Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of Franklin Short Duration U.S. Government ETF Under NYSE Arca Equities Rule 8.600, 56970-56977 [2013-22397]
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
Members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 9 and Rule 19b–4(f)(2) 10
thereunder. 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.
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:
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Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
EDGA–2013–26 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–EDGA–2013–26. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–EDGA–
2013–26 and should be submitted on or
before October 7, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–22404 Filed 9–13–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–70356; File No. SR–
NYSEArca–2013–86]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade Shares
of Franklin Short Duration U.S.
Government ETF Under NYSE Arca
Equities Rule 8.600
September 10, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that, on August
27, 2013, NYSE Arca, Inc. (‘‘Exchange’’
or ‘‘NYSE Arca’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the following under
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 17 CFR 240.19b–4.
U.S.C. 78s(b)(3)(A).
10 17 CFR 240.19b–4 (f)(2).
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
11 17
9 15
NYSE Arca Equities Rule 8.600
(‘‘Managed Fund Shares’’): Franklin
Short Duration U.S. Government ETF.
The text of the proposed rule change is
available on the Exchange’s Web site at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
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The Exchange proposes to list and
trade shares (‘‘Shares’’) of the following
under NYSE Arca Equities Rule 8.600,
which governs the listing and trading of
Managed Fund Shares3 on the
Exchange: Franklin Short Duration U.S.
Government ETF (the ‘‘Fund’’).4 The
Shares of the Fund will be offered by
Franklin ETF Trust (the ‘‘Trust’’). The
Trust will be registered with the
Commission as an open-end
3 A Managed Fund Share is a security that
represents an interest in an investment company
registered under the Investment Company Act of
1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as
an open-end investment company or similar entity
that invests in a portfolio of securities selected by
its investment adviser consistent with its
investment goal and policies. In contrast, an openend 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.
4 The Securities and Exchange Commission
(‘‘Commission’’) has previously approved listing
and trading on the Exchange of a number of actively
managed funds under Rule 8.600. See, e.g.,
Securities Exchange Act Release Nos. 57801 (May
8, 2008), 73 FR 27878 (May 14, 2008) (SR–
NYSEArca–2008–31) (order approving Exchange
listing and trading of twelve actively-managed
funds of the WisdomTree Trust); 60460 (August 7,
2009), 74 FR 41468 (August 17, 2009) (SR–
NYSEArca–2009–55) (order approving listing and
trading of Dent Tactical ETF); 63076 (October 12,
2010), 75 FR 63874 (October 18, 2010) (SR–
NYSEArca–2010–79) (order approving listing and
trading of Cambria Global Tactical ETF).
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Federal Register / Vol. 78, No. 179 / Monday, September 16, 2013 / Notices
management investment company.5
Franklin Advisers, Inc. will serve as the
investment manager to the Fund (the
‘‘Manager’’). Franklin Templeton
Distributors, Inc. (the ‘‘Distributor’’) will
be the principal underwriter and
distributor of the Fund’s Shares.
Franklin Templeton Services, LLC (the
‘‘Administrator’’) will serve as
administrator for the Fund and The
Bank of New York Mellon will serve as
sub-administrator for the Fund. The
Bank of New York Mellon will serve as
the custodian and transfer agent for the
Fund (‘‘Custodian’’ and ‘‘Transfer
Agent,’’ respectively).
Commentary .06 to Rule 8.600
provides that, if the investment adviser
to the investment company issuing
Managed Fund Shares is affiliated with
a broker-dealer, such investment adviser
shall erect a ‘‘fire wall’’ between the
investment adviser and the brokerdealer with respect to access to
information concerning the composition
of and/or changes to such investment
company portfolio. Commentary .06
further requires that personnel who
make decisions on the open-end fund’s
portfolio composition must be subject to
procedures designed to prevent the use
and dissemination of material
nonpublic information regarding the
open-end fund’s portfolio.6 Commentary
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5 The
Trust will be registered under the 1940 Act.
On February 7, 2013, the Trust filed a registration
statement on Form N–1A under the Securities Act
of 1933 (the ‘‘1933 Act’’) (15 U.S.C. 77a), and under
the 1940 Act, relating to the Fund (File Nos. 333–
186504 and 811–22801) (the ‘‘Registration
Statement’’). The description of the operation of the
Trust and the Fund herein is based, in part, on the
Registration Statement. The Trust filed an
application on June 8, 2012, and amendments to the
application on October 26, 2012 and December 18,
2012, requesting an Order under Section 6(c) of the
1940 Act for exemptions from various provisions of
the 1940 Act and rules thereunder (File No. 812–
14042) (‘‘Exemptive Application’’). The
Commission has issued an order granting certain
exemptive relief to the Trust under the 1940 Act.
See Investment Company Act Release No. 30350
(January 15, 2013) (‘‘Exemptive Order’’).
Investments made by the Fund will comply with
the conditions set forth in the Exemptive
Application and the Exemptive Order.
6 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 Manager and its related personnel are
subject to the provisions of Rule 204A–1 under the
Advisers Act relating to codes of ethics. This Rule
requires investment advisers to adopt a code of
ethics that reflects the fiduciary nature of the
relationship to clients as well as compliance with
other applicable securities laws. Accordingly,
procedures designed to prevent the communication
and misuse of non-public information by an
investment adviser must be consistent with Rule
204A–1 under the Advisers Act. In addition, Rule
206(4)–7 under the Advisers Act makes it unlawful
for an investment adviser to provide investment
advice to clients unless such investment adviser has
(i) adopted and implemented written policies and
procedures reasonably designed to prevent
violation, by the investment adviser and its
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.06 to Rule 8.600 is similar to
Commentary .03(a)(i) and (iii) to NYSE
Arca Equities Rule 5.2(j)(3); however,
Commentary .06 in connection with the
establishment of a ‘‘fire wall’’ between
the investment adviser and the brokerdealer reflects the applicable open-end
fund’s portfolio, not an underlying
benchmark index, as is the case with
index-based funds. The Manager is not
registered as a broker-dealer but it is
affiliated with a broker-dealer and has
represented that it has implemented a
fire wall with respect to its brokerdealer affiliate regarding access to
information concerning the composition
and/or changes to the portfolio. In the
event (a) the Manager or any sub-adviser
becomes newly affiliated with a brokerdealer, or (b) any new adviser or subadviser is a registered broker-dealer or
becomes affiliated with a broker-dealer,
they will implement a fire wall with
respect to their relevant personnel or
broker-dealer affiliate regarding access
to information concerning the
composition and/or changes to the
portfolio, and will be subject to
procedures designed to prevent the use
and dissemination of material nonpublic information regarding such
portfolio.
Fund Investments
According to the Registration
Statement, the Fund’s investment goal is
to provide a high level of current
income as is consistent with prudent
investing, while seeking preservation of
capital. The Fund will seek to achieve
its investment goal by investing, under
normal market conditions,7 at least 80%
of its net assets in securities issued or
guaranteed by the U.S. government, its
agencies, or instrumentalities. The Fund
currently targets an estimated average
portfolio duration8 of three (3) years or
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.
7 The term ‘‘under normal market conditions’’
includes, but is not limited to, the absence of
extreme volatility or trading halts in the equity
markets or the financial markets generally;
operational issues causing dissemination of
inaccurate market information; or force majeure
type events such as systems failure, natural or manmade disaster, act of God, armed conflict, act of
terrorism, riot or labor disruption or any similar
intervening circumstance.
8 In comparison to maturity (which is the date on
which a debt instrument ceases and the issuer is
obligated to repay the principal amount), duration
is a measure of the expected price volatility of a
debt instrument as a result of changes in market
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56971
less. The Manager calculates the
duration of the portfolio by modeling
the cash flows of all the individual
holdings, including the impact of
prepayment variability and coupon
adjustments where applicable, to
determine the duration of each holding
and then aggregating based on the size
of the position. In performing this
duration calculation, the Manager
utilizes third party models as adjusted
based on the Manager’s market
expectations with respect to interest
rates, borrower-level factors affecting
credit availability, the condition of the
housing market as well as broader
economic factors, among other things,
consistent with industry practice.
Because the Fund publishes its portfolio
on a daily basis, market participants
have the ability to assess whether the
duration calculation is consistent with
generally accepted market calculations
of duration.
According to the Registration
Statement, the Fund generally will
invest a substantial portion of its assets
in mortgage-backed securities9 issued or
guaranteed by the U.S. government, its
agencies or instrumentalities, including
adjustable rate mortgage securities, but
the Fund also will invest in direct
obligations of the U.S. government (such
as Treasury bonds, bills and notes) and
in securities issued or guaranteed by the
U.S. government, its agencies or
instrumentalities, including government
sponsored entities. All of the Fund’s
principal investments will be debt
securities, including bonds, notes and
debentures.
According to the Registration
Statement, the mortgage-backed
rates of interest, based on the weighted average
timing of the instrument’s expected principal and
interest payments and other factors. Duration differs
from maturity in that it considers a security’s yield,
coupon payments, principal payments, call features
and coupon adjustments in addition to the amount
of time until the security finally matures. As the
value of a security changes over time, so will its
duration. Prices of securities with lower durations
tend to be less sensitive to interest rate changes
than securities with higher durations. In general, a
portfolio of securities with a lower duration can be
expected to be less sensitive to interest rate changes
than a portfolio with a higher duration.
