[Federal Register: March 18, 2010 (Volume 75, Number 52)]
[Notices]
[Page 13181-13185]
[DOCID:fr18mr10-114]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61689; File No. SR-NYSEArca-2010-12]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Relating to Listing of the One Fund Under NYSE
Arca Equities Rule 8.600

March 11, 2010.
    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 March 2, 2010, 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 the following under NYSE
Arca Equities Rule 8.600 (``Managed Fund Shares''): One Fund, a series
of the U.S. One Trust. The text of the proposed rule change is
available at the Exchange, the

Commission's Public Reference Room, and http://www.nyx.com.

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 the following Managed Fund
Shares \4\ (``Shares'') under NYSE Arca Equities Rule 8.600: One Fund
(the ``Fund''), a series of the U.S. One Trust (the ``Trust'').\5\ The
Fund is a ``fund of funds,'' which means that the Fund seeks to achieve
its investment objective by investing primarily in the retail shares of
other exchange-traded funds that are registered under Investment
Company Act of 1940 (``1940 Act'') (``Underlying ETFs'').\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) (``1940 Act'') organized as an
open-end investment company or similar entity that invests in a
portfolio of securities selected by its investment advisor
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 approved NYSE Arca Equities Rule 8.600 and
the listing and trading of certain funds of the PowerShares Actively
Managed Funds Trust on the Exchange pursuant to Rule 8.600 in
Securities Exchange Act Release No. 57619 (April 4, 2008) 73 FR
19544 (April 10, 2008) (SR-NYSEArca-2008-25). The Commission also
previously approved listing and trading on the Exchange, or trading
on the Exchange pursuant to unlisted trading privileges (``UTP'') of
the following actively managed funds under Rule 8.600: Securities
Exchange Act Release Nos. 57626 (April 4, 2008), 73 FR 19923 (April
11, 2008) (SR-NYSEArca-2008-28) (order approving trading pursuant to
UTP of Bear Stearns Active ETF); 57801 (May 8, 2008), 73 FR 27878
(May 14, 2008) (SR-NYSEArca-2008-31) (order approving listing of
twelve actively-managed funds of the WisdomTree Trust); 59826 (April
28, 2009), 74 FR 20512 (May 4, 2009) (SR-NYSEArca-2009-22) (order
approving listing t [sic] of Grail American Beacon Large Cap Value
ETF); 60460 (August 7, 2009), 74 FR 41468 (August 17, 2009) (SR-
NYSEArca-2009-55) (order approving listing of Dent Tactical ETF);
60717 (September 24, 2009), 74 FR 50853 (October 1, 2009) (SR-
NYSEArca-2009-74 (order approving listing of four Grail Advisors RP
ETFs); 60981 (November 10, 2009) (SR-NYSEArca-2009-79) (order
approving listing of five fixed income funds of the PIMCO ETF
Trust); 60975 (November 10, 2009) (SR-NYSEArca-2009-83) (order
approving listing of Grail American Beacon International Equity
ETF); 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).
    \6\ The Trust is registered under the 1940 Act. On February 5,
2010, the Trust filed with the Commission Amendment No. 2 to Form N-
1A under the Securities Act of 1933 (15 U.S.C. 77a), and under the
1940 Act relating to the Fund (File Nos. 333-160877 and 811-22320)
(``Registration Statement''). The description of the operation of
the Trust and the Fund herein is based on the Registration
Statement.
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    U.S. One, Inc. (the ``Adviser'') is the adviser for the Fund.\7\
The Adviser is not affiliated with a broker-dealer.\8\ If the Adviser
becomes affiliated with a broker-dealer, the Adviser would be required
to comply with the ``fire wall'' provisions contained in Commentary .07
to NYSE Arca Equities Rule 8.600. PNC Global Investment Servicing, Inc.
serves as the custodian, transfer agent and administrator for the Fund.
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    \7\ The Exchange represents that the Adviser, as the investment
adviser of the Fund, and its related personnel, are subject to
Investment Advisers Act Rule 204A-1. This Rule specifically requires
the adoption of a code of ethics by an investment advisor to
include, at a minimum: (i) Standards of business conduct that
reflect the firm's/personnel fiduciary obligations; (ii) provisions
requiring supervised persons to comply with applicable federal
securities laws; (iii) provisions that require all access persons to
report, and the firm to review, their personal securities
transactions and holdings periodically as specifically set forth in
Rule 204A-1; (iv) provisions requiring supervised persons to report
any violations of the code of ethics promptly to the chief
compliance officer (``CCO'') or, provided the CCO also receives
reports of all violations, to other persons designated in the code
of ethics; and (v) provisions requiring the investment advisor to
provide each of the supervised persons with a copy of the code of
ethics with an acknowledgement by said supervised persons. 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 advisor 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.
    \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 investment adviser is subject to the
provisions of Rule 204A-1 under the Advisers Act relating to codes
of ethics. This Rule requires investment advisers to adopt a code of
ethics that reflects the fiduciary nature of the relationship to
clients as well as compliance with other applicable securities laws.
Accordingly, procedures designed to prevent the communication and
misuse of non-public information by an investment adviser must be
consistent with Rule 204A-1 under the Advisers Act.
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    According to the Registration Statement, the Fund's investment
objective is to seek long-term capital appreciation. In pursuing its
investment objective, the Adviser will normally invest at least 80% of
its total assets in Underlying ETFs. The Adviser invests in Underlying
ETFs that track various securities indices comprised of large, mid and
small capitalization companies in the United States, Europe and Asia,
as well as other developed and emerging markets.
    The Adviser employs an asset allocation strategy focused on
increasing shareholder return and reducing risk through exposure to a
variety of domestic and foreign market segments. The Adviser's asset
allocation strategy pre-determines a target mix of investment types for
the Fund to achieve its investment objective and then implements the
strategy by selecting securities that best represent each of the
desired investment types. The strategy also calls for periodic review
of the Fund's holdings as markets rise and fall to ensure that the
portfolio adheres to the target mix and indicates purchases and sales
necessary to return to the target mix. The Fund may change its
investment objective without shareholder approval, upon 60 days' notice
to shareholders.
    The Adviser intends to hold Underlying ETFs that hold equity
securities of large, mid and small capitalization companies in the
United States, as well as other developed countries and developing
countries, and that give the Fund exposure to most major developed and
developing markets around the world. While the Fund intends to
primarily invest in Underlying ETFs that hold equity securities, the
Adviser may also invest in Underlying ETFs that may hold U.S. and
foreign government debt and investment grade corporate bonds. There is
no limit on the percentage of Fund assets that may be invested in
securities of foreign issuers, including in securities of emerging
market issuers, through Underlying ETFs.
    The Adviser selects Underlying ETFs based on their ability to
accurately represent the underlying stock market to which the Adviser
seeks exposure for the Fund, and seeks to construct a portfolio that
will outperform its benchmark, the S&P 500 Index. Additionally, the
Adviser seeks to maintain a low after-tax cost structure for the Fund
and, therefore, also evaluates ETFs based on their

