[Federal Register Volume 81, Number 35 (Tuesday, February 23, 2016)]
[Notices]
[Pages 9029-9038]
[FR Doc No: 2016-03667]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77160; File No. SR-NYSEArca-2016-14]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Relating To Listing and Trading of Shares of
WBI Tactical Rotation Shares Under NYSE Arca Equities Rule 8.600

February 17, 2016.
    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, 2016, 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, 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 shares of the following
under NYSE Arca Equities Rule 8.600 (``Managed Fund Shares''): WBI
Tactical Rotation Shares. 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
WBI Tactical Rotation Shares (the ``Fund'') under NYSE Arca Equities
Rule 8.600, which governs the listing and trading of Managed Fund
Shares.\4\ The Shares will be offered by the Absolute Shares Trust (the
``Trust''),\5\ 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\
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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 Trust is registered under the 1940 Act. On August 24,
2015, the Trust filed with the Commission a registration statement
on Form N-1A, and on November 6, 2015 filed an amendment thereto,
under the Securities Act of 1933 (15 U.S.C. 77a) (``Securities
Act'') and the 1940 Act relating to the Fund (File Nos. 333-192733
and 811-22917) (as amended, 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 the 1940 Act. See Investment Company Act Release No.
30543 (May 29, 2013) (File No. 812-13886) (``Exemptive Order'').
    \6\ The Commission previously approved listing and trading on
the Exchange of the following actively managed funds under Rule
8.600. See 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); 60981 (November 10, 2009), 74 FR 59594 (November
18, 2009) (SR-NYSEArca-2009-79) (order approving listing of five
fixed income funds of the PIMCO ETF Trust); 63329 (November 17,
2010), 75 FR 71760 (November 24, 2010) (SR-NYSEArca-2010-86) (order
approving listing of Peritus High Yield ETF); 64550 (May 26, 2011),
76 FR 32005 (June 2, 2011) (SR-NYSEArca-2011-11) (order approving
listing of Guggenheim Enhanced Core Bond ETF and Guggenheim Enhanced
Ultra-Short Bond ETF).
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    Millington Securities, Inc. (``Adviser''), a wholly-owned
subsidiary of WBI Trading Company, Inc., will be the investment advisor
to the Fund. WBI Investments, Inc. (``WBI'' or the ``Sub-Adviser''), an
affiliate of WBI Trading Company, Inc., will act as Sub-Adviser to the
Fund. U.S. Bancorp Fund Services, LLC will serve as ``Administrator'',
``Transfer Agent'' and ``Index Receipt Agent''. U.S. Bank, National
Association will serve as the Fund's ``Custodian'' and ``Securities
Lending Agent''. Foreside Fund Services, LLC will serve as the
``Distributor'' for the Fund on an agency basis.
    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. The Adviser is a
registered broker-dealer and is affiliated with a broker-dealer. The
Sub-Adviser is not registered as a broker-dealer but is affiliated with
a broker-dealer. In such capacity, the Adviser and Sub-Adviser have
implemented a firewall with respect to their relevant personnel and
their respective broker-dealer affiliates regarding access to
information concerning the composition and/or changes to a portfolio,
and will be subject to procedures designed to prevent the use and
dissemination of material non-public information regarding such
portfolio. In the event (a) the Adviser becomes newly affiliated with a
broker-dealer or Sub-Adviser becomes registered as a broker-dealer or
newly affiliated with a broker-dealer, as applicable, or (b) any new
adviser or sub-adviser is a broker-dealer or becomes affiliated with a
broker-dealer, it will implement a fire wall with respect to its
personnel or 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 Adviser, Sub-Adviser and their related
personnel are subject to the provisions of Rule 204A-1 under the
Advisers Act relating to codes of ethics. This Rule requires
investment advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as well as
compliance with other applicable securities laws. Accordingly,
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under
the Advisers Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such investment adviser
has (i) adopted and implemented written policies and procedures
reasonably designed to prevent violation, by the investment adviser
and its supervised persons, of the Advisers Act and the Commission
rules adopted thereunder; (ii) implemented, at a minimum, an annual
review regarding the adequacy of the policies and procedures
established pursuant to subparagraph (i) above and the effectiveness
of their implementation; and (iii) designated an individual (who is
a supervised person) responsible for administering the policies and
procedures adopted under subparagraph (i) above.
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Principal Investments
    According to the Registration Statement, the Fund's investment
objective is to seek long term capital appreciation while also seeking
to protect principal during unfavorable market conditions.\8\
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    \8\ The Sub-Adviser's proprietary portfolio selection process
used for the Fund attempts to identify investments that can provide
consistent, attractive returns net of expenses with potentially less
volatility and risk to capital than traditional approaches, whatever
market conditions may be.
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    The Fund, under normal market conditions,\9\ will seek to invest
primarily (more than 50% of its total assets) in the securities
included in its principal investment strategy as indicated in the
following discussion. The Fund will invest directly in equity
securities, debt instruments and ``Financial Instruments'' (as
described below) or will invest in them indirectly by investing in the
equity securities of other registered investment companies (including
exchange traded funds (``ETFs''),\10\ mutual funds, unit investment
trusts, exchange-traded and over-the counter (``OTC'') closed-end funds
(``CEFs'') and exchange-traded and OTC business development companies),
equity securities of exchange-traded pooled vehicles not required to be
registered under the 1940 Act and issuing equity securities

