Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change To List and Trade Shares of Manna Core Equity Enhanced Dividend Income Fund Under NYSE Arca Equities Rule 8.600, 77761-77765 [2013-30631]
Download as PDF
Federal Register / Vol. 78, No. 247 / Tuesday, December 24, 2013 / Notices
include imposing a Global Lock where
required by applicable law, rule or
regulation and for reasons that may not
include an Enforcement Proceeding. If,
however, DTC imposed a Global Lock
under such circumstances, DTC would
afford the affected issuer the fair
procedures set forth in proposed Rule
22(B) (except if prohibited by law, rule
or regulation). Section 5(b)(iv) provides
that while DTC may freely communicate
with the issuer or its representative,
substantive communications must be in
writing in order to provide the
Commission with a complete record in
the event of an appeal.
Section 5(c) sets forth the means by
which DTC shall send notice to the
issuer.
Statutory Basis
emcdonald on DSK67QTVN1PROD with NOTICES
The proposed Rules 22(A) and (B)
establish a procedure which provides
for: (a) criteria for notice to an issuer
that a Deposit Chill or Global Lock will
be imposed, (b) an explanation of the
specific grounds upon which the
restrictions are being or have been
imposed, (c) the actions that the issuer
must take in order to prevent or remove
the restriction, (d) the process DTC will
undertake to review written
submissions of the issuer and to render
a final decision concerning the
restriction, and (e) maintenance of a
complete record for submission to the
Commission in the event an issuer
appeals. As such the proposed rule
change is in accordance with Section
17A(b)(5)(B) of the Act 27 and
encompasses a uniform procedure for
issuers whose securities may be or are
subject to a Deposit Chill or Global
Lock. Therefore, the proposed rule
change is consistent with the
requirements of the Section
17A(b)(3)(H) of the Act,28 which
requires that the rules of a registered
clearing agency are in accordance with
the provisions of Section 17A(b)(5)(B) of
the Act, and in general provide a fair
procedure with respect to the
prohibition or limitation by the clearing
agency of any person with respect to
27 See 15 U.S.C. 78q–1(b)(5)(B) which provides:
‘‘In any proceeding by a registered clearing agency
to determine whether a person shall be denied
participation or prohibited or limited with respect
to access to services offered by the clearing agency,
the clearing agency shall notify such person of, and
give him an opportunity to be heard upon, the
specific grounds for denial or prohibition or
limitation under consideration and keep a record.
A determination by the clearing agency to deny
participation or prohibit or limit a person with
respect to access to services offered by the clearing
agency shall be supported by a statement setting
forth the specific grounds on which the denial or
prohibition or limitation is based.
28 15 U.S.C. 78q–1(b)(3)(H).
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access to services offered by the clearing
agency.
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
DTC does not believe that the
proposed rule changes will have any
impact on, or impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Exchange Act, because
the proposed procedures as described
above will apply to all issues that may
subject to Deposit Chill or Global Lock.
(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments relating to the
proposed rule change have not yet been
solicited or received with respect to this
filing. To the extent DTC receives
written comments on the proposed Rule
change DTC will forward such
comments to the Commission.
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
up to 90 days (i) as the Commission may
designate 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
such 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
77761
All submissions should refer to File
Number SR–DTC–2013–11. 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 such
filings also will be available for
inspection and copying at the principal
office of DTC and on DTC’s Web site at
https://dtcc.com/en/legal/sec-rulefilings.aspx. 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–DTC–
2013–11 and should be submitted on or
before January 14, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–30595 Filed 12–23–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71133; File No. SR–
NYSEArca–2013–111]
• 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–
DTC–2013–11 on the subject line.
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Approving a
Proposed Rule Change To List and
Trade Shares of Manna Core Equity
Enhanced Dividend Income Fund
Under NYSE Arca Equities Rule 8.600
Paper Comments
December 18, 2013.
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
I. Introduction
On October 23, 2013, NYSE Arca, Inc.
(‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
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Federal Register / Vol. 78, No. 247 / Tuesday, December 24, 2013 / Notices
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) 1 of the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’) 2 and Rule 19b–4 thereunder,3 a
proposed rule change to list and trade
shares (‘‘Shares’’) of the Manna Core
Equity Enhanced Dividend Income
Fund (‘‘Fund’’). The proposed rule
change was published for comment in
the Federal Register on November 7,
2013.4 The Commission received no
comments on the proposal. This order
approves the proposed rule change.
II. Description of the Proposed Rule
Change
The Exchange proposes to list and
trade the Shares under NYSE Arca
Equities Rule 8.600, which governs the
listing and trading of Managed Fund
Shares on the Exchange. The Exchange
makes the following representations and
statements in describing the Fund and
its investment strategies, including
portfolio holdings and limitations. The
Shares will be offered by ETF Actively
Managed Trust (‘‘Trust’’). The Trust will
be registered with the Commission as an
open-end management investment
company.5 ETF Issuer Solutions, Inc.
will serve as the investment adviser to
the Fund (‘‘Adviser’’). ETF Distributors
LLC will be the principal distributor of
the Fund’s Shares. Manna ETFs
Management LLC (the ‘‘Sub-Adviser’’)
will serve as sub-adviser for the Fund.
The Bank of New York Mellon will
serve as the administrator, accountant,
custodian, and transfer agent for the
Fund. The Exchange represents that the
Adviser and Sub-Adviser are each not
registered as a broker-dealer, but the
Adviser is affiliated with a broker-dealer
and has implemented a fire wall with
respect to its broker-dealer affiliate
regarding access to information
1 15
U.S.C.78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
4 See Securities Exchange Act Release No. 70798
(November 1, 2013), 78 FR 66973 (‘‘Notice’’).
