Order Granting a Limited Exemption from Rule 102 of Regulation M Concerning the NYSE Arca, Inc.'s Exchange Traded Product Incentive Program Pilot Pursuant to Regulation M Rule 102(e), 35330-35333 [2013-13887]
Download as PDF
<![CDATA[
35330
Federal Register / Vol. 78, No. 113 / Wednesday, June 12, 2013 / Notices
NUCLEAR REGULATORY
COMMISSION
[NRC–2012–0293]
Initial Test Programs for Water-Cooled
Nuclear Power Plants
Nuclear Regulatory
Commission.
ACTION: Regulatory guide; issuance.
mstockstill on DSK4VPTVN1PROD with NOTICES
AGENCY:
SUMMARY: The U.S. Nuclear Regulatory
Commission (NRC) is issuing a revision
to Regulatory Guide (RG), 1.68, ‘‘Initial
Test Programs for Water-Cooled Nuclear
Power Plants.’’ This guide describes the
general scope and depth that the staff of
the NRC considers acceptable for Initial
Test Programs (ITPs) for light water
cooled nuclear power plants.
ADDRESSES: Please refer to Docket ID
NRC–2012–0293 about the availability
of information regarding this document.
You may access information related to
this document, which the NRC
possesses and are publically available,
by using any of the following methods:
• Federal Rulemaking Web site: Go to
https://www.regulations.gov and search
for Docket ID NRC–2012–0293. Address
questions about NRC dockets to Carol
Gallagher; telephone: 301–492–3668;
email: Carol.Gallagher@nrc.gov. For
technical questions, contact the
individual(s) listed in the FOR FURTHER
INFORMATION CONTACT section of this
document.
• NRC’s Agencywide Documents
Access and Management System
(ADAMS): You may access publicly
available documents online in the NRC
Library at https://www.nrc.gov/readingrm/adams.html. To begin the search,
select ‘‘ADAMS Public Documents’’ and
then select ‘‘Begin Web-based ADAMS
Search.’’ For problems with ADAMS,
please contact the NRC’s Public
Document Room (PDR) reference staff at
1–800–397–4209, 301–415–4737, or by
email to pdr.resource@nrc.gov. The
ADAMS accession number for each
document referenced in this notice is
provided the first time that a document
is referenced. Revision 4 of Regulatory
Guide 1.68, is available in ADAMS
under Accession No. ML13051A027.
The regulatory analysis may be found in
ADAMS under Accession No.
ML13051A035.
• NRC’s PDR: You may examine and
purchase copies of public documents at
the NRC’s PDR, Room O1–F21, One
White Flint North, 11555 Rockville
Pike, Rockville, Maryland 20852.
Regulatory guides are not
copyrighted, and NRC approval is not
required to reproduce them.
FOR FURTHER INFORMATION CONTACT:
Mark Orr, Office of Nuclear Regulatory
VerDate Mar<15>2010
16:32 Jun 11, 2013
Jkt 229001
Research, U.S. Nuclear Regulatory
Commission, Washington, DC 20555–
0001; telephone: 301–251–7495 or
email: mark.orr@nrc.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
The NRC is issuing a revision to an
existing guide in the NRC’s ‘‘Regulatory
Guide’’ series. This series was
developed to describe and make
available to the public information such
as methods that are acceptable to the
NRC staff for implementing specific
parts of the NRC’s regulations,
techniques that the staff uses in
evaluating specific problems or
postulated accidents, and data that the
staff needs in its review of applications
for permits and licenses. This regulatory
guide is a rule as designated in the
Congressional Review Act (5 U.S.C.
801–808). However, the Office of
Management and Budget (OMB) has not
found it to be a major rule as designated
in the Congressional Review Act.
II. Further Information
This guide describes the general scope
and depth that the NRC staff considers
acceptable for ITPs for light water
cooled nuclear power plants. This RG is
being revised to address design
qualification tests for new design
certifications (DCs) and combined
licenses (COLs) using the requirements
in part 52 of Title 10 of the Code of
Federal Regulations (10 CFR),
‘‘Licenses, Certifications, and Approvals
for Nuclear Power Plants.’’ This RG is
also being revised to add some
preoperational, low-power and power
ascension tests for new light water
reactors (LWRs) licensed under 10 CFR
Part 52. In addition, this RG is being
revised to add new and updated
references.
The RG has 3 appendices. Appendix
A addresses the specific tests
recommended or required for the ITPs.
Appendix B provides information about
ITP-related inspections that the NRC
staff will perform, including the
appropriate regional office staff. Finally,
Appendix C contains guidance on the
preparation and content of procedures
for preoperational, fuel loading, initial
criticality, low power, and power
ascension tests.
III. Backfitting and Issue Finality
Issuance of this final regulatory guide
does not constitute backfitting as
defined in 10 CFR 50.109 (the Backfit
Rule) and is not otherwise inconsistent
with the issue finality provisions in 10
CFR Part 52. As discussed in the
‘‘Implementation’’ section of this
regulatory guide, the NRC has no
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
current intention to impose this
regulatory guide on holders of current
operating licenses or combined licenses.
This regulatory guide may be applied
to applications for operating licenses
and combined licenses docketed by the
NRC as of the date of issuance of the
final regulatory guide, as well as future
applications for operating licenses and
combined licenses submitted after the
issuance of the regulatory guide. Such
action does not constitute backfitting as
defined in 10 CRF 50.109(a)(1) or is
otherwise inconsistent with the
applicable issue finality provision in 10
CFR Part 52, inasmuch as such
applicants or potential applicants are
not within the scope of entities
protected by the Backfit Rule or the
relevant issue finality provisions in Part
52.
Dated at Rockville, Maryland, this 31st day
of May, 2013.
For the Nuclear Regulatory Commission.
Thomas H. Boyce,
Chief, Regulatory Guide Development Branch,
Division of Engineering, Office of Nuclear
Regulatory Research.
[FR Doc. 2013–13951 Filed 6–11–13; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69707]
Order Granting a Limited Exemption
from Rule 102 of Regulation M
Concerning the NYSE Arca, Inc.’s
Exchange Traded Product Incentive
Program Pilot Pursuant to
Regulation M Rule 102(e)
June 6, 2013.
