[Federal Register Volume 80, Number 250 (Wednesday, December 30, 2015)]
[Notices]
[Pages 81564-81573]
[FR Doc No: 2015-32821]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76761; File No. SR-NYSEArca-2015-107]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of the REX Gold Hedged
S&P 500 ETF and the REX Gold Hedged FTSE Emerging Markets ETF Under
NYSE Arca Equities Rule 8.600

December 23, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on December 10, 2015, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``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''): The REX
Gold Hedged S&P 500 ETF and the REX Gold Hedged FTSE Emerging Markets
ETF. The text of the proposed rule change is available on the
Exchange's Web site at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade shares (the ``Shares'') of
the following under NYSE Arca Equities Rule 8.600, which governs the
listing and trading of Managed Fund Shares \4\: The REX Gold Hedged S&P
500 ETF and the REX Gold Hedged FTSE Emerging Markets ETF (each a
``Fund'' and, collectively, the ``Funds'').\5\
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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) (the ``1940 Act'') organized
as an open-end investment company or similar entity that invests in
a portfolio of securities selected by its investment adviser
consistent with its investment objectives and policies. In contrast,
an open-end investment company that issues Investment Company Units,
listed and traded on the Exchange under NYSE Arca Equities Rule
5.2(j)(3), seeks to provide investment results that correspond
generally to the price and yield performance of a specific foreign
or domestic stock index, fixed income securities index or
combination thereof.
    \5\ The Commission has approved listing and trading on the
Exchange of a number of actively managed funds under Rule 8.600.
See, e.g., Securities Exchange Act Release Nos. 63076 (October 12,
2010), 75 FR 63874 (October 18, 2010) (SR-NYSEArca-2010-79) (order
approving Exchange listing and trading of Cambria Global Tactical
ETF); 70055 (July 29, 2013) (SR-NYSEArca-2013-52) (order approving
proposed rule change relating to listing and trading of shares of
the First Trust Morningstar Managed Futures Strategy Fund under NYSE
Arca Equities Rule 8.600); and 71456 (January 31, 2014), 79 FR 7258
(February 6, 2014) (SR-NYSEArca-2013-116) (order approving proposed
rule change relating to listing and trading of shares of the
AdvisorShares International Gold ETF, AdvisorShares Gartman Gold/Yen
ETF, AdvisorShares Gartman Gold/British Pound ETF, and AdvisorShares
Gartman Gold/Euro ETF under NYSE Arca Equities Rule 8.600).
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    The Shares will be offered by Exchange Traded Concepts Trust (the
``Trust''), a Delaware statutory trust. Exchange Traded Concepts, LLC
will serve as the investment adviser to the Funds (``Adviser''). Vident
Investment Advisory, LLC (the ``Sub-Adviser'') will serve as sub-
adviser to the Funds.\6\
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    \6\ The Trust is registered under the 1940 Act. On October 9,
2015, the Trust filed with the Commission an amendment to its
registration statement on Form N-1A under the Securities Act of 1933
(15 U.S.C. 77a) (``Securities Act''), and under the 1940 Act
relating to the Funds (File Nos. 333-156529 and 811-22263)
(``Registration Statement''). The description of the operation of
the Trust and the Funds 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. 30445, April 2, 2013
(File No. 812-13969) (``Exemptive Order'').
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    SEI Investments Distribution Co. (``SIDCO''), (the ``Distributor'')
will be the principal underwriter and distributor of the Funds' Shares.
SEI Investments Global Funds Services (the ``Administrator'') will
serve as the administrator, custodian, transfer agent and fund
accounting agent for the Funds.\7\
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    \7\ The Funds are subject to regulation under the Commodity
Exchange Act (``CEA'') and Commodity Futures Trading Commission
(``CFTC'') rules as commodity pools. The Adviser is registered as a
commodity pool operator (``CPO''), and the Funds will be operated in
accordance with CFTC rules.
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    Commentary .06 to Rule 8.600 provides that, if the investment
adviser to the investment company issuing Managed Fund Shares is
affiliated with a broker-dealer, such investment adviser shall erect a
``fire wall'' between the investment adviser and the broker-dealer with
respect to access to information concerning the composition and/or
changes to such investment company portfolio. 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.\8\ Commentary .06 to Rule