9 Mortgage-backed securities represent an interest
in a pool of mortgage loans made by banks and
other financial institutions to finance purchases of
homes, commercial buildings and other real estate.
The individual mortgage loans are packaged or
‘‘pooled’’ together for sale to investors. As the
underlying mortgage loans are paid off, investors
receive principal and interest payments. These
securities may be fixed-rate or adjustable-rate
mortgage-backed securities (ARMS). Further, these
securities can also be categorized as collateralized
mortgage obligations (CMOs) or real estate mortgage
investment conduits (REMICs) where they are
divided into multiple classes with each class being
entitled to a different share of the principal and/or
interest payments received from the pool of
underlying assets.
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securities in which the Fund will
substantially invest are issued or
guaranteed by the U.S. government, its
agencies or instrumentalities, such as
Ginnie Mae and U.S. governmentsponsored entities, such as Fannie Mae
and Freddie Mac. Most mortgage-backed
securities are pass-through securities,
which means they provide investors
with monthly payments consisting of a
pro rata share of both regular interest
and principal payments as well as
unscheduled prepayments on the
underlying mortgage loans. Because
prepayment rates of individual mortgage
pools vary widely, the average life of a
particular pool cannot be predicted
accurately. Adjustable-rate mortgagebacked securities include ARMS and
other mortgage-backed securities with
interest rates that adjust periodically to
reflect prevailing market interest rates.
According to the Registration
Statement, the Fund may invest in
securities with various levels of credit
support 10 including, but not limited to,
those issued or guaranteed by the
Federal Home Loan Banks, Veterans
Administration, Federal Housing
Authority, Export-Import Bank of the
United States, Overseas Private
Investment Corporation, Commodity
Credit Corporation, Small Business
Administration, U.S. Agency for
International Development, Tennessee
Valley Authority and Farm Credit
System.
The Fund may invest in callable
agency securities, which give the issuer
(the U.S. government agency) the right
to redeem the security prior to maturity.
The Fund may also invest in U.S.
government inflation-indexed
securities.11 Additionally, the Fund may
10 Government agency or instrumentality
securities have different levels of credit support.
For example, Ginnie Mae securities carry a
guarantee as to the timely repayment of principal
and interest that is backed by the full faith and
credit of the U.S. government. However, the full
faith and credit guarantee does not apply to the
market prices and yields of the Ginnie Mae
securities or to the net asset value (‘‘NAV’’), trading
price or performance of the Fund, which will vary
with changes in interest rates and other market
conditions. Fannie Mae and Freddie Mac passthrough mortgage certificates are backed by the
credit of the respective instrumentality and are not
guaranteed by the U.S. government. Other securities
issued by government agencies or instrumentalities,
including government sponsored entities, may only
be backed by the credit worthiness of the issuing
institution, not the U.S. Government, or the issuers
may have the right to borrow from the U.S. Treasury
to meet its obligations.
11 Inflation-indexed securities are fixed-income
securities that are structured to provide protection
against inflation. The value of the security’s
principal or the interest income paid on the security
is adjusted to track changes in an official inflation
measure. The U.S. Treasury uses the Consumer
Price Index for Urban Consumers as the inflation
measure.
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invest, without limitation, in mortgage
dollar rolls.12 However, the Fund will
invest only in covered mortgage dollar
rolls, meaning that the Fund establishes
a segregated account with liquid
securities equal in value to the
securities it will repurchase. The Fund
intends to enter into mortgage dollar
rolls only with high quality securities
dealers and banks as determined by the
Manager under board approved
counterparty review procedures.
Other Investments
According to the Registration
Statement, when the Manager believes
market or economic conditions are
unfavorable for investors, the Manager
may invest up to 100% of the Fund’s
assets in a temporary defensive manner
by holding all or a substantial portion of
its assets in cash, cash equivalents or
other high quality short-term
investments. Temporary defensive
investments generally may include
short-term U.S. government securities,
high-grade commercial paper, bank
obligations, repurchase agreements,
money market fund shares (including
shares of an affiliated money market
fund) and other money market
instruments. The Manager also may
invest in these types of securities or
hold cash while looking for suitable
investment opportunities or to maintain
liquidity.13
The Fund may hold up to an aggregate
amount of 15% of its net assets in
illiquid securities (calculated at the time
of investment), including Rule 144A
securities deemed illiquid by the
Manager.14 The Fund will monitor its
12 In a mortgage dollar roll, the Fund will sell (or
buy) mortgage-backed securities for delivery on a
specified date and simultaneously contract to
repurchase (or sell) substantially similar (same type,
coupon, and maturity) securities on a future date.
During the period between a sale and repurchase,
the Fund will forgo principal and interest paid on
the mortgage-backed securities. The Fund will earn
or lose money on a mortgage dollar roll from any
difference between the sale price and the future
purchase price. In a sale and repurchase, the Fund
also earns money on the interest earned on the cash
proceeds of the initial sale.
13 Circumstances under which the Fund may
temporarily depart from its normal investment
process include, but are not limited to, extreme
volatility or trading halts in the equity markets or
the financial markets generally; operational issues
causing dissemination of inaccurate market
information; or force majeure type events such as
systems failure, natural or man-made disaster, act
of God, armed conflict, act of terrorism, riot or labor
disruption or any similar intervening circumstance.
14 In reaching liquidity decisions, the Manager
may consider the following factors: the frequency
of trades and quotes for the security, the number of
dealers wishing to purchase or sell the security and
the number of other potential purchasers; dealer
undertakings to make a market in the security; and
the nature of the security and the nature of the
marketplace in which it trades (e.g., the time
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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 the Fund’s net assets are held in
illiquid securities. Illiquid securities
include securities subject to contractual
or other restrictions on resale and other
instruments that lack readily available
markets as determined in accordance
with Commission staff guidance.15
The Fund may invest in other
investment companies to the extent
permitted by the 1940 Act, Commission
rules thereunder and exemptions
thereto. Section 12(d)(1)(A) of the 1940
Act requires that, as determined
immediately after a purchase is made,
(i) not more than 5% of the value of the
Fund’s total assets will be invested in
the securities of any one investment
company, (ii) not more than 10% of the
value of the Fund’s total assets will be
invested in securities of investment
companies as a group, and (iii) not more
than 3% of the outstanding voting stock
of any one investment company will be
owned by the Fund. Certain exceptions
to these limitations may apply, and the
Fund may also rely on any future
applicable Commission rules or orders
that provide exceptions to these
limitations.
The Fund may invest up to 20% of its
net assets in securities not issued or
guaranteed by the U.S. government, its
agencies or instrumentalities, including
mortgage backed securities. According
to the Registration Statement, these
investments may include investment
grade debt securities.16 The Fund will
needed to dispose of the security, the method of
soliciting offers, and the mechanics of transfer).
15 The Commission has stated that long-standing
Commission guidelines have required open-end
funds to hold no more than 15% of their net assets
in illiquid securities and other illiquid assets. See
Investment Company Act Release No. 28193 (March
11, 2008), 73 FR 14618 (March 18, 2008), footnote
34. See also, Investment Company Act Release No.
5847 (October 21, 1969), 35 FR 19989 (December
31, 1970) (Statement Regarding ‘‘Restricted
Securities’’); Investment Company Act Release No.
18612 (March 12, 1992), 57 FR 9828 (March 20,
1992) (Revisions of Guidelines to Form N–1A). A
fund’s portfolio security is illiquid if it cannot be
disposed of in the ordinary course of business
within seven days at approximately the value
ascribed to it by the fund. See Investment Company
Act Release No. 14983 (March 12, 1986), 51 FR
9773 (March 21, 1986) (adopting amendments to
Rule 2a-7 under the 1940 Act); Investment
Company Act Release No. 17452 (April 23, 1990),
55 FR 17933 (April 30, 1990) (adopting Rule 144A
under the 1933 Act).
16 Debt securities that are rated Baa or higher by
Moody’s, BBB or higher by S&P, or unrated
securities deemed by the Manager to be of
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not invest in non-investment grade debt
securities. The Fund may also lend a
portfolio of securities up to 331⁄3% of
the value of its total assets (measured at
the time of the most recent loan). In
exchange, the Fund will receive cash
collateral from a borrower at least equal
to the value of the security loaned by
the Fund. Cash collateral typically
consists of any combination of cash,
securities issued by the U.S. government
and its agencies and instrumentalities,
and irrevocable letters of credit. Such
securities will only be loaned to parties
that meet creditworthiness standards
approved by the Fund’s board. The
Fund may also invest in multi-class
pass-through securities, when-issued,
delayed delivery and to-be-announced
transactions; callable securities;
Franklin Templeton money market
funds; repurchase agreements; U.S.
Treasury rolls; unrated debt securities
deemed by the Manager to be of
comparable quality to investment grade
debt securities; variable rate securities;
and zero coupon, deferred interest and
pay-in-kind bonds.
The Fund will not invest in equity
securities other than possible
investments in shares of other
investment companies as noted above.