underlying costs. The Adviser employs a buy and hold strategy, meaning
that it buys and holds securities for a long period of time, with
minimal portfolio turnover. The Fund, using a buy and hold strategy,
seeks to achieve its investment objective through investment in
Underlying ETFs that track certain securities indices.
    According to the Registration Statement, the Fund does not invest
in derivatives. The Underlying ETFs in which the Fund invests may, to a
limited extent, invest in dervatives; however, the Fund will not invest
in an Underlying ETF that uses derivatives as a principal investment
strategy.
    According to the Registration Statement, in addition to the
principal investments and strategies described in the Registration
Statement, the Fund may also, to a lesser extent, use other strategies,
and engage in other investment practices.
    The Fund generally will remain fully invested in the Underlying
ETFs. However, the Fund may, to a limited extent, also invest its other
assets in securities not included in the indices tracked by the
Underlying ETFs, but which the Adviser believes will help the Fund stay
fully invested and reduce transaction costs. As non-principal
strategies, the Fund may invest in debt and other equity securities,
cash and cash equivalents or other money market instruments, including
shares of money market mutual funds and repurchase agreements.
    The Fund or its Underlying ETFs may invest in repurchase agreements
with commercial banks, brokers or dealers to generate income from its
excess cash balances and to invest securities lending cash collateral.
The Fund and its Underlying ETFs may enter into reverse repurchase
agreements, which involve the sale of securities with an agreement to
repurchase the securities at an agreed-upon price, date and interest
payment and have the characteristics of borrowing. The Fund or the
Underlying ETFs may invest in short-term instruments, including money
market instruments, on an ongoing basis to provide liquidity or for
other reasons. The Fund or the Underlying ETFs may invest in short-term
instruments, including money market instruments, on an ongoing basis to
provide liquidity or for other reasons.
    Underlying ETFs 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. To the extent an
Underlying ETF uses futures and/or options on futures, it will do so in
accordance with Rule 4.5 under the Commodity Exchange Act (``CEA'').\9\
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    \9\ 7 U.S.C. 1.
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    Underlying ETFs may trade put and call options on securities,
securities indices and currencies; may enter into swap agreements,
including, but not limited to, equity index swaps and interest rate
swap agreements, in an attempt to gain exposure to the stocks making up
an index of securities in a market without actually purchasing those
stocks, or to hedge a position; may buy and sell stock index futures
contracts with respect to any stock index traded on a recognized stock
exchange or board of trade; may invest in complex securities such as
equity options, index options, repurchase agreements, foreign currency
contracts, hedges and swaps, and futures contracts; and may invest in
exchange-traded notes.
    According to the Registration Statement, the Fund may take
advantage of opportunities in other investments which are not presently
contemplated for use by the Fund or which are not currently available
but which may be developed, to the extent such opportunities are both
consistent with the Fund's investment objective and legally permissible
for the Fund. Before entering into such transactions or making any such
investment, the Fund will provide appropriate disclosure.
    The Trust has adopted the following investment restrictions as
fundamental policies with respect to the Fund. These restrictions
cannot be changed with respect to the Fund without the approval of the
holders of a majority of the Fund's outstanding voting securities.
Except with the approval of a majority of the outstanding voting
securities, the Fund may not:
    1. (a) With respect to 75% of its total assets, purchase securities
of any issuer (except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or shares of investment
companies) if, as a result, more than 5% of its total assets would be
invested in the securities of such issuer; or (b) acquire more than 10%
of the outstanding voting securities of any one issuer.\10\
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    \10\ This diversification standard is contained in Section
5(b)(1) of the 1940 Act (15 U.S.C. 80e).
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    2. Invest 25% or more of its total assets in the securities of one
or more issuers conducting their principal business activities in the
same industry or group of industries. This limitation does not apply to
investments in securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, or shares of investment companies.
For purposes of this restriction, the Fund will aggregate the portfolio
holdings of the Underlying ETFs so that the Fund will not have
indirectly invested more than 25% of its assets in a particular
industry or group of industries.
    In addition to the investment restrictions adopted as fundamental
policies set forth above, the Fund will not hold illiquid assets in
excess of 15% of its net assets.\11\ An illiquid asset is any asset
which may not be sold or disposed of in the ordinary course of business
within seven days at approximately the value at which the Fund has
valued the investment.
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    \11\ This restriction may be changed without a shareholder vote.
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    According to the Registration Statement, the Fund will seek to
qualify for treatment as a Regulated Investment Company (``RIC'') under
the Internal Revenue Code.\12\
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    \12\ According to the Registration Statement, one of several
requirements for RIC qualification is that a Fund must receive at
least 90% of the Fund's gross income each year from dividends,
interest, payments with respect to securities loans, gains from the
sale or other disposition of stock, securities or foreign
currencies, or other income derived with respect to the Fund's
investments in stock, securities, foreign currencies and net income
from an interest in a qualified publicly traded partnership (the
``90% Test''). A second requirement for qualification as a RIC is
that a Fund must diversify its holdings so that, at the end of each
fiscal quarter of the Fund's taxable year: (a) At least 50% of the
market value of the Fund's total assets is represented by cash and
cash items, U.S. Government securities, securities of other RICs,
and other securities, with these other securities limited, in
respect to any one issuer, to an amount not greater than 5% of the
value of the Fund's total assets or 10% of the outstanding voting
securities of such issuer; and (b) not more than 25% of the value of
its total assets are invested in the securities (other than U.S.
Government securities or securities of other RICs) of any one issuer
or two or more issuers which the Fund controls and which are engaged
in the same, similar, or related trades or businesses, or the
securities of one or more qualified publicly traded partnership (the
``Asset Test'').
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    Underlying ETFs will be listed and traded in the U.S. on a national
securities exchange. While the Underlying ETFs may hold non-U.S. equity
securities, the Fund will not invest in non-U.S. equity securities.
    The Fund offers and issues Shares at their net asset value
(``NAV'') only in aggregations of a specified number of Shares (each, a
``Creation Unit''). The Fund generally offers and issues Shares in
exchange for shares of specified Underlying ETFs (``Deposit
Securities'') together with the deposit of a specified cash payment
(``Cash Component''). The Trust reserves the right to permit or require
the substitution of a ``cash in