8.600 is similar to Commentary .03(a)(i) and (iii) to NYSE Arca
Equities Rule 5.2(j)(3); however, Commentary .06 in connection with the
establishment of a ``fire wall'' between the investment adviser and the
broker-dealer reflects the applicable open-end fund's portfolio, not an
underlying benchmark index, as is the case with index-based funds.
Neither the Adviser nor the Sub-Adviser is a broker-dealer or
affiliated with a broker-dealer.
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    \8\ 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 and Sub-Adviser and their related
personnel will be 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 violations, 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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    In the event (a) the Adviser or Sub-Adviser becomes a registered
broker-dealer or becomes newly affiliated with a broker-dealer, or (b)
any new adviser or sub-adviser is a registered broker-dealer, or
becomes affiliated with a broker-dealer, it will implement a fire wall
with respect to its relevant personnel or its broker-dealer affiliate
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.
    The REX Gold Hedged S&P 500 ETF--Principal Investments
    According to the Registration Statement, the Fund will seek to
outperform the total return performance of the S&P 500 Dynamic Gold
Hedged Index (the ``S&P Benchmark'') by actively hedging the returns of
the S&P 500[supreg] Index using gold futures.
    The Fund will seek to achieve its investment objective of
outperforming the S&P Benchmark by providing exposure to a gold-hedged
U.S. large-cap portfolio using a quantitative, rules-based strategy.
The Fund will invest at least 80% of its assets (plus the amount of any
borrowings for investment purposes) in (i) U.S. exchange-listed large-
cap U.S. stocks; (ii) gold futures, (iii) exchange-traded funds
(``ETFs'') \9\ and exchange-traded closed-end funds (together with
ETFs, the ``Underlying Funds'') that provide exposure to large-cap U.S.
stocks, (iv) ETFs or exchange-traded notes (``ETNs'') \10\ that provide
exposure to gold, and (v) futures that provide exposure to the S&P
500[supreg] Index. The Fund will not invest in non-U.S. stocks.
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    \9\ For purposes of this filing, ETFs include Investment Company
Units (as described in NYSE Arca Equities Rule 5.2(j)(3)); Portfolio
Depository Receipts (as described in NYSE Arca Equities Rule 8.100);
and Managed Fund Shares (as described in NYSE Arca Equities Rule
8.600). The Underlying Funds in which a Fund will invest all will be
listed and traded on national securities exchanges. While the Funds
may invest in inverse ETFs, the Funds will not invest in leveraged
(e.g., 2X, -2X, 3X or -3X) ETFs.
    \10\ ETNs, which will be listed on a national securities
exchange, are securities such as those described in NYSE Arca
Equities Rule 5.2(j)(6). While the Funds may invest in inverse ETNs,
the Funds will not invest in leveraged (e.g., 2X, -2X, 3X or -3X)
ETNs.
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    The Fund will seek to achieve a similar level of volatility as that
of the S&P Benchmark, although there is no assurance it will do so.
    According to the Registration Statement, the S&P Benchmark seeks to
reflect the returns of a portfolio of S&P 500[supreg] stocks, hedged
with a long gold futures overlay. Specifically, the S&P Benchmark
measures the total return performance of a hypothetical portfolio
consisting of securities that compose the S&P 500[supreg] Index, which
measures the performance of the large-capitalization sector of the U.S.
equity market, and a long position in gold futures contracts, the
notional value of which is comparable to the value of the S&P
Benchmark's equity component.
    The Sub-Adviser will continuously monitor the Fund's holdings in
order to enhance performance while still providing approximately equal
notional exposure to equity securities and gold futures contracts.
    According to the Registration Statement, futures contracts, by
their terms, have stated expirations and, at a specified point in time
prior to expiration, trading in a futures contract for the current
delivery month will cease. Therefore, in order to maintain exposure to
gold futures contracts, the S&P Benchmark must periodically migrate out
of gold futures contracts nearing expiration and into gold futures
contracts that have longer remaining until expiration, a process
referred to as ``rolling.'' The impact from this continuous process of
selling expiring contracts and buying longer-dated contracts is called
roll yield. The S&P Benchmark rolls these futures contracts according
to a predefined schedule, regardless of the liquidity or roll yield of
the futures contract selected.
    The Fund will look to minimize the impact of rolling futures
contracts in a number of ways. For example, the Fund may roll positions
in gold futures contracts before or after the scheduled roll dates for
the S&P Benchmark, to the extent of favorable market prices and
available liquidity. Additionally, the Fund may attempt to minimize
roll costs (and maximize yields) by rolling into the gold futures
contract with the largest positive or smallest negative roll yield.
This strategy for taking long positions in and unwinding exposure to
gold futures contracts may cause the Fund to have more or less exposure
to gold futures contracts than the S&P Benchmark. Additionally, the
Fund is not obligated to rebalance its exposures at the same time that
the S&P Benchmark rebalances its exposures, and the Fund may rebalance
more or less frequently than the S&P Benchmark in order to ensure that
the Fund's exposure to equities remains comparable to the Fund's
exposure to the price of gold.
    The Fund will not directly hold gold futures contracts or other
commodity-linked instruments (namely, commodity-related pooled vehicles
(as described below) and options on commodity futures). Rather, the
Fund expects to gain exposure to these instruments by investing up to
25% of its total assets, as measured at the end of every quarter of the
Fund's taxable year, in a wholly-owned and controlled Cayman Islands
subsidiary (the ``Subsidiary''). The Subsidiary will be advised by the
Adviser and the Fund's investment in the Subsidiary will primarily be
intended to provide the Fund primarily with exposure to the price of
gold. The Fund's investment in the Subsidiary is expected to provide
the Fund with an effective means of obtaining exposure to the
commodities markets in a manner consistent with U.S. federal tax law
requirements applicable to registered investment companies.

The REX Gold Hedged FTSE Emerging Markets ETF--Principal Investments

    According to the Registration Statement, the REX Gold Hedged FTSE
Emerging Markets ETF (the ``Fund'') will seek to outperform the total
return performance of the FTSE Emerging Gold Overlay Index (the ``FTSE
Benchmark'') by actively hedging a portfolio of emerging markets
securities using gold futures.
    The Fund will seek to achieve its investment objective of
outperforming the FTSE Benchmark by providing exposure to a gold-hedged
emerging markets portfolio using a quantitative, rules-based strategy.
The Fund will invest at least 80% of its assets (plus the amount of any
borrowings for investment purposes) in (i) equity securities of
emerging markets companies, as such companies are classified by the
FTSE Benchmark