The Fund will be classified as a
‘‘diversified’’ investment company
under the 1940 Act.17
The Fund will not invest more than
25% of the Fund’s net assets in
securities of issuers in any one industry
(other than securities issued or
guaranteed by the U.S. government or
any of its agencies or instrumentalities
or securities of other investment
companies, whether registered or
excluded from registration under
Section 3(c) of the 1940 Act).18
Additionally, the Fund will not
purchase the securities of any one issuer
(other than the U.S. government or any
of its agencies or instrumentalities or
securities of other investment
companies, whether registered or
excluded from registration under
Section 3(c) of the 1940 Act) if
immediately after such investment (i)
more than 5% of the value of the Fund’s
total assets would be invested in such
issuer or (ii) more than 10% of the
outstanding voting securities of such
issuer would be owned by the Fund,
comparable quality, are considered to be
‘‘investment grade.’’
17 The diversification standard is set forth in
Section 5(b)(1) of the 1940 Act.
18 See Form N–1A, Item 9. The Commission has
taken the position that a fund is concentrated if it
invests more than 25% of the value of its total
assets in any one industry. See, e.g., Investment
Company Act Release No. 9011 (October 30, 1975),
40 FR 54241 (November 21, 1975).
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except that up to 25% of the value of the
Fund’s total assets may be invested
without regard to such 5% and 10%
limitations.
The Fund intends to qualify for and
to elect treatment as a separate regulated
investment company (‘‘RIC’’) under
Subchapter M of the Internal Revenue
Code.19
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 20
under the Act, as provided by NYSE
Arca Equities Rule 5.3. A minimum of
100,000 Shares for the Fund 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 NAV per
Share will be calculated daily and that
the NAV and the Disclosed Portfolio as
defined in NYSE Arca Equities Rule
8.600(c)(2) will be made available to all
market participants at the same time.
Investments in Derivatives
Consistent with the Exemptive Order,
to pursue its investment goal, the Fund
may invest in interest rate, fixed income
index, bond and U.S. Treasury futures
contracts. The use of these derivative
transactions may allow the Fund to
obtain net long or short exposures to
selected interest rates or durations.
These derivatives may be used to hedge
risks associated with the Fund’s other
portfolio investments. The Fund expects
that no more than 20% of the value of
the Fund’s net assets will be invested in
derivative instruments.
The Fund will not invest in options,
futures contracts or swap agreements
other than as set forth in the preceding
paragraph. The Fund’s investments will
be consistent with its investment goal
and will not be used to enhance
leverage.
Creation and Redemption of Shares
According to the Registration
Statement, the Fund will issue and
redeem Shares on a continuous basis at
NAV in aggregations of 50,000 Shares
(‘‘Creation Units’’).
The consideration for purchase of
Creation Units of the Fund will consist
of (i) a specified all-cash payment (the
‘‘Cash Deposit’’) or (ii) a designated
portfolio of securities (including any
portion of such securities for which
cash may be substituted) (the ‘‘Deposit
Securities’’), together with the deposit of
a specified cash payment (the ‘‘Cash
19 26
20 17
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CFR 240.10A–3.
Frm 00118
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56973
Component’’). The Cash Component
will be equal to the difference between
the NAV of the Shares (per Creation
Unit) and the market value of the
Deposit Securities. Together, the
Deposit Securities and the Cash
Component or, alternatively, the Cash
Deposit, constitute the ‘‘Fund Deposit,’’
which will be applicable to creation
requests received in proper form. The
Fund Deposit represents the minimum
initial and subsequent investment
amount for a Creation Unit of the Fund.
The Manager will make available
through the National Securities Clearing
Corporation (‘‘NSCC’’) on each business
day prior to the opening of business on
the Exchange, the list of names and the
required number or par value of each
Deposit Security and the amount of the
Cash Component (or Cash Deposit) to be
included in the current Fund Deposit
(based on information as of the end of
the previous business day for the Fund).
Such Fund Deposit is applicable to
purchases of Creation Units of Shares
until such time as the next-announced
Fund Deposit is made available.
To be eligible to place orders with the
Distributor and to create a Creation Unit
of the Fund, an entity must be: (i) a
broker-dealer or other participant in the
clearing process through the Continuous
Net Settlement System of the NSCC (the
‘‘Clearing Process’’), a clearing agency
that is registered with the Commission,
or (ii) a Depositary Trust Company
(‘‘DTC’’) Participant, and must have
executed an agreement with the
Distributor, with respect to creations
and redemptions of Creation Units. An
entity that satisfies these requirements
is known as an ‘‘Authorized
Participant.’’ Creation Units may be
purchased only by or through an
Authorized Participant.
To initiate an order for a Creation
Unit, an Authorized Participant must
submit to the Distributor or its agent an
irrevocable order to purchase Shares, in
proper form, before 4:00 p.m., Eastern
time (the ‘‘Cut-off Time’’) on any
business day to receive that day’s NAV.
Once the Fund has accepted an order,
upon the next determination of the NAV
of the Shares, the Fund will confirm the
issuance of a Creation Unit, against
receipt of payment, at such NAV. Except
as provided in the Registration
Statement, a Creation Unit will not be
issued until the transfer of good title to
the Fund of the Deposit Securities and
the payment of the Cash Component (or
Cash Deposit) have been completed. A
standard creation transaction fee will be
imposed to offset the transfer and other
transaction costs associated with the
issuance of Creation Units.
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Shares of the Fund may be redeemed
by Authorized Participants only in
Creation Units at their NAV next
determined after receipt of a redemption
request in proper form by the
Distributor and only on a business day.
The Manager will make available
through the NSCC, prior to the opening
of business on the Exchange on each
business day, the designated portfolio of
securities (including any portion of such
securities for which cash may be
substituted) that will be applicable to
redemption requests received in proper
form on that day (‘‘Fund Securities’’),
and an amount of cash equal to the
difference between the NAV of the
Shares being redeemed, as next
determined after the receipt of a
redemption request in proper form, and
the value of Fund Securities.
According to the Registration
Statement, such Fund Securities and the
corresponding cash amount will be
applicable, in order to effect
redemptions of Creation Units of the
Fund, until such time as the next
announced composition of the Fund
Securities and cash amount is made
available. Fund Securities received on
redemption may not be identical to
Deposit Securities that are applicable to
creations of Creation Units.
When partial or full cash redemptions
of Creation Units are available or
specified, they will be effected in
essentially the same manner as in-kind
redemptions. In the case of partial or
full cash redemption, the Authorized
Participant receives the cash equivalent
of the Fund Securities it would
otherwise receive through an in-kind
redemption, plus the same cash amount
to be paid to an in-kind redeemer.
Redemption requests for Creation
Units of the Fund must be submitted to
the Distributor by or through an
Authorized Participant. An Authorized
Participant must submit an irrevocable
request to redeem Shares generally
before 4:00 p.m., Eastern time on any
business day, in order to receive that
day’s NAV. A standard redemption
transaction fee will be imposed to offset
transfer and other transaction costs that
may be incurred by the Fund.
The right of redemption may be
suspended or the date of payment
postponed with respect to the Fund: (i)
For any period during which the
Exchange is closed (other than
customary weekend and holiday
closings); (ii) for any period during
which trading on the Exchange is
suspended or restricted; (iii) for any
period during which an emergency
exists as a result of which disposal of
the Fund’s portfolio securities or
determination of its NAV is not
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reasonably practicable; or (iv) in such
other circumstance as is permitted by
the Commission.
Detailed descriptions of the Fund’s
procedures for creating and redeeming
Shares, transaction fees and expenses,
dividends, distributions, taxes, risks,
and reports to be distributed to
beneficial owners of the Shares can be
found in the Registration Statement or
on the Web site for the Fund
(www.franklintempleton.com), as
applicable.
Determination of Net Asset Value
According to the Registration
Statement, the Fund will calculate the
NAV per Share each business day
normally as of the close of regular
trading on the New York Stock
Exchange (‘‘NYSE’’), normally 4:00 p.m.
Eastern time. The Fund will not
calculate the NAV on days the NYSE is
closed for trading. The NAV of the Fund
will be determined by deducting the
Fund’s liabilities from the total assets of
the portfolio. The NAV per Share will
be determined by dividing the total
NAV of the Fund by the number of
Shares outstanding.
When determining its NAV, the Fund
will value cash and receivables at their
realizable amounts, and will record
interest as accrued and dividends on the
ex-dividend date. The Fund will
generally utilize two independent
pricing services to assist in determining
a current market value for each security.
According to the Registration
Statement, generally, trading in
corporate bonds, U.S. government
securities and money market
instruments is substantially completed
each day at various times before the
close of the NYSE. The value of these
securities as of such times generally is
used in computing the NAV.
Occasionally, events affecting the values
of these securities may occur between
the times at which the values are
determined and the close of the NYSE.
The Fund will rely on third-party
pricing vendors to monitor for events
materially affecting the value of these
securities during this period. If an event
occurs, the third-party pricing vendors
will provide revised values to the Fund,
which will be incorporated into the
calculation of the Fund’s NAV.
The Fund will have procedures,
approved by the board of trustees, to
determine the fair value of individual
securities and other assets for which
market prices are not readily available
or which may not be reliably priced.
According to the Registration Statement,
some methods for valuing these
securities may include: fundamental
analysis (earnings multiple, etc.), matrix
PO 00000
Frm 00119
Fmt 4703
Sfmt 4703
pricing, discounts from market prices of
similar securities, or discounts applied
due to the nature and duration of
restrictions on the disposition of the
securities.
Mortgage pass-through securities,
other mortgage-backed securities, CMOs
and asset-backed securities generally
trade in the over-the-counter market
rather than on a securities exchange.