lieu'' amount to be added to the Cash Component to replace any Deposit
Security. The Shares are redeemable only in Creation Unit aggregations,
and generally in exchange for portfolio securities and a specified cash
payment. A Creation Unit of the Fund consists of 50,000 Shares.
    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 \13\ under the Exchange Act, as provided by
NYSE Arca Equities Rule 5.3. A minimum of 100,000 Shares will be
outstanding at the commencement of trading on the Exchange. The
Exchange will obtain a representation from the issuer of the Shares
that the net asset value and the Disclosed Portfolio will be made
available to all market participants at the same time.
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    \13\ 17 CFR 240.10A-3.
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    Availability of Information: The Fund's Web site (http://
www.onefund.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''),\14\ 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.\15\ The Web site
information will be publicly available at no charge.
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    \14\ The Bid/Ask Price of the Fund is determined using 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.
    \15\ Under accounting procedures followed by the Fund, trades
made on the prior business day (``T'') will be booked and reflected
in NAV on the current business day (``T+1''). Accordingly, the Fund
will be able to disclose at the beginning of the business day the
portfolio that will form the basis for the NAV calculation at the
end of the business day.
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    On a daily basis, the Advisor will disclose for each portfolio
security or other financial instrument of the Fund the following
information: ticker symbol (if applicable), name of security or
financial instrument, number of shares or dollar value of financial
instruments held in the portfolio, and percentage weighting of the
security or financial instrument in the portfolio.
    In addition, a basket composition file, which includes the security
names and share quantities required to be delivered in exchange for
Fund shares, together with estimates and actual cash components, will
be publicly disseminated daily prior to the opening of the New York
Stock Exchange (``NYSE'') via the National Securities Clearing
Corporation. The basket represents one Creation Unit of the Fund.
    The NAV of the Fund will normally be determined as of the close of
the regular trading session on the NYSE (ordinarily 4 p.m. Eastern
Time) on each business day.
    Investors can also obtain the Trust's Statement of Additional
Information (``SAI''), the Fund's Shareholder Reports, and its Form N-
CSR and Form N-SAR, filed twice a year. The Trust's SAI and Shareholder
Reports are available free upon request from the Trust, and those
documents and the Form N-CSR and Form N-SAR may be viewed on-screen or
downloaded from the Commission's Web site at http://www.sec.gov.
Information regarding market price and trading volume of the Shares is
and will be continually available on a real-time basis throughout the
day on brokers' computer screens and other electronic services.
Information regarding the previous day's closing price and trading
volume information will be published daily in the financial section of
newspapers. Quotation and last sale information for the Shares will be
available via the Consolidated Tape Association (``CTA'') high-speed
line. In addition, the Portfolio Indicative Value, as defined in NYSE
Arca Equities Rule 8.600 (c)(3), will be updated and disseminated by
one or more major market data vendors at least every 15 seconds during
the Core Trading Session. 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 to provide a close estimate of that value throughout the
trading day.
    Additional information regarding the Trust and the Shares,
including investment strategies, risks, creation and redemption
procedures, fees, portfolio holdings disclosure policies, distributions
and taxes is included in the Registration Statement. All terms relating
to the Fund that are referred to, but not defined in, this proposed
rule change are defined in the Registration Statement.
    Trading Halts: With respect to trading halts, the Exchange may
consider all relevant factors in exercising its discretion to halt or
suspend trading in the Shares of the Fund.\16\ 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
comprising the Disclosed Portfolio and/or the financial instruments of
the Fund; or (2) whether other unusual conditions or circumstances
detrimental to the maintenance of a fair and orderly market are
present. Trading in the Shares will be subject to NYSE Arca Equities
Rule 8.600(d)(2)(D), which sets forth circumstances under which Shares
of the Fund may be halted.
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    \16\ See NYSE Arca Equities Rule 7.12, Commentary .04.
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    Trading Rules: The Exchange deems the Shares to be equity
securities, thus rendering trading in the Shares subject to the
Exchange's existing rules governing the trading of equity securities.
Shares will trade on the NYSE Arca Marketplace from 4 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. The
minimum trading increment for Shares on the Exchange will be $0.01.
    Surveillance: The Exchange intends to utilize its existing
surveillance procedures applicable to derivative products (which
include Managed Fund Shares) to monitor trading in the Shares. The
Exchange represents that these procedures are adequate to properly
monitor Exchange trading of the Shares in all trading sessions and to
deter and detect violations of Exchange rules and applicable federal
securities laws.
    The Exchange's current trading surveillance focuses on detecting
securities trading outside their normal patterns. When such situations
are detected, surveillance analysis follows and investigations are
opened, where appropriate, to review the behavior of