(``ETPVs''),\11\ exchange-traded notes (``ETNs''),\12\ equity-linked
notes (``ELNs'') \13\ and index-linked exchangeable notes
(``ILENs'').\14\ (Collectively, ETFs, ETPVs, ETNs, ELNs and ILENs are
referred to as ``exchange traded products'' or ``ETPs''. Collectively,
ETFs, mutual funds, unit investment trusts, CEFs and business
development companies are referred to as ``Registered Funds''.) The
foregoing investments, which are further detailed below, will be
selected on the basis of the Sub-Adviser's proprietary global asset
rotation investment model and selection process as described herein and
in the Fund's Registration Statement.
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    \9\ The term ``under normal market conditions'' includes, but is
not limited to, the absence of extreme volatility or trading halts
in the equity markets or the financial markets generally;
operational issues causing dissemination of inaccurate market
information; or force majeure type events such as systems failure,
natural or man-made disaster, act of God, armed conflict, act of
terrorism, riot or labor disruption or any similar intervening
circumstance.
    \10\ For purposes of this filing, ETFs consist of Investment
Company Units (as described in NYSE Arca Equities Rule 5.2(j)(3));
Portfolio Depositary Receipts (as described in NYSE Arca Equities
Rule 8.100; and Managed Fund Shares (as described in NYSE Arca
Equities Rule 8.600). All ETFs will be listed and traded in the U.S.
on a national securities exchange. While the Fund may invest in
inverse ETFs, the Fund will not invest in leveraged (e.g., 2X, -2X,
3X or -3X) ETFs.
    \11\ For purposes of this filing, the ``exchange-traded pooled
vehicles'' or ``ETPVs'' consist of Trust Issued Receipts (as
described in NYSE Arca Equities Rule 8.200); Commodity-Based Trust
Shares (as described in NYSE Arca Equities Rule 8.201); Currency
Trust Shares (as described in NYSE Arca Equities Rule 8.202);
Commodity Index Trust Shares (as described in NYSE Arca Equities
Rule 8.203); and Commodity Futures Trust Shares (as described in
NYSE Arca Equities Rule 8.204).
    \12\ ETNs include Index-Linked Securities (as described in NYSE
Arca Equities Rule 5.2(j)(6)).
    \13\ Equity Linked Notes are described in NYSE Arca Equities
Rule 5.2(j)(2).
    \14\ Index-Linked Exchangeable Notes are described in NYSE Arca
Equities Rule 5.2(j)(4).
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    The Fund may invest in exchange-traded and OTC U.S. and foreign
equity securities (other than non-exchange-traded investment company
securities), which are the following: Common stocks, preferred stocks,
rights, warrants, convertibles, master limited partnerships (exchange-
traded businesses organized as partnerships (``MLPs'')), Depositary
Receipts (``DRs'', as described below),\15\ and exchange-traded real
estate investment trusts (``REITs'').
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    \15\ For purposes of this filing, DRs means the following:
American Depositary Receipts (``ADRs''), American Depositary Shares
(``ADSs''), European Depositary Receipts (``EDRs''), Global
Depositary Receipts (``GDRs'') and International Depositary Receipts
(``IDRs''). DRs are receipts typically issued in connection with a
U.S. or foreign bank or trust company which evidence ownership of
underlying securities issued by a non-U.S. company. ADRs are
depositary receipts for foreign securities denominated in U.S.
dollars and traded on U.S. securities markets. These securities may
not necessarily be denominated in the same currency as the
securities for which they may be exchanged. These are certificates
evidencing ownership of shares of a foreign-based issuer held in
trust by a bank or similar financial institutions. Designed for use
in U.S. securities markets, ADRs are alternatives to the purchase of
the underlying securities in their national market and currencies.
ADRs may be purchased through ``sponsored'' or ``unsponsored''
facilities. ADSs are U.S. dollar-denominated equity shares of a
foreign-based company available for purchase on an American stock
exchange. ADSs are issued by depository banks in the United States
under an agreement with the foreign issuer, and the entire issuance
is called an ADR and the individual shares are referred to as ADSs.
EDRs, GDRs, and IDRs are similar to ADRs in that they are
certificates evidencing ownership of shares of a foreign issuer,
however, GDRs, EDRs, and IDRs may be issued in bearer form and
denominated in other currencies, and are generally designed for use
in specific or multiple securities markets outside the U.S. EDRs,
for example, are designed for use in European securities markets
while GDRs are designed for use throughout the world. ADRs, GDRs,
EDRs, and IDRs will not necessarily be denominated in the same
currency as their underlying securities. Not more than 10% of the
Fund's assets will be invested in non-exchange-listed ADRs.
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    As part of the Fund's principal investment strategy, up to 20% of
the Fund's net assets may be invested in exchange-traded or OTC
``Financial Instruments''. For purposes of this filing, ``Financial
Instruments'' are the following: Foreign exchange forward contracts;
futures on equity securities, debt securities, equity indices, fixed
income indices, commodity indices, currencies, commodities, and
interest rates; exchange-traded and OTC options on equity indices,
currencies, and equity and debt securities; exchange-traded and OTC
options on futures contracts; exchange-traded and OTC interest rate
swaps, cross-currency swaps, total return swaps on fixed income and
equity securities, inflation swaps and credit default swaps; and
options on such swaps (``swaptions'').\16\ Financial Instruments will
be utilized in connection with option strategies used by the Fund,
including writing (selling) covered calls, buying puts, using
combinations of calls and puts, and using combinations of calls and
combinations of puts. The Fund may also use options on indices and on
futures, such as by writing a call on a futures contract.\17\ The Fund
may enter cap, floor and collar agreements as a part of its option
strategies.\18\
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    \16\ Options on swaps are traded OTC. In the future, in the
event that there are exchange-traded options on swaps, the Fund may
invest in these instruments.
    \17\ The Fund may directly write call options on stocks and
stock indices if the calls are ``covered'' throughout the life of
the option. The Fund may also write and purchase put options
(``puts'').
    \18\ In a typical cap or floor agreement, one party agrees to
make payments only under specified circumstances, usually in return
for payment of a fee by the other party. For example, the buyer of
an interest rate cap obtains the right to receive payments to the
extent that a specified interest rate exceeds an agreed-upon level.
The seller of an interest rate floor is obligated to make payments
to the extent that a specified interest rate falls below an agreed-
upon level. An interest rate collar combines elements of buying a
cap and selling a floor.
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    As part of its principal investment strategy, the Fund may invest
in the following types of debt securities (``Debt Instruments''):
Corporate debt securities; \19\ corporate debt securities that are
convertible into common stock or interests; U.S. Government securities;
\20\ debt securities of foreign issuers; sovereign debt securities;
repurchase agreements; municipal securities; sovereign debt
obligations; obligations of international agencies or supranational
agencies; sovereign, quasi-sovereign, supranational or local authority
debt obligations issued by non-U.S. governments; Treasury Inflation-
Protected Securities (``TIPs''); and zero coupon bonds. Debt
Instruments may be of all maturities, from less than one year to more
than thirty years (if available). Debt Instruments may be fixed,
variable or floating rate securities.
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    \19\ Such corporate debt securities also includes debt
securities sold pursuant to Rule 144A under the Securities Act.
    The Adviser expects that, under normal market conditions, the
Fund generally will seek to invest at least 75% of its corporate
debt securities in issuances that have at least $100,000,000 par
amount outstanding in developed countries or at least $200,000,000
par amount outstanding in emerging market countries.
    \20\ The Fund may invest in U.S. Government obligations and
other quasi government related obligations. Such obligations include
Treasury bills, certificates of indebtedness, notes and bonds, and
issues of such entities as the Government National Mortgage
Association (``GNMA''), Federal Home Loan Banks, Federal
Intermediate Credit Banks, Federal Farm Credit Banks, Federal
Housing Administration, Federal National Mortgage Association
(``FNMA''), Federal Home Loan Mortgage Corporation (``FHLMC''), and
the Student Loan Marketing Association.
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    The Fund may invest in and hold cash or ``Cash Equivalents'' \21\
as part of the normal operation of its principal investment strategy.
As a result, an investment in cash or Cash Equivalents may periodically
represent a material percentage of the Fund's assets.
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    \21\ ``Cash Equivalents'' means: High-quality short-term debt
securities; money market instruments, certificates of deposit issued
by commercial banks as well as savings banks or savings and loan
associations; bankers' acceptances; time deposits; and commercial
paper and short-term notes rated at the time of purchase ``A-2'' or
higher by Standard & Poor's, ``Prime-1'' by Moody's Investors
Services Inc., or similarly rated by another nationally recognized
statistical rating organization, or, if unrated, will be determined
by the Sub-Adviser to be of comparable quality, as well as U.S.
Government obligations.
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    For investments in Registered Funds, the Fund may invest in excess
of the limits contained in the 1940 Act.\22\
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    \22\ The Commission has granted exemptive relief to the Trust
under Section 12(d)(1)(J) of the 1940 Act permitting the Fund to
operate as a ``fund of funds'' and invest in other investment
companies without complying with the limitations set forth in
Section 12(d)(1) of the 1940 Act, subject to certain terms and
limitations that are contained in the Exemptive Order.
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Non-Principal Investment Strategies
    While the Fund, under normal market conditions, will seek to invest
primarily (at least 50% of its total assets) in the securities
described above, the Fund may invest as part of its non-principal
investment strategy (less than 50% of