(``Emerging Markets Securities'') \11\, (ii) gold futures, (iii) ETFs
and exchange-traded closed-end funds (together with ETFs, the
``Underlying Funds''), American Depository Receipts (``ADRs'') \12\,
Global Depository Receipts (``GDRs'', American Depositary Shares
(``ADS''), European Depositary Receipts (``EDRs''), International
Depository Receipts (``IDRs'', and together with ADRs, GDRs and ADS,
``Depositary Receipts'') that provide exposure to Emerging Markets
Securities, (iv) ETFs \13\ or ETNs \14\ that provide exposure to gold,
and (v) futures that provide exposure to Emerging Markets Securities.
The Fund will seek to achieve a similar level of volatility as that of
the FTSE Benchmark, although there is no assurance it will do so. The
FTSE Benchmark classifies a market as an emerging market based on a
number of considerations related to the strength of the economy and the
strength of capital market systems. The FTSE Benchmark classifies a
company as being an emerging markets company based on a number of
factors related to incorporation, listing, governance and operations of
the company.
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    \11\ The non-U.S. equity securities in the Fund's portfolio will
meet the following criteria at time of purchase: (1) Non-U.S. equity
securities each shall have a minimum market value of at least $100
million; (2) non-U.S. equity securities each shall have a minimum
global monthly trading volume of 250,000 shares, or minimum global
notional volume traded per month of $25,000,000, averaged over the
last six months; (3) the most heavily weighted non-U.S. equity
security shall not exceed 25% of the weight of the Fund's entire
portfolio, and, to the extent applicable, the five most heavily
weighted non-U.S. equity securities shall not exceed 60% of the
weight of the Fund's entire portfolio; and (4) each non-U.S. equity
security shall be listed and traded on an exchange that has last-
sale reporting. For purposes of this filing, the term ``non-U.S.
equity securities'' includes the following (each as referenced
below): common stocks and preferred securities of foreign
corporations; warrants; convertible securities; master limited
partnerships (``MLPs''); rights; and ``Depositary Receipts'' (as
defined below, excluding Depositary Receipts that are registered
under the Act).
    \12\ According to the Registration Statement, ADRs are receipts
typically issued by United States banks and trust companies which
evidence ownership of underlying securities issued by a foreign
corporation. Generally, ADRs in registered form are designed for use
in domestic securities markets and are traded on exchanges or over-
the-counter in the United States. American Depositary Shares (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. GDRs, EDRs, 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. Non-exchange-listed ADRs will not exceed 10%
of the Fund's net assets.
    \13\ See note 9, supra.
    \14\ See note 10, supra.
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    The FTSE Benchmark seeks to reflect the returns of a portfolio of
Emerging Markets Securities, hedged with a long gold futures overlay.
Specifically, the FTSE Benchmark measures the total return performance
of a hypothetical portfolio consisting of Emerging Markets Securities
and a long position in gold futures, the notional value of which is
comparable to the value of the FTSE Benchmark's equity component.
    The Sub-Adviser will continuously monitor the Fund's holdings in
order to enhance performance while still providing approximately equal
notional exposure to equity securities and gold futures contracts.
    According to the Registration Statement, futures contracts, by
their terms, have stated expirations and, at a specified point in time
prior to expiration, trading in a futures contract for the current
delivery month will cease. Therefore, in order to maintain exposure to
gold futures contracts, the FTSE Benchmark must periodically migrate
out of gold futures contracts nearing expiration and into gold futures
contracts that have longer remaining until expiration, a process
referred to as ``rolling.'' The impact from this continuous process of
selling expiring contracts and buying longer-dated contracts is called
roll yield. The FTSE Benchmark rolls these futures contracts according
to a predefined schedule, regardless of the liquidity or roll yield of
the futures contract selected.
    The Fund will look to minimize the impact of rolling futures
contracts in a number of ways. For example, the Fund may roll positions
in gold futures contracts before or after the scheduled roll dates for
the FTSE Benchmark, to the extent of favorable market prices and
available liquidity. Additionally, the Fund may attempt to minimize
roll costs (and maximize yields) by rolling into the gold futures
contract with the largest positive or smallest negative roll yield.
This strategy for taking long positions in and unwinding exposure to
gold futures contracts may cause the Fund to have more or less exposure
to gold futures contracts than the FTSE Benchmark. Additionally, the
Fund is not obligated to rebalance its exposures at the same time that
the FTSE Benchmark rebalances its exposures, and the Fund may rebalance
more or less frequently than the FTSE Benchmark in order to ensure that
the Fund's exposure to equities remains comparable to the Fund's
exposure to the price of gold.
    The Fund will not directly hold gold futures contracts or other
commodity-linked instruments (namely, commodity-related pooled vehicles
(as described below) and options on commodity futures). Rather, the
Fund expects to gain exposure to these instruments by investing up to
25% of its total assets, as measured at the end of every quarter of the
Fund's taxable year, in a wholly-owned and controlled Cayman Islands
subsidiary (the ``Subsidiary''). The Subsidiary will be advised by the
Adviser and the Fund's investment in the Subsidiary will primarily be
intended to provide the Fund with exposure to the price of gold. The
Fund's investment in the Subsidiary is expected to provide the Fund
with an effective means of obtaining exposure to the commodities
markets in a manner consistent with U.S. federal tax law requirements
applicable to registered investment companies.