The Fund predominantly values these
portfolio securities by relying on
independent pricing services, but may
also utilize quotations from bond
dealers and information with respect to
bond and note transactions when prices
are not readily available from or reliably
priced by such independent pricing
services, all in accordance with
valuation procedures approved by the
Fund’s board. The Fund’s pricing
services will use valuation models or
matrix pricing to determine current
value. In general, they will use
information with respect to comparable
bond and note transactions, quotations
from bond dealers or by reference to
other securities that are considered
comparable in such characteristics as
rating, interest rate, maturity date,
option adjusted spread models,
prepayment projections, interest rate
spreads and yield curves. Matrix pricing
is considered a form of fair value
pricing.
The Fund will not invest in equity
securities other than possible
investments in shares of other
investment companies as noted above.
Redeemable securities issued by openend investment companies are valued
on any given business day using the
respective closing NAVs of such
companies for purchase and/or
redemption orders placed on that day in
accordance with valuation procedures
approved by the Fund’s board. For
securities that are traded on an
exchange, the Fund will value those
securities at the last quoted sale price of
the day in accordance with valuation
procedures approved by the Fund’s
board.
Availability of Information
The Fund’s Web site
(www.franklintempleton.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) the prior
business day’s NAV and the market
closing price or mid-point of the bid/ask
spread at the time of calculation of such
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mstockstill on DSK4VPTVN1PROD with NOTICES
NAV (the ‘‘Bid/Ask Price’’),21 and a
calculation of the premium or discount
of the market closing price or Bid/Ask
Price against the NAV, and (2) a table
showing the number of days the Market
Price (as defined by the Commission in
Form N–1A) 22 of the Fund shares was
greater than the Fund’s NAV and the
number of days it was less than the
Fund’s NAV (i.e., premium or discount)
for the most recently completed
calendar year, and the most recently
completed calendar quarters since that
year (or the life of the Fund, if shorter).
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 that
will form the basis for the Fund’s
calculation of NAV at the end of the
business day.23
On a daily basis, the Manager will
disclose for each portfolio security or
other financial instrument of the Fund
the following information on the Fund’s
Web site: Ticker symbol (if applicable),
name of security or financial
instrument, number of shares or dollar
value of securities and financial
instruments held in the portfolio, and
percentage weighting of the security and
financial instrument in the portfolio.
The Web site information will be
publicly available at no charge.
In addition, for in-kind creations, a
basket composition file, which will
include the security names and share
quantities to deliver in exchange for
Shares, together with estimates and
actual cash components, will be
publicly disseminated daily prior to the
opening of the Exchange via the NSCC.
The basket will represent one Creation
Unit of the Fund.
Investors can also obtain the Trust’s
Statement of Additional Information
21 The Bid/Ask Price of the Fund will be
determined using the mid-point of the highest bid
and the lowest offer on the Exchange as of the time
of calculation of the Fund’s NAV. The records
relating to Bid/Ask Prices will be retained by the
Fund and its service providers.
22 The Commission has defined ‘‘Market Price’’ in
Form N–1A as the ‘‘last reported sale price at which
Exchange-Traded Fund shares trade on the
principal U.S. market on which the Fund’s Shares
are traded during a regular trading session or, if it
more accurately reflects the current market value of
the Fund’s Shares at the time the Fund uses to
calculate its net asset value, a price within the range
of the highest bid and lowest offer on the principal
U.S. market on which the Fund’s Shares are traded
during a regular trading session.’’
23 Under accounting procedures to be 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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(‘‘SAI’’), the Fund’s Shareholder
Reports, and the Trust’s Form N–CSR
and Form N–SAR, filed twice a year.
The Trust’s SAI and Shareholder
Reports will be available free upon
request from the Trust, and those
documents and the Form N–CSR and
Form N–SAR may be viewed on-screen
or downloaded from the Commission’s
Web site at www.sec.gov. Information
regarding market price and trading
volume of the Shares will be continually
available on a real-time basis throughout
the day on brokers’ computer screens
and other electronic services.
Information regarding the previous
day’s closing price and trading volume
information for the Shares will be
published daily in the financial section
of newspapers. Quotation and last sale
information for the Shares 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 widely disseminated
at least every 15 seconds during the
Core Trading Session by one or more
major market data vendors.24 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 will provide a close estimate of that
value throughout the trading day.
The intra-day, closing and settlement
prices of the portfolio securities and
other Fund investments will also be
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.
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.25 Trading in Shares of the
Fund will be halted if the circuit breaker
24 Currently, it is the Exchange’s understanding
that several major market data vendors widely
disseminate Portfolio Indicative Values taken from
CTA or other data feeds.
25 See NYSE Arca Equities Rule 7.12.
PO 00000
Frm 00120
Fmt 4703
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56975
parameters in NYSE Arca Equities Rule
7.12 have been reached. Trading also
may be halted because of market
conditions or for reasons that, in the
view of the Exchange, make trading in
the Shares inadvisable. These may
include: (1) The extent to which trading
is not occurring in the securities and/or
the financial instruments comprising
the Disclosed Portfolio of the 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.
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 4:00
a.m. to 8:00 p.m. Eastern time in
accordance with NYSE Arca Equities
Rule 7.34 (Opening, Core, and Late
Trading Sessions). The Exchange has
appropriate rules to facilitate
transactions in the Shares during all
trading sessions. As provided in NYSE
Arca Equities Rule 7.6, Commentary .03,
the minimum price variation (‘‘MPV’’)
for quoting and entry of orders in equity
securities traded on the NYSE Arca
Marketplace is $0.01, with the exception
of securities that are priced less than
$1.00 for which the MPV for order entry
is $0.0001.
Surveillance
The Exchange represents that trading
in the Shares will be subject to the
existing trading surveillances,
administered by the Financial Industry
Regulatory Authority (‘‘FINRA’’) on
behalf of the Exchange, which are
designed to detect violations of
Exchange rules and applicable federal
securities laws.26 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 surveillances referred to above
generally focus on detecting securities
trading outside their normal patterns,
which could be indicative of
manipulative or other violative activity.
When such situations are detected,
surveillance analysis follows and
26 FINRA surveils trading on the Exchange
pursuant to a regulatory services agreement. The
Exchange is responsible for FINRA’s performance
under this regulatory services agreement.
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investigations are opened, where
appropriate, to review the behavior of
all relevant parties for all relevant
trading violations. FINRA, on behalf of
the Exchange, will communicate as
needed regarding trading in the Shares
with other markets and other entities
that are members of the Intermarket
Surveillance Group (‘‘ISG’’) and FINRA,
on behalf of the Exchange, may obtain
trading information regarding trading in
the Shares from such markets and other
entities. In addition, the Exchange may
obtain information regarding trading in
the Shares from markets and other
entities that are members of ISG or with
which the Exchange has in place a
comprehensive surveillance sharing
agreement.27
In addition, the Exchange also has a
general policy prohibiting the
distribution of material, non-public
information by its employees.
mstockstill on DSK4VPTVN1PROD with NOTICES
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
Act. The Bulletin will also disclose that
the NAV for the Shares will be
27 For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all
components of the Disclosed Portfolio for 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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17:46 Sep 13, 2013
Jkt 229001
calculated after 4:00 p.m. Eastern time
each trading day.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 28 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 is designed to
prevent fraudulent and manipulative
acts and practices in that the Shares will
be listed and traded on the Exchange
pursuant to the initial and continued
listing criteria in NYSE Arca Equities
Rule 8.600. 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. The
Manager is not registered as a brokerdealer but it is affiliated with a brokerdealer and has represented that it has
implemented a fire wall with respect to
its broker-dealer affiliate regarding
access to information concerning the
composition and/or changes to the
portfolio.
FINRA, on behalf of the Exchange,
may obtain information via ISG from
other exchanges that are members of ISG
or with which the Exchange has entered
into a comprehensive surveillance
sharing agreement.
The proposed rule change is designed
to promote just and equitable principles
of trade and to protect investors and the
public interest in that the Exchange will
obtain a representation from the issuer
of the Shares that the NAV per Share
will be calculated daily and that the
NAV and the Disclosed Portfolio will be
made available to all market
participants at the same time. In
addition, a large amount of information
is publicly available regarding the Fund
and the Shares, thereby promoting
market transparency. Moreover, the
Portfolio Indicative Value will be
widely disseminated at least every 15
seconds during the Core Trading
Session by one or more major market
data vendors. On each business day,
before commencement of trading in
Shares on a national securities
exchange, the Fund will disclose on its
Web site the identities and quantities of
the Fund’s portfolio holdings that will
form the basis for the Fund’s calculation
28 15
PO 00000
U.S.C. 78f(b)(5).
Frm 00121
Fmt 4703
Sfmt 4703
of NAV at the end of that business day.
The intra-day, closing and settlement
prices of the portfolio securities and
other Fund investments will also be
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. 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 will
be available via the CTA high-speed
line. The Web site for the Fund will
include the prospectus for the Fund and
additional data relating to NAV and
other applicable quantitative
information. Moreover, prior to the
commencement of trading, the Exchange
will inform its ETP Holders in an
Information Bulletin of the special
characteristics and risks associated with
trading the Shares. 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
circumstances under which Shares of
the Fund may be halted. In addition, as
noted above, investors will have ready
access to information regarding the
Fund’s holdings, the Portfolio Indicative
Value, the Disclosed Portfolio, and
quotation and last sale information for
the Shares.
