchange under 
NYSE Arca Equities Rule 8.600.\9\
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    \9\ See Securities Exchange Act Release Nos. 69915 (July 2, 
2013), 78 FR 41145 (July 9,2013) (SR-NYSEArca-2013-56) (order 
approving listing and trading of shares of the PowerShares China A-
Share Portfolio under NYSE Arca Equities Rule 8.600); 72665 (July 
24, 2014), 79 FR 44236 (July 30, 2014) (SR-NYSEArca-2014-59) (order 
approving listing and trading of shares of the AdvisorShares Athena 
High Dividend ETF under NYSE Arca Equities Rule 8.600; 72882 (August 
20, 2014) (SR-NYSEArca-2014-58) (order approving listing and trading 
of shares of PIMCO Short-Term Exchange-Traded Fund and PIMCO 
Municipal Bond Exchange-Traded Fund under NYSE Arca Equities Rule 
8.600); 72853 (August 15, 2014) (SR-NYSEArca-2014-57) (order 
approving listing and trading of shares of the PIMCO Foreign Bond 
Exchange-Traded Fund (U.S. Dollar-Hedged), PIMCO Foreign Bond 
Exchange-Traded Fund (Unhedged), PIMCO Global Advantage Bond 
Exchange-Traded Fund, and PIMCO International Advantage Bond 
Exchange-Traded Fund under NYSE Arca Equities Rule 8.600); 
73331(October 9, 2014), 79 FR 62213 (October 16, 2014) (SR-NYSEArca-
2014-104) (notice of effectiveness of proposed rule change relating 
to use of derivatives by certain PIMCO exchange-traded funds).
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    Such an increase will provide the Fund with the ability to invest 
to a limited extent in non-U.S. equity securities outside of U.S. 
markets and therefore will facilitate the Fund's ability to achieve its 
investment objective of long-term capital appreciation above 
international benchmarks, as noted above. Except for the change 
described above, all other representations made in the Prior Release 
remain unchanged.\10\ The Fund will continue to comply with all initial 
and continued listing requirements under NYSE Arca Equities Rule 8.600.
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    \10\ See note 4, supra. All terms referenced but not defined 
herein are defined in the Prior Release.
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    The Exchange represents that the 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.\11\ 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. FINRA, on behalf of the Exchange, will communicate as 
needed regarding trading in the Shares and exchange-listed equity 
securities (including ADRs) 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 and 
exchange-listed equity securities (including ADRs) from such markets 
and other entities. The Exchange may obtain information regarding 
trading in the Shares and exchange-listed equity securities (including 
ADRs) from markets and other entities that are members of ISG or with 
which the Exchange has in place a comprehensive surveillance sharing 
agreement.\12\ In addition, as stated in the Prior Release, investors 
have ready access to information regarding the Fund's holdings, the 
Portfolio Indicative Value, the Disclosed Portfolio, and quotation and 
last sale information for the Shares.
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    \11\ 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.
    \12\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all of the components 
of the portfolio for the Fund may trade on exchanges that are 
members of the ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
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2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under section 6(b)(5) \13\ 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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    \13\ 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. With respect to the representation that the Fund may invest in 
securities outside of U.S. markets and that not more than 10% of the 
net assets of the Fund in the aggregate invested in equity securities 
(excluding non-exchange-traded investment company securities) shall 
consist of equity securities whose principal market is not a member of 
the ISG or is a market with which the Exchange does not have a 
comprehensive surveillance sharing agreement, the Exchange believes 
such limitation of assets will not adversely impact investors and 
serves to protect investors and the public interest for the following 
reasons. The Commission has previously approved such limitations