The Securities and Exchange
Commission (‘‘Commission’’) approved
a proposed rule change of the NYSE
Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’)
to add new NYSE Arca Equities Rule
8.800 (‘‘New Rule 8.800’’) which
establishes the exchange-traded product
(‘‘ETP’’) Incentive Program (‘‘Incentive
Program’’ or ‘‘Program’’) effective on
one year on a pilot basis. The Incentive
Program is designed to incentivize
market makers to take Lead Market
Maker (‘‘LMM’’) assignments in certain
lower volume ETPs by offering an
alternative fee structure for such LMMs
that would be funded from the
Exchange’s general revenues. The costs
of the Incentive Program would be
funded by charging participating issuers
(which may be paid by sponsors on
behalf of the issuer) non-refundable
‘‘Optional Incentive Fees,’’ which
would be credited to LMMs from the
E:\FR\FM\12JNN1.SGM
12JNN1
Federal Register / Vol. 78, No. 113 / Wednesday, June 12, 2013 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
Exchange’s general revenues.1 The
Commission believes that payment of
the Optional Incentive Fee by the issuer
(or a sponsor on behalf of the issuer) for
the purpose of incentivizing market
makers to become LMMs in the issuer’s
securities would constitute an indirect
attempt by the issuer to induce a bid for
or a purchase of a covered security
during a restricted period.2 As a result,
absent exemptive relief, participation in
the Incentive Program by an issuer (or
sponsor on behalf of the issuer) would
violate Rule 102 of Regulation M.3 This
order grants a limited exemption from
Rule 102 of Regulation M solely to
permit issuers and sponsors to
participate in the Program during the
1 See Securities Exchange Act Release No. 69706
(June 6, 2013) (‘‘Approval Order’’). The Approval
Order contains a detailed description of the
Program. On March 21, 2013, the Exchange filed
with the Commission, pursuant to Section 19(b)(1)
of the Securities Exchange Act of 1934, as amended
(‘‘Act’’ or ‘‘Exchange Act’’) and Rule 19b–4
thereunder, a proposed rule change to establish the
Program. The proposed rule change, as modified by
Amendment No. 1 thereto, was published for
comment in the Federal Register on April 11, 2013.
Securities Exchange Act Release No. 69335 (Apr. 5,
2013), 78 FR 21681 (Apr. 11, 2013). The Approval
Order grants approval of the proposed rule change,
as modified by Amendments No. 1 and 2.
Previously, the Exchange filed, but later
withdrew, an initial proposed rule change to
establish the Program. On April 27, 2012, NYSE
Arca filed with the Commission, pursuant to
Section 19(b)(1) of the Exchange Act and Rule 19b–
4 thereunder, a proposed rule change to establish
the Program. The proposed rule change was
published for comment in the Federal Register on
May 17, 2012. Securities Exchange Act Release No.
66966 (May 11, 2012), 77 FR 29419 (May 17, 2012).
On June 20, 2012, the Commission extended the
time period in which to either approve the
proposed rule change, disapprove the proposed rule
change, or institute proceedings to determine
whether to disapprove the proposed rule change to
August 15, 2012. Securities Exchange Act Release
No. 67222 (June 20, 2012), 77 FR 38116 (June 26,
2012). On July 11, 2012, the Commission instituted
proceedings to determine whether to approve or
disapprove the proposed rule change. Securities
Exchange Act Release No. 67411 (July 11, 2012), 77
FR 42052 (July 17, 2012). On October 2, 2012, the
Commission issued a notice of designation of a
longer period for Commission action on
proceedings to determine whether to disapprove the
proposed rule change. Securities Exchange Act
Release No. 67962 (Oct. 2, 2012), 77 FR 61462 (Oct.
9, 2012). On January 9, 2013, the Exchange
withdrew the proposed rule change. Securities
Exchange Release No. 68616 (Jan. 10, 2013), 78 FR
3482 (Jan. 16, 2013).
2 See Securities Exchange Act Release No. 67411
(July 11, 2012), 77 FR 42052 (July 17, 2012) (stating
‘‘[t]he Commission believes that issuer payments
made under the SRO Proposals would constitute an
indirect attempt by the issuer of a covered security
to induce a purchase or bid in a covered security
during a restricted period in violation of Rule 102
. . . [u]nder the NYSE Arca Proposal, the purpose
of the Program is ‘to create a Incentive Program for
issuers of certain ETPs listed’ on NYSE Arca, which
. . . could induce bids or purchases for the issuer’s
security during a restricted period’’).
3 17 CFR 242.102.
VerDate Mar<15>2010
16:32 Jun 11, 2013
Jkt 229001
pilot, subject to certain conditions
described below.
NYSE Arca stated that the Incentive
Program is designed to incentivize
market makers to undertake LMM
assignments in ETPs.4 An issuer of an
ETP that participates in the Incentive
Program would elect to pay an
‘‘Optional Incentive Fee’’ to NYSE Arca
in an amount ranging from $10,000 to
$40,000 per year with the actual amount
to be determined by the issuer.5 The
Optional Incentive Fee is in addition to
the currently applicable listing and
annual fees applicable to the ETP and is
paid by the issuer to the Exchange’s
general revenues.6 Subject to the
requirements set forth in New Rule
8.800, a market maker accepting an
LMM assignment in an ETP in the
Incentive Program would receive a
payment quarterly from NYSE Arca
(‘‘LMM Payment’’) in an amount equal
to the Optional Incentive Fee, less a 5%
NYSE Arca administration fee.7 If the
LMM does not meet or exceed its
Incentive Program performance
standards for an assigned ETP for a
particular month or if the ETP is
withdrawn from the Program pursuant
to the rule, the LMM would not receive
a LMM Payment for that month.8 The
voluntary Program established by New
Rule 8.800 will be effective for one year
on a pilot basis.9
Under New Rule 8.800, NYSE Arca
will be required to provide notification
on its Web site regarding: (i) The ETPs
participating in the Incentive Program,
(ii) the date a particular ETP begins
participating in the Incentive Program,
(iii) the date the Exchange receives
written notice of an issuer’s intent to
withdraw its ETP from the Incentive
Program, and the intended withdrawal
date, if provided, (iv) the date a
particular ETP ceases participating in
the Incentive Program, (v) the LMM
assigned to each ETP participating in
the Incentive Program, (vi) the date the
Exchange receives written notice of an
LMM’s intent to withdraw from its ETP
assignment(s) in the Incentive Program,
and the intended withdrawal date, if
provided, and (vii) the amount of the
Optional Incentive Fee for each ETP.10
4 See
Approval Order.