the Fund's assets) in the types of investments discussed below.
    The Fund may invest in short positions in equity securities.
    The Fund may invest in agency and non-agency residential mortgage-
backed securities (``RMBS''); agency and non-agency commercial
mortgage-backed securities (``CMBS''); and agency and non-agency asset-
backed securities (``ABS'').
Investment Restrictions
    The Fund may invest up to 40% of its net assets in Debt Instruments
rated below investment grade (also known as ``junk bonds'').
    The Fund will not invest more than 50% of its net assets in
securities of issuers in emerging markets, which could consist of DRs,
dollar-denominated foreign securities or non-U.S. dollar denominated
foreign securities.
    Investments in non-agency mortgage and asset backed securities will
be limited to 20% of the Fund's total assets in the aggregate.
    The Fund may invest up to 30% of its total assets in securities
denominated in non-U.S. Dollars, but this limitation will not apply to
securities of non-U.S. issuers that are denominated in U.S. Dollars.
The Fund may invest up to 50% of the Fund's principal investments in
the securities of issuers in emerging markets.
    The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid assets (calculated at the time of investment),
including Rule 144A securities deemed illiquid by the Adviser. The Fund
will monitor its portfolio liquidity on an ongoing basis to determine
whether, in light of current circumstances, an adequate level of
liquidity is being maintained, and will consider taking appropriate
steps in order to maintain adequate liquidity if, through a change in
values, net assets, or other circumstances, more than 15% of the Fund's
net assets are held in illiquid assets. Illiquid assets include
securities subject to contractual or other restrictions on resale and
other instruments that lack readily available markets as determined in
accordance with Commission staff guidance.\23\
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    \23\ 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. 31835 (September 22, 2015),
discussions at footnotes 92 & 93; Investment Company Act Release No.
28193 (March 11, 2008), 73 FR 14618 (March 18, 2008), footnote 34.
See also, Investment Company Act Release No. 5847 (October 21,
1969), 35 FR 19989 (December 31, 1970) (Statement Regarding
``Restricted Securities''); Investment Company Act Release No. 18612
(March 12, 1992), 57 FR 9828 (March 20, 1992) (Revisions of
Guidelines to Form N-1A). A fund's portfolio security is illiquid if
it cannot be disposed of in the ordinary course of business within
seven days at approximately the value ascribed to it by the fund.
See Investment Company Act Release No. 14983 (March 12, 1986), 51 FR
9773 (March 21, 1986) (adopting amendments to Rule 2a-7 under the
1940 Act); Investment Company Act Release No. 17452 (April 23,
1990), 55 FR 17933 (April 30, 1990) (adopting Rule 144A under the
1933 Act).
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    The Fund will be non-diversified under the 1940 Act.\24\
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    \24\ The diversification standard is set forth in Section
5(b)(1) of the 1940 Act (15 U.S.C. 80e).
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    The Fund intends to qualify for and to elect to be treated as a
separate regulated investment company (``RIC'') under Subchapter M of
the Internal Revenue Code.\25\
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    \25\ 26 U.S.C. 851.
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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. That is,
while the Fund will be permitted to borrow as permitted under the 1940
Act, the Fund's investments will not be used to seek performance that
is the multiple or inverse multiple (i.e., 2Xs and 3Xs) of the Fund's
primary broad-based securities benchmark index (as defined in Form N-
1A).\26\
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    \26\ The Fund's broad-based securities benchmark index will be
identified in a future amendment to the Registration Statement
following the Fund's first full calendar year of performance.
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Net Asset Value (``NAV'')
    The NAV per Share of the Fund will be computed by dividing the
value of the net assets of the Fund (i.e., the Fund's total assets less
total liabilities) by the total number of outstanding Shares of the
Fund, rounded to the nearest cent.
    For purposes of calculating NAV, portfolio securities and other
assets for which market quotes are readily available will be valued at
market value. Market value will generally be determined on the basis of
last reported sales prices, or if no sales are reported, based on
quotes obtained from a quotation reporting system, established market
makers, or pricing services.
    Exchange-traded equity securities (including common stocks, ETPs,
CEFs, convertibles, REITs, warrants, MLPs, DRs and preferred
securities) will be valued at the official closing price or the last
trading price on the exchange or market on which the security is
primarily traded at the time of valuation. If no sales or closing
prices are reported during the day, exchange-traded equity securities
will generally be valued at the mean of the last available bid and ask
quotation on the exchange or market on which the security is primarily
traded, or using other market information obtained from quotation
reporting systems, established market makers, or pricing services.
Investment company securities that are not exchange-traded will be
valued at NAV. Equity securities traded OTC will be valued at the last
sale price in the OTC market. If a non-exchange traded security does
not trade on a particular day, then the mean between the last quoted
closing bid and asked price will be used. In the event that such market
quotations are not readily available, then the security will be fair
valued in accordance with the Trust's procedures.
    U.S. and non-U.S. debt securities with a maturity of greater than
60 days at the time of acquisition, as well as non-exchange traded
Financial Instruments, will be valued at prices that reflect broker/
dealer supplied valuations or are obtained from independent pricing
services. Short-term securities with remaining maturities of 60 days or
less will be valued at amortized cost, provided such amount
approximates market value. Cash Equivalents will be valued based on
information provided by third party pricing services.
    Financial Instruments for which market quotes are readily available
will be valued at market value or on the basis of quotes obtained from
a quotation reporting system, established market makers and pricing
services. Local closing prices will be used for all instrument
valuation purposes. Futures and options on futures will be valued at
the closing price on the day of valuation. Non-exchange traded
Financial Instruments, including forwards, swaps, and certain options,
will normally be valued on the basis of quotes obtained from brokers
and dealers or pricing services using data reflecting the closing of
the principal market for those assets. Caps and floors will be valued
using the exchange closing prices on the applicable options.
    Generally, trading in foreign securities markets is substantially
completed each day at various times prior to the close of the New York
Stock Exchange (``NYSE'') (generally 4:00 p.m. Eastern time (``E.T.'')
(the ``NYSE Close'')). The values of foreign securities are determined
as of the close of such foreign markets or the close of the NYSE, if
earlier. If a foreign security's value has materially changed after the
close of the security's primary exchange or principal market but before
the NYSE Close, the security will be valued at fair value based on
procedures established and approved by the Trust's Board of Trustees
(the ``Board''). Foreign securities that do not trade when the

NYSE is open will also be valued at fair value.
    All investments quoted in foreign currency will be valued in U.S.
dollars on the basis of the foreign currency exchange rates prevailing
at the close of U.S. business at 4:00 p.m. E.T. As a result, the NAV of
the Fund's Shares may be affected by changes in the value of currencies
in relation to the U.S. dollar.
    When market quotations are not readily available, are deemed
unreliable or do not reflect material events occurring between the
close of local markets and the time of valuation, investments will be
valued using fair value pricing as determined in good faith by the Sub-
Adviser under procedures established by and under the general
supervision and responsibility of the Board. Investments that may be
valued using fair value pricing include, but are not limited to: (1)
Illiquid assets; (2) securities of an issuer that becomes bankrupt or
enters into a restructuring; (3) securities whose trading has been
halted or suspended; and (4) foreign securities traded on exchanges
that close before the Fund's NAV is calculated.
Indicative Intra-Day Value
    An independent third party calculator, initially the Exchange, will
calculate the Indicative Intra-Day Value (``IIV'') (which is the
Portfolio Indicative Value, as defined in NYSE Arca Equities Rule
8.600(c)(3)) for the Fund during the Exchange's Core Trading Session
(as defined in NYSE Arca Equities Rule 7.34) by dividing the
``Estimated Fund Value'' as of the time of the calculation by the total
number of outstanding Shares of the Fund. ``Estimated Fund Value'' is
the sum of the estimated amount of cash held in the Fund's portfolio,
the estimated amount of accrued interest owed to the Fund and the
estimated value of assets held in the Fund's portfolio minus the
estimated amount of the Fund's liabilities. The IIV will be calculated
based on the same portfolio holdings disclosed on the Trust's Web site.
The IIV 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 provide the independent third party calculator with
information to calculate the IIV, but the Fund will not be involved in
the actual calculation of the IIV and is not responsible for the
calculation or dissemination of the IIV. The IIV should not be viewed
as a ``real-time'' update of NAV because the IIV may not be calculated
in the same manner as the NAV, which will be computed once per day.
    In addition, the IIV will be widely disseminated by one or more
major market data vendors at least every 15 seconds during the Core
Trading Session. The IIV dissemination together with the Disclosed
Portfolio will allow investors to determine the value of the underlying
portfolio of the Fund on a daily basis and to provide a close estimate
of that value throughout the trading day.
    For the purposes of determining the IIV, the third party market
data provider's valuation of Financial Instruments is expected to be
similar to their valuation of all securities. The third party market
data provider may use market quotes if available or may fair value
securities against proxies (such as swap or yield curves).
    With respect to specific Financial Instruments:
     Foreign exchange forward contracts may be valued intraday
using market quotes, or another proxy as determined to be appropriate
by the third party market data provider.
     Futures may be valued intraday using the relevant futures
exchange data, or another proxy as determined to be appropriate by the
third party market data provider.
     Interest rate swaps and cross-currency swaps may be mapped
to a swap curve and valued intraday based on changes of the swap curve,
or another proxy as determined to be appropriate by the third party
market data provider.
     Credit default swaps (such as, CDX/CDS) may be valued
using intraday data from market vendors, or based on underlying asset
price, or another proxy as determined to be appropriate by the third
party market data provider.
     Total return swaps may be valued intraday using the
underlying asset price, or another proxy as determined to be
appropriate by the third party market data provider.
     Exchange listed options may be valued intraday using the
relevant exchange data, or another proxy as determined to be
appropriate by the third party market data provider.
     OTC options and swaptions may be valued intraday through
option valuation models (e.g., Black-Scholes) or using exchange-traded
options as a proxy, or another proxy as determined to be appropriate by
the third party market data provider.
     Currency spot and forward rates from major market data
vendors will generally be determined as of the NYSE Close.
Disclosures About Financial Instruments in the Disclosed Portfolio
    The Fund's disclosure of Financial Instrument positions in the
Disclosed Portfolio will include information that market participants
can use to value these positions intraday. On a daily basis, the
Adviser will disclose on the Fund's Web site the following information
regarding each portfolio holding, as applicable to the type of holding:
Ticker symbol, CUSIP number or other identifier, if any; a description
of the holding (including the type of holding, such as the type of
swap); the identity of the security, commodity, index or other asset or
instrument underlying the holding, if any; for options, the option
strike price; quantity held (as measured by, for example, par value,
notional value or number of shares, contracts or units); maturity date,
if any; coupon rate, if any; effective date, if any; market value of
the holding; and the percentage weighting of the holding in the Fund's
portfolio. The Web site information will be publicly available at no
charge.
Impact on Arbitrage Mechanism
    The Adviser and the Sub-Adviser believe there will be minimal, if
any, impact to the arbitrage mechanism as a result of the use of
Financial Instruments. Market makers and participants should be able to
value Financial Instruments as long as the positions are disclosed with
relevant information. The Adviser and the Sub-Adviser believe that the
price at which Shares trade will continue to be disciplined by
arbitrage opportunities created by the ability to purchase or redeem
creation Shares at their NAV, which should ensure that Shares will not
trade at a material discount or premium in relation to their NAV.
    The Adviser and the Sub-Adviser do not believe there will be any
significant impacts to the settlement or operational aspects of the
Fund's arbitrage mechanism due to the use of Financial Instruments.
Because Financial Instruments generally are not eligible for in-kind
transfer, they will typically be substituted with a ``cash in lieu''
amount when the Fund processes purchases or redemptions of creation
units in-kind.
Creation and Redemption of Shares
    According to the Registration Statement, the Trust will issue and
sell Shares of the Fund only in aggregations of a specified number of
Shares (each a ``Creation Unit''). Creation Unit sizes will be 50,000
Shares per Creation Unit. The Creation Unit size may be changed.