all relevant parties for all relevant trading violations.
    The Exchange may obtain information via the Intermarket
Surveillance Group (``ISG'') from other exchanges that are members of
ISG.\17\
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    \17\ For a list of the current members of ISG, see http://
www.isgportal.org. The Exchange notes that not all components of the
Disclosed Portfolio for the Fund may trade on markets that are
members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.
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    In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
    Information Bulletin: Prior to the commencement of trading, the
Exchange will inform its Equity Trading Permit (``ETP'') Holders in an
Information Bulletin (``Bulletin'') of the special characteristics and
risks associated with trading the Shares. Specifically, the Bulletin
will discuss the following: (1) The procedures for purchases and
redemptions of Shares in Creation 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 ETP Holders to learn the
essential facts relating to every customer prior to trading the Shares;
(3) the risks involved in trading the Shares during the Opening and
Late Trading Sessions when an updated Portfolio Indicative Value will
not be calculated or publicly disseminated; (4) how information
regarding the Portfolio Indicative Value is disseminated; (5) the
requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; and (6) trading information.
    In addition, the Bulletin will reference that the Fund is subject
to various fees and expenses described in the Registration Statement.
The Bulletin will discuss any exemptive, no-action, and interpretive
relief granted by the Commission from any rules under the Exchange Act.
The Bulletin will also disclose that the NAV for the Shares will be
calculated after 4:00 p.m. Eastern Time each trading day.
2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is
the requirement under Section 6(b)(5) \18\ that an exchange have rules
that are designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest. The
Exchange believes that the proposed rule change 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.
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    \18\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