5 Id.
6 Id. Under the current fee schedule for listings,
an issuer of an ETP is required to pay a listing fee
that ranges from $5,000 to $45,000. ETP issuers also
pay a graduated annual fee based on the number of
shares of the ETP that are outstanding, which
ranges $5,000 to $55,000. See Securities Exchange
Act Release No. 67411 (July 11, 2012), 77 FR 42052
(July 17, 2012).
7 Approval Order.
8 Id.
9 Preamble to New Rule 8.800.
10 New Rule 8.800(b)(6).
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
35331
This page would also include a fair and
balanced description of the Incentive
Program, including (i) a description of
the Incentive Program’s operation as a
pilot, including the effective date
thereof, (ii) the potential benefits that
may be realized by an ETP’s
participation in the Incentive Program,
(iii) the potential risks that may be
attendant with an ETP’s participation in
the Incentive Program, (iv) the potential
impact resulting from an ETP’s entry
into and exit from the Incentive
Program, and (v) how interested parties
can request additional information
regarding the Incentive Program and/or
the ETPs participating therein.11
Furthermore, an issuer that is approved
to participate in the Incentive Program
shall issue a press release to the public,
in a form and manner prescribed by the
Exchange, when it commences
participation or ceases to participate in
the Incentive Program.12 Such press
release would be issued, if practicable,
at least two days before the ETP
commences or ceases participation in
the Incentive Program.13 The issuer also
will be required to dedicate space on its
Web site, or, if it does not have a Web
site, on the Web site of the adviser or
sponsor of the ETP, to (i) include any
such press releases and (ii) provide a
hyperlink to the dedicated page on
NYSE Arca’s Web site that describes the
Program.14
The Approval Order notes
commenters’ general support of the
Program’s stated goal to increase
liquidity and promote efficient robust
markets for ETPs.15 However, certain
commenters expressed concerns about
the Program as originally proposed last
year,16 including the departure from
rules precluding market makers from
directly or indirectly accepting payment
from an issuer of a security for acting as
a market maker.17 In particular,
11 Id.
12 New
Rule 8.800(b)(7).
13 Id.
14 Id.
15 See
Approval Order Section II.
note 1, supra. Only two comments were
received when the proposal was re-filed with the
Commission, both of which were in favor of the
proposal. See Letter from John Hyland, CFA, Chief
Investment Officer, United States Commodity
Funds, dated April 10, 2013 and Letter from
Stanislav Dolgopolov, Assistant Adjunct Professor
and Lowell Milken Institute Law Teaching Fellow,
University of California, Los Angeles, dated April
26, 2013. The Commission believes, however, that
the concerns raised by commenters regarding the
original proposal still are relevant to the proposal
as re-filed with the Commission.
17 See, e.g., Letter from Gus Sauter, Managing
Director and Chief Investment Officer, Vanguard,
dated June 7, 2012 (citing to his comment letter
regarding the similar NASDAQ Market Quality
Program that included a discussion of NASD Notice
16 See
E:\FR\FM\12JNN1.SGM
Continued
12JNN1
35332
Federal Register / Vol. 78, No. 113 / Wednesday, June 12, 2013 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
commenters to that proposal discussed
the potential distortive impact on the
natural market forces of supply and
demand.18 Commenters also discussed
what they viewed as the failure of the
originally-proposed Program
requirements to adequately mitigate
potential negative impacts of that
proposal.19
One commenter stated that ‘‘[i]ssuer
payments to market makers have the
potential to distort market forces,
resulting in spreads and prices that do
not reflect actual supply and
demand.’’ 20 One commenter questioned
whether any safeguards could alleviate
their concerns regarding issuer
payments to market makers.21 Another
commenter questioned whether
information relating to the similar
NASDAQ Market Quality Program
posted to that exchange’s Web site in a
similar manner as required in New Rule
8.800(b)(6) by NYSE Arca would
adequately address investor protection
and market integrity concerns because
investors may not search an exchange
Web site for important information
about a particular ETP.22
to Members 75–16 regarding the reasons for
prohibiting issuer payments for market making:
‘‘The additional factor of payments by an issuer to
a market maker would probably be viewed as a
conflict of interest since it would undoubtedly
influence, to some degree, a firm’s decision to make
a market and thereafter, perhaps, the prices it
would quote. Hence, what might appear to be
independent trading activity may well be
illusory.’’). In addition, another commenter noted
‘‘that market maker incentive programs, such as the
[then-proposed Program], represent a departure
from the current rules precluding market makers
from accepting payment from an issuer of a security
for acting as a market marker’’ yet supported the
concept of market maker incentive programs on a
pilot basis. Letter from Ari Burstein, Investment
Company Institute (‘‘ICI’’), dated June 7, 2012. In a
subsequent letter, however, the same commenter
noted that certain of its members opposed the
Program as originally proposed and stated that it
‘‘could create a ‘pay-to-play’ environment.’’ Letter
from Ari Burstein, ICI, dated Aug. 16, 2012. The
Approval Order also notes that a number of aspects
of the Program mitigate the concerns that the rule
in question, FINRA Rule 5250 (Payments for Market
Making), were designed to address.
18 See, e.g., Letter from F. William McNabb,
Chairman and Chief Executive Officer, Vanguard,
dated Aug. 16, 2012.
19 See, e.g., Letter from Gus Sauter, Managing
Director and Chief Investment Officer, Vanguard,
dated June 7, 2012.
20 Letter from F. William McNabb, Chairman and
Chief Executive Officer, Vanguard, dated Aug. 16,
2012.
21 Letter from Ari Burstein, ICI, dated Aug. 16,
2012 (stating ‘‘ICI members who oppose the
Programs believe any fixes to the proposed
parameters will be insufficient to address their
overall concerns with market maker incentive
programs’’).
22 Letter from Gus Sauter, Managing Director and
Chief Investment Officer, Vanguard, dated (May 3,
2012) (asking ‘‘[f]or example, given what we know
about investor behavior, is it likely that investors
would consult Nasdaq’s Web site for information
VerDate Mar<15>2010
16:32 Jun 11, 2013
Jkt 229001
Rule 102 of Regulation M
Rule 102 of Regulation M prohibits
issuers, selling security holders, or any
affiliated purchaser of such persons,
directly or indirectly, from bidding for,
purchasing, or attempting to induce any
person to bid for or purchase a covered
security 23 during the applicable
restricted period in connection with a
distribution of securities effected by or
on behalf of an issuer or selling security
holder, except as specifically permitted
in the rule.24 As mentioned above, the
Commission believes that the payment
of the Optional Incentive Fee would
constitute an indirect attempt to induce
a bid for or purchase of a covered
security during the applicable restricted
period.25 As a result, absent exemptive
relief, participation in the Program by a
sponsor or issuer would violate Rule
102.