The Fund will issue and redeem Shares only in Creation Units at the NAV
next determined after receipt of order on a continuous basis on a
``Business Day''. A Business Day will be, generally, any day on which
the Exchange is open for business. The NAV of the Fund will be
determined once each Business Day, normally as of the close of trading
on the NYSE (normally, 4:00 p.m. E.T.). An order to purchase or redeem
Creation Units will be deemed to be received on the Business Day on
which the order is placed through the Distributor at the Shares' NAV
next determined after receipt of an order in proper form.
    The Fund will issue and redeem Creation Units to or through an
``Authorized Participant'', which is either a ``Participating Party''
(i.e., a broker-dealer or other participant in the continuous net
settlement system of the National Securities Clearing Corporation
(``NSCC''), or a participant of the Depository Trust Company (``DTC''),
and, in each case, must have entered an agreement with the Distributor
with respect to the creation and redemption of Creation Units).
    The consideration for purchase of Creation Units of the Fund
generally will consist of an in-kind deposit of a designated portfolio
of securities--the ``Deposit Securities''--for each Creation Unit
constituting a substantial replication, or representation, of the
securities included in the Fund's portfolio as selected by the Sub-
Adviser (``Fund Securities'') and an amount of cash--the ``Cash
Component''--computed as described below. Together, the Deposit
Securities and the Cash Component constitute the ``Fund Deposit,''
which represents the minimum initial and subsequent investment amount
for a Creation Unit of the Fund. The Cash Component is an amount equal
to the difference between the NAV of the Shares (per Creation Unit) and
an amount equal to the market value of the Deposit Securities (the
``Deposit Amount''). If the Cash Component is a positive number (i.e.,
the NAV per Creation Unit exceeds the Deposit Amount), the Authorized
Participant will deliver the Cash Component. If the Cash Component is a
negative number (i.e., the NAV per Creation Unit is less than the
Deposit Amount), the Authorized Participant will receive the Cash
Component. The Cash Component serves to compensate the Trust or the
Authorized Participant, as applicable, for any differences between the
NAV per Creation Unit and the Deposit Securities. Authorized
Participants will be required to pay the Custodian a fixed transaction
fee in connection with creation and redemption of Shares.
    In addition, the Trust reserves the right to permit or require the
substitution of an amount of cash (that is a ``cash in lieu'' amount)
to be added to the Cash Component to replace any Deposit Security which
may not be available in sufficient quantity for delivery or that may
not be eligible for transfer or for other similar reasons. The Trust
also reserves the right to permit or require a ``cash in lieu'' amount
where the delivery of Deposit Securities by the Authorized Participant
(as described below) would be restricted under the securities laws or
where delivery of Deposit Securities to the Authorized Participant
would result in the disposition of Deposit Securities by the Authorized
Participant becoming restricted under the securities laws, and in
certain other situations.
    The Custodian through the (``NSCC''), will make available on each
Business Day, prior to the opening of business on the Exchange
(currently 9:30 a.m. E.T.), the list of the names and the required
number of shares of each Deposit Security to be included in the current
Fund Deposit (based on information at the end of the previous Business
Day) for the Fund. This Fund Deposit will be applicable, subject to any
adjustments, to orders to effect creations of Creation Units of the
Fund until such time as the next-announced composition of the Deposit
Securities is made available.
    In addition to the list of names and number of securities
constituting the current Deposit Securities of a Fund Deposit, the
Custodian, through the NSCC, also will make available on each Business
Day the estimated Cash Component, effective through and including the
previous Business Day, per outstanding Creation Unit of the Fund.
    The process to redeem Creation Units is essentially the reverse of
the process by which Creation Units are created, as described above. To
redeem Shares directly from the Fund, an investor must be an Authorized
Participant or must redeem through an Authorized Participant. The Trust
redeems Creation Units on a continuous basis on any Business Day
through the Distributor at the Shares' NAV next determined after
receipt of an order in proper form.
    Generally, Creation Units of the Fund will be redeemed in-kind, at
NAV per Share next computed, plus a transaction fee as described below.
The Custodian, through the NSCC, makes available prior to the opening
of business on the Exchange (currently 9:30 a.m. E.T.) on each Business
Day, the identity of the Fund Securities that will be applicable
(subject to possible amendment or correction) to redemption requests
received in proper form (as described below) on that day. Fund
Securities received on redemption may not be identical to Deposit
Securities that are applicable to creations of Creation Units. The
redemption proceeds for a Creation Unit consists of Fund Securities--as
announced on the Business Day the request for redemption is received in
proper form--plus or minus cash in an amount equal to the difference
between the NAV of the Shares being redeemed, as next determined after
a receipt of a redemption request in proper form, and the value of the
Fund Securities (``Cash Redemption Amount''), less a redemption
transaction fee.
    The right of redemption may be suspended or the date of payment
postponed with respect to any Fund (1) for any period during which the
NYSE is closed (other than customary weekend and holiday closings); (2)
for any period during which trading on the Exchange is suspended or
restricted; (3) for any period during which an emergency exists as a
result of which disposal of the Shares of the Fund or determination of
the Fund's NAV is not reasonably practicable; or (4) in such other
circumstances as is permitted by the Commission.
    The Trust may in its discretion at any time, or from time to time,
exercise its option to redeem Shares by providing the redemption
proceeds in cash, and the redeeming Authorized Participant will be
required to receive its redemption proceeds in cash. In addition, an
investor may request a redemption in cash that the Trust may permit, in
its sole discretion. In either case, the investor will receive a cash
payment equal to the NAV of its Shares based on the NAV of Shares of
the Fund next determined after the redemption request is received in
proper form (minus a transaction fee).\27\ The Fund may also, in its
sole discretion, upon request of a shareholder, provide such redeemer a
portfolio of securities that differs from the exact composition of the
Fund Securities, or cash in lieu of some securities added to the Cash
Redemption Amount, but in no event will the total value of the
securities delivered and the cash transmitted differ from the NAV.
---------------------------------------------------------------------------

    \27\ The Adviser represents that, to the extent the Trust
effects the creation or redemption of Shares in cash, such
transactions will be effected in the same manner for all Authorized
Participants.