Other Investments

    While each Fund will invest at least 80% of its net assets in the
securities and financial instruments described above, a Fund may invest
its remaining assets in the securities and financial instruments
described below.
    In addition to the exchange-traded equity securities described
above for the Funds, the Funds may invest in the following exchange-
traded equity securities: exchange-traded common stock (other than
large-cap U.S. stocks or Emerging Markets Securities, respectively, for
the respective Funds); exchange-traded preferred stock (other than
preferred stock referred to above with respect to the REX Gold Hedged
S&P 500 ETF), warrants, MLPs, rights, and convertible securities.
    The Funds may invest in restricted (Rule 144A) securities.
    In addition to the futures transactions described above under
``Principal Investments'' of a Fund, the Funds may engage in other
index, commodity and currency futures transactions and may engage in
exchange-traded options transactions on such futures. The Funds may use
futures contracts and related options for bona fide hedging; attempting
to offset changes in the value of securities held or expected to be
acquired or be disposed of; attempting to gain exposure to a particular
market, index, or instrument; or other risk management purposes.
    The Funds may purchase and write (sell) exchange-traded and OTC put
and call options on securities, securities indices and currencies. A
Fund may

purchase put and call options on securities to protect against a
decline in the market value of the securities in its portfolio or to
anticipate an increase in the market value of securities that a Fund
may seek to purchase in the future.
    Each Fund will also invest in money market mutual funds, cash and
cash equivalents \15\ to collateralize its exposure to futures
contracts and for investment purposes.
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    \15\ For purposes of this filing, cash equivalents include
short-term instruments (instruments with maturities of less than 3
months) of the following types: (i) U.S. Government securities,
including bills, notes and bonds differing as to maturity and rates
of interest, which are either issued or guaranteed by the U.S.
Treasury or by U.S. Government agencies or instrumentalities; (ii)
certificates of deposit issued against funds deposited in a bank or
savings and loan association; (iii) bankers' acceptances, which are
short-term credit instruments used to finance commercial
transactions; (iv) repurchase agreements and reverse repurchase
agreements; (v) bank time deposits, which are monies kept on deposit
with banks or savings and loan associations for a stated period of
time at a fixed rate of interest; (vi) commercial paper, which are
short-term unsecured promissory notes; and (vii) money market funds.
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    In addition to the securities and financial instruments described
under ``Principal Investments'' above for each Fund, each Fund may
invest in the securities of pooled vehicles that are not investment
companies and, thus, not required to comply with the provisions of the
1940 Act. These pooled vehicles typically hold currency or commodities,
such as gold or oil, or other property that is itself not a
security.\16\
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    \16\ For purposes of the filing, pooled vehicles will mean:
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); Commodity Index Trust Shares (as described in
NYSE Arca Equities Rule 8.203); and Trust Units (as described in
NYSE Arca Equities Rule 8.500).
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    Each Fund may enter into repurchase agreements with financial
institutions, which may be deemed to be loans.
    Each Fund may enter into reverse repurchase agreements as part of a
Fund's investment strategy.
    In addition, the Funds may invest in the following fixed income
instruments (``Fixed Income Instruments''): U.S. government securities,
namely, U.S. Treasury obligations \17\, U.S. government agency
securities and U.S. Treasury zero-coupon bonds.
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    \17\ U.S. Treasury obligations consist of bills, notes and bonds
issued by the U.S. Treasury and separately traded interest and
principal component parts of such obligations that are transferable
through the federal book-entry system known as Separately Traded
Registered Interest and Principal Securities (``STRIPS'') and
Treasury Receipts.
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    The Funds will invest in the securities of other investment
companies, including the Underlying Funds, to the extent that such an
investment would be consistent with the requirements of Section
12(d)(1) of the 1940 Act, or any rule, regulation or order of the
Commission or interpretation thereof.

Investment in the Subsidiaries

    According to the Registration Statement, each Fund will achieve
commodities exposure through investment in a Subsidiary. Such
investment may not exceed 25% of a Fund's total assets, as measured at
the end of every quarter of a Fund's taxable year. Each Subsidiary will
invest in derivatives, including commodity and equity futures contracts
and commodity-linked instruments, and other investments (cash, cash
equivalents and Fixed Income Instruments with less than one year to
maturity) intended to serve as margin or collateral or otherwise
support the Subsidiary's derivatives positions. Unlike a Fund, the
Subsidiary may invest without limitation in commodity futures and may
use leveraged investment techniques. The Subsidiaries otherwise are
subject to the same general investment policies and restrictions as the
Funds.
    According to the Registration Statement, the Subsidiaries are not
registered under the 1940 Act. As an investor in its Subsidiary, each
Fund, as the Subsidiary's sole shareholder, would not have the
protections offered to investors in registered investment companies.
However, because a Fund would wholly own and control the Subsidiary,
and a Fund and Subsidiary would be managed by the Adviser, it is
unlikely that the Subsidiary would take action contrary to the
interests of a Fund or a Fund's shareholders. A Fund's Board of
Trustees has oversight responsibility for the investment activities of
the Funds, including their investments in its respective Subsidiary,
and each Fund's role as the sole shareholder of its Subsidiary. Also,
in managing a Subsidiary's portfolio, the Adviser and Sub-Adviser would
be subject to the same investment restrictions and operational
guidelines that apply to the management of a Fund.

Investment Restrictions

    Each Fund will concentrate its investments (i.e., hold 25% or more
of its total assets) in a particular industry or group of industries to
approximately the same extent that the respective benchmark
concentrates in an industry or group of industries.\18\
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    \18\ The Commission has taken the position that a fund is
concentrated if it invests more than 25% of the value of its total
assets in any one industry. See, e.g., Investment Company Act
Release No. 9011 (October 30, 1975), 40 FR 54241 (November 21, 1975.
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    Each Fund will be classified as a non-diversified investment
company under the 1940 Act. A ``non-diversified'' classification means
that a Fund is not limited by the 1940 Act with regard to the
percentage of their assets that may be invested in the securities of a
single issuer.\19\
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    \19\ The diversification standard is set forth in Section
5(b)(1) of the 1940 Act.
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    The Adviser will not take defensive positions in the Funds'
portfolios during periods of adverse market, economic, political, or
other conditions as the Adviser intends for each Fund to remain fully
invested consistent with its investment strategy under all market
conditions.
    Each Fund may invest 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,\20\
consistent with Commission guidance. Each 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 a Fund's net assets are
invested 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.\21\
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    \20\ In reaching liquidity decisions, the Adviser may consider
the following factors: The frequency of trades and quotes for the
security; the number of dealers wishing to purchase or sell the
security and the number of other potential purchasers; dealer
undertakings to make a market in the security; and the nature of the
security and the nature of the marketplace in which it trades (e.g.,
the time needed to dispose of the security, the method of soliciting
offers and the mechanics of transfer).
    \21\ The Commission has stated that long-standing Commission
guidelines have required open-end funds to hold no more than 15% of
their net assets in illiquid securities and other illiquid assets.
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR
14618 (March 18, 2008), footnote 34. See also, Investment Company
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31,
1970) (Statement Regarding ``Restricted Securities''); Investment
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio
security is illiquid if it cannot be disposed of in the ordinary
course of business within seven days at approximately the value
ascribed to it by the fund. See Investment Company Act Release No.
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990)
(adopting Rule 144A under the Securities Act of 1933).

