April 18, 2013.
On February 14, 2013, NYSE Arca, Inc. (“Exchange” or “NYSE Arca”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 
and Rule 19b-4 thereunder,
a proposed rule change to list and trade shares (“Shares”) of fourteen series of the iShares Trust (“Trust”). The proposed rule change was published for comment in the Federal Register on March 6, 2013.
The Commission received no comments on the proposal. On April 2, 2013, the Exchange filed Amendment No. 1 to the proposed rule change.
This order grants approval of the proposed rule change, as modified by Amendment No. 1 thereto.
II. Description of the Proposed Rule Change
The Exchange proposes to list and trade the Shares of the iShares Australian Dollar Cash Rate Fund; iShares British Pound Cash Rate Fund; iShares Canadian Dollar Cash Rate Start Printed Page 24277Fund; iShares Chinese Offshore Renminbi Cash Rate Fund; iShares Euro Cash Rate Fund; iShares Japanese Yen Cash Rate Fund; iShares Mexican Peso Cash Rate Fund; iShares New Zealand Dollar Cash Rate Fund; iShares Norwegian Krone Cash Rate Fund; iShares Singapore Dollar Cash Rate Fund; iShares Swedish Krona Cash Rate Fund; iShares Swiss Franc Cash Rate Fund; iShares Thai Offshore Baht Cash Rate Fund; and iShares Turkish Lira Cash Rate Fund (each, a “Fund” and, collectively, the “Funds”) under NYSE Arca Equities Rule 8.600, which governs the listing and trading of Managed Fund Shares on the Exchange. The Shares will be offered by iShares Trust, a statutory trust organized under the laws of Delaware and registered with the Securities and Exchange Commission as an open-end management investment company.
The investment adviser to the Funds will be BlackRock Fund Advisors (“Investment Adviser”), an indirect wholly-owned subsidiary of BlackRock, Inc. BlackRock Investments, LLC, an affiliate of the Investment Adviser, will serve as the distributor for the Funds. State Street Bank and Trust Company will serve as the administrator, custodian, and transfer agent for each Fund. According to the Exchange, the Investment Adviser is affiliated with multiple broker-dealers and has implemented a “fire wall” with respect to such broker-dealers regarding access to information concerning the composition and/or changes to the Funds' portfolio.
Summary of the Funds
Each Fund generally will seek to provide its shareholders a daily return that reflects: (i) The increase or decrease in the exchange rate of the foreign currency identified in its name (“FX Base Currency”) against the United States dollar; and (ii) the yield of the FX Base Currency, minus the Fund's fees and expenses. “Yield” refers to the yield an investor would expect to receive if they invested in an overnight or similar cash or cash equivalent investment denominated in the FX Base Currency. Each Fund also will seek to preserve liquidity, and maintain stability of principal and preserve capital, as measured in the FX Base Currency.
According to the Registration Statement, each Fund will be an actively managed exchange-traded fund that will seek to achieve its investment objective by investing, under normal circumstances,
substantially all of its assets in short-term securities denominated in United States dollars and a matching notional amount of spot foreign exchange contracts (generally required to be settled within two business days) to purchase the FX Base Currency (against delivery of the United States dollar). Under normal circumstances, there will be a 1:1 ratio between the fixed income securities and spot contracts. The strategy of combining investments in short-term fixed income securities and spot foreign exchange contracts is designed to provide financial exposure substantially similar to a purchase of the FX Base Currency, reflecting: (i) The increase or decrease in the exchange rate of the FX Base Currency against the United States dollar; and (ii) the yield of the FX Base Currency, minus the Fund's fees and expenses.
According to the Registration Statement, each Fund will invest in United States dollar denominated short-term debt securities of varying maturities and spot foreign exchange contracts in order to seek to replicate the daily return of the FX Base Currency. The short-term debt securities held by the each Fund generally will consist of high quality debt obligations and may include, but are not limited to, obligations issued by the U.S. government and its agencies and instrumentalities, U.S. municipal variable rate demand notes,
U.S. corporate and commercial debt instruments,
and bank notes and similar demand deposits. Each Fund's assets also may be invested in short-term debt instruments and bank notes and similar demand deposits denominated in the FX Base Currency from time to time when the Investment Adviser believes these debt securities may help the Fund achieve its investment objective. All short-term debt securities acquired by each Fund will be rated investment grade by at least one nationally recognized statistical rating organization (“NRSRO”) or, if unrated, deemed by the Investment Adviser to be of equivalent quality.
Each Fund may also invest its assets in money market funds (including funds that are managed by the Investment Adviser or one of its affiliates), cash, and cash equivalents. All money market securities acquired by each Fund will be rated investment grade. The Funds do not intend to invest in any unrated money market securities. However, a Fund may do so, to a limited extent, such as where a rated money market security becomes unrated, if such money market security is determined by the Investment Adviser to be of comparable quality.