5 The Trust is registered under the 1940 Act. On
April 2, 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–
187668 and 811–22819) (the ‘‘Registration
Statement’’). The Trust filed an Amended and
Restated Application for an Order under Section
6(c) of the 1940 Act for exemptions from various
provisions of the 1940 Act and rules thereunder
(File No. 812–14080), dated June 19, 2013
(‘‘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. 30607 (July 23, 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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concerning the composition of and
changes to the Fund’s portfolio.6
The Fund will seek long-term capital
appreciation and income primarily
through purchases and short sales of
U.S. and international equity securities.
To achieve its investment objective,
normally 7 the Fund will invest up to
100% (but not less than 80%) of its net
assets between its Core Position,
Dividend Position and Short Position
(each as defined below). The Fund
expects to invest in a portfolio of U.S.
common stocks or exchange traded
funds (‘‘ETFs’’) selected by the SubAdviser to reflect a broad spectrum (i.e.,
positions in companies of different
market capitalizations) of the U.S.
equity market (the ‘‘Core Position’’). The
Fund also expects to invest in a
portfolio that may contain U.S. and nonU.S. common stocks, American
Depositary Receipts (‘‘ADRs’’),
participation notes, or other equity
securities listed on U.S. or non-U.S.
exchanges or traded over the counter
that the Sub-Adviser expects to generate
dividend income to the Fund (the
‘‘Dividend Position’’). The Fund also
expects to sell short a portfolio of
common stocks, index- or sector-based
ETFs, other investment companies,
exchange traded notes (‘‘ETNs’’) and
other exchange traded products
(‘‘ETPs’’),8 other securities or index- or
6 See Commentary .06 to NYSE Arca Equities
Rule 8.600. The Exchange represents that in the
event (a) the Adviser or any Sub-Adviser registers
as a broker-dealer or becomes newly affiliated with
a broker-dealer, or (b) any new adviser or subadviser is a registered broker-dealer or becomes
affiliated with a broker-dealer, it will implement a
fire wall with respect to its relevant personnel or
its broker-dealer affiliate regarding access to
information concerning the composition of or
changes to the Fund’s portfolio, and will be subject
to procedures designed to prevent the misuse of
material, non-public information regarding the
Fund’s portfolio.
7 The term ‘‘normally’’ 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. According to
the Registration Statement, in certain adverse
market, economic, political, or other conditions, the
Fund may temporarily depart from its normal
investment policies and strategies provided that the
alternative is consistent with the Fund’s investment
objective and is in the best interest of the Fund. The
Fund may determine that market conditions
warrant investing in cash or cash equivalents, such
as money market instruments, and to the extent
permitted by applicable law and the Fund’s
investment restrictions, shares of other investment
companies. Under such circumstances, the Fund
may invest up to 100% of its assets in these
investments.
8 For purposes of this proposed rule change, ETPs
include Investment Company Units (as described in
NYSE Arca Equities Rule 5.2(j)(3)); Index-Linked
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sector-based futures contracts all of
which trade on U.S. and non-U.S.
exchanges selected for the purpose of
hedging against country or currency risk
associated with the investments in the
Dividend Position, or because they are
likely to underperform the market or
lose value in the near term (the ‘‘Short
Position’’).
The Fund will be an actively managed
ETF and thus does not seek to replicate
the performance of a specific index.
Instead, the Fund will use an active
investment strategy to meet its
investment objective. The Sub-Adviser,
subject to the oversight of the Adviser
and the Board of Trustees of the Trust,
will have discretion on a daily basis to
manage the Fund’s portfolio in
accordance with the Fund’s investment
objective and investment policies.
The Sub-Adviser will typically seek to
invest the Core Position in a portfolio of
common stocks and ETPs selected by
the Sub-Adviser to reflect a broad
spectrum (i.e., positions in companies of
different market capitalizations) of the
U.S. equity market. The Core Position
may invest in the common stock of
issuers of any market capitalization and
there are no requirements as to the
number of securities the Core Position
must hold.
The Fund may invest in any type of
ETF, including index based ETFs, sector
based ETFs, and fixed-income ETFs.
The Fund may hold ETFs with
portfolios comprised of domestic or
foreign stocks or bonds or any
combination thereof. However, due to
legal limitations, the Fund will be
prevented from purchasing more than
3% of an ETF’s outstanding shares
unless: (i) the ETF or the Fund has
received an order for exemptive relief
from the 3% limitation from the
Commission that is applicable to the
Fund; and (ii) the ETF and the Fund
take appropriate steps to comply with
any conditions in such order.
According to the Exchange, to
implement the Dividend Position’s
strategy, the Sub-Adviser will seek to
maximize the level of dividend income
that the Dividend Position receives,
Securities (as described in NYSE Arca Equities Rule
5.2(j)(6)); Portfolio Depositary Receipts (as
described in NYSE Arca Equities Rule 8.100); Trust
Issued Receipts (as described in NYSE Arca
Equities Rule 8.200); Commodity-Based Trust
Shares (as described in NYSE Arca Equities Rule
8.201); Currency Trust Shares (as described in
NYSE Arca Equities Rule 8.202); Commodity Index
Trust Shares (as described in NYSE Arca Equities
Rule 8.203); Trust Units (as described in NYSE Arca
Equities Rule 8.500); Managed Fund Shares (as
described in NYSE Arca Equities Rule 8.600). The
ETPs all will be listed and traded in the U.S. on
registered exchanges. While the Funds may invest
in inverse ETPs, the Funds will not invest in
leveraged or inverse leveraged ETPs (e.g., 2X or 3X).
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through the purchase of U.S. and nonU.S. securities that the Sub-Adviser
expects to generate dividend income for
the Dividend Position. To participate in
non-U.S. developed or emerging
markets, the Dividend Position may
invest in debt or equity securities,
ADRs, participation notes, and other
securities listed on U.S. or non-U.S.
exchanges or U.S. securities traded over
the counter. The Fund will invest only
in foreign securities and ADRs that are
traded on an exchange that is a member
of the Intermarket Surveillance Group
(‘‘ISG’’) or with which the Exchange has
in place a comprehensive surveillance
sharing agreement.