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    According to the Registration Statement, each Fund will seek to
qualify for treatment as a Regulated Investment Company (``RIC'') under
the Internal Revenue Code.\22\
---------------------------------------------------------------------------

    \22\ 26 U.S.C. 851.
---------------------------------------------------------------------------

    With respect to the REX Gold Hedged FTSE Emerging Markets ETF, the
non-U.S. equity securities in such Fund's portfolio will meet the
following criteria at time of purchase \23\: (1) Non-U.S. equity
securities each shall have a minimum market value of at least $100
million; (2) non-U.S. equity securities each shall have a minimum
global monthly trading volume of 250,000 shares, or minimum global
notional volume traded per month of $25,000,000, averaged over the last
six months; (3) the most heavily weighted non-U.S. equity security
shall not exceed 25% of the weight of the Fund's entire portfolio, and,
to the extent applicable, the five most heavily weighted non-U.S.
equity securities shall not exceed 60% of the weight of the Fund's
entire portfolio; and (4) each non-U.S. equity security shall be listed
and traded on an exchange that has last-sale reporting.
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    \23\ These criteria are similar to certain ``generic'' listing
criteria in NYSE Arca Equities Rule 5.2(j)(3), Commentary .01(a)(B),
which relate to criteria applicable to an index or portfolio of U.S.
and non-U.S. stocks underlying a series of Investment Company Units
to be listed and traded on the Exchange pursuant to Rule 19b-4(e)
under the Act.
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    According to the Registration Statement, the Funds are subject to
regulation under the Commodity Exchange Act and CFTC rules as commodity
pools. The Adviser is registered as a commodity pool operator, and the
Funds will be operated in accordance with CFTC rules.
    Each Fund's investments will be consistent with its investment
objective and will not be used to enhance leverage. While a Fund may
invest in inverse ETFs and ETNs, a Fund will not invest in leveraged
(e.g., 2X, -2X, 3X or -3X) ETFs and ETNs.

Creation of Shares

    According to the Registration Statement, the Trust will issue and
sell shares of each Fund only in Creation Units of at least 50,000
Shares each on a continuous basis through the Distributor, at their NAV
next determined after receipt, on any business day of an order received
in proper form.
    The consideration for purchase of a Creation Unit of a Fund
generally will consist of an in-kind deposit of a designated portfolio
of securities--the ``Deposit Securities''--per each Creation Unit
constituting a substantial replication, or a representation, of the
securities included in a Fund's portfolio 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
the market value of the Deposit Securities. If the Cash Component is a
positive number (i.e., the NAV per Creation Unit exceeds the market
value of the Deposit Securities), the Cash Component shall be such
positive amount. If the Cash Component is a negative number (i.e., the
NAV per Creation Unit is less than the market value of the Deposit
Securities), the Cash Component shall be such negative amount and the
creator will be entitled to receive cash from a Fund in an amount equal
to the Cash Component. The Cash Component serves the function of
compensating for any differences between the NAV per Creation Unit and
the market value of the Deposit Securities.
    The Administrator, through the National Securities Clearing
Corporation (``NSCC''), will make available on each business day,
immediately prior to the opening of business on the Exchange (currently
9:30 a.m., Eastern Time), 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 each Fund.
    The Trust reserves the right to permit or require the substitution
of an amount of cash--i.e., 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 which may not be
eligible for transfer, or which may not be eligible for trading by an
Authorized Participant (as defined below) or the investor for which it
is acting. The Trust also reserves the right to offer an ``all cash''
option for creations of Creation Units for each Fund.\24\
---------------------------------------------------------------------------

    \24\ 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.
---------------------------------------------------------------------------