The proposed rule change is designed
to perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest in that
it will facilitate the listing and trading
of an additional type of activelymanaged exchange-traded product that
will enhance competition among market
participants, to the benefit of investors
and the marketplace. Under normal
market conditions, at least 80% of the
Fund’s net assets will be invested in
securities issued or guaranteed by the
U.S. government, its agencies, or
instrumentalities. As noted above, 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 FINRA, on behalf of
the Exchange, may obtain information
via ISG from other exchanges that are
members of ISG or with which the
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Exchange has entered into a
comprehensive surveillance sharing
agreement. In addition, as noted above,
investors will have ready access to
information regarding the Fund’s
holdings, the Portfolio Indicative Value
and quotation and last sale information
for the Shares. The Fund may invest up
to 15% of its net assets in illiquid
securities (calculated at the time of
investment), including Rule 144A
securities deemed illiquid by the
Manager. The Fund expects that no
more than 20% of the value of the
Fund’s net assets will be invested in
derivative instruments as discussed
above. Such derivative investments will
be consistent with the Fund’s
investment goal and will not be used to
enhance leverage.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purpose of the Act. The Exchange
notes that the proposed rule change will
facilitate the listing and trading of an
additional type of actively-managed
exchange-traded product that will
enhance competition among market
participants, to the benefit of investors
and the marketplace.
mstockstill on DSK4VPTVN1PROD with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or 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 or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
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17:46 Sep 13, 2013
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56977
Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[File No. 500–1]
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2013–86 on the subject line.
Axcess International, Inc., Gamma
Pharmaceuticals, Inc., Innovex, Inc,
Knight Energy Corp., Komodo, Inc.,
Uphonia, Inc., and Wilson Brothers
USA, Inc., Order of Suspension of
Trading
Paper Comments
September 12, 2013.
• 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–2013–86. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://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 Section, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing will also be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEArca–2013–86 and should be
submitted on or before October 7, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–22397 Filed 9–13–13; 8:45 am]
BILLING CODE 8011–01–P
29 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00122
Fmt 4703
Sfmt 4703
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Axcess
International, Inc. because it has not
filed any periodic reports since the
period ended September 30, 2010.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Gamma
Pharmaceuticals, Inc. because it has not
filed any periodic reports since the
period ended September 30, 2009.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Innovex, Inc
because it has not filed any periodic
reports since the period ended July 4,
2009.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Knight
Energy Corp. because it has not filed
any periodic reports since the period
ended September 30, 2008.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Komodo,
Inc. because it has not filed any periodic
reports since the period ended June 30,
2008.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Uphonia,
Inc. because it has not filed any periodic
reports since the period ended
September 30, 2005.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Wilson
Brothers USA, Inc. because it has not
filed any periodic reports since the
period ended September 30, 2004.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
companies. Therefore, it is ordered,
pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that
E:\FR\FM\16SEN1.SGM
16SEN1
]]>Agencies
[Federal Register Volume 78, Number 179 (Monday, September 16, 2013)]
[Notices]
[Pages 56970-56977]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-22397]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70356; File No. SR-NYSEArca-2013-86]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of Franklin Short
Duration U.S. Government ETF Under NYSE Arca Equities Rule 8.600
September 10, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on August 27, 2013, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. 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\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade shares of the following
under NYSE Arca Equities Rule 8.600 (``Managed Fund Shares''): Franklin
Short Duration U.S. Government ETF. The text of the proposed rule
change is available on the Exchange's Web site at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade shares (``Shares'') of the
following under NYSE Arca Equities Rule 8.600, which governs the
listing and trading of Managed Fund Shares\3\ on the Exchange: Franklin
Short Duration U.S. Government ETF (the ``Fund'').\4\ The Shares of the
Fund will be offered by Franklin ETF Trust (the ``Trust''). The Trust
will be registered with the Commission as an open-end
[[Page 56971]]
management investment company.\5\ Franklin Advisers, Inc. will serve as
the investment manager to the Fund (the ``Manager''). Franklin
Templeton Distributors, Inc. (the ``Distributor'') will be the
principal underwriter and distributor of the Fund's Shares. Franklin
Templeton Services, LLC (the ``Administrator'') will serve as
administrator for the Fund and The Bank of New York Mellon will serve
as sub-administrator for the Fund. The Bank of New York Mellon will
serve as the custodian and transfer agent for the Fund (``Custodian''
and ``Transfer Agent,'' respectively).
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\3\ A Managed Fund Share is a security that represents an
interest in an investment company registered under the Investment
Company Act of 1940 (15 U.S.C. 80a-1) (``1940 Act'') organized as an
open-end investment company or similar entity that invests in a
portfolio of securities selected by its investment adviser
consistent with its investment goal 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.
\4\ The Securities and Exchange Commission (``Commission'') has
previously approved listing and trading on the Exchange of a number
of actively managed funds under Rule 8.600. See, e.g., Securities
Exchange Act Release Nos. 57801 (May 8, 2008), 73 FR 27878 (May 14,
2008) (SR-NYSEArca-2008-31) (order approving Exchange listing and
trading of twelve actively-managed funds of the WisdomTree Trust);
60460 (August 7, 2009), 74 FR 41468 (August 17, 2009) (SR-NYSEArca-
2009-55) (order approving listing and trading of Dent Tactical ETF);
63076 (October 12, 2010), 75 FR 63874 (October 18, 2010) (SR-
NYSEArca-2010-79) (order approving listing and trading of Cambria
Global Tactical ETF).
\5\ The Trust will be registered under the 1940 Act. On February
7, 2013, the Trust filed a registration statement on Form N-1A under
the Securities Act of 1933 (the ``1933 Act'') (15 U.S.C. 77a), and
under the 1940 Act, relating to the Fund (File Nos. 333-186504 and
811-22801) (the ``Registration Statement''). The description of the
operation of the Trust and the Fund herein is based, in part, on the
Registration Statement. The Trust filed an application on June 8,
2012, and amendments to the application on October 26, 2012 and
December 18, 2012, requesting an Order under Section 6(c) of the
1940 Act for exemptions from various provisions of the 1940 Act and
rules thereunder (File No. 812-14042) (``Exemptive Application'').
The Commission has issued an order granting certain exemptive relief
to the Trust under the 1940 Act. See Investment Company Act Release
No. 30350 (January 15, 2013) (``Exemptive Order''). Investments made
by the Fund will comply with the conditions set forth in the
Exemptive Application and the Exemptive Order.
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Commentary .06 to Rule 8.600 provides that, if the investment
adviser to the investment company issuing Managed Fund Shares is
affiliated with a broker-dealer, such investment adviser shall erect a
``fire wall'' between the investment adviser and the broker-dealer with
respect to access to information concerning the composition of and/or
changes to such investment company portfolio. Commentary .06 further
requires that personnel who make decisions on the open-end fund's
portfolio composition must be subject to procedures designed to prevent
the use and dissemination of material nonpublic information regarding
the open-end fund's portfolio.\6\ Commentary .06 to Rule 8.600 is
similar to Commentary .03(a)(i) and (iii) to NYSE Arca Equities Rule
5.2(j)(3); however, Commentary .06 in connection with the establishment
of a ``fire wall'' between the investment adviser and the broker-dealer
reflects the applicable open-end fund's portfolio, not an underlying
benchmark index, as is the case with index-based funds. The Manager is
not registered as a broker-dealer but it is affiliated with a broker-
dealer and has represented that it has implemented a fire wall with
respect to its broker-dealer affiliate regarding access to information
concerning the composition and/or changes to the portfolio. In the
event (a) the Manager or any sub-adviser becomes newly affiliated with
a broker-dealer, or (b) any new adviser or sub-adviser is a registered
broker-dealer or becomes affiliated with a broker-dealer, they will
implement a fire wall with respect to their relevant personnel or
broker-dealer affiliate regarding access to information concerning the
composition and/or changes to the portfolio, and will be subject to
procedures designed to prevent the use and dissemination of material
non-public information regarding such portfolio.
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\6\ 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 Manager and its related personnel are
subject to the provisions of Rule 204A-1 under the Advisers Act
relating to codes of ethics. This Rule requires investment advisers
to adopt a code of ethics that reflects the fiduciary nature of the
relationship to clients as well as compliance with other applicable
securities laws. Accordingly, procedures designed to prevent the
communication and misuse of non-public information by an investment
adviser must be consistent with Rule 204A-1 under the Advisers Act.
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful
for an investment adviser to provide investment advice to clients
unless such investment adviser has (i) adopted and implemented
written policies and procedures reasonably designed to prevent
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.
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Fund Investments
According to the Registration Statement, the Fund's investment goal
is to provide a high level of current income as is consistent with
prudent investing, while seeking preservation of capital. The Fund will
seek to achieve its investment goal by investing, under normal market
conditions,\7\ at least 80% of its net assets in securities issued or
guaranteed by the U.S. government, its agencies, or instrumentalities.
The Fund currently targets an estimated average portfolio duration\8\
of three (3) years or less. The Manager calculates the duration of the
portfolio by modeling the cash flows of all the individual holdings,
including the impact of prepayment variability and coupon adjustments
where applicable, to determine the duration of each holding and then
aggregating based on the size of the position. In performing this
duration calculation, the Manager utilizes third party models as
adjusted based on the Manager's market expectations with respect to
interest rates, borrower-level factors affecting credit availability,
the condition of the housing market as well as broader economic
factors, among other things, consistent with industry practice. Because
the Fund publishes its portfolio on a daily basis, market participants
have the ability to assess whether the duration calculation is
consistent with generally accepted market calculations of duration.