On the basis of the conditions set out
below and the requirements set forth in
New Rule 8.800, which in general are
designed to help inform investors about
the potential impact of the Program, the
Commission finds that it is appropriate
in the public interest, and is consistent
with the protection of investors, to grant
a limited exemption from Rule 102 of
Regulation M solely to permit the
payment of the Optional Incentive Fee
as set forth in New Rule 8.800 during
the pilot.26 This limited exemption is
conditioned on a requirement that the
security participating in the Program is
an ETP and the secondary market price
for shares of the ETP must not vary
substantially from the net asset value of
such ETP shares during the duration of
the ETP’s participation in the Program.
This condition is designed to limit the
Program to ETPs that have a pricing
mechanism that is expected to keep the
price of the ETP shares tracking the net
asset value of the ETP shares, which
should make the shares less susceptible
to price manipulation.
This limited exemption is further
conditioned on disclosure requirements,
as set forth below, which are designed
to alert potential investors that the
trading market for the otherwise less
about which ETFs and market makers are
participating in the [NASDAQ Market Quality
Program] . . . [i]f not, then most investors would
not be able to distinguish quotations that reflect
true market forces from quotations that have been
influenced by issuer payments’’).
23 Covered security is defined as any security that
is the subject of a distribution, or any reference
security. 17 CFR 242.100(b).
24 17 CFR 242.102(a).
25 See note 2, supra.
26 Rule 102(e) allows the Commission to grant an
exemption from the provision of Rule 102, either
unconditionally or on specified terms and
conditions, to any transaction or class of
transactions, or to any security or class of securities.
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
liquid securities in the Program may be
affected by participation in the Program.
By making it easier for investors to be
able to distinguish which quotations
may have been influenced by the
Optional Incentive Fee from those that
have not, and by requiring the issuers
and sponsors to provide information on
the potential effect of Program
participation on the price and liquidity
of a security participating in the
Program, the required enhanced
disclosure requirements are designed to
inform potential investors about the
potential distortive impact of the
Optional Incentive Fee on the natural
market forces of supply and demand.
The general disclosures required by
New Rule 8.800, while helpful, may not
be sufficient to obtain this result.27 The
required enhanced disclosures are
expected to promote greater investor
protection by helping to ensure that
investors will have easier access to
important information about a particular
ETP.28
As a practical matter, these
requirements are not intended to be
duplicative with the issuer disclosures
required by New Rule 8.800. These
requirements can be satisfied via the
press release and dedicated Web page
required by New Rule 8.800(b)(7),
however these materials must contain
all the required disclosures outlined
below, and be in the manner stated in
the condition, in addition to any
requirements of the Exchange. Issuers or
sponsors of products that are not
registered under the Investment
Company Act of 1940, as amended,
(‘‘1940 Act’’) may also meet the press
release requirements of these enhanced
disclosures in a manner compliant with
Regulation FD (other than Web site only
disclosure).29 We also note that, to the
extent that information about
participation in the Program is material,
disclosure of this kind may already be
27 New Rule 8.800(b)(7) does not contain any
specific content requirements for issuer or sponsor
disclosure, other than a ‘‘press release’’ when
entering or leaving the Program and a hyperlink on
a dedicated issuer, advisor, or sponsor’s Web page
to the Exchange’s Web site that contains a number
of specific disclosures about the program. As
outlined below, the enhanced disclosures required
of the issuer or sponsor as conditions to this order
require that the issuer or sponsor’s press release and
Web page directly contain a number of helpful
disclosures for investors, including risks of the
program.
28 The required Web site and press release
disclosures should be less burdensome than other
methods of notifying investors of a security’s
participation in the Program, such as requiring a
ticker symbol identifier or flagging participating
LMM quotes and trades.
29 See condition (4), infra.
E:\FR\FM\12JNN1.SGM
12JNN1
Federal Register / Vol. 78, No. 113 / Wednesday, June 12, 2013 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
required by the federal securities laws
and rules.
Conclusion
It is therefore ordered, that issuers or
sponsors who pay an Optional Incentive
Fee are hereby exempted from Rule 102
of Regulation M solely to permit the
payment of the Optional Incentive Fee
as set forth in New Rule 8.800 in
connection with a security participating
in the Program during the pilot, subject
to the conditions contained in this order
and compliance with the requirements
of New Rule 8.800.
This exemption is subject to the
following conditions:
1. The security participating in the
Program is an ETP and the secondary
market price for shares of the ETP must
not vary substantially from the net asset
value of such ETP shares during the
duration of the security’s participation
in the Program;
2. The issuer of the participating ETP,
or sponsor on behalf of the issuer, must
provide prompt notice to the public by
broadly disseminating a press release
prior to entry (or upon re-entry) into the
Program. This press release must
disclose:
a. The payment of an Optional
Incentive Fee is intended to generate
more quotes and trading than might
otherwise exist absent this payment,
and that the security leaving the
Program may adversely impact a
purchaser’s subsequent sale of the
security; and
b. A hyperlink to the Web page
described in condition (5) below;
3. The issuer of the participating ETP,
or sponsor on behalf of the issuer, must
provide prompt notice to the public by
broadly disseminating a press release
prior to a security leaving the Program
for any reason, including termination of
the Program. This press release must
disclose:
a. The date that the security is leaving
the Program and that leaving the
Program may have a negative impact on
the price and liquidity of the security
which could adversely impact a
purchaser’s subsequent sale of the
security; and
b. A hyperlink to the Web page
described in condition (5) below;
4. In place of the press releases
required by conditions (2) and (3) above,
an issuer of a participating ETP that is
not registered under the 1940 Act, or
sponsor on behalf of the issuer, may
provide prompt notice to the public
through the use of such other written
Regulation FD compliant methods
(other than Web site disclosure only)
that is designed to provide broad public
dissemination as provided in 17 CFR
VerDate Mar<15>2010
16:32 Jun 11, 2013
Jkt 229001
243.101(e) provided, however, that such
other methods must contain all the
information required to be disclosed by
conditions (2) and (3) above;
5. The issuer of the participating ETP,
or sponsor on behalf of the issuer, must
provide prompt, prominent and
continuous disclosure on its Web site in
the location generally used to
communicate information to investors
about a particular security participating
in the Program, and for a security that
has a separate Web site, the security’s
Web site of:
a. The security participating in the
Program and ticker, date of entry into
the Program, and the amount of the
Optional Incentive Fee;
b. Risk factors investors should
consider when making an investment
decision, including that participation in
the Program may have potential impacts
on the price and liquidity of the
security; and
c. Termination date of the pilot,
anticipated date (if any) of the security
leaving the Program for any reason, date
of actual exit (if applicable), and that the
security leaving the Program could
adversely impact a purchaser’s
subsequent sale of the security; and
6. The Web site disclosure in
condition (5) above must be promptly
updated if a material change occurs
with respect to any information
contained in the disclosure.
