Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Reflect a Change to the Reference Index Relating to the Columbia Select Large Cap Value ETF, 33973-33976 [2014-13821]

Download as PDF Federal Register / Vol. 79, No. 114 / Friday, June 13, 2014 / Notices leveraged returns. The Fund’s investments will not be used to seek performance that is the multiple or inverse multiple (i.e., 2Xs and 3Xs) of the Fund’s primary broad-based securities benchmark index (as defined in Form N–1A). 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. Proceedings To Determine Whether To Approve or Disapprove File No. SR– NYSEArca–2014–20 and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act 42 to determine whether the proposed rule change, as modified by Amendment Nos. 3 and 5 thereto, should be approved or disapproved. Institution of such proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change, as discussed below. As noted above, institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as described below, the Commission seeks and encourages interested persons to provide comments on the proposed rule change to inform the Commission’s analysis of whether to approve or disapprove the proposed rule change, as modified by Amendment Nos. 3 and 5. Pursuant to Section 19(b)(2)(B) of the Act,43 the Commission is providing notice of the grounds for disapproval under consideration. The Commission is instituting proceedings to allow for additional analysis of the proposed rule change’s consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a 42 15 U.S.C. 78s(b)(2)(B). 43 Id. VerDate Mar<15>2010 18:01 Jun 12, 2014 Jkt 232001 national securities exchange be ‘‘designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,’’ and ‘‘to protect investors and the public interest.’’ 44 IV. Procedure: Request for Written Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended by Amendment Nos. 3 and 5, is consistent with Section 6(b)(5) of the Act or any other provision of the Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval which would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4, any request for an opportunity to make an oral presentation.45 Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by July 7, 2014. Any person who wishes to file a rebuttal to any other person’s submission must file that rebuttal by July 18, 2014. 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–2014–20 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2014–20. 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 44 15 U.S.C. 78f(b)(5). 19(b)(2) of the Act, as amended by the Securities Act Amendments of 1975, Public Law 94–29 (June 4, 1975), grants the Commission flexibility to determine what type of proceeding— either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Act Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). 45 Section PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 33973 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– NYSEArca–2014–20 and should be submitted on or before July 7, 2014. Rebuttal comments should be submitted by July 18, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.46 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–13819 Filed 6–12–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72349; File No. SR– NYSEArca–2014–66] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Reflect a Change to the Reference Index Relating to the Columbia Select Large Cap Value ETF June 9, 2014. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on June 2, 2014, NYSE Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule 46 17 CFR 200.30–3(a)(12) and 17 CFR 200.30– 3(a)(57). 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. E:\FR\FM\13JNN1.SGM 13JNN1 33974 Federal Register / Vol. 79, No. 114 / Friday, June 13, 2014 / Notices change, as described in Items I and II 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 reflect a change to the reference index relating to the Columbia Select Large Cap Value ETF (formerly, Grail American Beacon Large Cap Value ETF). Shares of the Fund are currently listed and traded on the Exchange. 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 mstockstill on DSK4VPTVN1PROD with NOTICES 1. Purpose The Commission has approved listing and trading on the Exchange of shares (‘‘Shares’’) of the Columbia Select Large Cap Value ETF (formerly, Grail American Beacon Large Cap Value ETF) (‘‘Fund’’), a series of Columbia ETF Trust (‘‘Trust’’) (formerly, the Grail Advisors ETF Trust) 4 under NYSE Arca Equities Rule 8.600, which governs the listing and trading of Managed Fund Shares. Shares of the Fund are currently listed and traded on the Exchange. The Shares are offered by the Trust, which is registered with the Commission as an open-end 4 See Securities Exchange Act Release No. 59826 (April 28, 2009), 74 FR 20512 (May 4, 2009) (SR– NYSEArca–2009–22) (‘‘Prior Order’’). See also Securities Exchange Act Release No. 59651 (March 30, 2009), 74 FR 15548 (April 6, 2009) (SR– NYSEArca–2009–22) (‘‘Prior Notice,’’ and together with the Prior Order, the ‘‘Prior Release’’). VerDate Mar<15>2010 18:01 Jun 12, 2014 Jkt 232001 management investment company.5 The investment advisor to the Fund is Columbia Management Investment Advisers, LLC (the ‘‘Investment Manager’’).6 In this proposed rule change, the Exchange proposes to reflect a change to the index that the Investment Manager will utilize to implement the Fund’s investment objective, as described below.7 The Prior Release stated that the Fund’s investment objective is longterm capital appreciation and current income; that, ordinarily, at least 80% of the Fund’s net assets (plus the amount of any borrowings for investment purposes) would be invested in equity securities of large market capitalization U.S. companies; and that these companies generally have market capitalizations similar to the market capitalizations of the companies in the Russell 1000® Index at the time of investment.8 The Prior Release further stated that the Fund’s investment subadvisers will select stocks that, in their opinion, have most or all of the following characteristics (relative to the Russell 1000® Index): Above-average earnings growth potential; belowaverage price to earnings ratio; belowaverage price to book value ratio; and above-average dividend yields.9 5 The Trust is registered under the Investment Company Act of 1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’). On April 14, 2014, the Trust filed with the Commission an amendment to its registration statement on Form N–1A under the Securities Act of 1933 (15 U.S.C. 77a), and under the 1940 Act relating to the Fund (File Nos. 333–148082 and 811–22154) (‘‘Registration Statement’’). The description of the operation of the Trust and the Fund herein is based, in part, on the Registration Statement. In addition, the Commission has issued an order granting certain exemptive relief to the Trust under the 1940 Act. See Investment Company Act Release No. 28604 (January 16, 2009) (File No. 812–13440) (‘‘Exemptive Order’’). 