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\7\ The term ``under normal market conditions'' includes, but is
not limited to, the absence of extreme volatility or trading halts
in the equity markets or the financial markets generally;
operational issues causing dissemination of inaccurate market
information; or force majeure type events such as systems failure,
natural or man-made disaster, act of God, armed conflict, act of
terrorism, riot or labor disruption or any similar intervening
circumstance.
\8\ In comparison to maturity (which is the date on which a debt
instrument ceases and the issuer is obligated to repay the principal
amount), duration is a measure of the expected price volatility of a
debt instrument as a result of changes in market rates of interest,
based on the weighted average timing of the instrument's expected
principal and interest payments and other factors. Duration differs
from maturity in that it considers a security's yield, coupon
payments, principal payments, call features and coupon adjustments
in addition to the amount of time until the security finally
matures. As the value of a security changes over time, so will its
duration. Prices of securities with lower durations tend to be less
sensitive to interest rate changes than securities with higher
durations. In general, a portfolio of securities with a lower
duration can be expected to be less sensitive to interest rate
changes than a portfolio with a higher duration.
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According to the Registration Statement, the Fund generally will
invest a substantial portion of its assets in mortgage-backed
securities\9\ issued or guaranteed by the U.S. government, its agencies
or instrumentalities, including adjustable rate mortgage securities,
but the Fund also will invest in direct obligations of the U.S.
government (such as Treasury bonds, bills and notes) and in securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities, including government sponsored entities. All of the
Fund's principal investments will be debt securities, including bonds,
notes and debentures.
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\9\ Mortgage-backed securities represent an interest in a pool
of mortgage loans made by banks and other financial institutions to
finance purchases of homes, commercial buildings and other real
estate. The individual mortgage loans are packaged or ``pooled''
together for sale to investors. As the underlying mortgage loans are
paid off, investors receive principal and interest payments. These
securities may be fixed-rate or adjustable-rate mortgage-backed
securities (ARMS). Further, these securities can also be categorized
as collateralized mortgage obligations (CMOs) or real estate
mortgage investment conduits (REMICs) where they are divided into
multiple classes with each class being entitled to a different share
of the principal and/or interest payments received from the pool of
underlying assets.
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According to the Registration Statement, the mortgage-backed
[[Page 56972]]
securities in which the Fund will substantially invest are issued or
guaranteed by the U.S. government, its agencies or instrumentalities,
such as Ginnie Mae and U.S. government-sponsored entities, such as
Fannie Mae and Freddie Mac. Most mortgage-backed securities are pass-
through securities, which means they provide investors with monthly
payments consisting of a pro rata share of both regular interest and
principal payments as well as unscheduled prepayments on the underlying
mortgage loans. Because prepayment rates of individual mortgage pools
vary widely, the average life of a particular pool cannot be predicted
accurately. Adjustable-rate mortgage-backed securities include ARMS and
other mortgage-backed securities with interest rates that adjust
periodically to reflect prevailing market interest rates.
According to the Registration Statement, the Fund may invest in
securities with various levels of credit support \10\ including, but
not limited to, those issued or guaranteed by the Federal Home Loan
Banks, Veterans Administration, Federal Housing Authority, Export-
Import Bank of the United States, Overseas Private Investment
Corporation, Commodity Credit Corporation, Small Business
Administration, U.S. Agency for International Development, Tennessee
Valley Authority and Farm Credit System.
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\10\ Government agency or instrumentality securities have
different levels of credit support. For example, Ginnie Mae
securities carry a guarantee as to the timely repayment of principal
and interest that is backed by the full faith and credit of the U.S.
government. However, the full faith and credit guarantee does not
apply to the market prices and yields of the Ginnie Mae securities
or to the net asset value (``NAV''), trading price or performance of
the Fund, which will vary with changes in interest rates and other
market conditions. Fannie Mae and Freddie Mac pass-through mortgage
certificates are backed by the credit of the respective
instrumentality and are not guaranteed by the U.S. government. Other
securities issued by government agencies or instrumentalities,
including government sponsored entities, may only be backed by the
credit worthiness of the issuing institution, not the U.S.
Government, or the issuers may have the right to borrow from the
U.S. Treasury to meet its obligations.
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The Fund may invest in callable agency securities, which give the
issuer (the U.S. government agency) the right to redeem the security
prior to maturity. The Fund may also invest in U.S. government
inflation-indexed securities.\11\ Additionally, the Fund may invest,
without limitation, in mortgage dollar rolls.\12\ However, the Fund
will invest only in covered mortgage dollar rolls, meaning that the
Fund establishes a segregated account with liquid securities equal in
value to the securities it will repurchase. The Fund intends to enter
into mortgage dollar rolls only with high quality securities dealers
and banks as determined by the Manager under board approved
counterparty review procedures.
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\11\ Inflation-indexed securities are fixed-income securities
that are structured to provide protection against inflation. The
value of the security's principal or the interest income paid on the
security is adjusted to track changes in an official inflation
measure. The U.S. Treasury uses the Consumer Price Index for Urban
Consumers as the inflation measure.
\12\ In a mortgage dollar roll, the Fund will sell (or buy)
mortgage-backed securities for delivery on a specified date and
simultaneously contract to repurchase (or sell) substantially
similar (same type, coupon, and maturity) securities on a future
date. During the period between a sale and repurchase, the Fund will
forgo principal and interest paid on the mortgage-backed securities.
The Fund will earn or lose money on a mortgage dollar roll from any
difference between the sale price and the future purchase price. In
a sale and repurchase, the Fund also earns money on the interest
earned on the cash proceeds of the initial sale.
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Other Investments
According to the Registration Statement, when the Manager believes
market or economic conditions are unfavorable for investors, the
Manager may invest up to 100% of the Fund's assets in a temporary
defensive manner by holding all or a substantial portion of its assets
in cash, cash equivalents or other high quality short-term investments.
Temporary defensive investments generally may include short-term U.S.
government securities, high-grade commercial paper, bank obligations,
repurchase agreements, money market fund shares (including shares of an
affiliated money market fund) and other money market instruments. The
Manager also may invest in these types of securities or hold cash while
looking for suitable investment opportunities or to maintain
liquidity.\13\
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\13\ Circumstances under which the Fund may temporarily depart
from its normal investment process include, but are not limited to,
extreme volatility or trading halts in the equity markets or the
financial markets generally; operational issues causing
dissemination of inaccurate market information; or force majeure
type events such as systems failure, natural or man-made disaster,
act of God, armed conflict, act of terrorism, riot or labor
disruption or any similar intervening circumstance.
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The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid securities (calculated at the time of investment),
including Rule 144A securities deemed illiquid by the Manager.\14\ The
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 the Fund's
net assets are held in illiquid securities. Illiquid securities include
securities subject to contractual or other restrictions on resale and
other instruments that lack readily available markets as determined in
accordance with Commission staff guidance.\15\
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\14\ In reaching liquidity decisions, the Manager may consider
the following factors: the frequency of trades and quotes for the
security, the number of dealers wishing to purchase or sell the
security and the number of other potential purchasers; dealer
undertakings to make a market in the security; and the nature of the
security and the nature of the marketplace in which it trades (e.g.,
the time needed to dispose of the security, the method of soliciting
offers, and the mechanics of transfer).
\15\ The Commission has stated that long-standing Commission
guidelines have required open-end funds to hold no more than 15% of
their net assets in illiquid securities and other illiquid assets.
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR
14618 (March 18, 2008), footnote 34. See also, Investment Company
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31,
1970) (Statement Regarding ``Restricted Securities''); Investment
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio
security is illiquid if it cannot be disposed of in the ordinary
course of business within seven days at approximately the value
ascribed to it by the fund. See Investment Company Act Release No.
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990)
(adopting Rule 144A under the 1933 Act).
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The Fund may invest in other investment companies to the extent
permitted by the 1940 Act, Commission rules thereunder and exemptions
thereto. Section 12(d)(1)(A) of the 1940 Act requires that, as
determined immediately after a purchase is made, (i) not more than 5%
of the value of the Fund's total assets will be invested in the
securities of any one investment company, (ii) not more than 10% of the
value of the Fund's total assets will be invested in securities of
investment companies as a group, and (iii) not more than 3% of the
outstanding voting stock of any one investment company will be owned by
the Fund. Certain exceptions to these limitations may apply, and the
Fund may also rely on any future applicable Commission rules or orders
that provide exceptions to these limitations.
The Fund may invest up to 20% of its net assets in securities not
issued or guaranteed by the U.S. government, its agencies or
instrumentalities, including mortgage backed securities. According to
the Registration Statement, these investments may include investment
grade debt securities.\16\ The Fund will
[[Page 56973]]
not invest in non-investment grade debt securities. The Fund may also
lend a portfolio of securities up to 33\1/3\% of the value of its total
assets (measured at the time of the most recent loan). In exchange, the
Fund will receive cash collateral from a borrower at least equal to the
value of the security loaned by the Fund. Cash collateral typically
consists of any combination of cash, securities issued by the U.S.
government and its agencies and instrumentalities, and irrevocable
letters of credit. Such securities will only be loaned to parties that
meet creditworthiness standards approved by the Fund's board. The Fund
may also invest in multi-class pass-through securities, when-issued,
delayed delivery and to-be-announced transactions; callable securities;
Franklin Templeton money market funds; repurchase agreements; U.S.