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

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

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

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
    The Exchange has requested accelerated approval of this proposed
rule change prior to the 30th day after the date of publication of
notice in the Federal Register. The Commission is considering granting
accelerated approval of the proposed rule change at the end of a 15-day
comment period.

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 e-mail to<EMAIL_ADDRESS>Please include
File Number SR-NYSEArca-2010-12 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2010-12. This
file number should be included on the subject line if e-mail 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 20549-1090 on official business days
between the hours of 10 a.m. and 3 p.m. Copies of the filing will also
be available for inspection and copying at the Exchange's principal
office and on its Internet Web site at http://www.nyse.com. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2010-12 and should
be submitted on or before April 2, 2010.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5912 Filed 3-17-10; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 235 (Wednesday, December 7, 2011)]
[Notices]
[Pages 76455-76457]
[FR Doc No: 2011-31414]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65866; File No. S7-24-89]

Joint Industry Plan; Notice of Filing and Immediate Effectiveness
of Amendment No. 26 to the Joint Self-Regulatory Organization Plan
Governing the Collection, Consolidation and Dissemination of Quotation
and Transaction Information for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading Privileges Basis Submitted by the BATS
Exchange, Inc., BATS Y-Exchange, Inc., Chicago Board Options Exchange,
Incorporated, Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX
Exchange, Inc., Financial Industry Regulatory Authority, Inc.,
International Securities Exchange LLC, NASDAQ OMX BX, Inc., NASDAQ OMX
PHLX LLC, Nasdaq Stock Market LLC, National Stock Exchange, Inc., New
York Stock Exchange LLC, NYSE Amex, Inc., and NYSE Arca, Inc.

