Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to reflect a change to the means of achieving the investment objective, and the size of a Creation Unit (as described below) applicable to, the Accuvest Global Long Short ETF (“Fund”) (formerly known as the Mars Hill Global Relative Value ETF). The text of the proposed rule change is available on the Exchange's Web site at
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 Commission has approved listing and trading on the Exchange of shares (“Shares”) of the Mars Hill Global Relative Value ETF, a series of AdvisorShares Trust (“Trust”),
The investment adviser to the Fund is AdvisorShares Investments, LLC (“Adviser”). On December 1, 2011, the sub-adviser to the Fund changed from Mars Hill Partners, LLC to Accuvest Global Advisors LLC (“Accuvest” or “Sub-Adviser”), and the name of the Fund changed to the Accuvest Global Long Short ETF. Shareholders of the Fund were notified of the change to the Sub-Adviser and the name of the Fund in an amendment to the Registration Statement on Form N–1A on December 1, 2011. The Adviser and Sub-Adviser are not affiliated with a broker-dealer.
In this proposed rule change, the Exchange proposes to reflect a change in the Registration Statement to the description of the measures the Sub-Adviser will utilize to implement the Fund's investment objective.
The Adviser seeks to make the following changes to representations made in the Prior Release:
(1) According to the Prior Release, the Sub-Adviser seeks to achieve the Fund's investment objective by taking long positions in the Underlying ETFs that invest in what it believes to be the most relatively attractive global regions and countries within those regions, and by establishing an equivalent dollar amount of short positions in the Underlying ETFs that invest in what it believes to be the most relatively unattractive global regions and countries within those regions. The Registration Statement was amended to state that the Sub-Adviser seeks to achieve the Fund's investment objective by taking long positions in the Underlying ETFs that invest in what it believes to be the most relatively attractive global regions and countries within those regions, and by taking short positions, by entering into short sales, in the Underlying ETFs that invest in what it believes to be the most relatively unattractive global regions and countries within those regions. Thus, the Sub-Adviser no longer would take into account the dollar equivalency of the short positions. The purpose of this change is to provide additional flexibility to the Sub-Adviser to meet the Fund's investment objective by altering the Fund's long positions based on the Sub-Adviser's assessment of the relative attractiveness or unattractiveness of global regions without having to establish dollar equivalency with the Fund's short positions, and
(2) According to the Prior Release, by maintaining a core portfolio construction of equal long and short dollar exposure, the Sub-Adviser seeks to minimize the influence of directional trends and market exposure (“beta”), and seeks to profit from the relative performance between long and short positions in global regions, countries, styles, or sectors. The Prior Release also stated that, from time-to-time, the Sub-Adviser may also add directional exposure of up to 50% net long or net short exposure on top of its core long/short portfolio, and that, in doing so, the Sub-Adviser seeks to generate additional profits for the Fund by being net long when stock markets are rising and net short when markets are falling.
In eliminating the equivalent position requirement, as described in (1) above, under this proposal the Sub-Adviser would no longer seek to minimize the influence of directional trends and beta. In addition, the representation in the preceding paragraph was revised in the Registration Statement to state that, in establishing the long and short positions referenced above, the Fund seeks to profit from the relative performance between the long and short positions in global regions, countries, styles, or sectors. From time to time, the Fund may have directional exposure to seek to profit by being net long when stock markets are rising and net short when markets are falling. The purpose of this change is to provide additional flexibility to the Sub-Adviser to meet the Fund's investment objective by focusing on the relative performance between long and short positions in global regions, countries, styles, or sectors, rather than equal long and short dollar exposure. The Sub-Adviser also could establish added directional exposure of any amount based on the Sub-Adviser's market assessment, and, without the 50% net long or net short exposure limitation, in order to maximize potential returns, in furtherance of the Fund's investment objective.
The Adviser represents that, while the Fund's investment objective is being slightly revised, the Adviser believes the investment objective is not changing in a significant way because (1) the Fund will continue to aim to achieve average annual returns in excess of the total return of the Index; (2) the Fund will continue to take long and short positions in the securities in which it invests, but the revised representations will provide additional flexibility to the Sub-Adviser to meet the Fund's stated investment objective by focusing on the relative performance between long and short positions in global regions, countries, styles, or sectors, rather than equal long and short dollar exposure or limited added directional exposure; and (3) the Fund will continue to assess the most relatively attractive or unattractive global regions and countries within those regions, respectively, but the
Except for the changes noted above, all other representations made in the Prior Release remain unchanged, including representations regarding implementation of “fire walls” by any additional Fund advisers and sub-advisers affiliated with a broker-dealer, and Underlying ETFs in which the Fund invests. The Fund will continue to comply with all initial and continued listing requirements under NYSE Arca Equities Rule 8.600. All terms referenced but not defined herein are defined in the Prior Release.
The basis under the Act
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will continue to be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Equities Rule 8.600. The Index, which is referenced in the Fund's investment objective, is a global, broad-based index of large capitalization companies. The Fund invests in Underlying ETFs that are primarily index-based ETFs that hold substantially all of their assets in securities representing a specific index. The Underlying ETFs in which the Fund invests will be traded on a U.S. national securities exchange. Except for Underlying ETFs that may hold non-U.S. issues, the Fund will not otherwise invest in non-U.S.-registered issues. The Fund will continue to comply with all initial and continued listing requirements under NYSE Arca Equities Rule 8.600.
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 Adviser represents that, while the investment objective of the Fund is being slightly revised, it is not changing in a significant way. The Adviser represents that the purpose of the change relating to establishing long and short positions without reference to a dollar equivalency requirement is to provide additional flexibility to the Sub-Adviser to meet the Fund's investment objective by focusing on the relative performance between long and short positions in global regions, countries, styles, or sectors, rather than equal long and short dollar exposure or limited added directional exposure.
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 the Fund invests in Underlying ETFs that are primarily index-based ETFs that hold substantially all of their assets in securities representing a specific index. The Underlying ETFs in which the Fund invests are traded on a U.S. national securities exchange. The additional flexibility afforded to the Adviser and Sub-Adviser under the proposed change will permit the Adviser and Sub-Adviser to better achieve provide [sic] the Fund's objective to achieve average annual returns in excess of the total return of the MSCI World Index. Such added flexibility also will provide a better opportunity for the Fund to maximize potential return for investors based primarily on the Adviser's and Sub-Adviser's assessment of the most relatively attractive or unattractive global regions and countries within those regions, respectively. Except for the changes noted above, all other representations made in the Prior Release remain unchanged.
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.
No written comments were solicited or received with respect to the proposed rule change.
Because the foregoing proposed rule does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, provided that the self-regulatory organization has given the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change or such shorter time as designated by the Commission, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),
The Commission notes that, under the proposal, the Fund will continue to: (1) Aim to achieve average annual returns in excess of the total return of the Index;
For the foregoing reasons, the Commission believes that the proposed change does not raise novel or unique regulatory issues that should delay the implementation of the Fund's proposed changes. In addition, the Commission believes it is consistent with the protection of investors and the public interest to waive the 30-day operative delay, as a waiver would allow the Advisor and Sub-Advisor the flexibility to invest in ways they believe will result in greater returns for investors, with the goal of achieving average annual returns in excess of the total return of the Index, without undue delay.
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.