    In addition to the list of names and numbers of securities
constituting the current Deposit Securities of a Fund Deposit, the
Administrator, 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
each Fund.
    To be eligible to place orders with the Distributor to create a
Creation Unit of a Fund, an entity must be (i) a ``Participating
Party,'' i.e., a broker-dealer or other participant in the clearing
process through the Continuous Net Settlement System of the NSCC, a
clearing agency that is registered with the Commission; or (ii) a
Depository Trust Company (``DTC'') Participant, and, in each case, must
have executed an agreement with the Trust, the Distributor and the
Administrator with respect to creations and redemptions of Creation
Units (``Participant Agreement''). A Participating Party and DTC
Participant are collectively referred to as an ``Authorized
Participant.''
    All orders to create or redeem Creation Units must be placed for
one or more Creation Unit size aggregations of at least 50,000 Shares
and must be received by the Distributor no later than 3:00 p.m.,
Eastern Time, an hour earlier than the close of the regular trading
session on the Exchange (ordinarily 4:00 p.m., Eastern Time) (``Closing
Time''), in each case on the date such order is placed in order for the
creation of Creation Units to be effected based on the NAV of Shares of
each Fund as next determined on such date after receipt of the order in
proper form.
    If permitted by the Adviser or Sub-Adviser in its sole discretion
with respect to a Fund, an Authorized Participant may also agree to
enter into or arrange for an exchange of a futures contract for a
related position (``EFCRP'') or block trade with the relevant Fund or
its Subsidiary whereby the Authorized Participant would also transfer
to such Fund a number and type of exchange-traded futures contracts at
or near the closing settlement price for such contracts on the purchase
order date. Similarly, the Sub-Adviser in its sole discretion may agree
with an Authorized Participant to use an EFCRP or block trade to effect
an order to redeem Creation Units.\25\
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    \25\ According to the Registration Statement, an EFCRP is a
technique permitted by the rules of certain futures exchanges that,
as utilized by a Fund in the Sub-Adviser's discretion, would allow
such Fund or its Subsidiary to take a position in a futures contract
from an Authorized Participant, or give futures contracts to an
Authorized Participant, in the case of a redemption, rather than to
enter the futures exchange markets to obtain such a position. An
EFCRP by itself will not change either party's net risk position
materially. Because the futures position that a Fund would otherwise
need to take in order to meet its investment objective can be
obtained without unnecessarily impacting the financial or futures
markets or their pricing, EFCRPs can generally be viewed as
transactions beneficial to a Fund. A block trade is a technique that
permits certain funds to obtain a futures position without going
through the market auction system and can generally be viewed as a
transaction beneficial to such funds.

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

Redemption of Shares

    Shares may be redeemed only in Creation Units at their NAV next
determined after receipt of a redemption request in proper form by a
Fund through the Administrator and only on a business day. The Trust
will not redeem Shares in amounts less than Creation Units. Beneficial
owners must accumulate enough Shares in the secondary market to
constitute a Creation Unit in order to have such Shares redeemed by the
Trust.
    With respect to the Funds, the Administrator, through the NSCC,
will make available immediately prior to the opening of business on the
Exchange (currently 9:30 a.m., Eastern Time) on each business day, the
``Fund Securities'' that will be applicable (subject to possible
amendment or correction) to redemption requests received in proper form
on that day. Fund Securities received on redemption may not be
identical to Deposit Securities which are applicable to creations of
Creation Units.
    Unless cash redemptions are available or specified for a Fund, the
redemption proceeds for a Creation Unit generally will consist of Fund
Securities, as announced by the Administrator on the business day of
the request for redemption received in proper form, plus cash in an
amount equal to the difference between the NAV of the Shares being
redeemed, as next determined after receipt of a request in proper form,
and the value of the Fund Securities (the ``Cash Redemption Amount''),
less a redemption transaction fee. In the event that the Fund
Securities have a value greater than the NAV of the Shares, a
compensating cash payment equal to the differential will be required to
be made by or through an Authorized Participant by the redeeming
shareholder.
    If it is not possible to effect deliveries of the Fund Securities,
the Trust may in its discretion exercise its option to redeem such
shares in cash, and the redeeming ``Beneficial Owner'' will be required
to receive its redemption proceeds in cash. In addition, an investor
may request a redemption in cash which a Fund may, in its sole
discretion, permit. In either case, the investor will receive a cash
payment equal to the NAV of its Shares based on the NAV of Shares of a
Fund next determined after the redemption request is received in proper
form (minus a redemption transaction fee and additional charge for
requested cash redemptions, to offset the Trust's brokerage and other
transaction costs associated with the disposition of Fund Securities).
Each Fund may also, in its sole discretion, upon request of a
shareholder, provide such redeemer a portfolio of securities which
differs from the exact composition of the Fund Securities but does not
differ in NAV.
    The right of redemption may be suspended or the date of payment
postponed with respect to a Fund (1) for any period during which the
Exchange 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 a Fund or determination of
the Shares' NAV is not reasonably practicable; or (4) in such other
circumstance as is permitted by the Commission.

Net Asset Value

    The NAV per Share of each Fund will be computed by dividing the
value of the net assets of a Fund (i.e., the value of its total assets
less total liabilities) by the total number of Shares of a Fund
outstanding, rounded to the nearest cent. Expenses and fees, including
without limitation, the management, administration and distribution
fees, will be accrued daily and taken into account for purposes of
determining NAV per Share. The NAV per Share for each Fund will be
calculated by the Administrator and determined as of the close of the
regular trading session on the Exchange (ordinarily 4:00 p.m., Eastern
Time) on each day that such exchange is open.
    In computing a Fund's NAV, a Fund's securities holdings will be
valued based on their last readily available market price. Price
information on exchange-listed securities, including common stocks,
preferred stocks, warrants, convertible securities, MLPs, rights,
commodity-linked instruments (as described above), Underlying Funds,
ETNs, Depositary Receipts and pooled vehicles in which a Fund invests,
will be taken from the exchange where the security is primarily traded.
Other portfolio securities and assets for which market quotations are
not readily available or determined to not represent the current fair
value will be valued based on fair value as determined in good faith by
the Sub-Adviser in accordance with procedures adopted by the Board.
    Futures contracts and exchange-traded options on futures will be
valued at the settlement or closing price determined by the applicable
exchange. Exchange-traded options contracts will be valued at their
most recent sale price. OTC options normally will be valued on the
basis of quotes obtained from a third-party broker-dealer who makes
markets in such securities or on the basis of quotes obtained from a
third-party pricing service.
    Cash and cash equivalents may be valued at market values, as
furnished by recognized dealers in such securities or assets. Cash
equivalents also may be valued on the basis of information furnished by
an independent pricing service that uses a valuation matrix which
incorporates both dealer-supplied valuations and electronic data
processing techniques.
    Fixed Income Instruments, Rule 144A securities, repurchase
agreements and reverse repurchase agreements will generally be valued
at bid prices received from independent pricing services as of the
announced closing time for trading in fixed-income instruments in the
respective market. Shares of money market mutual funds held by each
Fund will be valued at their respective NAVs.