 December 2, 2011.
    Pursuant to Rule 608 of the Securities Exchange Act of 1934 (the
``Act'') \1\ notice is hereby given that on November 11, 2011, the
operating committee (``Operating Committee'' or ``Committee'') \2\ of
the Joint Self-Regulatory Organization Plan Governing the Collection,
Consolidation, and Dissemination of Quotation and Transaction
Information for Nasdaq-Listed Securities Traded on Exchanges on an
Unlisted Trading Privilege Basis (``Nasdaq/UTP Plan'' or ``Plan'')
filed with the Securities and Exchange Commission (``Commission'') an
amendment to the Plan.\3\ This amendment represents Amendment No. 26
(``Amendment'') to the Plan and proposes to harmonize the price
structures among the U.S. national market system plans by replacing the
annual administrative fees that the Participants impose in respect of
real-time data with monthly access fees. Pursuant to Rule 608(b)(3)(i)
under the Act, the Participants designated the Amendment as
establishing or changing a fee or other charge collected on behalf of
all of the participants in connection with access to, or use of, the
facilities contemplated by the Amendment. As a result, the Amendment
has been put into effect upon filing with the Commission. At any time
within 60 days of the filing of the Amendment, the Commission may
summarily abrogate the Amendment and require that the Amendment be
refiled in accordance with paragraph (a)(1) of Rule 608 and reviewed in
accordance with paragraph (b)(2) of Rule 608, if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or the maintenance of fair
and orderly markets, to remove impediments to, and perfect the
mechanisms of, a national market system or otherwise in furtherance of
the purposes of the Act. The Commission is publishing this notice to
solicit comments from interested persons.
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    \1\ 17 CFR 242.608.
    \2\ The Plan Participants (collectively, ``Participants'') are
the: BATS Exchange, Inc. (``BATS''); BATS Y-Exchange, Inc.(``BATS
Y''); Chicago Board Options Exchange, Incorporated (``CBOE'');
Chicago Stock Exchange, Inc. (``CHX''); EDGA Exchange, Inc.
(``EDGA''); EDGX Exchange, Inc.(``EDGX''); Financial Industry
Regulatory Authority, Inc. (``FINRA''); International Securities
Exchange LLC (``ISE''); NASDAQ OMX BX, Inc. (``BX''); NASDAQ OMX
PHLX LLC (``PHLX''); Nasdaq Stock Market LLC (``Nasdaq''); National
Stock Exchange, Inc. (``NSX''); New York Stock Exchange LLC
(``NYSE''); NYSE Amex, Inc. (``NYSEAmex''); and NYSE Arca, Inc.
(``NYSEArca'').
    \3\ The Plan governs the collection, processing, and
dissemination on a consolidated basis of quotation information and
transaction reports in Eligible Securities for each of its
Participants. This consolidated information informs investors of the
current quotation and recent trade prices of Nasdaq securities. It
enables investors to ascertain from one data source the current
prices in all the markets trading Nasdaq securities. The Plan serves
as the required transaction reporting plan for its Participants,
which is a prerequisite for their trading Eligible Securities. See
Securities Exchange Act Release No. 55647 (April 19, 2007) 72 FR
20891 (April 26, 2007).
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I. Rule 608(a)