This exemptive relief expires when
the pilot terminates, and is subject to
modification or revocation at any time
the Commission determines that such
action is necessary or appropriate in
furtherance of the purposes of the
Exchange Act. This exemptive relief is
limited solely to the payment of the
Optional Incentive Fee as set forth in
New Rule 8.800 for a security that is an
ETP participating in the Program,30 and
does not extend to any other activities,
any other security of the trust related to
the participating ETP, or any other
issuers.31 In addition, persons relying
on this exemption are directed to the
anti-fraud and anti-manipulation
provisions of the Exchange Act,
particularly Sections 9(a) and 10(b), and
Rule 10b–5 thereunder. Responsibility
for compliance with these and any other
applicable provisions of the federal
securities laws must rest with the
30 All ETPs that are allowed to participate in the
Program have a pool of underlying assets. See New
Rule 8.800(a)(2). Should the program be modified
to include other ETPs, such as exchange-traded
notes, that do not have a pool of underlying assets,
the Commission would consider this a material
change and outside the scope of this exemptive
relief.
31 Other activities, such as ETP redemptions, are
not covered by this exemptive relief.
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
35333
persons relying on this exemption. This
order does not represent Commission
views with respect to any other question
that the proposed activities may raise,
including, but not limited to the
adequacy of the disclosure required by
federal securities laws and rules, and
the applicability of other federal or state
laws and rules to, the proposed
activities.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–13887 Filed 6–11–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69708; File No. SR–FICC–
2013–01]
Self-Regulatory Organizations; The
Fixed Income Clearing Corporation;
Order Granting Approval of a
Proposed Rule Change To Amend the
Mortgage-Backed Securities Division
Rule To Reflect Recommendations of
the Treasury Market Practice Group
June 6, 2013.
I. Introduction
On April 15, 2013, the Fixed Income
Clearing Corporation (‘‘FICC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–FICC–2013–01 pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder.2 The proposed rule
change was published for comment in
the Federal Register on April 29, 2013.3
The Commission received no comment
letters. This order approves the
proposed rule change.
II. Description
To address the persistent settlement
fails in agency debt and mortgagebacked securities (‘‘MBS’’) transactions
and to encourage market participants to
resolve such fails promptly, the
Treasury Market Practices Group
(‘‘TMPG’’) recommended in February
2012 that the MBS market impose a fails
charge.4 FICC’s Mortgage-Backed
Securities Division (‘‘MBSD’’) amended
Rule 12 (Fails Charges) of MBSD’s
32 17
CFR 200.30–3(a)(6).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 69424
(April 22, 2013), 78 FR 25115 (April 29, 2013).
4 The TMPG is a group of market participants
active in the treasury securities market sponsored
by the Federal Reserve Bank of New York.
1 15
E:\FR\FM\12JNN1.SGM
12JNN1
]]>Agencies
[Federal Register Volume 78, Number 113 (Wednesday, June 12, 2013)]
[Notices]
[Pages 35330-35333]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-13887]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69707]
Order Granting a Limited Exemption from Rule 102 of Regulation M
Concerning the NYSE Arca, Inc.'s Exchange Traded Product Incentive
Program Pilot Pursuant to Regulation M Rule 102(e)
June 6, 2013.
The Securities and Exchange Commission (``Commission'') approved a
proposed rule change of the NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') to add new NYSE Arca Equities Rule 8.800 (``New Rule 8.800'')
which establishes the exchange-traded product (``ETP'') Incentive
Program (``Incentive Program'' or ``Program'') effective on one year on
a pilot basis. The Incentive Program is designed to incentivize market
makers to take Lead Market Maker (``LMM'') assignments in certain lower
volume ETPs by offering an alternative fee structure for such LMMs that
would be funded from the Exchange's general revenues. The costs of the
Incentive Program would be funded by charging participating issuers
(which may be paid by sponsors on behalf of the issuer) non-refundable
``Optional Incentive Fees,'' which would be credited to LMMs from the
[[Page 35331]]
Exchange's general revenues.\1\ The Commission believes that payment of
the Optional Incentive Fee by the issuer (or a sponsor on behalf of the
issuer) for the purpose of incentivizing market makers to become LMMs
in the issuer's securities would constitute an indirect attempt by the
issuer to induce a bid for or a purchase of a covered security during a
restricted period.\2\ As a result, absent exemptive relief,
participation in the Incentive Program by an issuer (or sponsor on
behalf of the issuer) would violate Rule 102 of Regulation M.\3\ This
order grants a limited exemption from Rule 102 of Regulation M solely
to permit issuers and sponsors to participate in the Program during the
pilot, subject to certain conditions described below.
---------------------------------------------------------------------------
\1\ See Securities Exchange Act Release No. 69706 (June 6, 2013)
(``Approval Order''). The Approval Order contains a detailed
description of the Program. On March 21, 2013, the Exchange filed
with the Commission, pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934, as amended (``Act'' or ``Exchange Act'') and
Rule 19b-4 thereunder, a proposed rule change to establish the
Program. The proposed rule change, as modified by Amendment No. 1
thereto, was published for comment in the Federal Register on April
11, 2013. Securities Exchange Act Release No. 69335 (Apr. 5, 2013),
78 FR 21681 (Apr. 11, 2013). The Approval Order grants approval of
the proposed rule change, as modified by Amendments No. 1 and 2.