The Sub-Adviser expects to seek to
participate in special dividend
situations and engage in dividend
capture trading. Special dividend
situations may include those where
issuers decide to return large cash
balances to shareholders as one-time
dividend payments.
The Fund expects to establish Short
Positions, representing up to 30% of the
Fund’s principal investments, in
securities selected by the Sub-Adviser
for the purpose of hedging against
country, currency, sector or other risk
associated with the investments in the
Dividend Position, in an attempt to
establish, between the Dividend
Position and the Short Positions, a
market neutral position with respect to
the countries and currency in which the
Dividend Position is invested. The Fund
may also invest in Short Positions in
securities that the Sub-Adviser believes
are likely to underperform the market or
lose value in the near term. To
implement the Short Positions, the SubAdviser expects to typically sell short a
portfolio of equities, index- or sectorbased ETF’s, other investment
companies, index- or sector-based
futures contracts or other securities that
trade on U.S. and non-U.S. exchanges.9
According to the Registration Statement,
the proceeds from the Short Positions
(i.e., cash received from selling
securities short) will typically be used
to fund the acquisition of the Fund’s
investments in the Dividend Position.
Although the Fund expects to invest
not less than 80% of its assets as
described above, the Fund has
flexibility to invest in other types of
securities when the Sub-Adviser
believes they offer more attractive
opportunities or to meet liquidity,
9 To participate in non-U.S. developed or
emerging markets, the Fund may invest in ETFs,
ADRs, futures contracts and other securities listed
on U.S. or non-U.S. exchanges or traded over the
counter that are intended to track the non-U.S.
equity markets or market sectors in which the SubAdviser seeks exposure.
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77763
redemption, and short term investing
needs. The Fund may invest up to 20%
of its assets in securities convertible into
common stock. Convertible securities
eligible for purchase by the Fund
include convertible bonds, convertible
preferred stocks, and warrants. The
Fund will not invest directly in real
estate, but may invest in readily
marketable securities issued by
companies that invest in real estate or
interests therein. The Fund may also
invest in readily marketable interests in
real estate investment trusts.
of the Fund will be invested in
unsponsored ADRs. Additional
information regarding the Fund; the
Shares; the Fund’s investment objective,
strategies, methodology, and
restrictions; the Adviser; the distributor;
the administrator; the custodian; the
transfer agent; risks; fees and expenses;
creations and redemptions of Shares;
availability of information; trading rules
and halts; and surveillance procedures,
among other things, can be found in the
Notice and Registration Statement, as
applicable.10
Investment Limitations
The Fund may hold up to an aggregate
amount of 15% of its net assets in
illiquid assets (calculated at the time of
investment), including Rule 144A
securities deemed to be illiquid by the
Sub-Adviser. 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 assets. Illiquid assets include
assets subject to contractual or other
restrictions on resale and other
instruments that lack readily available
markets as determined in accordance
with Commission staff guidance.
The Fund may lend portfolio
securities in an amount equal to up to
33% of its total assets to broker-dealers,
major banks, or other recognized
domestic institutional borrowers of
securities that the Sub-Adviser has
determined are creditworthy under
guidelines established by the Board of
Trustees. The Fund may not lend
securities to any company affiliated
with the Sub-Adviser. Each loan of
securities will be collateralized by cash,
securities, or letters of credit.
The Fund will not purchase the
securities of issuers conducting their
principal business activity in the same
industry if, immediately after the
purchase and as a result thereof, the
value of the Fund’s investments in that
industry would equal or exceed 25% of
the current value of the Fund’s total
assets, provided that this restriction
does not limit the Fund’s: (i)
Investments in securities of other
investment companies, (ii) investments
in securities issued or guaranteed by the
U.S. government, its agencies or
instrumentalities, or (iii) investments in
repurchase agreements collateralized by
U.S. government securities.
The Fund will not invest in swaps,
and no more than 10% of the net assets
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the Exchange’s proposal to list
and trade the Shares is consistent with
the Exchange Act and the rules and
regulations thereunder applicable to a
national securities exchange.11 In
particular, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) of the Exchange
Act,12 which requires, among other
things, that the Exchange’s rules be
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 a national market
system, and, in general, to protect
investors and the public interest. The
Commission notes that the Fund and the
Shares must comply with the
requirements of NYSE Arca Equities
Rule 8.600 to be listed and traded on the
Exchange.
The Commission finds that the
proposal to list and trade the Shares on
the Exchange is consistent with Section
11A(a)(1)(C)(iii) of the Exchange Act,13
which sets forth Congress’ finding that
it is in the public interest and
appropriate for the protection of
investors and the maintenance of fair
and orderly markets to assure the
availability to brokers, dealers, and
investors of information with respect to
quotations for and transactions in
securities. Quotation and last-sale
information for the Shares and any
underlying ETPs, sponsored ADRs, and
common stock will be available via the
Consolidated Tape Association highspeed line, and price information for
futures and non-exchange traded
securities held by the Fund will be
available from publicly-available pricing
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10 See
supra notes 4 and 5 respectively.
approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition and capital
formation. See 15 U.S.C. 78c(f).
12 15 U.S.C. 78f(b)(5).
13 15 U.S.C. 78k–1(a)(1)(C)(iii).