A. Purpose of the Amendments

    The Participants propose to harmonize the price structures among
the U.S. national market system plans by replacing the annual
administrative fees that the Participants impose in respect of real-
time data with monthly access fees. The proposed Nasdaq/UTP Plan access
fees are similar to those that the Network A and Network B Participants
impose under the CTA and CQ Plans and that the OPRA Participants impose
under the OPRA Plan.
    The Participants propose to establish the monthly fee for access to
UTP Level 1 real-time data feeds at $1,500 for direct access and at
$500 for indirect access.
    The Participants propose to impose the direct access fee on parties
that receive access to any one or more UTP Level 1 real-time data feeds
by means of a linkage or interface directly with the Plan's Securities
Information Processor (Nasdaq) via an extranet or other connection that
Nasdaq has approved. The Participants propose to impose the indirect
access fee on parties that receive ``indirect access'' to any one or
more UTP Level 1 real-time data feeds by means of a data feed service
that a third-party data feed provider makes available. Distributors
receiving access both directly and indirectly shall be liable only for
direct access fees.
    The references to ``data feeds'' would include the receipt of data
in an uncontrolled format. The data recipient is responsible for the
telecommunications facilities necessary to access data.
    Currently, the Participants impose the following annual
administrative fee on distributors for access to UTP Level 1 Service:

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

------------------------------------------------------------------------
Delayed distributor..........................................       $250
0-999 real-time terminals....................................        500
1,000-4,999 real-time terminals..............................      1,250
5,000-9,999 real-time terminals..............................      2,250
10,000+ real-time terminals..................................      3,750
------------------------------------------------------------------------

    The Participants propose to replace each of the real-time
administrative fees with the access fees. As a result, the Participants
propose to delete the real-time annual administrative fees from the fee
schedule. The $250 annual administrative fee that the Participants
impose on delayed distributors would remain in effect.
    The Participants project that replacing the annual administrative
fees with monthly access fees would increase annual revenues received
under the Nasdaq/UTP Plan approximately five percent for 2012.
    From an administrative perspective, the administrator under the
Nasdaq/UTP Plan would require parties with direct or indirect access to
UTP Level 1 real-time data feeds to enter into the same market data
agreements that they are required to enter into today.

B. Governing or Constituent Documents

    Not applicable.

C. Implementation of Amendment

    The Participants have manifested their approval of the proposed
Amendment by means of their execution of the Amendment. The
Participants propose to make the rate changes effective for calendar
year 2012.

D. Development and Implementation Phases

    Not applicable.

E. Analysis of Impact on Competition

    The proposed Amendment does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. The access fees amount to a competitive response to the access
fees that the

Participants in the CTA, CQ and OPRA Plans impose. The proposed monthly
access fees and the monthly access fees that currently apply under
those other national market system plans compare as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                Proposed under
                                              Network A         Network B           OPRA         NASDAQ/UTP Plan
----------------------------------------------------------------------------------------------------------------
Direct Access:
    Last Sale...........................            $1,000              $350  ................  ................
    Bid/Ask.............................             1,100               400  ................  ................
                                         -----------------------------------------------------------------------
        Total...........................             2,100               750         \4\ 2,500             1,500
----------------------------------------------------------------------------------------------------------------
Indirect Access:
    Last Sale...........................               500               200  ................  ................
    Bid/Ask.............................               700               250  ................  ................
                                         -----------------------------------------------------------------------
        Total...........................             1,200               450               600               500
----------------------------------------------------------------------------------------------------------------

    The Participants in the CTA and CQ Plans have imposed access fees
since the Commission declared the plans effective in the 1970s. Those
fees went unchanged from the rates initially adopted in the 1970s until
2009, when the Participants in those Plans raised them to the levels
indicated above. The CTA and CQ Plan Participants coupled raising those
fees with eliminating program classification charges, stating that the
net result would be approximately revenue neutral. In its approval
order,\5\ the Commission found that the replacement of the program
classification charges with the hike in the access fees is consistent
with Rule 608(b)(2) of the Act. It stated that:
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    \4\ The total OPRA Plan direct access fee of $2,500 consists of
a $1,000 monthly direct access fee and a $1,500 monthly
redistribution fee that OPRA imposes on vendors that distribute OPRA
data to any person, whether on a real-time or delayed basis.
    \5\ See Securities Exchange Act Release No. 61226 (December 22,
2009); 74 FR 68893 (December 29, 2009) (SR-CTA/CQ-2009-02).

    The Commission believes that eliminating program classification
charges and replacing them with separate fees for the receipt of
Network A and Network B market data are fair and reasonable and
provide for an equitable allocation of dues, fees, and other charges
among vendors, data recipients and other persons using CTA Network A
and Network B facilities.\6\
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    \6\ Id.