Previously, the Exchange filed, but later withdrew, an initial
proposed rule change to establish the Program. On April 27, 2012,
NYSE Arca filed with the Commission, pursuant to Section 19(b)(1) of
the Exchange Act and Rule 19b-4 thereunder, a proposed rule change
to establish the Program. The proposed rule change was published for
comment in the Federal Register on May 17, 2012. Securities Exchange
Act Release No. 66966 (May 11, 2012), 77 FR 29419 (May 17, 2012). On
June 20, 2012, the Commission extended the time period in which to
either approve the proposed rule change, disapprove the proposed
rule change, or institute proceedings to determine whether to
disapprove the proposed rule change to August 15, 2012. Securities
Exchange Act Release No. 67222 (June 20, 2012), 77 FR 38116 (June
26, 2012). On July 11, 2012, the Commission instituted proceedings
to determine whether to approve or disapprove the proposed rule
change. Securities Exchange Act Release No. 67411 (July 11, 2012),
77 FR 42052 (July 17, 2012). On October 2, 2012, the Commission
issued a notice of designation of a longer period for Commission
action on proceedings to determine whether to disapprove the
proposed rule change. Securities Exchange Act Release No. 67962
(Oct. 2, 2012), 77 FR 61462 (Oct. 9, 2012). On January 9, 2013, the
Exchange withdrew the proposed rule change. Securities Exchange
Release No. 68616 (Jan. 10, 2013), 78 FR 3482 (Jan. 16, 2013).
\2\ See Securities Exchange Act Release No. 67411 (July 11,
2012), 77 FR 42052 (July 17, 2012) (stating ``[t]he Commission
believes that issuer payments made under the SRO Proposals would
constitute an indirect attempt by the issuer of a covered security
to induce a purchase or bid in a covered security during a
restricted period in violation of Rule 102 . . . [u]nder the NYSE
Arca Proposal, the purpose of the Program is `to create a Incentive
Program for issuers of certain ETPs listed' on NYSE Arca, which . .
. could induce bids or purchases for the issuer's security during a
restricted period'').
\3\ 17 CFR 242.102.
---------------------------------------------------------------------------
NYSE Arca stated that the Incentive Program is designed to
incentivize market makers to undertake LMM assignments in ETPs.\4\ An
issuer of an ETP that participates in the Incentive Program would elect
to pay an ``Optional Incentive Fee'' to NYSE Arca in an amount ranging
from $10,000 to $40,000 per year with the actual amount to be
determined by the issuer.\5\ The Optional Incentive Fee is in addition
to the currently applicable listing and annual fees applicable to the
ETP and is paid by the issuer to the Exchange's general revenues.\6\
Subject to the requirements set forth in New Rule 8.800, a market maker
accepting an LMM assignment in an ETP in the Incentive Program would
receive a payment quarterly from NYSE Arca (``LMM Payment'') in an
amount equal to the Optional Incentive Fee, less a 5% NYSE Arca
administration fee.\7\ If the LMM does not meet or exceed its Incentive
Program performance standards for an assigned ETP for a particular
month or if the ETP is withdrawn from the Program pursuant to the rule,
the LMM would not receive a LMM Payment for that month.\8\ The
voluntary Program established by New Rule 8.800 will be effective for
one year on a pilot basis.\9\
---------------------------------------------------------------------------
\4\ See Approval Order.
\5\ Id.
\6\ Id. Under the current fee schedule for listings, an issuer
of an ETP is required to pay a listing fee that ranges from $5,000
to $45,000. ETP issuers also pay a graduated annual fee based on the
number of shares of the ETP that are outstanding, which ranges
$5,000 to $55,000. See Securities Exchange Act Release No. 67411
(July 11, 2012), 77 FR 42052 (July 17, 2012).
\7\ Approval Order.
\8\ Id.
\9\ Preamble to New Rule 8.800.
---------------------------------------------------------------------------
Under New Rule 8.800, NYSE Arca will be required to provide
notification on its Web site regarding: (i) The ETPs participating in
the Incentive Program, (ii) the date a particular ETP begins
participating in the Incentive Program, (iii) the date the Exchange
receives written notice of an issuer's intent to withdraw its ETP from
the Incentive Program, and the intended withdrawal date, if provided,
(iv) the date a particular ETP ceases participating in the Incentive
Program, (v) the LMM assigned to each ETP participating in the
Incentive Program, (vi) the date the Exchange receives written notice
of an LMM's intent to withdraw from its ETP assignment(s) in the
Incentive Program, and the intended withdrawal date, if provided, and
(vii) the amount of the Optional Incentive Fee for each ETP.\10\ This
page would also include a fair and balanced description of the
Incentive Program, including (i) a description of the Incentive
Program's operation as a pilot, including the effective date thereof,
(ii) the potential benefits that may be realized by an ETP's
participation in the Incentive Program, (iii) the potential risks that
may be attendant with an ETP's participation in the Incentive Program,
(iv) the potential impact resulting from an ETP's entry into and exit
from the Incentive Program, and (v) how interested parties can request
additional information regarding the Incentive Program and/or the ETPs
participating therein.\11\ Furthermore, an issuer that is approved to
participate in the Incentive Program shall issue a press release to the
public, in a form and manner prescribed by the Exchange, when it
commences participation or ceases to participate in the Incentive
Program.\12\ Such press release would be issued, if practicable, at
least two days before the ETP commences or ceases participation in the
Incentive Program.\13\ The issuer also will be required to dedicate
space on its Web site, or, if it does not have a Web site, on the Web
site of the adviser or sponsor of the ETP, to (i) include any such
press releases and (ii) provide a hyperlink to the dedicated page on
NYSE Arca's Web site that describes the Program.\14\
---------------------------------------------------------------------------
\10\ New Rule 8.800(b)(6).
\11\ Id.
\12\ New Rule 8.800(b)(7).
\13\ Id.
\14\ Id.
---------------------------------------------------------------------------
The Approval Order notes commenters' general support of the
Program's stated goal to increase liquidity and promote efficient
robust markets for ETPs.\15\ However, certain commenters expressed
concerns about the Program as originally proposed last year,\16\
including the departure from rules precluding market makers from
directly or indirectly accepting payment from an issuer of a security
for acting as a market maker.\17\ In particular,
[[Page 35332]]
commenters to that proposal discussed the potential distortive impact
on the natural market forces of supply and demand.\18\ Commenters also
discussed what they viewed as the failure of the originally-proposed
Program requirements to adequately mitigate potential negative impacts
of that proposal.\19\
---------------------------------------------------------------------------
\15\ See Approval Order Section II.