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

Availability of Information
    The Fund's Web site (www.wbishares.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''),\28\ 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.\29\
---------------------------------------------------------------------------

    \28\ The Bid/Ask Price of Shares of the Fund will be 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.
    \29\ Under accounting procedures to be 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.
---------------------------------------------------------------------------

    In addition, a basket composition file, which will include 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 NSCC. The basket represents one Creation Unit of the Fund.
    Investors can also obtain the Trust's Statement of Additional
Information (``SAI''), the Fund's Shareholder Reports, and 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 for the Shares will be
continually available on a real-time basis throughout the day on
brokers' computer screens and other electronic services. Quotation and
last sale information for the Shares, and U.S. exchange-traded common
stocks, preferred stocks, rights, warrants, convertibles, MLPs, DRs,
REITs, CEFs, ETFs, ETPs and ETNs will be available via the Consolidated
Tape Association (``CTA'') high-speed line. Intra-day price information
for foreign exchange-traded common stocks, preferred stocks, rights,
warrants, convertibles, MLPs, DRs and REITs, will be available from the
applicable foreign exchange and from major market data vendors. Price
information for OTC common stocks, OTC CEFs, and OTC Financial
Instruments will be available from major market data vendors. Intra-day
and closing price information for exchange-traded Financial Instruments
will be available from the applicable exchange and from major market
data vendors. In addition, price information for U.S. exchange-traded
options is available from the Options Price Reporting Authority. Intra-
day price information for Cash Equivalents will be available from major
market data vendors.
    Intra-day and closing price information from brokers and dealers or
independent pricing services will be available for Debt Instruments. In
addition, the Portfolio Indicative Value, 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.\30\ The dissemination of the Portfolio Indicative
Value, together with the Disclosed Portfolio, will allow investors to
determine the value of the underlying portfolio of the Fund on a daily
basis and provide a close estimate of that value throughout the trading
day.
---------------------------------------------------------------------------

    \30\ Currently, it is the Exchange's understanding that several
major market data vendors display and/or make widely available
Portfolio Indicative Values taken from CTA or other data feeds.
---------------------------------------------------------------------------

Trading Halts
    With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund.\31\ Trading in Shares of the Fund
will be halted if the circuit breaker parameters in NYSE Arca Equities
Rule 7.12 have been reached. Trading also may be halted because of
market conditions or for reasons that, in the view of the Exchange,
make trading in the Shares inadvisable. These may include: (1) The
extent to which trading is not occurring in the securities and/or the
Financial Instruments comprising the Disclosed Portfolio of the Fund;
or (2) whether other unusual conditions or circumstances detrimental to
the maintenance of a fair and orderly market are present. Trading in
the Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D),
which sets forth circumstances under which Shares of the Fund may be
halted.
---------------------------------------------------------------------------

    \31\ See NYSE Arca Equities Rule 7.12, Commentary .04.
---------------------------------------------------------------------------

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 a.m. to 8 p.m. E.T. in accordance with
NYSE Arca Equities Rule 7.34 (Opening, Core, and Late Trading
Sessions). The Exchange has appropriate rules to facilitate
transactions in the Shares during all trading sessions. As provided in
NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price
variation (``MPV'') for quoting and entry of orders in equity
securities traded on the NYSE Arca Marketplace is $0.01, with the
exception of securities that are priced less than $1.00 for which the
MPV for order entry is $0.0001.
    The Shares will conform to the initial and continued listing
criteria under NYSE Arca Equities Rule 8.600. The Exchange represents
that, for initial and/or continued listing, the Fund will be in
compliance with Rule 10A-3\32\ under the Act, as provided by NYSE Arca
Equities Rule 5.3. A minimum of 100,000 Shares of the Fund will be
outstanding at the commencement of trading on the Exchange. The
Exchange will obtain a representation from the issuer of the Shares
that the NAV per Share will be calculated daily and that the NAV and
the Disclosed Portfolio will be made available to all market
participants at the same time.
---------------------------------------------------------------------------

    \32\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Surveillance
    The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances, administered by the Financial
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange, or
by regulatory staff 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. \33\
---------------------------------------------------------------------------

    \33\ FINRA surveils trading on the Exchange pursuant to a
regulatory services agreement. The Exchange is responsible for
FINRA's performance under this regulatory services agreement.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
    FINRA, on behalf of the Exchange, and regulatory staff of the
Exchange, will communicate as needed regarding trading in the Shares,
certain exchange-traded options and futures, certain exchange-traded
equities (including ETFs, ETPs. ETNs, CEFs, certain common stocks and
certain REITs) with other markets or other entities that are members of
the Intermarket Surveillance Group (``ISG'')\34\, and FINRA and
regulatory staff of the Exchange may obtain trading information
regarding trading in the Shares, certain exchange-traded options and
futures, certain exchange-traded equities (including ETFs, ETPs. ETNs,
CEFs, certain common stocks and certain REITs) from such markets or
entities. In addition, the Exchange may obtain information regarding
trading in the Shares, certain exchange-traded options and futures,
certain exchange-traded equities (including ETFs, ETPs. ETNs, CEFs,
certain common stocks and certain REITs) from markets or other entities
that are members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.\35\ FINRA, on behalf of
the Exchange, is able to access, as needed, trade information for
certain fixed income securities held by the Fund reported to FINRA's
Trade Reporting and Compliance Engine (``TRACE'').
---------------------------------------------------------------------------

    \34\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Disclosed Portfolio may trade on markets that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.
    \35\ Certain of the exchange-traded equity securities in which
the Fund may invest may trade in markets that are not members of
ISG.
---------------------------------------------------------------------------

    Not more than 10% of the net assets of the Fund in the aggregate
invested in equity securities (other than 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. Furthermore, not more than 10% of the net assets of the Fund
in the aggregate invested in futures contracts or exchange-traded
options contracts shall consist of futures contracts or exchange-traded
options contracts whose principal market is not a member of ISG or is a
market with which the Exchange does not have a comprehensive
surveillance sharing agreement.
    In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its
Equity Trading Permit Holders in an Information Bulletin (``Bulletin'')
of the special characteristics and risks associated with trading the
Shares. Specifically, the Bulletin will discuss the following: (1) The
procedures for purchases and redemptions of Shares in Creation 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
Equity Trading Permit Holders to learn the essential facts relating to
every customer prior to trading the Shares; (3) the risks involved in
trading the Shares during the Opening and Late Trading Sessions when an
updated Portfolio Indicative Value will not be calculated or publicly
disseminated; (4) how information regarding the Portfolio Indicative
Value and the Disclosed Portfolio is disseminated; (5) the requirement
that Equity Trading Permit Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; and (6) trading information.
    In addition, the Bulletin will reference that the Fund is subject
to various fees and expenses described in the Registration Statement.
The Bulletin will discuss any exemptive, no-action, and interpretive
relief granted by the Commission from any rules under the Act. The
Bulletin will also disclose that the NAV for the Shares will be
calculated after 4:00 p.m. E.T. each trading day.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \36\ 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.
---------------------------------------------------------------------------

    \36\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Equities Rule
8.600. The Exchange has in place surveillance procedures that are
adequate to properly monitor trading in the Shares in all trading
sessions and to deter and detect violations of Exchange rules and
federal securities laws applicable to trading on the Exchange.
    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 Advisor is a broker-dealer and has represented that it has
implemented a firewall with respect to relevant personnel 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 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. FINRA, on behalf of the Exchange, and
regulatory staff of the Exchange, will communicate as needed regarding
trading in the Shares, certain exchange-traded options and futures,
certain exchange-traded equities (including ETFs, ETPs. ETNs, CEFs,
certain common stocks and certain REITs) with other markets or other
entities that are members of the ISG, and FINRA, on behalf of the
Exchange, and regulatory staff of the Exchange, may obtain trading
information regarding trading in the Shares, certain exchange-traded
options and futures, certain exchange-traded equities (including ETFs,
ETPs. ETNs, CEFs, certain common stocks and certain REITs) from such
markets or entities. In addition, the Exchange may obtain information
regarding trading in the Shares, certain exchange-traded options and
futures, certain exchange-traded equities (including ETFs, ETPs, ETNs,
CEFs, certain common stocks and certain REITs) from markets or other
entities that are members of ISG or with which the Exchange has in
place a comprehensive surveillance sharing agreement. FINRA, on behalf
of the Exchange, is able to access, as needed, trade information for
certain fixed income securities held by the Fund reported to FINRA's
TRACE.
    The Fund's disclosure of Financial Instrument positions in the
Disclosed Portfolio will include information that