11 In
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sources, including Bloomberg, IDC, and
Reuters. The Exchange will disseminate
the Indicative Optimized Portfolio
Value (‘‘IOPV’’), which is the Portfolio
Indicative Value as defined in NYSE
Arca Equities Rule 8.600(c)(3), at least
every 15 seconds during the Core
Trading Session through one or more
major market data vendors.14 The net
asset value (‘‘NAV’’) of the Fund will be
determined as of the close of the regular
trading session on the Exchange
(ordinarily 4:00 p.m., Eastern time) on
each day that the Exchange is open. The
Fund’s Web site will include a form of
the prospectus for the Fund and
additional quantitative information
updated on a daily basis, including, (1)
the prior business day’s reported closing
price, NAV, and mid-point of the bid/
ask spread at the time of calculation of
such NAV (‘‘Bid/Ask Price’’),15 and a
calculation of the premium and
discount of the Bid/Ask Price against
the NAV, and (2) data in chart format
displaying the frequency distribution of
discounts and premiums of the daily
Bid/Ask Price against the NAV, within
appropriate ranges, for each of the four
previous calendar quarters.16
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.17 NYSE Arca expects that
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.18
Further, the Commission believes that
the proposal to list and trade the Shares
is reasonably designed to promote fair
disclosure of information that may be
necessary to price the Shares
appropriately and to prevent trading
when a reasonable degree of
transparency cannot be assured. The
Fund will make available on its Web
site on each business day before
14 See Notice, supra note 4, 78 FR at 66977. The
IOPV calculations will be estimates of the value of
the Fund’s NAV per Share using market data
converted into U.S. dollars at the current currency
rates. The IOPV price will be based on quotes and
closing prices from the securities’ local market and
may not reflect events that occur subsequent to the
local market’s close. The quotations of certain Fund
holdings may not be updated during U.S. trading
hours if such holdings do not trade in the United
States. See id.
15 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. See id.
16 See id.
17 See id.
18 See id.
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commencement of the Core Trading
Session the Disclosed Portfolio, as
defined in NYSE Arca Equities Rule
8.600(c)(2), that will form the basis for
the Fund’s calculation of NAV at the
end of the business day.19 The
Commission notes that the Exchange
will obtain a representation from the
Fund 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.20 In addition, a basket
composition file, which will include the
security names and share quantities
required to be delivered in exchange for
the Fund’s Shares, together with
estimates and actual cash components,
will be publicly disseminated daily
prior to the opening of the New York
Stock Exchange via the National
Securities Clearing Corporation.21 The
basket will represent one Creation Unit
of Shares of the Fund. The Exchange
will halt trading in the Shares under the
specific circumstances set forth in NYSE
Arca Equities Rule 8.600(d)(2)(D), and
may halt trading in the Shares if trading
is not occurring in the securities or
financial instruments constituting the
Disclosed Portfolio of the Fund, or if
other unusual conditions or
circumstances detrimental to the
maintenance of a fair and orderly
market are present.22 Further, if the
IOPV is not being disseminated as
required, the Exchange may halt trading
during the day in which the
interruption occurs; if the interruption
persists past the day in which it
occurred, the Exchange will halt trading
no later than the beginning of the
trading day following the interruption.23
19 See id. On a daily basis, the Adviser 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 and financial
instrument, number of shares or dollar value of
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.
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. See
id.
20 See id. at 66978.
21 See id. at 66977.
22 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 a Fund. Trading in Shares of a Fund will be
halted if the circuit breaker parameters in NYSE
Arca Equities Rule 7.12 have been reached. Trading
may also be halted because of market conditions or
for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable.
23 See NYSE Arca Equities Rule 8.600(d)(2)(D).
PO 00000
Frm 00122
Fmt 4703
Sfmt 4703
The Exchange will consider the
suspension of trading in or removal
from listing of the Shares if the IOPV is
no longer calculated or available or the
Disclosed Portfolio is not made
available to all market participants at
the same time.24 Further, the
Commission notes that the Reporting
Authority that provides the Disclosed
Portfolio must implement and maintain,
or be subject to, procedures designed to
prevent the use and dissemination of
material non-public information
regarding the actual components of the
portfolio.25 The Exchange represents
that the Adviser is affiliated with a
broker-dealer and has implemented a
fire wall with respect to such brokerdealer 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 the portfolio.26 The Exchange
has a general policy prohibiting the
distribution of material, non-public
information by its employees. Finally,
the Exchange states that, on its behalf,
the Financial Industry Regulatory
Authority (‘‘FINRA’’) will communicate
as needed with other markets that are
members of the ISG regarding trading in
the Shares and exchange-traded
securities held by the Fund.27
The Exchange has represented that
the Shares are equity securities subject
to the Exchange’s rules governing the
trading of equity securities.28 In support
of this proposal, the Exchange has made
representations, including:
(1) The Shares will conform to the
initial and continuing listing criteria
under NYSE Arca Equities Rule 8.600.
(2) The Exchange’s surveillance
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.29
(3) FINRA, on behalf of the Exchange,
will communicate as needed regarding
trading in the Shares and exchangetraded securities held by the Fund with
other markets that are members of the
ISG and FINRA, on behalf of the
Exchange, may obtain trading
information regarding trading in the
Shares and exchange-traded securities
held by the Fund from such markets or
24 See
NYSE Arca Equities Rule 8.600(d)(2)(C)(ii).
NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
26 See supra note 6 and accompanying text.
27 See Notice, supra note 4, 78 FR at 66979.
28 See id. at 66978.
29 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.
25 See
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emcdonald on DSK67QTVN1PROD with NOTICES
Federal Register / Vol. 78, No. 247 / Tuesday, December 24, 2013 / Notices
other entities. In addition, the Exchange
may obtain information regarding
trading in the Shares and exchangetraded securities held by the Fund from
markets and other entities that are
members of ISG or with which the
Exchange has in place a comprehensive
surveillance sharing agreement.30 The
Fund will invest only in foreign
securities and ADRs that are traded on
an exchange that is a member of the ISG
or with which the Exchange has in place
a comprehensive surveillance sharing
agreement.
(4) The Exchange has appropriate
rules to facilitate transactions in the
Shares during all trading sessions.
(5) Prior to the commencement of
trading, the Exchange will inform its
Equity Trading Permit Holders (‘‘ETP
Holders’’) in an Information Bulletin of
the special characteristics and risks
associated with trading the Shares.