\16\ See note 1, supra. Only two comments were received when the
proposal was re-filed with the Commission, both of which were in
favor of the proposal. See Letter from John Hyland, CFA, Chief
Investment Officer, United States Commodity Funds, dated April 10,
2013 and Letter from Stanislav Dolgopolov, Assistant Adjunct
Professor and Lowell Milken Institute Law Teaching Fellow,
University of California, Los Angeles, dated April 26, 2013. The
Commission believes, however, that the concerns raised by commenters
regarding the original proposal still are relevant to the proposal
as re-filed with the Commission.
\17\ See, e.g., Letter from Gus Sauter, Managing Director and
Chief Investment Officer, Vanguard, dated June 7, 2012 (citing to
his comment letter regarding the similar NASDAQ Market Quality
Program that included a discussion of NASD Notice to Members 75-16
regarding the reasons for prohibiting issuer payments for market
making: ``The additional factor of payments by an issuer to a market
maker would probably be viewed as a conflict of interest since it
would undoubtedly influence, to some degree, a firm's decision to
make a market and thereafter, perhaps, the prices it would quote.
Hence, what might appear to be independent trading activity may well
be illusory.''). In addition, another commenter noted ``that market
maker incentive programs, such as the [then-proposed Program],
represent a departure from the current rules precluding market
makers from accepting payment from an issuer of a security for
acting as a market marker'' yet supported the concept of market
maker incentive programs on a pilot basis. Letter from Ari Burstein,
Investment Company Institute (``ICI''), dated June 7, 2012. In a
subsequent letter, however, the same commenter noted that certain of
its members opposed the Program as originally proposed and stated
that it ``could create a `pay-to-play' environment.'' Letter from
Ari Burstein, ICI, dated Aug. 16, 2012. The Approval Order also
notes that a number of aspects of the Program mitigate the concerns
that the rule in question, FINRA Rule 5250 (Payments for Market
Making), were designed to address.
\18\ See, e.g., Letter from F. William McNabb, Chairman and
Chief Executive Officer, Vanguard, dated Aug. 16, 2012.
\19\ See, e.g., Letter from Gus Sauter, Managing Director and
Chief Investment Officer, Vanguard, dated June 7, 2012.
---------------------------------------------------------------------------
One commenter stated that ``[i]ssuer payments to market makers have
the potential to distort market forces, resulting in spreads and prices
that do not reflect actual supply and demand.'' \20\ One commenter
questioned whether any safeguards could alleviate their concerns
regarding issuer payments to market makers.\21\ Another commenter
questioned whether information relating to the similar NASDAQ Market
Quality Program posted to that exchange's Web site in a similar manner
as required in New Rule 8.800(b)(6) by NYSE Arca would adequately
address investor protection and market integrity concerns because
investors may not search an exchange Web site for important information
about a particular ETP.\22\
---------------------------------------------------------------------------
\20\ Letter from F. William McNabb, Chairman and Chief Executive
Officer, Vanguard, dated Aug. 16, 2012.
\21\ Letter from Ari Burstein, ICI, dated Aug. 16, 2012 (stating
``ICI members who oppose the Programs believe any fixes to the
proposed parameters will be insufficient to address their overall
concerns with market maker incentive programs'').
\22\ Letter from Gus Sauter, Managing Director and Chief
Investment Officer, Vanguard, dated (May 3, 2012) (asking ``[f]or
example, given what we know about investor behavior, is it likely
that investors would consult Nasdaq's Web site for information about
which ETFs and market makers are participating in the [NASDAQ Market
Quality Program] . . . [i]f not, then most investors would not be
able to distinguish quotations that reflect true market forces from
quotations that have been influenced by issuer payments'').
---------------------------------------------------------------------------
Rule 102 of Regulation M
Rule 102 of Regulation M prohibits issuers, selling security
holders, or any affiliated purchaser of such persons, directly or
indirectly, from bidding for, purchasing, or attempting to induce any
person to bid for or purchase a covered security \23\ during the
applicable restricted period in connection with a distribution of
securities effected by or on behalf of an issuer or selling security
holder, except as specifically permitted in the rule.\24\ As mentioned
above, the Commission believes that the payment of the Optional
Incentive Fee would constitute an indirect attempt to induce a bid for
or purchase of a covered security during the applicable restricted
period.\25\ As a result, absent exemptive relief, participation in the
Program by a sponsor or issuer would violate Rule 102.
---------------------------------------------------------------------------
\23\ Covered security is defined as any security that is the
subject of a distribution, or any reference security. 17 CFR
242.100(b).
\24\ 17 CFR 242.102(a).
\25\ See note 2, supra.
---------------------------------------------------------------------------
On the basis of the conditions set out below and the requirements
set forth in New Rule 8.800, which in general are designed to help
inform investors about the potential impact of the Program, the
Commission finds that it is appropriate in the public interest, and is
consistent with the protection of investors, to grant a limited
exemption from Rule 102 of Regulation M solely to permit the payment of
the Optional Incentive Fee as set forth in New Rule 8.800 during the
pilot.\26\ This limited exemption is conditioned on a requirement that
the security participating in the Program is an ETP and the secondary
market price for shares of the ETP must not vary substantially from the
net asset value of such ETP shares during the duration of the ETP's
participation in the Program. This condition is designed to limit the
Program to ETPs that have a pricing mechanism that is expected to keep
the price of the ETP shares tracking the net asset value of the ETP
shares, which should make the shares less susceptible to price
manipulation.
---------------------------------------------------------------------------
\26\ Rule 102(e) allows the Commission to grant an exemption
from the provision of Rule 102, either unconditionally or on
specified terms and conditions, to any transaction or class of
transactions, or to any security or class of securities.