According to the Registration Statement, each Fund generally will maintain a weighted average portfolio maturity of between 1 and 30 days and generally will be limited to investments with remaining maturities of 60 days or less. The Funds will not purchase any security with a remaining maturity of more than 397 calendar days.
According to the Registration Statement, generally, each spot foreign exchange contract entered into by each Fund will require such Fund to Start Printed Page 24278purchase from a foreign exchange dealer selected by the Investment Adviser, at a specified purchase price expressed in United States dollars, a specified amount of the FX Base Currency. Each Fund will enter into spot foreign exchange contracts only in the FX Base Currency and mainly for the purpose of taking long positions in the FX Base Currency. Because the spot foreign exchange contracts entered into by each Fund will be spot transactions and typically settle within two business days, in order to maintain exposure to the FX Base Currency, each Fund will continuously enter into new spot foreign exchange contracts by entering into two simultaneous trades.
The Funds will not enter into forward foreign exchange contracts. Each Fund is classified as “non-diversified.” 
In addition to the principal investments described above, each Fund will invest in other short-term instruments, including other money market instruments, on an ongoing basis to provide liquidity or for other reasons. While each Fund may invest in money market instruments as part of its principal investment strategies, the Investment Adviser expects that, under normal circumstances, each Fund also intends to invest in money market securities in a manner consistent with its investment objective in order to help manage cash flows in and out of the Fund, such as in connection with payment of dividends or expenses, and to satisfy margin requirements, or to provide collateral.
All money market securities acquired by the Funds will be rated investment grade. The Funds do not intend to invest in any unrated money market securities. However, a Fund may do so, to a limited extent, such as where a rated money market security becomes unrated, if such money market security is determined by the Investment Adviser to be of comparable quality.
Each Fund may hold up to 15% of its net assets in securities that are illiquid (calculated at the time of investment), including Rule 144A Securities. The aggregate value of all of a Fund's illiquid securities and Rule 144A Securities shall not exceed 15% of a Fund's total assets. 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 held in illiquid securities.
A Fund may not concentrate its investments (i.e., invest 25% or more of its total assets in the securities of a particular industry or industry group), provided that this restriction does not limit a Fund's: (i) Investments in its FX Base Currency; (ii) investments in securities of other investment companies; (iii) investments in securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities, certificates of deposit, and bankers' acceptances; (iv) investments in repurchase agreements collateralized by U.S. government securities; or (v) investments in U.S. municipal securities.
Each Fund intends to qualify as a regulated investment company under Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code. The Funds will not invest in any non-U.S registered equity securities and will not invest in options contracts, futures contracts, or swap agreements. Each Fund's investments will be consistent with the Fund's investment objective and will not be used to enhance leverage.
Additional information regarding the individual Funds (including additional details regarding the underlying FX Base Currencies and descriptions of the relevant FX Base Currency spot markets), investment strategies, risks, creation and redemption procedures, fees, portfolio holdings and disclosure policies, dissemination of key values, including NAV, and distributions, among other information, are included in the Notice and Registration Statement, as applicable.
III. Discussion and Commission's Findings
After careful review, the Commission finds that the proposed rule change is consistent with the requirements of Section 6 of the Act 
and the rules and regulations thereunder applicable to a national securities exchange.
In particular, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,
which requires, among other things, that the Exchange's rules be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission notes that the Shares of each Fund will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Equities Rule 8.600.
The Commission finds that the proposal to list and trade the Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the Act,
which sets forth Congress' finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for, and transactions in, securities. Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services, and quotation and last-sale information for the Shares will be available via the Consolidated Tape Association (“CTA”) high-speed line. In addition, intra-day, closing, and settlement prices or other Start Printed Page 24279values of the debt securities, fixed income instruments, and other investments held by the Funds are also generally readily available from the national securities exchanges trading such securities, automated quotation systems, published or other public sources, or on-line information services such as Bloomberg or Reuters. Foreign currency exchange rates are generally readily available from on-line information services such as Bloomberg or Reuters. Each Fund's Portfolio Indicative Value (“PIV”), as defined in NYSE Arca Equities Rule 8.600(c)(3), will be widely disseminated by one or more major market data vendors at least every 15 seconds during the Exchange's Core Trading Session.
On each business day, before commencement of trading in Shares in the Core Trading Session on the Exchange, the Funds will disclose on their Web site the Disclosed Portfolio, as defined in NYSE Arca Equities Rule 8.600(c)(2), that will form the basis for each Fund's calculation of NAV at the end of the business day.