[[Page 9303]]

for other funds listed on the Exchange under NYSE Arca Equities Rule 
8.600.\14\ Such a representation assures that most applicable exchange-
traded assets of the Fund will be assets whose principal market is an 
ISG member or a market with which the Exchange has a comprehensive 
surveillance sharing agreement.
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    \14\ See Securities Exchange Act Release Nos. 69915 (July 2, 
2013), 78 FR 41145 (July 9, 2013) (SR-NYSEArca-2013-56) (order 
approving listing and trading of shares of the PowerShares China A-
Share Portfolio under NYSE Arca Equities Rule 8.600); 72665 (July 
24, 2014), 79 FR 44236 (July 30, 2014) (SR-NYSEArca-2014-59) (order 
approving listing and trading of shares of the AdvisorShares Athena 
High Dividend ETF under NYSE Arca Equities Rule 8.600; 72882 (August 
20, 2014) (SR-NYSEArca-2014-58) (order approving listing and trading 
of shares of PIMCO Short-Term Exchange-Traded Fund and PIMCO 
Municipal Bond Exchange-Traded Fund under NYSE Arca Equities Rule 
8.600); 72853 (August 15, 2014) (SR-NYSEArca-2014-57) (order 
approving listing and trading of shares of the PIMCO Foreign Bond 
Exchange-Traded Fund (U.S. Dollar-Hedged), PIMCO Foreign Bond 
Exchange-Traded Fund (Unhedged), PIMCO Global Advantage Bond 
Exchange-Traded Fund, and PIMCO International Advantage Bond 
Exchange-Traded Fund under NYSE Arca Equities Rule 8.600).
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    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 the 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 net asset value (``NAV'') per Share is calculated daily and 
that the NAV and the Disclosed Portfolio is 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 Portfolio Indicative Value, 
as defined in NYSE Arca Equities Rule 8.600 (c)(3), is disseminated by 
one or more major market data vendors at least every 15 seconds during 
the Exchange's Core Trading Session. On a daily basis, the Adviser 
discloses for each portfolio security or other financial instrument of 
the Fund the following information: ticker symbol (if applicable), name 
of security or financial instrument, number of shares or dollar value 
of financial instruments held in the portfolio, and percentage 
weighting of the security or financial instrument in the portfolio. The 
Fund's holdings are 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. Information regarding market price and 
trading volume of the Shares is and will be continually available on a 
real-time basis throughout the day on brokers' computer screens and 
other electronic services, and quotation and last sale information is 
available via the Consolidated Tape Association high-speed line. Price 
information regarding the Fund's equity investments is available from 
major market data vendors. The intra-day, closing and settlement prices 
for exchange-listed equity securities held by the Fund are also readily 
available from the national securities exchanges trading such 
securities. 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. Trading in the Shares 
is 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 Web 
site for the Fund includes a form of the prospectus for the Fund and 
additional data relating to NAV and other applicable quantitative 
information. In addition, as stated in the Prior Notice, investors have 
ready access to information regarding the Fund's holdings, the 
Portfolio Indicative Value, 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. As noted above, the Exchange represents that the 
trading in the Shares will be subject to the existing trading 
surveillances, administered by FINRA on behalf of the Exchange, which 
are designed to detect violations of Exchange rules and applicable 
federal securities laws. 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. 
FINRA, on behalf of the Exchange, will communicate as needed regarding 
trading in the Shares and exchange-listed equity securities (including 
ADRs) 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 and exchange-listed equity 
securities (including ADRs) from such markets and other entities. In 
addition, the Exchange may obtain information regarding trading in the 
Shares and exchange-listed equity securities (including ADRs) from 
markets and other entities that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement. 
In addition, as stated in the Prior Release, investors have ready 
access to information regarding the Fund's holdings, the Portfolio 
Indicative Value, the Disclosed Portfolio, and quotation and last sale 
information for the Shares. The Adviser represents that the proposed 
change, as described above, is consistent with the Fund's investment 
objective, and will further assist the Adviser and Sub-Adviser to 
achieve such investment objective. Such an increase may further the 
public interest by providing the Fund with additional flexibility to 
achieve long-term capital appreciation above international benchmarks.

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 believes the 
proposed rule change is designed to broaden the range of securities in 
which the Fund may invest to include non-U.S. securities, thereby 
helping the Fund to achieve its investment objective, and will enhance 
competition among issues of Managed Fund Shares that invest in equity 
securities.

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 change 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, the proposed rule 
change has become effective pursuant to section 19(b)(3)(A)

[[Page 9304]]

of the Act \15\ and Rule 19b-4(f)(6)(iii) thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give 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 Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the 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 Number SR-NYSEArca-2015-06 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2015-06. 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 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-2015-06 and should be submitted 
on or before March 13, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-03516 Filed 2-19-15; 8:45 am]
BILLING CODE 8011-01-P