Specifically, the Information Bulletin
will discuss the following: (a) The
procedures for purchases and
redemptions of Creation Unit
Aggregations and that Shares are not
individually redeemable; (b) 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; (c) the risks involved in trading
the Shares during the Opening and Late
Trading Sessions when an updated
IOPV will not be calculated or publicly
disseminated; (d) how information
regarding the IOPV is disseminated; (e)
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 (f) trading
information.
(6) For initial and continued listing,
the Fund will be in compliance with
Rule 10A–3 under the Exchange Act,31
as provided by NYSE Arca Equities Rule
5.3.32
(7) The Fund will not invest in swaps.
(8) The Fund’s investments will be
consistent with its investment objective
and will not be used to enhance
leverage.
(9) The Fund may hold up to an
aggregate amount of 15% of its net
assets in illiquid assets (calculated at
the time of investment), including Rule
144A securities. The Fund will monitor
its portfolio liquidity on an ongoing
30 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.
31 17 CFR 240.10A–3.
32 See Notice, supra note 4, 78 FR at 66978.
VerDate Mar<15>2010
16:36 Dec 23, 2013
Jkt 232001
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 assets.
(10) A minimum of 100,000 Shares for
the Fund will be outstanding at the
commencement of trading on the
Exchange.
This order is based on the Exchange’s
representations.
For the foregoing reasons, the
Commission finds that the proposed
rule change is consistent with the
Exchange Act.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,33
that the proposed rule change (SR–
NYSEArca–2013–111), be, and it hereby
is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Kevin M. O’Neill,
Deputy Secretary.
77765
organization. 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 to offer
partial cabinets and cabinet upgrades as
part of its co-location services and to
amend the NYSE Arca Options Fee
Schedule (‘‘Options Fee Schedule’’) and
the NYSE Arca Equities Schedule of
Fees and Charges for Exchange Services
(‘‘Equities Fee Schedule’’ and, together
with the Options Fee Schedule, ‘‘Fee
Schedules’’) to reflect the new services.
The Exchange proposes to implement
the fee change effective December 16,
2013. 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
[FR Doc. 2013–30631 Filed 12–23–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71130; File No. SR–
NYSEArca–2013–143]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change to Offer Partial Cabinets
and Cabinet Upgrades As Part of Its
Co-location Services and to Amend the
NYSE Arca Options Fee Schedule and
the NYSE Arca Equities Schedule of
Fees and Charges for Exchange
Services to Reflect the New Services
December 18, 2013.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on December
12, 2013, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
33 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
34 17
PO 00000
Frm 00123
Fmt 4703
Sfmt 4703
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to offer partial
cabinets and cabinet upgrades as part of
its co-location services and to amend
the Fee Schedules to reflect the new
services.4 The Exchange proposes to
4 The Securities and Exchange Commission
(‘‘Commission’’) initially approved the Exchange’s
co-location services in Securities Exchange Act
Release No. 63275 (November 8, 2010), 75 FR 70048
(November 16, 2010) (SR–NYSEArca–2010–100)
(the ‘‘Original Co-location Approval’’). The
Exchange operates a data center in Mahwah, New
Jersey (the ‘‘data center’’) from which it provides
co-location services to Users. The Exchange’s colocation services allow Users to rent space in the
data center so they may locate their electronic
servers in close physical proximity to the
Exchange’s trading and execution system. See id. at
70049.
E:\FR\FM\24DEN1.SGM
24DEN1
Agencies
[Federal Register Volume 78, Number 247 (Tuesday, December 24, 2013)]
[Notices]
[Pages 77761-77765]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-30631]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71133; File No. SR-NYSEArca-2013-111]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a
Proposed Rule Change To List and Trade Shares of Manna Core Equity
Enhanced Dividend Income Fund Under NYSE Arca Equities Rule 8.600
December 18, 2013.
I. Introduction
On October 23, 2013, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed
[[Page 77762]]
with the Securities and Exchange Commission (``Commission''), pursuant
to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934
(``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ a proposed rule
change to list and trade shares (``Shares'') of the Manna Core Equity
Enhanced Dividend Income Fund (``Fund''). The proposed rule change was
published for comment in the Federal Register on November 7, 2013.\4\
The Commission received no comments on the proposal. This order
approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ See Securities Exchange Act Release No. 70798 (November 1,
2013), 78 FR 66973 (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
The Exchange proposes to list and trade the Shares under NYSE Arca
Equities Rule 8.600, which governs the listing and trading of Managed
Fund Shares on the Exchange. The Exchange makes the following
representations and statements in describing the Fund and its
investment strategies, including portfolio holdings and limitations.
The Shares will be offered by ETF Actively Managed Trust (``Trust'').
The Trust will be registered with the Commission as an open-end
management investment company.\5\ ETF Issuer Solutions, Inc. will serve
as the investment adviser to the Fund (``Adviser''). ETF Distributors
LLC will be the principal distributor of the Fund's Shares. Manna ETFs
Management LLC (the ``Sub-Adviser'') will serve as sub-adviser for the
Fund. The Bank of New York Mellon will serve as the administrator,
accountant, custodian, and transfer agent for the Fund. The Exchange
represents that the Adviser and Sub-Adviser are each not registered as
a broker-dealer, but the Adviser is affiliated with a broker-dealer and
has implemented a fire wall with respect to its broker-dealer affiliate
regarding access to information concerning the composition of and
changes to the Fund's portfolio.\6\
---------------------------------------------------------------------------
\5\ The Trust is registered under the 1940 Act. On April 2,
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. 333-187668 and
811-22819) (the ``Registration Statement''). The Trust filed an
Amended and Restated Application for an Order under Section 6(c) of
the 1940 Act for exemptions from various provisions of the 1940 Act
and rules thereunder (File No. 812-14080), dated June 19, 2013
(``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. 30607 (July 23, 2013)
(``Exemptive Order''). Investments made by the Fund will comply with
the conditions set forth in the Exemptive Application and the
Exemptive Order.