Treasury rolls; unrated debt securities deemed by the Manager to be of
comparable quality to investment grade debt securities; variable rate
securities; and zero coupon, deferred interest and pay-in-kind bonds.
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\16\ Debt securities that are rated Baa or higher by Moody's,
BBB or higher by S&P, or unrated securities deemed by the Manager to
be of comparable quality, are considered to be ``investment grade.''
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The Fund will not invest in equity securities other than possible
investments in shares of other investment companies as noted above.
The Fund will be classified as a ``diversified'' investment company
under the 1940 Act.\17\
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\17\ The diversification standard is set forth in Section
5(b)(1) of the 1940 Act.
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The Fund will not invest more than 25% of the Fund's net assets in
securities of issuers in any one industry (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities or securities of other investment companies, whether
registered or excluded from registration under Section 3(c) of the 1940
Act).\18\
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\18\ See Form N-1A, Item 9. The Commission has taken the
position that a fund is concentrated if it invests more than 25% of
the value of its total assets in any one industry. See, e.g.,
Investment Company Act Release No. 9011 (October 30, 1975), 40 FR
54241 (November 21, 1975).
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Additionally, the Fund will not purchase the securities of any one
issuer (other than the U.S. government or any of its agencies or
instrumentalities or securities of other investment companies, whether
registered or excluded from registration under Section 3(c) of the 1940
Act) if immediately after such investment (i) more than 5% of the value
of the Fund's total assets would be invested in such issuer or (ii)
more than 10% of the outstanding voting securities of such issuer would
be owned by the Fund, except that up to 25% of the value of the Fund's
total assets may be invested without regard to such 5% and 10%
limitations.
The Fund intends to qualify for and to elect treatment as a
separate regulated investment company (``RIC'') under Subchapter M of
the Internal Revenue Code.\19\
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\19\ 26 U.S.C. 851 et seq.
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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 \20\ under the Act, as provided by NYSE Arca
Equities Rule 5.3. A minimum of 100,000 Shares for the Fund 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 NAV per Share will be calculated daily and that the NAV and
the Disclosed Portfolio as defined in NYSE Arca Equities Rule
8.600(c)(2) will be made available to all market participants at the
same time.
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\20\ 17 CFR 240.10A-3.
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Investments in Derivatives
Consistent with the Exemptive Order, to pursue its investment goal,
the Fund may invest in interest rate, fixed income index, bond and U.S.
Treasury futures contracts. The use of these derivative transactions
may allow the Fund to obtain net long or short exposures to selected
interest rates or durations. These derivatives may be used to hedge
risks associated with the Fund's other portfolio investments. The Fund
expects that no more than 20% of the value of the Fund's net assets
will be invested in derivative instruments.
The Fund will not invest in options, futures contracts or swap
agreements other than as set forth in the preceding paragraph. The
Fund's investments will be consistent with its investment goal and will
not be used to enhance leverage.
Creation and Redemption of Shares
According to the Registration Statement, the Fund will issue and
redeem Shares on a continuous basis at NAV in aggregations of 50,000
Shares (``Creation Units'').
The consideration for purchase of Creation Units of the Fund will
consist of (i) a specified all-cash payment (the ``Cash Deposit'') or
(ii) a designated portfolio of securities (including any portion of
such securities for which cash may be substituted) (the ``Deposit
Securities''), together with the deposit of a specified cash payment
(the ``Cash Component''). The Cash Component will be equal to the
difference between the NAV of the Shares (per Creation Unit) and the
market value of the Deposit Securities. Together, the Deposit
Securities and the Cash Component or, alternatively, the Cash Deposit,
constitute the ``Fund Deposit,'' which will be applicable to creation
requests received in proper form. The Fund Deposit represents the
minimum initial and subsequent investment amount for a Creation Unit of
the Fund.
The Manager will make available through the National Securities
Clearing Corporation (``NSCC'') on each business day prior to the
opening of business on the Exchange, the list of names and the required
number or par value of each Deposit Security and the amount of the Cash
Component (or Cash Deposit) to be included in the current Fund Deposit
(based on information as of the end of the previous business day for
the Fund). Such Fund Deposit is applicable to purchases of Creation
Units of Shares until such time as the next-announced Fund Deposit is
made available.
To be eligible to place orders with the Distributor and to create a
Creation Unit of the Fund, an entity must be: (i) a broker-dealer or
other participant in the clearing process through the Continuous Net
Settlement System of the NSCC (the ``Clearing Process''), a clearing
agency that is registered with the Commission, or (ii) a Depositary
Trust Company (``DTC'') Participant, and must have executed an
agreement with the Distributor, with respect to creations and
redemptions of Creation Units. An entity that satisfies these
requirements is known as an ``Authorized Participant.'' Creation Units
may be purchased only by or through an Authorized Participant.
To initiate an order for a Creation Unit, an Authorized Participant
must submit to the Distributor or its agent an irrevocable order to
purchase Shares, in proper form, before 4:00 p.m., Eastern time (the
``Cut-off Time'') on any business day to receive that day's NAV. Once
the Fund has accepted an order, upon the next determination of the NAV
of the Shares, the Fund will confirm the issuance of a Creation Unit,
against receipt of payment, at such NAV. Except as provided in the
Registration Statement, a Creation Unit will not be issued until the
transfer of good title to the Fund of the Deposit Securities and the
payment of the Cash Component (or Cash Deposit) have been completed. A
standard creation transaction fee will be imposed to offset the
transfer and other transaction costs associated with the issuance of
Creation Units.
[[Page 56974]]
Shares of the Fund may be redeemed by Authorized Participants only
in Creation Units at their NAV next determined after receipt of a
redemption request in proper form by the Distributor and only on a
business day. The Manager will make available through the NSCC, prior
to the opening of business on the Exchange on each business day, the
designated portfolio of securities (including any portion of such
securities for which cash may be substituted) that will be applicable
to redemption requests received in proper form on that day (``Fund
Securities''), and an amount of cash equal to the difference between
the NAV of the Shares being redeemed, as next determined after the
receipt of a redemption request in proper form, and the value of Fund
Securities.
According to the Registration Statement, such Fund Securities and
the corresponding cash amount will be applicable, in order to effect
redemptions of Creation Units of the Fund, until such time as the next
announced composition of the Fund Securities and cash amount is made
available. Fund Securities received on redemption may not be identical
to Deposit Securities that are applicable to creations of Creation
Units.
When partial or full cash redemptions of Creation Units are
available or specified, they will be effected in essentially the same
manner as in-kind redemptions. In the case of partial or full cash
redemption, the Authorized Participant receives the cash equivalent of
the Fund Securities it would otherwise receive through an in-kind
redemption, plus the same cash amount to be paid to an in-kind
redeemer.
Redemption requests for Creation Units of the Fund must be
submitted to the Distributor by or through an Authorized Participant.
An Authorized Participant must submit an irrevocable request to redeem
Shares generally before 4:00 p.m., Eastern time on any business day, in
order to receive that day's NAV. A standard redemption transaction fee
will be imposed to offset transfer and other transaction costs that may
be incurred by the Fund.
The right of redemption may be suspended or the date of payment
postponed with respect to the Fund: (i) For any period during which the
Exchange is closed (other than customary weekend and holiday closings);
(ii) for any period during which trading on the Exchange is suspended
or restricted; (iii) for any period during which an emergency exists as
a result of which disposal of the Fund's portfolio securities or
determination of its NAV is not reasonably practicable; or (iv) in such
other circumstance as is permitted by the Commission.
Detailed descriptions of the Fund's procedures for creating and
redeeming Shares, transaction fees and expenses, dividends,
distributions, taxes, risks, and reports to be distributed to
beneficial owners of the Shares can be found in the Registration
Statement or on the Web site for the Fund (www.franklintempleton.com),
as applicable.
Determination of Net Asset Value
According to the Registration Statement, the Fund will calculate
the NAV per Share each business day normally as of the close of regular
trading on the New York Stock Exchange (``NYSE''), normally 4:00 p.m.
Eastern time. The Fund will not calculate the NAV on days the NYSE is
closed for trading. The NAV of the Fund will be determined by deducting
the Fund's liabilities from the total assets of the portfolio. The NAV
per Share will be determined by dividing the total NAV of the Fund by
the number of Shares outstanding.
When determining its NAV, the Fund will value cash and receivables
at their realizable amounts, and will record interest as accrued and
dividends on the ex-dividend date. The Fund will generally utilize two
independent pricing services to assist in determining a current market
value for each security.
According to the Registration Statement, generally, trading in
corporate bonds, U.S. government securities and money market
instruments is substantially completed each day at various times before
the close of the NYSE. The value of these securities as of such times
generally is used in computing the NAV. Occasionally, events affecting
the values of these securities may occur between the times at which the
values are determined and the close of the NYSE. The Fund will rely on
third-party pricing vendors to monitor for events materially affecting
the value of these securities during this period. If an event occurs,
the third-party pricing vendors will provide revised values to the
Fund, which will be incorporated into the calculation of the Fund's
NAV.