6 The previous investment manager for the Fund was Grail Advisors LLC, a majority-owned subsidiary of Grail Partners LLC. The Fund previously was sub-advised by American Beacon Advisors, Inc. 7 The changes described herein will be effective upon filing with the Commission of another amendment to the Fund’s Registration Statement. See note 5, supra. The Investment Manager represents that it will manage the Fund in the manner described in the Prior Release, and will not implement the changes described herein until the instant proposed rule change is operative. 8 The Russell 1000 Index measures the performance of the 1,000 largest U.S. companies based on total market capitalization. The Prior Release stated that the Fund’s investments may include common stocks, preferred stocks, securities convertible into U.S. common stocks, U.S. dollardenominated American Depositary Receipts, and U.S. dollar-denominated foreign stocks traded on U.S. exchanges, and that the Fund will not purchase or sell securities in markets outside the U.S. 9 The Fund currently does not have a sub-adviser. The activities of the sub-advisers described in the PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 Going forward, whether day-to-day portfolio management of the Fund is provided by the Investment Manager or a sub-adviser selected by the Investment Manager, the Investment Manager wishes to revise the description of what constitutes equity securities of ‘‘large market capitalization U.S. companies’’ from the market capitalization range of the Russell 1000® Index to companies with market capitalizations similar to the market capitalizations of the companies in the Russell 1000® Value Index at the time of investment.10 The Investment Manager represents that it has managed the Fund consistent with the range of the Russell 1000® Index; however, the Investment Manager believes that the Russell 1000 Value® Index will better reflect the Fund’s ‘‘value’’ style of investing.11 The Investment Manager represents that there is no change to the Fund’s investment objective. The Fund will Prior Release have been assumed by the Investment Manager, but the Investment Manager may, in the future, employ for the Fund the services of an investment sub-adviser or sub-advisers. The Investment Manager is not registered as a brokerdealer, but 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 Fund’s portfolio. If the Investment Manager elects to hire a sub-adviser for the Fund that is registered as a broker-dealer or is affiliated with a brokerdealer, such sub-adviser will implement a fire wall with respect to its relevant personnel or brokerdealer 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. In the event (a) the Investment Manager becomes registered as a broker-dealer or 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 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. 10 The Russell 1000 Value® Index, which is a subset of the Russell® 1000 Index, measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values. The Russell 1000 Value Index is reconstituted annually. The Fund’s current performance benchmark is the Russell 1000 Value® Index, as reflected in the Registration Statement. 11 According to the Registration Statement, the Investment Manager considers a variety of factors in identifying opportunities and constructing the Fund’s portfolio which may include, among others, a low price-to-earnings ratio; positive change in senior management; positive corporate restructuring; temporary setback in price due to factors that no longer exist or are ending; a positive shift in the company’s business cycle; and/or a catalyst for increase in the rate of the company’s earnings growth. These factors may change over time. E:\FR\FM\13JNN1.SGM 13JNN1 Federal Register / Vol. 79, No. 114 / Friday, June 13, 2014 / Notices continue to comply with all initial and continued listing requirements under NYSE Arca Equities Rule 8.600. Except for the changes noted above, all other facts presented and representations made in the Prior Release remain unchanged. All terms referenced but not defined herein are defined in the Prior Release. 2. Statutory Basis The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) 12 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, and is designed to promote just and equitable principles of trade and to protect investors and the public interest, in that the Investment Manager represents that there is no change to the Fund’s investment objective and the Investment Manager believes that the Russell 1000 Value® Index better reflects the Fund portfolio managers’ value style of investing. In addition, the Investment Manager notes that the Fund’s current performance benchmark is the Russell 1000 Value® Index. The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that the Fund will continue to comply with all initial and continued listing requirements under NYSE Arca Equities Rule 8.600. The Investment Manager represents that there is no change to the Fund’s investment objective. Except for the changes noted above, all other representations made in the Prior Release remain unchanged. mstockstill on DSK4VPTVN1PROD with NOTICES 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 purposes of the Act. The proposed changes will accommodate continued listing and trading of an issue of Managed Fund Shares that, ordinarily, principally holds largecapitalization, U.S. exchange-listed equities. 12 15 U.S.C. 78f(b)(5). VerDate Mar<15>2010 18:01 Jun 12, 2014 Jkt 232001 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 Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and Rule 19b–4(f)(6)(iii) thereunder.14 A proposed rule change filed under Rule 19b–4(f)(6) 15 normally does not become operative for 30 days after the date of the filing. However, Rule 19b– 4(f)(6)(iii) 16 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requests that the Commission waive the 30-day operative delay to accommodate the proposed change without delay. The Exchange states that the Shares of the Fund are currently listed and trading. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest.17 As stated in this proposal, the proposed change does not alter the Fund’s investment objective. Under the proposal, the Exchange seeks to change the description of what constitutes equity securities of ‘‘large market capitalization U.S. companies’’ from the market capitalization range of the Russell 1000® Index to companies with market capitalizations similar to the market capitalizations of the companies 13 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 15 17 CFR 240.19b–4(f)(6). 16 17 CFR 240.19b–4(f)(6)(iii). 17 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 14 17 PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 33975 in the Russell 1000® Value Index at the time of investment. The Commission notes that the Russell 1000 Value® Index, which measures the performance of the large-cap value segment of the U.S. equity universe, is a subset of the Russell® 1000 Index. The Commission further notes that the Fund’s current performance benchmark is the Russell 1000 Value® Index, as reflected in the Registration Statement. The Exchange represents that, except for this change, all other facts and representations made in the Prior Release remain unchanged, and the Fund will continue to comply with all initial and continued listing requirements under NYSE Arca Equities Rule 8.600. Because the proposed change does not alter the Fund’s investment objective and does not raise any novel or unique regulatory issues, the Commission designates the proposed rule change as operative upon filing. At any time within 60 days of the filing of the 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: 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–2014–66 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2014–66. 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 E:\FR\FM\13JNN1.SGM 13JNN1 33976 Federal Register / Vol. 79, No. 114 / Friday, June 13, 2014 / Notices 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 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–2014–66 and should be submitted on or before July 7, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–13821 Filed 6–12–14; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–72348; File No. SR–BOX– 2014–17] Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Penny Pilot Program mstockstill on DSK4VPTVN1PROD with NOTICES June 9, 2014. 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 June 5, 2014, BOX Options Exchange LLC (the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule from interested persons. CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 18:01 Jun 12, 2014 Jkt 232001 The Exchange proposes to amend Rule 7260 to extend, through December 31, 2014, the pilot program that permits certain classes to be quoted in penny increments (‘‘Penny Pilot Program’’). The text of the proposed rule change is available from the principal office of the Exchange, at the Commission’s Public Reference Room and also on the Exchange’s Internet Web site at https:// boxexchange.com. 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 these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose SECURITIES AND EXCHANGE COMMISSION 18 17 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend the effective time period of the Penny Pilot Program that is currently scheduled to expire on June 30, 2014, for an additional six months, through December 31, 2014.3 The Penny Pilot Program permits certain classes to be quoted in penny increments. The minimum price variation for all classes included in the Penny Pilot Program, except for the QQQs, SPY and IWM, will continue to be $0.01 for all quotations in options series that are quoted at less than $3 per contract and $0.05 for all quotations in options series 3 The Penny Pilot Program has been in effect on the Exchange since its inception in May 2012. See Securities Exchange Act Release Nos. 66871 (April 27, 2012) 77 FR 26323 (May 3, 2012) (File No. 10– 206, In the Matter of the Application of BOX Options Exchange LLC for Registration as a National Securities Exchange Findings, Opinion, and Order of the Commission), 67328 (June 29, 2012) 77 FR 40123 (July 6, 2012) (SR–BOX–2012– 007), 68425 (December 13, 2012), 77 FR 75234 (December 19, 2013) (SR–BOX–2012–021), 69789 (June 18, 2013), 78 FR 37854 (June 24, 2013) (SR– BOX–2013–31), and 71056 (December 12, 2013), 78 FR 76691 (December 18, 2013) (SR–BOX–2013–56). The extension of the effective date and the revision of the dates to replace issues that have been delisted are the only changes to the Penny Pilot Program being proposed at this time. PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 that are quoted at $3 per contract or greater. The QQQs, SPY and IWM, will continue to be quoted in $0.01 increments for all options series. The Exchange may replace any Pilot Program classes that have been delisted on the second trading day following July 1, 2014. The replacement classes will be selected based on trading activity for the six month period beginning December 1, 2013, and ending May 31, 2014. The Exchange will employ the same parameters to prospective replacement classes as approved and applicable under the Pilot Program, including excluding high-priced underlying securities. The Exchange will distribute a Regulatory Circular notifying Participants which replacement classes shall be included in the Penny Pilot Program. 2. Statutory Basis The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act,4 in general, and Section 6(b)(5) of the Act,5 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general protect investors and the public interest. In particular, the proposed rule change, which extends the Penny Pilot for an additional six months through December 31, 2014 and changes the date for replacing Penny Pilot issues that were delisted to the second trading day following July 1, 2014, will enable public customers and other market participants to express their true prices to buy and sell options for the benefit of all market participants. This is consistent with the Act. 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 not necessary or appropriate in furtherance of the purposes of the Act. To the contrary, this proposal is procompetitive because it allows Penny Pilot issues to continue trading on the Exchange. Moreover, the Exchange believes that the proposed rule change will allow for further analysis of the Pilot and a determination of how the 4 15 5 15 E:\FR\FM\13JNN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(5). 13JNN1