Availability of Information

    The Funds' Web site, which will be publicly available prior to the
public offering of Shares, will include a form of the prospectus for
the Funds that may be downloaded. The Funds' Web site will include
additional quantitative information updated on a daily basis,
including, for each 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''),\26\ and
a calculation of the premium or 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
Funds' Web site will disclose the Disclosed Portfolio that will form
the basis for each Fund's calculation of NAV at the end of the business
day.\27\
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    \26\ The Bid/Ask Price of Shares of each 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 a Fund's NAV. The records
relating to Bid/Ask Prices will be retained by a Fund and its
service providers.
    \27\ Under accounting procedures followed by the Funds, trades
made on the prior business day (``T'') will be booked and reflected
in NAV on the current business day (``T+1''). Accordingly, the Funds
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.

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

    On a daily basis, the Funds will disclose on the Funds' Web site
the following information regarding each portfolio holding of a Fund
and its respective Subsidiary, 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); 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 a Fund's portfolio. The Web site
information will be publicly available at no charge.
    In addition, a basket composition file (i.e., the Deposit
Securities), which includes the security names and share quantities (as
applicable) 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 New York Stock Exchange
via the NSCC. The basket will represent one Creation Unit of a Fund.
    Investors will also be able to obtain the Trust's Statement of
Additional Information (``SAI''), a Fund's Shareholder Reports, and its
Form N-CSR and Form N-SAR, filed twice a year. The Trust's SAI and
Shareholder Reports will be available free upon request from the Trust,
and those documents and the Form N-CSR and Form N-SAR may be viewed on-
screen or downloaded from the Commission's Web site at www.sec.gov.
Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers. Quotation and last sale information for the
Shares, Underlying Funds, ETNs and other U.S. exchange-traded equities,
will be available via the Consolidated Tape Association (``CTA'') high-
speed line, and, for equity securities that are U.S. exchange-listed,
will be available from the national securities exchange on which they
are listed. With respect to non-U.S. exchange-listed equity securities,
intra-day, closing and settlement prices of common stocks and other
equity securities (including shares of preferred securities, and non-
U.S. Depositary Receipts), will be available from the foreign exchanges
on which such securities trade as well as from major market data
vendors. Price information for money market funds will be available
from the investment company's Web site and from market data vendors.
Price information relating to money market mutual funds, cash, cash
equivalents, futures, options, options on futures, Depositary Receipts,
Rule 144A securities, repurchase agreements, reverse repurchase
agreements, the S&P Benchmark and the FTSE Benchmark will be available
from major market data vendors. Information relating to futures and
exchange-traded options on futures also will be available from the
exchange on which such instruments are traded. Information relating to
U.S. exchange-traded options will be available via the Options Price
Reporting Authority. Pricing information regarding each asset class in
which a Fund will invest will generally be available through nationally
recognized data service providers through subscription agreements.
    In addition, the Portfolio Indicative Value, as defined in NYSE
Arca Equities Rule 8.600(c)(3), will be widely disseminated at least
every 15 seconds during the Core Trading Session by one or more major
market data vendors.\28\ The dissemination of the Portfolio Indicative
Value, together with the Disclosed Portfolio, will allow investors to
determine the value of the underlying portfolio of each Fund on a daily
basis and will provide a close estimate of that value throughout the
trading day.
---------------------------------------------------------------------------

    \28\ 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 Funds.\29\ Trading in Shares of the Funds
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 Funds;
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 Funds may be
halted.
---------------------------------------------------------------------------

    \29\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------

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. Eastern Time in
accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late
Trading Sessions). The Exchange has appropriate rules to facilitate
transactions in the Shares during all trading sessions. As provided in
NYSE Arca Equities Rule 7.6, 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 of each Fund will conform to the initial and continued
listing criteria under NYSE Arca Equities Rule 8.600. Consistent with
NYSE Arca Equities Rule 8.600(d)(2)(B)(ii), the Adviser, as the
``Reporting Authority'', will implement and maintain, or be subject to,
procedures designed to prevent the use and dissemination of material
non-public information regarding the actual components of a Fund's
portfolio. The Exchange represents that, for initial and/or continued
listing, each Fund will be in compliance with Rule 10A-3 \30\ under the
Act, as provided by NYSE Arca Equities Rule 5.3. A minimum of 100,000
Shares of each Fund will be outstanding at the commencement of trading
on the Exchange. The Exchange will obtain a representation from the
issuer of the Shares of each Fund that the NAV per Share will be
calculated daily and that the NAV and the Disclosed Portfolio as
defined in NYSE Arca Equities Rule 8.600(c)(2) will be made available
to all market participants at the same time.
---------------------------------------------------------------------------

    \30\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Surveillance

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

behalf of the Exchange, which are designed to detect violations of
Exchange rules and applicable federal securities laws.\31\ The Exchange
represents that these procedures are adequate to properly monitor
Exchange trading of the Shares in all trading sessions and to deter and
detect violations of Exchange rules and applicable federal securities
laws.
---------------------------------------------------------------------------