market participants can use to value these positions intraday. On a
daily basis, the Fund will disclose on the Fund's Web site the
following information regarding each portfolio holding, as applicable
to the type of holding: Ticker symbol, CUSIP number or other
identifier, if any; a description of the holding (including the type of
holding, such as the type of swap); the identity of the security,
commodity, index or other asset or instrument underlying the holding,
if any; for options, the option strike price; quantity held (as
measured by, for example, par value, notional value or number of
shares, contracts or units); maturity date, if any; coupon rate, if
any; effective date, if any; market value of the holding; and the
percentage weighting of the holding in the Fund's portfolio. Price
information for the debt and equity securities held by the Fund will be
available through major market data vendors and on the applicable
securities exchanges on which such securities are listed and traded. In
addition, a large amount of information will be publicly available
regarding the Fund and the Shares, thereby promoting market
transparency. Moreover, the Portfolio Indicative Value 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 Equity Trading Permit Holders in an Information Bulletin of
the special characteristics and risks associated with trading the
Shares. Trading in Shares of the Fund will be halted if the circuit
breaker parameters in NYSE Arca Equities Rule 7.12 have been reached or
because of market conditions or for reasons that, in the view of the
Exchange, make trading in the Shares inadvisable, and trading in the
Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), which
sets forth circumstances under which Shares of the Fund may be halted.
In addition, as noted above, investors will 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 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. Not more than 10% of the net assets of
the Fund in the aggregate invested in equity securities (other than
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. Furthermore, not more than 10% of the
net assets of the Fund in the aggregate invested in futures contracts
or exchange-traded options contracts shall consist of futures contracts
or exchange-traded options contracts whose principal market is not a
member of ISG or is a market with which the Exchange does not have a
comprehensive surveillance sharing agreement. In addition, as noted
above, investors will 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.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed rule change will facilitate the listing and trading of an
additional type of actively-managed exchange-traded product that holds
equities and fixed income securities, which may be represented by
certain Financial Instruments as discussed above, which will enhance
competition among market participants, to the benefit of investors and
the marketplace.

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 up to 90 days (i) as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or (ii) as to which the self-regulatory
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEArca-2016-14 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-NYSEArca2016-14. 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 the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2016-14 and should
be submitted on or before March 15, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
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    \37\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-03667 Filed 2-22-16; 8:45 am]
 BILLING CODE 8011-01-P


Reader’s Guide Silicon Dioxide & Silica Gel

CRM:  James Parker

EPA/OPPTS/OPP/SRRD

Reader’s Guide to the Silicon Dioxide & Silica Gel E-docket #
EPA-HQ-OPP-2007-1140

Publication Date: March 26, 2008

EPA has created this document to provide an organizational structure to
the Silicon Dioxide & Silica Gel E-docket.  The docket index lists the
caption entries sequentially, 	while this document lists them by subject
matter.  The Agency is providing the 	“Readers Guide” to allow the
reader to more easily access and navigate the various entries contained
in the Silicon Dioxide & Silica Gel E-docket.

Federal Register and Docket Organization Documents:

Docket Entry 1.	Federal Register Notice:  Silicon dioxide and Silica gel
Registration Review document, Risk Assessments and Related documents;
Notice of Availability (March 26, 2008)

This notice announces that the risk assessments are available for public
review and comment.

Docket Entry 2.	Reader’s Guide to the Silicon dioxide and Silica gel
E-docket# EPA-HQ-OPP-2007-1140 (March 26, 2008)

This document is an index which lists all documents available in the
docket to assist the readers in locating information.

Docket Entry 3.	Silicon dioxide and Silica gel: Registration Review
Summary document					(March 14, 2008)

This document discusses the Agency’s Preliminary Work Plan for Silicon
Dioxide & Silica Gel and summarizes the uses, health effects, and
ecological effects.

Usage

Docket Entry 4.	Silicon dioxide and Silica gel: Screening Level Usage
Data

			(August 08, 2007)

This document estimates Silicon Dioxide & Silica Gel usage on
agricultural crops in the United States.

Ecological Risk Assessment Documents

Docket Entry 5. 	Silicon Dioxide and Silica Gel Reregistration
Eligibility Decision (RED) document (September, 1991)

This document summarizes the initial Agency assessment for silicon
dioxide and silica gel.

Docket Entry 6.	Overview of Ecological Risk Assessment Process in the
Office of Pesticide Programs (January, 23, 2004)

Endangered and Threatened Species Effects and Determinations.

Human Health Risk Assessment Documents

Docket Entry 7.	November 13, 2001 and December 18, 2001 Meeting of the
IIFG

Decision Memo.   (January 31, 2002)

Inert Ingredient Focus Group recommendations for the inert ingredients
associated with the “weathered materials” grouping.

Docket Entry 8.	Review of Potential Occupational and Residential
Exposure to Silicon Dioxide for the Reregistration Eligibility Document
(July 03, 1991)

This document, summaries the potential occupational and residential
exposure risks used in the Reregistration Eligibility document for
silicon dioxide.

Docket Entry 9. 	Review of Potential Occupational and Residential
Exposure to Silica Gel for the Reregistration Eligibility Document
((July 03, 1991))

This document, summaries the potential occupational and residential
exposure risks used in the Reregistration Eligibility document for
silica gel.

Docket Entry 10.	Silicon Dioxide; Reregistration Product Chemistry
Considerations for Natural Insecto Products (August 01, 1991)

This document describes issues related Natural Insecto Products as
described by the Agency.

Docket Entry 11.	Reregistration of Silicon Dioxide and Silica Gel:
Product and Residue Chemistry Considerations. (August 01, 1991)

This document summarizes the labeling issues associated with silicon
dioxide and silica gel based on available product and residue chemistry
considerations.


[Federal Register Volume 80, Number 131 (Thursday, July 9, 2015)]
[Notices]
[Pages 39474-39477]
[FR Doc No: 2015-16812]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-31704; File No. 812-14460]

Macquarie Capital (USA) Inc., et al.; Notice of Application and
Temporary Order

July 6, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Temporary order and notice of application for a permanent order
under section 9(c) of the Investment Company Act of 1940 (``Act'').

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Summary of Application: Applicants have received a temporary order
(``Temporary Order'') exempting them from section 9(a) of the Act, with
respect to an injunction entered against Macquarie Capital (USA) Inc.
(``Macquarie Capital'') on April 1, 2015 by the United States District
Court for the Southern District of New York (``District Court''), until
the Commission takes final action on an application for a permanent
order (the ``Permanent Order,'' and with the Temporary Order, the
``Orders''). Applicants also have applied for a Permanent Order.

Applicants: Macquarie Capital, Delaware Management Business Trust
(``DMBT''), on behalf of its series, Delaware Management Company
(``DMC'') and Delaware Investments Fund Advisers (``DIFA''), Four
Corners Capital Management, LLC (``FCCM''), Macquarie Capital
Investment Management LLC (``MCIM''), Macquarie Funds Management Hong
Kong Limited (``MFMHK''), and Delaware Distributors, L.P. (``Delaware
Distributors'') (collectively, the ``Applicants'').

Filing Dates: The application was filed on May 15, 2015 and amended on
June 10, 2015.

Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving Applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on July 31, 2015, and should be accompanied by proof of service on
Applicants, in the form of an affidavit, or for lawyers, a certificate
of service. Pursuant to rule 0-5 under the Act, hearing requests should
state the nature of the writer's interest, any facts bearing upon the
desirability of a hearing on the matter, the reason for the request,
and the issues contested. Persons who wish to be notified of a hearing
may request notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090; Applicants: Macquarie Capital
and MCIM: 125 West 55th Street, 22nd Floor, New York, NY 10019, DMBT,
FCCM and Delaware Distributors: 2005 Market Street, Philadelphia, PA
19103, and MFMHK: One International Finance Center, 1 Harbour View
Street, Central, Hong Kong SAR.

FOR FURTHER INFORMATION CONTACT: Robert H. Shapiro, Senior Counsel, at
(202) 551-7758, or Mary Kay Frech, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a temporary order and a
summary of the application. The complete application may be obtained
via the Commission's Web site by searching for the file number, or an
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling<PHONE_NUMBER>.