---------------------------------------------------------------------------
This limited exemption is further conditioned on disclosure
requirements, as set forth below, which are designed to alert potential
investors that the trading market for the otherwise less liquid
securities in the Program may be affected by participation in the
Program. By making it easier for investors to be able to distinguish
which quotations may have been influenced by the Optional Incentive Fee
from those that have not, and by requiring the issuers and sponsors to
provide information on the potential effect of Program participation on
the price and liquidity of a security participating in the Program, the
required enhanced disclosure requirements are designed to inform
potential investors about the potential distortive impact of the
Optional Incentive Fee on the natural market forces of supply and
demand. The general disclosures required by New Rule 8.800, while
helpful, may not be sufficient to obtain this result.\27\ The required
enhanced disclosures are expected to promote greater investor
protection by helping to ensure that investors will have easier access
to important information about a particular ETP.\28\
---------------------------------------------------------------------------
\27\ New Rule 8.800(b)(7) does not contain any specific content
requirements for issuer or sponsor disclosure, other than a ``press
release'' when entering or leaving the Program and a hyperlink on a
dedicated issuer, advisor, or sponsor's Web page to the Exchange's
Web site that contains a number of specific disclosures about the
program. As outlined below, the enhanced disclosures required of the
issuer or sponsor as conditions to this order require that the
issuer or sponsor's press release and Web page directly contain a
number of helpful disclosures for investors, including risks of the
program.
\28\ The required Web site and press release disclosures should
be less burdensome than other methods of notifying investors of a
security's participation in the Program, such as requiring a ticker
symbol identifier or flagging participating LMM quotes and trades.
---------------------------------------------------------------------------
As a practical matter, these requirements are not intended to be
duplicative with the issuer disclosures required by New Rule 8.800.
These requirements can be satisfied via the press release and dedicated
Web page required by New Rule 8.800(b)(7), however these materials must
contain all the required disclosures outlined below, and be in the
manner stated in the condition, in addition to any requirements of the
Exchange. Issuers or sponsors of products that are not registered under
the Investment Company Act of 1940, as amended, (``1940 Act'') may also
meet the press release requirements of these enhanced disclosures in a
manner compliant with Regulation FD (other than Web site only
disclosure).\29\ We also note that, to the extent that information
about participation in the Program is material, disclosure of this kind
may already be
[[Page 35333]]
required by the federal securities laws and rules.
---------------------------------------------------------------------------
\29\ See condition (4), infra.
---------------------------------------------------------------------------
Conclusion
It is therefore ordered, that issuers or sponsors who pay an
Optional Incentive Fee are hereby exempted from Rule 102 of Regulation
M solely to permit the payment of the Optional Incentive Fee as set
forth in New Rule 8.800 in connection with a security participating in
the Program during the pilot, subject to the conditions contained in
this order and compliance with the requirements of New Rule 8.800.
This exemption is subject to the following conditions:
1. The security participating in the Program is an ETP and the
secondary market price for shares of the ETP must not vary
substantially from the net asset value of such ETP shares during the
duration of the security's participation in the Program;
2. The issuer of the participating ETP, or sponsor on behalf of the
issuer, must provide prompt notice to the public by broadly
disseminating a press release prior to entry (or upon re-entry) into
the Program. This press release must disclose:
a. The payment of an Optional Incentive Fee is intended to generate
more quotes and trading than might otherwise exist absent this payment,
and that the security leaving the Program may adversely impact a
purchaser's subsequent sale of the security; and
b. A hyperlink to the Web page described in condition (5) below;
3. The issuer of the participating ETP, or sponsor on behalf of the
issuer, must provide prompt notice to the public by broadly
disseminating a press release prior to a security leaving the Program
for any reason, including termination of the Program. This press
release must disclose:
a. The date that the security is leaving the Program and that
leaving the Program may have a negative impact on the price and
liquidity of the security which could adversely impact a purchaser's
subsequent sale of the security; and
b. A hyperlink to the Web page described in condition (5) below;
4. In place of the press releases required by conditions (2) and
(3) above, an issuer of a participating ETP that is not registered
under the 1940 Act, or sponsor on behalf of the issuer, may provide
prompt notice to the public through the use of such other written
Regulation FD compliant methods (other than Web site disclosure only)
that is designed to provide broad public dissemination as provided in
17 CFR 243.101(e) provided, however, that such other methods must
contain all the information required to be disclosed by conditions (2)
and (3) above;
5. The issuer of the participating ETP, or sponsor on behalf of the
issuer, must provide prompt, prominent and continuous disclosure on its
Web site in the location generally used to communicate information to
investors about a particular security participating in the Program, and
for a security that has a separate Web site, the security's Web site
of:
a. The security participating in the Program and ticker, date of
entry into the Program, and the amount of the Optional Incentive Fee;
b. Risk factors investors should consider when making an investment
decision, including that participation in the Program may have
potential impacts on the price and liquidity of the security; and
c. Termination date of the pilot, anticipated date (if any) of the
security leaving the Program for any reason, date of actual exit (if
applicable), and that the security leaving the Program could adversely
impact a purchaser's subsequent sale of the security; and
6. The Web site disclosure in condition (5) above must be promptly
updated if a material change occurs with respect to any information
contained in the disclosure.
This exemptive relief expires when the pilot terminates, and is
subject to modification or revocation at any time the Commission
determines that such action is necessary or appropriate in furtherance
of the purposes of the Exchange Act. This exemptive relief is limited
solely to the payment of the Optional Incentive Fee as set forth in New
Rule 8.800 for a security that is an ETP participating in the
Program,\30\ and does not extend to any other activities, any other
security of the trust related to the participating ETP, or any other
issuers.\31\ In addition, persons relying on this exemption are
directed to the anti-fraud and anti-manipulation provisions of the
Exchange Act, particularly Sections 9(a) and 10(b), and Rule 10b-5
thereunder. Responsibility for compliance with these and any other
applicable provisions of the federal securities laws must rest with the
persons relying on this exemption. This order does not represent
Commission views with respect to any other question that the proposed
activities may raise, including, but not limited to the adequacy of the
disclosure required by federal securities laws and rules, and the
applicability of other federal or state laws and rules to, the proposed
activities.
---------------------------------------------------------------------------
\30\ All ETPs that are allowed to participate in the Program
have a pool of underlying assets. See New Rule 8.800(a)(2). Should
the program be modified to include other ETPs, such as exchange-
traded notes, that do not have a pool of underlying assets, the
Commission would consider this a material change and outside the
scope of this exemptive relief.
\31\ Other activities, such as ETP redemptions, are not covered
by this exemptive relief.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
---------------------------------------------------------------------------
\32\ 17 CFR 200.30-3(a)(6).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-13887 Filed 6-11-13; 8:45 am]
BILLING CODE 8011-01-P