    \31\ FINRA surveils certain trading activity 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.
    The regulatory staff of the Exchange or FINRA, on behalf of the
Exchange, will communicate as needed regarding trading in the Shares,
certain exchange-listed equity securities, certain futures, certain
options on futures, and certain exchange-traded options with other
markets and other entities that are members of the Intermarket
Surveillance Group (``ISG''), and FINRA, on behalf of the Exchange, may
obtain trading information regarding trading such securities and
financial instruments from such markets and other entities. In
addition, the regulatory staff of the Exchange may obtain information
regarding trading in such securities and financial instruments from
markets and other entities that are members of ISG or with which the
Exchange has in place a comprehensive surveillance sharing
agreement.\32\ FINRA, on behalf of the Exchange, is able to access, as
needed, trade information for certain fixed income securities held by a
Fund reported to FINRA's Trade Reporting and Compliance Engine
(``TRACE'').
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    \32\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Disclosed Portfolio for a Fund may trade on markets that are members
of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.
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    Not more than 10% of the net assets of a Fund in the aggregate
invested in futures contracts or options contracts shall consist of
futures contracts or 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 Unit
aggregations (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 Funds will be
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. Eastern Time each trading day.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \33\ 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.
---------------------------------------------------------------------------

    \33\ 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. Trading in the Shares will be subject to the existing trading
surveillances, administered by the regulatory staff of the Exchange or
FINRA on behalf of the Exchange, which are designed to detect
violations of Exchange rules and applicable federal securities laws.
The regulatory staff of the Exchange or FINRA, on behalf of the
Exchange, will communicate as needed regarding trading in the Shares,
certain exchange-listed equity securities, certain futures, certain
options on futures, and certain exchange-traded options with other
markets and other entities that are members of the ISG, and FINRA, on
behalf of the Exchange, may obtain trading information regarding
trading such securities and financial instruments from such markets and
other entities. In addition, the Exchange may obtain information
regarding trading in such securities and financial instruments from
markets and other entities that are members of ISG or with which the
Exchange has in place a comprehensive surveillance sharing agreement.
    With respect to the Rex Gold Hedged FTSE Emerging Markets ETF, the
non-U.S. equity securities in the Fund's portfolio will meet the
following criteria at time of purchase: (1) Non-U.S. equity securities
each shall have a minimum market value of at least $100 million; (2)
non-U.S. equity securities each shall have a minimum global monthly
trading volume of 250,000 shares, or minimum global notional volume
traded per month of $25,000,000, averaged over the last six months; (3)
the most heavily weighted non-U.S. equity security shall not exceed 25%
of the weight of the Fund's entire portfolio, and, to the extent
applicable, the five most heavily weighted non-U.S. equity securities
shall not exceed 60% of the weight of the Fund's entire portfolio; and
(4) each non-U.S. equity security shall be listed and traded on an
exchange that has last-sale reporting.
    Not more than 10% of the net assets of a Fund in the aggregate
invested in futures contracts or options contracts shall consist of
futures contracts or 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. Each Fund's investments
will be consistent with its investment objective and will not be used
to enhance leverage. While a Fund may invest in inverse ETFs and ETNs,
a Fund will not invest in leveraged (e.g., 2X, -2X, 3X or -3X) ETFs and
ETNs.
    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 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. In addition, a
large amount of information will be publicly available regarding the
Funds and the Shares, thereby promoting market transparency.
    Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers. Quotation and last sale information for the
Shares, Underlying Funds and other U.S. exchange-traded equities, will
be available via the CTA high-speed line, and, for equity securities
that are U.S. exchange-listed, will be available from the national
securities exchange on which they are listed. Price information for
money market funds will be available from the investment company's Web
site and from market data vendors. Price information relating to money
market mutual funds, cash, cash equivalents, futures, options, options
on futures, Depositary Receipts, Rule 144A securities, repurchase
agreements, reverse repurchase agreements, the S&P Benchmark and the
FTSE Benchmark will be available from major market data vendors.
Information relating to futures and exchange-traded options on futures
also will be available from the exchange on which such instruments are
traded. Information relating to U.S. exchange-traded options will be
available via the Options Price Reporting Authority. Pricing
information regarding each asset class in which a Fund will invest will
generally be available through nationally recognized data service
providers through subscription agreements.
    In addition, the Portfolio Indicative Value will be widely
disseminated by the Exchange at least every 15 seconds during the Core
Trading Session. The Funds' Web site will include a form of the
prospectus for the Funds that may be downloaded, as well as additional
quantitative information updated on a daily basis. On each business
day, before commencement of trading in Shares in the Core Trading
Session on the Exchange, the Funds' Web site will disclose the
Disclosed Portfolio that will form the basis for each Fund's
calculation of NAV at the end of the business day.
    On a daily basis, the Funds will disclose on the Funds' 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); 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 a Fund's
portfolio. 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 Funds will be halted if
the circuit breaker parameters in NYSE Arca Equities Rule 7.12 have
been reached or because of market conditions or for reasons that, in
the view of the Exchange, make trading in the Shares inadvisable.
Trading in the Shares will be subject to NYSE Arca Equities Rule
8.600(d)(2)(D), which sets forth circumstances under which Shares of a
Fund may be halted. In addition, as noted above, investors will have
ready access to information regarding the Funds' 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
additional types of actively-managed exchange-traded products that will
enhance competition among market participants, to the benefit of
investors and the marketplace. In addition, as noted above, investors
will have ready access to information regarding the Funds' 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
additional types of actively-managed exchange-traded products based on
the price of gold and other financial instruments that 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-2015-107 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2015-107. 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-2015-107 and should
be submitted on or before January 20, 2016.
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    \34\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
Brent J. Fields,
Secretary.
[FR Doc. 2015-32821 Filed 12-29-15; 8:45 am]
 BILLING CODE 8011-01-P