    The Participants believe that the same holds true for the Nasdaq/
UTP Plan's proposal. The proposed access fees compare favorably to
those currently imposed under the CTA, CQ and OPRA Plans, including
those approved by the Commission less than two years ago. The Nasdaq/
UTP Plan Participants do not impose the program classification charges
that the CTA and CQ Plan Participants eliminated. In addition to the
favorable comparability of the Nasdaq/UTP Plan Participants' proposed
access fees, the Plan's other charges also compare favorably to their
CTA, CQ and OPRA Plan counterparts. These include device charges,
charges for nonprofessional subscriber services, per-query fees, and
television ticker fees.
    In addition to the CTA, CQ and OPRA Plans, many individual
exchanges around the world impose access fees for the receipt of market
data feeds. On the other hand, few exchanges impose annual
administrative fees.
    As a result, this Amendment promotes consistency in price
structures among the national market system plans, as well as
consistency with the preponderance of other market data providers. It
would make access fees easier to administer and enable data recipients
to compare their charges under the respective national market system
plans more easily. It would make for a more straightforward and
streamlined administrative process for both the network administrator
and the vendors.
    Access fees allow those who gain access to the Plan's data feeds to
contribute an appropriate amount for their receipt of market data under
the Plan. They provide for an equitable allocation of dues, fees, and
other charges among data feed customers, end users and others receiving
and using market data made available under the Plan.
    The Participants propose to impose the access fees uniformly on all
vendors that receive UTP Level 1 real-time data in a data feed/
uncontrolled format (including members of the Participant markets and
non-members). The Participants do not believe that the proposed plan
Amendment introduces terms that are unreasonably discriminatory for the
purposes of Section 11A(c)(1)(D) of the Act.

F. Written Understanding or Agreements relating to Interpretation of,
or Participation in, Plan

    The Participants have no written understandings or agreements
relating to interpretation of the Plan as a result of the Amendment.

G. Approval by Sponsors in Accordance with Plan

    Each of the Plan's Participants has executed a written Amendment to
the Plan.

H. Description of Operation of Facility Contemplated by the Proposed
Amendment

    Not applicable.

I. Terms and Conditions of Access

    See Item A(1) above.

J. Method of Determination and Imposition, and Amount of, Fees and
Charges

    The Participants believe that the level of the access fee allows
vendors to contribute an appropriate amount for their receipt and use
of market data under the Plan. The access fees amount to a competitive
response to the access fees that the Participants in the CTA, CQ and
OPRA Plans impose.
    The Participants believe that the proposed access fees are fair and
reasonable and provide for an equitable allocation of dues, fees, and
other charges among vendors, data recipients and other persons using
the Participants' facilities.

K. Method and Frequency of Processor Evaluation

    Not applicable.

L. Dispute Resolution

    Not applicable.

II. Rule 601(a)

A. Reporting Requirements

    Not applicable.

B. Manner of Collecting, Processing, Sequencing, Making Available and
Disseminating Last Sale Information

    Not applicable.

C. Manner of Consolidation

    Not applicable.

D. Standards and Methods Ensuring Promptness, Accuracy and Completeness
of Transaction Reports

    Not applicable.

E. Rules and Procedures Addressed to Fraudulent or Manipulative
Dissemination

    Not applicable.

F. Terms of Access to Transaction Reports

    Not applicable.

G. Identification of Marketplace of Execution

    Not Applicable.

III. Solicitation of Comments

    The Commission seeks general comments on Amendment No. 26.
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposal 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 S7-24-89 on the subject line.

Paper Comments

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

All submissions should refer to File Number S7-24-89. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of
the submission, all written statements with respect to the proposed
Plan amendment that are filed with the Commission, and all written
communications relating to the proposed Plan amendment 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 on official business days between the hours of 10 a.m.
and 3 p.m. Copies of the filing also will be available for Web site
viewing and printing at the Office of the Secretary of the Committee,
currently located at the CBOE, 400 S. LaSalle Street, Chicago, IL
60605. 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 S7-24-
89 and should be submitted on or December 28, 2011.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(27).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-31414 Filed 12-6-11; 8:45 am]
BILLING CODE 8011-01-P