The Fund will have procedures, approved by the board of trustees,
to determine the fair value of individual securities and other assets
for which market prices are not readily available or which may not be
reliably priced. According to the Registration Statement, some methods
for valuing these securities may include: fundamental analysis
(earnings multiple, etc.), matrix pricing, discounts from market prices
of similar securities, or discounts applied due to the nature and
duration of restrictions on the disposition of the securities.
Mortgage pass-through securities, other mortgage-backed securities,
CMOs and asset-backed securities generally trade in the over-the-
counter market rather than on a securities exchange. The Fund
predominantly values these portfolio securities by relying on
independent pricing services, but may also utilize quotations from bond
dealers and information with respect to bond and note transactions when
prices are not readily available from or reliably priced by such
independent pricing services, all in accordance with valuation
procedures approved by the Fund's board. The Fund's pricing services
will use valuation models or matrix pricing to determine current value.
In general, they will use information with respect to comparable bond
and note transactions, quotations from bond dealers or by reference to
other securities that are considered comparable in such characteristics
as rating, interest rate, maturity date, option adjusted spread models,
prepayment projections, interest rate spreads and yield curves. Matrix
pricing is considered a form of fair value pricing.
The Fund will not invest in equity securities other than possible
investments in shares of other investment companies as noted above.
Redeemable securities issued by open-end investment companies are
valued on any given business day using the respective closing NAVs of
such companies for purchase and/or redemption orders placed on that day
in accordance with valuation procedures approved by the Fund's board.
For securities that are traded on an exchange, the Fund will value
those securities at the last quoted sale price of the day in accordance
with valuation procedures approved by the Fund's board.
Availability of Information
The Fund's Web site (www.franklintempleton.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) the prior
business day's NAV and the market closing price or mid-point of the
bid/ask spread at the time of calculation of such
[[Page 56975]]
NAV (the ``Bid/Ask Price''),\21\ and a calculation of the premium or
discount of the market closing price or Bid/Ask Price against the NAV,
and (2) a table showing the number of days the Market Price (as defined
by the Commission in Form N-1A) \22\ of the Fund shares was greater
than the Fund's NAV and the number of days it was less than the Fund's
NAV (i.e., premium or discount) for the most recently completed
calendar year, and the most recently completed calendar quarters since
that year (or the life of the Fund, if shorter). 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 that will form the basis for the Fund's calculation of NAV at
the end of the business day.\23\
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\21\ The Bid/Ask Price of the Fund will be determined using the
mid-point of the highest bid and the lowest offer on the Exchange as
of the time of calculation of the Fund's NAV. The records relating
to Bid/Ask Prices will be retained by the Fund and its service
providers.
\22\ The Commission has defined ``Market Price'' in Form N-1A as
the ``last reported sale price at which Exchange-Traded Fund shares
trade on the principal U.S. market on which the Fund's Shares are
traded during a regular trading session or, if it more accurately
reflects the current market value of the Fund's Shares at the time
the Fund uses to calculate its net asset value, a price within the
range of the highest bid and lowest offer on the principal U.S.
market on which the Fund's Shares are traded during a regular
trading session.''
\23\ Under accounting procedures to be 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 Manager will disclose for each portfolio
security or other financial instrument of the Fund the following
information on the Fund's Web site: Ticker symbol (if applicable), name
of security or financial instrument, number of shares or dollar value
of securities and financial instruments held in the portfolio, and
percentage weighting of the security and financial instrument in the
portfolio. The Web site information will be publicly available at no
charge.
In addition, for in-kind creations, a basket composition file,
which will include the security names and share quantities to deliver
in exchange for Shares, together with estimates and actual cash
components, will be publicly disseminated daily prior to the opening of
the Exchange via the NSCC. The basket will represent one Creation Unit
of the Fund.
Investors can also obtain the Trust's Statement of Additional
Information (``SAI''), the Fund's Shareholder Reports, and the Trust's
Form N-CSR and Form N-SAR, filed twice a year. The Trust's SAI and
Shareholder Reports will be available free upon request from the Trust,
and those documents and the Form N-CSR and Form N-SAR may be viewed on-
screen or downloaded from the Commission's Web site at www.sec.gov.
Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers. Quotation and last sale information for the
Shares 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 widely
disseminated at least every 15 seconds during the Core Trading Session
by one or more major market data vendors.\24\ 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 will provide a close estimate of that
value throughout the trading day.
---------------------------------------------------------------------------
\24\ Currently, it is the Exchange's understanding that several
major market data vendors widely disseminate Portfolio Indicative
Values taken from CTA or other data feeds.
---------------------------------------------------------------------------
The intra-day, closing and settlement prices of the portfolio
securities and other Fund investments will also be 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.
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.\25\ 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 and/or the
financial instruments comprising the Disclosed Portfolio 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.
---------------------------------------------------------------------------
\25\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace from 4:00 a.m. to 8:00 p.m. Eastern time in
accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late
Trading Sessions). The Exchange has appropriate rules to facilitate
transactions in the Shares during all trading sessions. As provided in
NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price
variation (``MPV'') for quoting and entry of orders in equity
securities traded on the NYSE Arca Marketplace is $0.01, with the
exception of securities that are priced less than $1.00 for which the
MPV for order entry is $0.0001.
Surveillance
The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances, administered by the Financial
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange,
which are designed to detect violations of Exchange rules and
applicable federal securities laws.\26\ 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.
---------------------------------------------------------------------------
\26\ FINRA surveils trading on the Exchange pursuant to a
regulatory services agreement. The Exchange is responsible for
FINRA's performance under this regulatory services agreement.
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The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
[[Page 56976]]
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations. FINRA, on
behalf of the Exchange, will communicate as needed regarding trading in
the Shares with other markets and other entities that are members of
the Intermarket Surveillance Group (``ISG'') and FINRA, on behalf of
the Exchange, may obtain trading information regarding trading in the
Shares from such markets and other entities. In addition, the Exchange
may obtain information regarding trading in the Shares from markets and
other entities that are members of ISG or with which the Exchange has
in place a comprehensive surveillance sharing agreement.\27\
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\27\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Disclosed Portfolio for 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 Act. The
Bulletin will also disclose that the NAV for the Shares will be
calculated after 4:00 p.m. Eastern time each trading day.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \28\ 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.
---------------------------------------------------------------------------
\28\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Equities Rule
8.600. 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. The Manager is not registered as a broker-
dealer but it is affiliated with a broker-dealer and has represented
that it has implemented a fire wall with respect to its broker-dealer
affiliate regarding access to information concerning the composition
and/or changes to the portfolio.
FINRA, on behalf of the Exchange, may obtain information via ISG
from other exchanges that are members of ISG or with which the Exchange
has entered into a comprehensive surveillance sharing agreement.
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation from the issuer of the
Shares that the NAV per Share will be calculated daily and that the NAV
and the Disclosed Portfolio will be made available to all market
participants at the same time. In addition, a large amount of
information is publicly available regarding the Fund and the Shares,
thereby promoting market transparency. Moreover, the Portfolio
Indicative Value will be widely disseminated at least every 15 seconds
during the Core Trading Session by one or more major market data
vendors. On each business day, before commencement of trading in Shares
on a national securities exchange, the Fund will disclose on its Web
site the identities and quantities of the Fund's portfolio holdings
that will form the basis for the Fund's calculation of NAV at the end
of that business day. The intra-day, closing and settlement prices of
the portfolio securities and other Fund investments will also be
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.
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 will be available via the CTA high-
speed line. The Web site for the Fund will include the prospectus for
the Fund and additional data relating to NAV and other applicable
quantitative information. Moreover, prior to the commencement of
trading, the Exchange will inform its ETP Holders in an Information
Bulletin of the special characteristics and risks associated with
trading the Shares. 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 circumstances under which Shares of
the Fund may be halted. In addition, as noted above, investors will
have ready access to information regarding the Fund's holdings, the
Portfolio Indicative Value, the Disclosed Portfolio, and quotation and
last sale information for the Shares.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of actively-managed exchange-traded product that
will enhance competition among market participants, to the benefit of
investors and the marketplace. Under normal market conditions, at least
80% of the Fund's net assets will be invested in securities issued or
guaranteed by the U.S. government, its agencies, or instrumentalities.
As noted above, 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 FINRA, on behalf of the Exchange, may
obtain information via ISG from other exchanges that are members of ISG
or with which the
[[Page 56977]]
Exchange has entered into a comprehensive surveillance sharing
agreement. In addition, as noted above, investors will have ready
access to information regarding the Fund's holdings, the Portfolio
Indicative Value and quotation and last sale information for the
Shares. The Fund may invest up to 15% of its net assets in illiquid
securities (calculated at the time of investment), including Rule 144A
securities deemed illiquid by the Manager. The Fund expects that no
more than 20% of the value of the Fund's net assets will be invested in
derivative instruments as discussed above. Such derivative investments
will be consistent with the Fund's investment goal and will not be used
to enhance leverage.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed rule change will facilitate the listing and trading of an
additional type of actively-managed exchange-traded product that will
enhance competition among market participants, to the benefit of
investors and the marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or 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 or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2013-86 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-2013-86. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://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 Section, 100 F Street
NE., Washington, DC 20549 on official business days between the hours
of 10:00 a.m. and 3:00 p.m. Copies of the filing will also be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2013-86 and should
be submitted on or before October 7, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-22397 Filed 9-13-13; 8:45 am]
BILLING CODE 8011-01-P