Applicants' Representations

    1. Macquarie Capital, a Delaware corporation, is an indirect,
wholly-owned subsidiary of Macquarie Group Limited (``MGL'') and a
broker-dealer registered under the Securities Exchange Act of 1934 (the
``Exchange Act''). MCIM, a Delaware limited liability company, is an
indirect, wholly-owned subsidiary of MGL and an investment adviser
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). DMC and DIFA are series of DMBT, which is a Delaware statutory
trust and an indirect, wholly-owned subsidiary of MGL. DMBT is an
investment adviser registered under the Advisers Act. FCCM, a Delaware
limited liability company, is a wholly-owned subsidiary of a series of
DMBT and an investment adviser registered under the Advisers Act.
Delaware Distributors, a Delaware limited partnership, is an indirect,
wholly-owned subsidiary of MGL and a broker-dealer registered under the
Exchange Act. MFMHK is an indirect, wholly-owned subsidiary of MGL and
an investment adviser registered under the Advisers Act. DMC and DIFA,
as series of DMBT, MCIM, FCCM, and MFMHK (collectively, the ``Adviser
Applicants'') each serve as investment adviser or investment sub-
adviser to investment companies registered under the Act, or series of
such companies (each, a ``Fund'') \1\ and

Delaware Distributors provides principal underwriting services to
certain Funds. The Adviser Applicants and Delaware Distributers are
collectively referred to as the ``Fund Servicing Applicants.''
---------------------------------------------------------------------------

    \1\ The term ``Fund'' refers to any registered investment
company, including any registered unit investment trust (``UIT'') or
registered face amount certificate company (``FACC''), as well as
any business development company and employees' securities company.
---------------------------------------------------------------------------

    2. While no existing company of which Macquarie Capital is an
affiliated person within the meaning of section 2(a)(3) of the Act
(``Affiliated Person''), other than the Fund Servicing Applicants,
currently serves as an investment adviser or depositor of any Fund or
principal underwriter (as defined in section 2(a)(29) of the Act) for
any open-end registered investment company (``Open-End Fund''),
registered UIT, or registered FACC (such activities, ``Fund Services
Activities''), Applicants request that any relief granted also apply to
any existing company of which Macquarie Capital is an Affiliated Person
and to any other company of which Macquarie Capital may become an
Affiliated Person in the future (together with the Fund Servicing
Applicants, the ``Covered Persons'') \2\ with respect to any activity
contemplated by section 9(a) of the Act.
---------------------------------------------------------------------------

    \2\ Macquarie Capital is a party to the application, but does
not and will not engage in Fund Services Activities, and is not a
Covered Person.
---------------------------------------------------------------------------

    3. On March 27, 2015, the Commission filed a complaint (the
``Complaint'') in the District Court. According to the Complaint,
Macquarie Capital was the lead underwriter on a 2010 secondary public
stock offering by Puda Coal, Inc. (``Puda Coal''), which traded on the
New York Stock Exchange at the time and purportedly owned a coal
company in the People's Republic of China. According to the Complaint,
in the offering documents, Puda Coal falsely claimed that it held a 90-
percent ownership interest in the Chinese coal company. According to
the Complaint, Macquarie Capital repeated those statements in its
marketing materials for the offering despite obtaining a report showing
that Puda Coal did not possess an ownership interest in the coal
company. The Complaint alleges that two former Macquarie Capital
employees were negligent by failing to act on due diligence information
about the true ownership interest in the Chinese coal company and
instead moving forward with the offering.\3\ The Complaint alleges that
Macquarie Capital was negligent as an organization by underwriting and
marketing the offering while in possession of this information.
---------------------------------------------------------------------------

    \3\ The Commission also charged former Macquarie Capital
managing director Aaron Black and former Macquarie Capital
investment banker William Fang for failing to exercise appropriate
care in their due diligence review. Black and Fang each consented to
the entry of court orders containing the same injunctions as the
Court Order (as defined below).
---------------------------------------------------------------------------

    4. On April 1, 2015, the District Court entered an order (the
``Court Order'') enjoining Macquarie Capital from violating sections
17(a)(2) and 17(a)(3) of the Securities Act of 1933 (the
``Injunction'').\4\ The Court Order also requires Macquarie Capital to
pay $12 million in disgorgement and prejudgment interest and a civil
monetary penalty in the amount of $3 million. Macquarie Capital
consented to the entry of the Court Order without admitting or denying
the allegations in the Complaint (other than those relating to the
jurisdiction of the District Court and the jurisdiction of the
Commission over the Conduct \5\).
---------------------------------------------------------------------------

    \4\ Securities and Exchange Commission v. Macquarie Capital
(USA) Inc., et al., Civil Action No. 15-CV-02304 (S.D.N.Y. April 1,
2015) (Final Judgment as to Defendant Macquarie Capital (USA) Inc.).
    \5\ The alleged conduct giving rise to the Injunction is
referred to herein as the ``Conduct.''
---------------------------------------------------------------------------

    5. Applicants represent that escrow accounts have been established
into which have been or will be deposited amounts equal to the advisory
fees paid by the Funds to the Adviser Applicants for the period from
April 1, 2015 through May 15, 2015.

Applicants' Legal Analysis

    1. Section 9(a)(2) of the Act, in relevant part, prohibits a person
who has been enjoined from engaging in or continuing any conduct or
practice in connection with the purchase or sale of a security, or in
connection with activities as an underwriter, broker or dealer, from
acting, among other things, as an investment adviser or depositor of
any registered investment company or a principal underwriter for any
Open-End Fund, UIT or FACC. Section 9(a)(3) of the Act makes the
prohibition in section 9(a)(2) applicable to a company, any affiliated
person of which has been disqualified under the provisions of section
9(a)(2). Section 2(a)(3) of the Act defines ``affiliated person'' to
include, among others, any person directly or indirectly controlling,
controlled by, or under common control with, the other person.
Applicants state that, taken together, sections 9(a)(2) and 9(a)(3)
have the effect of precluding the Fund Servicing Applicants and Covered
Persons from engaging in Fund Services Activities as a result of the
Injunction entered against Macquarie Capital because Macquarie Capital
is an Affiliated Person of each Fund Servicing Applicant and Covered
Person.
    2. Section 9(c) of the Act provides that, upon application, the
Commission shall by order grant an exemption from the disqualification
provisions of section 9(a) of the Act, either unconditionally or on an
appropriate temporary or other conditional basis, to any person if that
person establishes that: (a) The prohibitions of section 9(a), as
applied to the person, are unduly or disproportionately severe or (b)
the conduct of the person has been such as not to make it against the
public interest or the protection of investors to grant the exemption.
Applicants have filed an application pursuant to section 9(c) seeking a
Temporary Order and a Permanent Order exempting the Fund Servicing
Applicants and other Covered Persons from the disqualification
provisions of section 9(a) of the Act. The Fund Servicing Applicants
and other Covered Persons may, if the relief is granted, in the future
act in any of the capacities contemplated by section 9(a) of the Act
subject to the applicable terms and conditions of the Orders. On May
15, 2015, Applicants received a temporary conditional order from the
Commission exempting the Covered Persons from section 9(a) of the Act
with respect to the Injunction from May 15, 2015 until the Commission
takes final action on an application for a Permanent Order or, if
earlier, July 14, 2015.
    3. Applicants believe they meet the standards for exemption
specified in section 9(c). Applicants state that the prohibitions of
section 9(a) as applied to them would be unduly and disproportionately
severe and that the conduct of Applicants has not been such as to make
it against the public interest or the protection of investors to grant
the exemption from section 9(a).
    4. Applicants state that the alleged Conduct giving rise to the
Injunction did not in any way involve any of the Fund Servicing
Applicants acting in their capacity as investment adviser, sub-adviser
or principal underwriter for the Funds. Applicants also state that the
Conduct did not involve any Fund or Fund assets with respect to which
Fund Servicing Applicants engaged in Fund Services Activities. In
addition, Applicants state that none of the Funds to which Fund
Servicing Applicants provide Fund Services Activities purchased, held,
or hold securities issued in the 2010 Puda Coal stock offering.
    5. Applicants state that: (i) None of the current or former
directors, officers or employees of the Fund Servicing Applicants had
any involvement in the Conduct and (ii) the personnel who were involved
in the Conduct have had