\6\ See Commentary .06 to NYSE Arca Equities Rule 8.600. The
Exchange represents that in the event (a) the Adviser or any Sub-
Adviser registers as a broker-dealer or 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,
it will implement a fire wall with respect to its relevant personnel
or its broker-dealer affiliate regarding access to information
concerning the composition of or changes to the Fund's portfolio,
and will be subject to procedures designed to prevent the misuse of
material, non-public information regarding the Fund's portfolio.
---------------------------------------------------------------------------
The Fund will seek long-term capital appreciation and income
primarily through purchases and short sales of U.S. and international
equity securities. To achieve its investment objective, normally \7\
the Fund will invest up to 100% (but not less than 80%) of its net
assets between its Core Position, Dividend Position and Short Position
(each as defined below). The Fund expects to invest in a portfolio of
U.S. common stocks or exchange traded funds (``ETFs'') selected by the
Sub-Adviser to reflect a broad spectrum (i.e., positions in companies
of different market capitalizations) of the U.S. equity market (the
``Core Position''). The Fund also expects to invest in a portfolio that
may contain U.S. and non-U.S. common stocks, American Depositary
Receipts (``ADRs''), participation notes, or other equity securities
listed on U.S. or non-U.S. exchanges or traded over the counter that
the Sub-Adviser expects to generate dividend income to the Fund (the
``Dividend Position''). The Fund also expects to sell short a portfolio
of common stocks, index- or sector-based ETFs, other investment
companies, exchange traded notes (``ETNs'') and other exchange traded
products (``ETPs''),\8\ other securities or index- or sector-based
futures contracts all of which trade on U.S. and non-U.S. exchanges
selected for the purpose of hedging against country or currency risk
associated with the investments in the Dividend Position, or because
they are likely to underperform the market or lose value in the near
term (the ``Short Position'').
---------------------------------------------------------------------------
\7\ The term ``normally'' 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. According to the
Registration Statement, in certain adverse market, economic,
political, or other conditions, the Fund may temporarily depart from
its normal investment policies and strategies provided that the
alternative is consistent with the Fund's investment objective and
is in the best interest of the Fund. The Fund may determine that
market conditions warrant investing in cash or cash equivalents,
such as money market instruments, and to the extent permitted by
applicable law and the Fund's investment restrictions, shares of
other investment companies. Under such circumstances, the Fund may
invest up to 100% of its assets in these investments.
\8\ For purposes of this proposed rule change, ETPs include
Investment Company Units (as described in NYSE Arca Equities Rule
5.2(j)(3)); Index-Linked Securities (as described in NYSE Arca
Equities Rule 5.2(j)(6)); Portfolio Depositary Receipts (as
described in NYSE Arca Equities Rule 8.100); Trust Issued Receipts
(as described in NYSE Arca Equities Rule 8.200); Commodity-Based
Trust Shares (as described in NYSE Arca Equities Rule 8.201);
Currency Trust Shares (as described in NYSE Arca Equities Rule
8.202); Commodity Index Trust Shares (as described in NYSE Arca
Equities Rule 8.203); Trust Units (as described in NYSE Arca
Equities Rule 8.500); Managed Fund Shares (as described in NYSE Arca
Equities Rule 8.600). The ETPs all will be listed and traded in the
U.S. on registered exchanges. While the Funds may invest in inverse
ETPs, the Funds will not invest in leveraged or inverse leveraged
ETPs (e.g., 2X or 3X).
---------------------------------------------------------------------------
The Fund will be an actively managed ETF and thus does not seek to
replicate the performance of a specific index. Instead, the Fund will
use an active investment strategy to meet its investment objective. The
Sub-Adviser, subject to the oversight of the Adviser and the Board of
Trustees of the Trust, will have discretion on a daily basis to manage
the Fund's portfolio in accordance with the Fund's investment objective
and investment policies.
The Sub-Adviser will typically seek to invest the Core Position in
a portfolio of common stocks and ETPs selected by the Sub-Adviser to
reflect a broad spectrum (i.e., positions in companies of different
market capitalizations) of the U.S. equity market. The Core Position
may invest in the common stock of issuers of any market capitalization
and there are no requirements as to the number of securities the Core
Position must hold.
The Fund may invest in any type of ETF, including index based ETFs,
sector based ETFs, and fixed-income ETFs. The Fund may hold ETFs with
portfolios comprised of domestic or foreign stocks or bonds or any
combination thereof. However, due to legal limitations, the Fund will
be prevented from purchasing more than 3% of an ETF's outstanding
shares unless: (i) the ETF or the Fund has received an order for
exemptive relief from the 3% limitation from the Commission that is
applicable to the Fund; and (ii) the ETF and the Fund take appropriate
steps to comply with any conditions in such order.
According to the Exchange, to implement the Dividend Position's
strategy, the Sub-Adviser will seek to maximize the level of dividend
income that the Dividend Position receives,
[[Page 77763]]
through the purchase of U.S. and non-U.S. securities that the Sub-
Adviser expects to generate dividend income for the Dividend Position.
To participate in non-U.S. developed or emerging markets, the Dividend
Position may invest in debt or equity securities, ADRs, participation
notes, and other securities listed on U.S. or non-U.S. exchanges or
U.S. securities traded over the counter. The Fund will invest only in
foreign securities and ADRs that are traded on an exchange that is a
member of the Intermarket Surveillance Group (``ISG'') or with which
the Exchange has in place a comprehensive surveillance sharing
agreement.
The Sub-Adviser expects to seek to participate in special dividend
situations and engage in dividend capture trading. Special dividend
situations may include those where issuers decide to return large cash
balances to shareholders as one-time dividend payments.