The NAV for each Fund normally will be determined once daily Monday through Friday, generally as of the regularly scheduled close of business of the New York Stock Exchange (“NYSE”) (normally 4:00 p.m. E.T.), on each day that the NYSE is open for trading. The Web site for the Funds will include a form of the prospectus for the Fund and additional data relating to NAV and other applicable quantitative information. In addition, a basket composition file, which will include the security names and share quantities, if applicable, required to be delivered in exchange for a Fund's Shares, together with estimates and actual cash components, will be publicly disseminated daily prior to the opening of the NYSE via the National Securities Clearing Corporation.
The Commission further believes that the proposal to list and trade the Shares is reasonably designed to promote fair disclosure of information that may be necessary to price the Shares appropriately and to prevent trading when a reasonable degree of transparency cannot be assured. 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. Trading in Shares of the Fund will be halted if the circuit breaker parameters in NYSE Arca Equities Rule 7.12 have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable,
and trading in the Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), which sets forth additional circumstances under which Shares of the Fund may be halted. The Exchange states that it has a general policy prohibiting the distribution of material, non-public information by its employees. Consistent with NYSE Arca Equities Rule 8.600(d)(2)(B)(ii), the Reporting Authority must 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 the Funds' portfolios. The Investment Adviser has implemented a “fire wall” with respect to its affiliated broker-dealers regarding access to information concerning the composition and/or changes to each Fund's portfolio.
The Commission also notes that the Financial Industry Regulatory Authority (“FINRA”), on behalf of the Exchange,
will communicate as needed regarding trading in the Shares with other markets that are members of the Intermarket Surveillance Group (“ISG”) or with which the Exchange has in place a comprehensive surveillance sharing agreement. 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.
The Exchange represents that the Shares are deemed to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. In support of this proposal, the Exchange has made representations, including:
(1) The Shares will conform to the initial and continued listing criteria under NYSE Arca Equities Rule 8.600.
(2) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions.
(3) The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws and 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.
(4) 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. Specifically, the Information Bulletin will discuss the following: (a) The procedures for purchases and redemptions of Shares in aggregations equal to or greater than the relevant Fund's Minimum Subscription Size (and that Shares are not individually redeemable); (b) NYSE Start Printed Page 24280Arca 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; (c) the risks involved in trading the Shares during the Opening and Late Trading Sessions when an updated PIV will not be calculated or publicly disseminated; (d) how information regarding the PIV is disseminated; (e) 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 (f) trading information.
(5) For initial and/or continued listing, the Fund will be in compliance with Rule 10A-3 under the Act,
as provided by NYSE Arca Equities Rule 5.3.
(6) The Funds will not invest in any non-U.S registered equity securities. The Funds will not invest in options contracts, futures contracts, or swap agreements. Each Fund may hold up to 15% of its net assets in securities that are illiquid (calculated at the time of investment), including Rule 144A Securities. The aggregate value of all of a Fund's illiquid securities and Rule 144A Securities shall not exceed 15% of a Fund's total assets.
(7) All short-term debt and money market securities acquired by the Funds will be rated investment grade by at least one NRSRO or, if unrated, deemed by the Investment Adviser to be of equivalent quality. The Fund will invest only in corporate bonds that the Investment Adviser deems to be sufficiently liquid at time of investment. Generally a non-U.S. corporate bond must have $200 million (or an equivalent value if denominated in a currency other than United States dollars) or more par amount outstanding and significant par value traded to be considered as an eligible investment, and a U.S. corporate bond must have $100 million (or an equivalent value if denominated in a currency other than United States dollars) or more par amount outstanding and significant par value traded to be considered as an eligible investment. In addition, variable rate demand notes purchased by the Funds will be backed by a letter of credit provided by a highly rated bank or financial institution that meets credit standards deemed appropriate by the Investment Adviser. According to the Exchange, the Funds will purchase variable rate demand notes with hard one or seven-day put options, which will increase the liquidity profile within the Funds that hold them, since they can be converted to cash within one or seven days.
(8) Each Fund's investments will be consistent with such Fund's investment objective and will not be used to enhance leverage.
(9) A minimum of 100,000 Shares of each Fund will be outstanding at the commencement of trading on the Exchange.
This approval order is based on all of the Exchange's representations, including those set forth above and in the Notice, and the Exchange's description of the Funds.
For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendment No. 1 thereto, is consistent with Section 6(b)(5) of the Act 
and the rules and regulations thereunder applicable to a national securities exchange.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (SR-NYSEArca-2013-18), as modified by Amendment No. 1 thereto, be, and it hereby is, approved.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Kevin M. O'Neill,
[FR Doc. 2013-09626 Filed 4-23-13; 8:45 am]
BILLING CODE 8011-01-P