no, and will not have any, involvement in providing Fund Services
Activities and will not serve as an officer, director, or employee of
any Covered Person providing Fund Services Activities. Applicants
assert that because the personnel of the Fund Servicing Applicants did
not have any involvement in the Conduct, shareholders of Funds that
received investment advisory, depository and principal underwriting
services from the Fund Servicing Applicants were not affected any
differently than if those Funds had received services from any other
non-affiliated investment adviser, depositor or principal underwriter.
    6. Applicants submit that section 9(a) should not operate to bar
them from serving the Funds and their shareholders in the absence of
improper practices relating to their Fund Services Activities.
Applicants state that the section 9(a) disqualification could result in
substantial costs to the Funds to which the Fund Servicing Applicants
provide investment advisory services, and such Funds' operations would
be disrupted, as they sought to engage new advisers or sub-advisers.
Applicants assert that these effects would be unduly severe given the
Fund Servicing Applicants' lack of involvement in the Conduct.
Moreover, Applicants state that Macquarie Capital has taken remedial
actions to address the Conduct, including reviewing its due diligence
policies and procedures with the assistance of a number of different
outside law firms, as outlined in the application. Thus, Applicants
believe that granting the exemption from section 9(a), as requested,
would be consistent with the public interest and the protection of
investors.
    7. Applicants state that the inability of the Fund Servicing
Applicants to continue to provide investment advisory services to Funds
would result in those Funds and their shareholders facing unduly and
disproportionately severe hardships. Applicants assert that imposing
the section 9(a) disqualifications upon the Adviser Applicants would
deprive the shareholders of certain Funds of the advisory or sub-
advisory services that they expected to receive when they decided to
invest in the Funds. Applicants state that many shareholders have long-
standing investments and relationships with the Funds. Applicants
represent that each Adviser Applicant has developed a familiarity and
expertise with a particular Fund's operations, and that replacing the
Adviser Applicants with another adviser would result in inefficiencies
and potential investment losses during a transition period. Applicants
assert that disqualification from providing these services would
disrupt investment strategies and could potentially result in large net
redemptions of shares of the Funds, which in turn could both frustrate
efforts to effectively manage the Funds' assets and increase the Funds'
expense ratios to the detriment of non-redeeming shareholders.
Applicants also note that any effort to find suitable replacement
investment advisers and/or sub-advisers would necessarily take time,
during which the Funds would lack advisory services, and that the cost
to the Funds of obtaining shareholder approval for the new investment
advisory or sub-advisory services would be substantial. Applicants
further assert that the disqualification of Delaware Distributors would
cause the Funds to expend time and resources to find and engage
substitute principal underwriters, and that the substitute underwriters
would not be able to replicate the selling network established by
Delaware Distributors.
    8. Applicants also represent that the boards of directors or
trustees (the ``Boards'') of those Funds for which a Fund Servicing
Applicant serves as the primary adviser or principal underwriter have
been apprised of the consequences to the relevant Fund Servicing
Applicants as a result of the issuance of the Injunction, and that such
Boards have requested that the relevant Fund Servicing Applicants
continue to provide services to their Funds. Applicants further state
that for those Funds for which a Fund Servicing Applicant serves as a
sub-adviser, Applicants have provided the primary investment advisers
with written materials describing the Conduct, the Injunction, the
disqualification under section 9(a) of the Act, and the process for
obtaining exemptive relief under section 9(c) of the Act, and that none
of the sub-advised Funds or their primary advisers has requested that
the Fund Servicing Applicants cease providing sub-advisory services.
    9. Applicants state that, once a Permanent Order is issued, the
Fund Servicing Applicants will, as soon as reasonably practicable,
distribute additional written materials with updated information to the
Boards of the Funds. The written materials will include an offer to
meet in person with the Boards, including the directors who are not
``interested persons'' of such Funds as defined in section 2(a)(19) of
the Act and their independent legal counsel as defined in rule 0-
1(a)(6) under the Act.
    10. Applicants represent that they have undertaken to develop
procedures reasonably designed to prevent violations of section 9(a) by
Fund Servicing Applicants and their affiliated persons. Applicants
state that as part of this process their legal and compliance groups
have issued a firm-wide communication establishing a procedure whereby
the legal and compliance personnel in each of MGL's business groups
globally must identify and escalate potential cross-divisional and
cross-jurisdictional impacts from a regulatory enforcement matter or
litigation, including disqualifying events under applicable securities
laws and regulations, to central legal and compliance management, which
will further assess the event to determine, among other things, whether
there exists any disqualification events under federal securities laws.
    11. Applicants represent that they will engage an independent
consultant (``Independent Consultant'') to review and test the existing
procedures relating to compliance with section 9(a) and to recommend
appropriate enhancements to ensure that the procedures are reasonably
designed to prevent violations of section 9(a) by Covered Persons.
Applicants state that, as part of this process, the Independent
Consultant specifically will consider enhancements to the procedures to
provide for the escalation of information regarding potential
disqualifying events under section 9(a) so that the information may be
appropriately analyzed in a timely manner. Applicants further represent
that, based on the recommendations of the Independent Consultant,
Applicants will implement, within 60 days of the date of the Permanent
Order, enhancements to the procedures that are reasonably designed to
prevent violations of section 9(a) by Covered Persons. Applicants state
that, in the case of Covered Persons that are registered investment
advisers, such procedures will be part of their written policies and
procedures adopted and implemented pursuant to rule 206(4)-7 under the
Advisers Act. In addition, Applicants state that, in the case of
Delaware Distributors or any other Covered Person that serves as a
principal underwriter to a registered investment company in the future,
such procedures will be part of their Written Supervisory Procedures.
Applicants represent that the Board of each Fund that has a Covered
Person as its primary investment adviser and/or principal underwriter
also will review the adequacy of these procedures and the

effectiveness of their implementation at or before the next annual
review of the policies and procedures of the relevant primary
investment adviser and/or principal underwriter in accordance with rule
38a-1 under the Act. Applicants further represent that, for each sub-
advised Fund, the Fund Servicing Applicants will transmit such
procedures to each Fund's primary investment adviser for consideration
by the relevant Board in accordance with rule 38a-1 under the Act.
    12. Applicants state that if the Fund Servicing Applicants were
barred under section 9(a) of the Act from providing investment advisory
services to the Funds, and were unable to obtain the requested
exemption, the effect on their businesses and employees would be unduly
and disproportionately severe because they have committed substantial
capital and other resources to establishing an expertise in advising
Funds. Applicants further state that prohibiting the Fund Servicing
Applicants from engaging in Fund Services Activities would not only
adversely affect their businesses, but would also adversely affect
their employees who are involved in those activities. Applicants state
that many of these employees working for the Fund Servicing Applicants
could experience significant difficulties and/or delays in finding
alternative fund-related employment.
    13. Applicants state that none of the Applicants has previously
applied for an exemptive order under section 9(c) of the Act.

Applicants' Conditions

    Applicants agree that any order granted by the Commission pursuant
to the application will be subject to the following conditions:
    1. As a condition to the Temporary Order, Applicants will continue
to hold in escrow amounts equal to all advisory fees paid by the Funds
to the Adviser Applicants for the period from April 1, 2015 through May
15, 2015. Amounts paid into the escrow accounts will be disbursed to
the relevant Funds and/or Adviser Applicants after the Commission has
acted on the application for a Permanent Order and discussions with the
relevant Funds.
    2. Any temporary exemption granted pursuant to the application
shall be without prejudice to, and shall not limit the Commission's
rights in any manner with respect to, any Commission investigation of,
or administrative proceedings involving or against, Covered Persons,
including without limitation, the consideration by the Commission of a
permanent exemption from section 9(a) of the Act requested pursuant to
the application or the revocation or removal of any temporary
exemptions granted under the Act in connection with the application.
    3. Each Applicant and Covered Person will adopt and implement
policies and procedures reasonably designed to ensure that it will
comply with any terms and conditions of the Orders within 60 days of
the date of the Permanent Order.
    4. Macquarie Capital will comply with the Court Order.
    5. Applicants will provide written notification to the Chief
Counsel of the Commission's Division of Investment Management with a
copy to the Chief Counsel of the Commission's Division of Enforcement
of a material violation of the terms and conditions of the Orders or
Court Order within 30 days of discovery of the material violation.

Temporary Order

    The Commission has considered the matter and finds that Applicants
have made the necessary showing to justify granting a temporary
exemption.
    Accordingly,
    It is hereby ordered, pursuant to section 9(c) of the Act, that the
Fund Servicing Applicants and any other Covered Persons are granted a
temporary exemption from the provisions of section 9(a) effective
forthwith, solely with respect to the Injunction, subject to the
representations and conditions in the application, until the date the
Commission takes final action on their application for a Permanent
Order.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2015-16812 Filed 7-8-15; 8:45 am]
 BILLING CODE 8011-01-P