The Fund expects to establish Short Positions, representing up to
30% of the Fund's principal investments, in securities selected by the
Sub-Adviser for the purpose of hedging against country, currency,
sector or other risk associated with the investments in the Dividend
Position, in an attempt to establish, between the Dividend Position and
the Short Positions, a market neutral position with respect to the
countries and currency in which the Dividend Position is invested. The
Fund may also invest in Short Positions in securities that the Sub-
Adviser believes are likely to underperform the market or lose value in
the near term. To implement the Short Positions, the Sub-Adviser
expects to typically sell short a portfolio of equities, index- or
sector-based ETF's, other investment companies, index- or sector-based
futures contracts or other securities that trade on U.S. and non-U.S.
exchanges.\9\ According to the Registration Statement, the proceeds
from the Short Positions (i.e., cash received from selling securities
short) will typically be used to fund the acquisition of the Fund's
investments in the Dividend Position.
---------------------------------------------------------------------------
\9\ To participate in non-U.S. developed or emerging markets,
the Fund may invest in ETFs, ADRs, futures contracts and other
securities listed on U.S. or non-U.S. exchanges or traded over the
counter that are intended to track the non-U.S. equity markets or
market sectors in which the Sub-Adviser seeks exposure.
---------------------------------------------------------------------------
Although the Fund expects to invest not less than 80% of its assets
as described above, the Fund has flexibility to invest in other types
of securities when the Sub-Adviser believes they offer more attractive
opportunities or to meet liquidity, redemption, and short term
investing needs. The Fund may invest up to 20% of its assets in
securities convertible into common stock. Convertible securities
eligible for purchase by the Fund include convertible bonds,
convertible preferred stocks, and warrants. The Fund will not invest
directly in real estate, but may invest in readily marketable
securities issued by companies that invest in real estate or interests
therein. The Fund may also invest in readily marketable interests in
real estate investment trusts.
Investment Limitations
The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid assets (calculated at the time of investment),
including Rule 144A securities deemed to be illiquid by the Sub-
Adviser. 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 assets. Illiquid
assets include assets subject to contractual or other restrictions on
resale and other instruments that lack readily available markets as
determined in accordance with Commission staff guidance.
The Fund may lend portfolio securities in an amount equal to up to
33% of its total assets to broker-dealers, major banks, or other
recognized domestic institutional borrowers of securities that the Sub-
Adviser has determined are creditworthy under guidelines established by
the Board of Trustees. The Fund may not lend securities to any company
affiliated with the Sub-Adviser. Each loan of securities will be
collateralized by cash, securities, or letters of credit.
The Fund will not purchase the securities of issuers conducting
their principal business activity in the same industry if, immediately
after the purchase and as a result thereof, the value of the Fund's
investments in that industry would equal or exceed 25% of the current
value of the Fund's total assets, provided that this restriction does
not limit the Fund's: (i) Investments in securities of other investment
companies, (ii) investments in securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities, or (iii)
investments in repurchase agreements collateralized by U.S. government
securities.
The Fund will not invest in swaps, and no more than 10% of the net
assets of the Fund will be invested in unsponsored ADRs. Additional
information regarding the Fund; the Shares; the Fund's investment
objective, strategies, methodology, and restrictions; the Adviser; the
distributor; the administrator; the custodian; the transfer agent;
risks; fees and expenses; creations and redemptions of Shares;
availability of information; trading rules and halts; and surveillance
procedures, among other things, can be found in the Notice and
Registration Statement, as applicable.\10\
---------------------------------------------------------------------------
\10\ See supra notes 4 and 5 respectively.
---------------------------------------------------------------------------
III. Discussion and Commission Findings
After careful review, the Commission finds that the Exchange's
proposal to list and trade the Shares is consistent with the Exchange
Act and the rules and regulations thereunder applicable to a national
securities exchange.\11\ In particular, the Commission finds that the
proposed rule change is consistent with Section 6(b)(5) of the Exchange
Act,\12\ which requires, among other things, that the Exchange's rules
be 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
a national market system, and, in general, to protect investors and the
public interest. The Commission notes that the Fund and the Shares must
comply with the requirements of NYSE Arca Equities Rule 8.600 to be
listed and traded on the Exchange.
---------------------------------------------------------------------------
\11\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition and
capital formation. See 15 U.S.C. 78c(f).
\12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission finds that the proposal to list and trade the Shares
on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the
Exchange Act,\13\ which sets forth Congress' finding that it is in the
public interest and appropriate for the protection of investors and the
maintenance of fair and orderly markets to assure the availability to
brokers, dealers, and investors of information with respect to
quotations for and transactions in securities. Quotation and last-sale
information for the Shares and any underlying ETPs, sponsored ADRs, and
common stock will be available via the Consolidated Tape Association
high-speed line, and price information for futures and non-exchange
traded securities held by the Fund will be available from publicly-
available pricing
[[Page 77764]]
sources, including Bloomberg, IDC, and Reuters. The Exchange will
disseminate the Indicative Optimized Portfolio Value (``IOPV''), which
is the Portfolio Indicative Value as defined in NYSE Arca Equities Rule
8.600(c)(3), at least every 15 seconds during the Core Trading Session
through one or more major market data vendors.\14\ The net asset value
(``NAV'') of the Fund will be determined as of the close of the regular
trading session on the Exchange (ordinarily 4:00 p.m., Eastern time) on
each day that the Exchange is open. The Fund's Web site will include a
form of the prospectus for the Fund and additional quantitative
information updated on a daily basis, including, (1) the prior business
day's reported closing price, NAV, and mid-point of the bid/ask spread
at the time of calculation of such NAV (``Bid/Ask Price''),\15\ and a
calculation of the premium and discount of the Bid/Ask Price against
the NAV, and (2) data in chart format displaying the frequency
distribution of discounts and premiums of the daily Bid/Ask Price
against the NAV, within appropriate ranges, for each of the four
previous calendar quarters.\16\ 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.\17\ NYSE Arca expects that 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.\18\
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
\14\ See Notice, supra note 4, 78 FR at 66977. The IOPV
calculations will be estimates of the value of the Fund's NAV per
Share using market data converted into U.S. dollars at the current
currency rates. The IOPV price will be based on quotes and closing
prices from the securities' local market and may not reflect events
that occur subsequent to the local market's close. The quotations of
certain Fund holdings may not be updated during U.S. trading hours
if such holdings do not trade in the United States. See id.
\15\ 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. See id.
\16\ See id.
\17\ See id.
\18\ See id.
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Further, the Commission believes that the proposal to list and
trade the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately and
to prevent trading when a reasonable degree of transparency cannot be
assured. The Fund will make available on its Web site on each business
day before commencement of the Core Trading Session the Disclosed
Portfolio, as defined in NYSE Arca Equities Rule 8.600(c)(2), that will
form the basis for the Fund's calculation of NAV at the end of the
business day.\19\ The Commission notes that the Exchange will obtain a
representation from the Fund 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.\20\ In addition,
a basket composition file, which will include the security names and
share quantities required to be delivered in exchange for the Fund's
Shares, together with estimates and actual cash components, will be
publicly disseminated daily prior to the opening of the New York Stock
Exchange via the National Securities Clearing Corporation.\21\ The
basket will represent one Creation Unit of Shares of the Fund. The
Exchange will halt trading in the Shares under the specific
circumstances set forth in NYSE Arca Equities Rule 8.600(d)(2)(D), and
may halt trading in the Shares if trading is not occurring in the
securities or financial instruments constituting the Disclosed
Portfolio of the Fund, or if other unusual conditions or circumstances
detrimental to the maintenance of a fair and orderly market are
present.\22\ Further, if the IOPV is not being disseminated as
required, the Exchange may halt trading during the day in which the
interruption occurs; if the interruption persists past the day in which
it occurred, the Exchange will halt trading no later than the beginning
of the trading day following the interruption.\23\ The Exchange will
consider the suspension of trading in or removal from listing of the
Shares if the IOPV is no longer calculated or available or the
Disclosed Portfolio is not made available to all market participants at
the same time.\24\ Further, the Commission notes that the Reporting
Authority that provides the Disclosed Portfolio must implement and
maintain, or be subject to, procedures designed to prevent the use and
dissemination of material non-public information regarding the actual
components of the portfolio.\25\ The Exchange represents that the
Adviser is affiliated with a broker-dealer and has implemented a fire
wall with respect to such broker-dealer 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 the portfolio.\26\ The
Exchange has a general policy prohibiting the distribution of material,
non-public information by its employees. Finally, the Exchange states
that, on its behalf, the Financial Industry Regulatory Authority
(``FINRA'') will communicate as needed with other markets that are
members of the ISG regarding trading in the Shares and exchange-traded
securities held by the Fund.\27\
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\19\ See id. On a daily basis, the Adviser 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 and financial instrument, number of
shares or dollar value of 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. 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. See id.
\20\ See id. at 66978.
\21\ See id. at 66977.
\22\ 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 a Fund. Trading in Shares of a Fund will be
halted if the circuit breaker parameters in NYSE Arca Equities Rule
7.12 have been reached. Trading may also be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable.
\23\ See NYSE Arca Equities Rule 8.600(d)(2)(D).
\24\ See NYSE Arca Equities Rule 8.600(d)(2)(C)(ii).
\25\ See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
\26\ See supra note 6 and accompanying text.
\27\ See Notice, supra note 4, 78 FR at 66979.
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The Exchange has represented that the Shares are equity securities
subject to the Exchange's rules governing the trading of equity
securities.\28\ In support of this proposal, the Exchange has made
representations, including:
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\28\ See id. at 66978.
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(1) The Shares will conform to the initial and continuing listing
criteria under NYSE Arca Equities Rule 8.600.
(2) The Exchange's surveillance 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.\29\
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\29\ 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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(3) FINRA, on behalf of the Exchange, will communicate as needed
regarding trading in the Shares and exchange-traded securities held by
the Fund with other markets that are members of the ISG and FINRA, on
behalf of the Exchange, may obtain trading information regarding
trading in the Shares and exchange-traded securities held by the Fund
from such markets or
[[Page 77765]]
other entities. In addition, the Exchange may obtain information
regarding trading in the Shares and exchange-traded securities held by
the Fund from markets and other entities that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.\30\ The Fund will invest only in foreign securities
and ADRs that are traded on an exchange that is a member of the ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.
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\30\ 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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(4) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.
(5) Prior to the commencement of trading, the Exchange will inform
its Equity Trading Permit Holders (``ETP Holders'') in an Information
Bulletin of the special characteristics and risks associated with
trading the Shares. Specifically, the Information Bulletin will discuss
the following: (a) The procedures for purchases and redemptions of
Creation Unit Aggregations and that Shares are not individually
redeemable; (b) 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; (c) the risks involved
in trading the Shares during the Opening and Late Trading Sessions when
an updated IOPV will not be calculated or publicly disseminated; (d)
how information regarding the IOPV is disseminated; (e) 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 (f) trading information.
(6) For initial and continued listing, the Fund will be in
compliance with Rule 10A-3 under the Exchange Act,\31\ as provided by
NYSE Arca Equities Rule 5.3.\32\
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\31\ 17 CFR 240.10A-3.
\32\ See Notice, supra note 4, 78 FR at 66978.
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(7) The Fund will not invest in swaps.
(8) The Fund's investments will be consistent with its investment
objective and will not be used to enhance leverage.
(9) The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid assets (calculated at the time of investment),
including Rule 144A securities. 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 assets.
(10) A minimum of 100,000 Shares for the Fund will be outstanding
at the commencement of trading on the Exchange.
This order is based on the Exchange's representations.
For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with the Exchange Act.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\33\ that the proposed rule change (SR-NYSEArca-2013-111),
be, and it hereby is, approved.
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\33\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
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\34\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-30631 Filed 12-23-13; 8:45 am]
BILLING CODE 8011-01-P