Agencies

[Federal Register Volume 79, Number 114 (Friday, June 13, 2014)]
[Notices]
[Pages 33973-33976]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-13821]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72349; File No. SR-NYSEArca-2014-66]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change to Reflect a Change 
to the Reference Index Relating to the Columbia Select Large Cap Value 
ETF

June 9, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on June 2, 2014, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule

[[Page 33974]]

change, as described in Items I and II 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to reflect a change to the reference index 
relating to the Columbia Select Large Cap Value ETF (formerly, Grail 
American Beacon Large Cap Value ETF). Shares of the Fund are currently 
listed and traded on the Exchange. 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 Commission has approved listing and trading on the Exchange of 
shares (``Shares'') of the Columbia Select Large Cap Value ETF 
(formerly, Grail American Beacon Large Cap Value ETF) (``Fund''), a 
series of Columbia ETF Trust (``Trust'') (formerly, the Grail Advisors 
ETF Trust) \4\ under NYSE Arca Equities Rule 8.600, which governs the 
listing and trading of Managed Fund Shares. Shares of the Fund are 
currently listed and traded on the Exchange.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 59826 (April 28, 
2009), 74 FR 20512 (May 4, 2009) (SR-NYSEArca-2009-22) (``Prior 
Order''). See also Securities Exchange Act Release No. 59651 (March 
30, 2009), 74 FR 15548 (April 6, 2009) (SR-NYSEArca-2009-22) 
(``Prior Notice,'' and together with the Prior Order, the ``Prior 
Release'').
---------------------------------------------------------------------------

    The Shares are offered by the Trust, which is registered with the 
Commission as an open-end management investment company.\5\ The 
investment advisor to the Fund is Columbia Management Investment 
Advisers, LLC (the ``Investment Manager'').\6\
---------------------------------------------------------------------------

    \5\ The Trust is registered under the Investment Company Act of 
1940 (15 U.S.C. 80a-1) (``1940 Act''). On April 14, 2014, the Trust 
filed with the Commission an amendment to its registration statement 
on Form N-1A under the Securities Act of 1933 (15 U.S.C. 77a), and 
under the 1940 Act relating to the Fund (File Nos. 333-148082 and 
811-22154) (``Registration Statement''). The description of the 
operation of the Trust and the Fund herein is based, in part, on the 
Registration Statement. In addition, the Commission has issued an 
order granting certain exemptive relief to the Trust under the 1940 
Act. See Investment Company Act Release No. 28604 (January 16, 2009) 
(File No. 812-13440) (``Exemptive Order'').
    \6\ The previous investment manager for the Fund was Grail 
Advisors LLC, a majority-owned subsidiary of Grail Partners LLC. The 
Fund previously was sub-advised by American Beacon Advisors, Inc.
---------------------------------------------------------------------------

    In this proposed rule change, the Exchange proposes to reflect a 
change to the index that the Investment Manager will utilize to 
implement the Fund's investment objective, as described below.\7\
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    \7\ The changes described herein will be effective upon filing 
with the Commission of another amendment to the Fund's Registration 
Statement. See note 5, supra. The Investment Manager represents that 
it will manage the Fund in the manner described in the Prior 
Release, and will not implement the changes described herein until 
the instant proposed rule change is operative.
---------------------------------------------------------------------------

    The Prior Release stated that the Fund's investment objective is 
long-term capital appreciation and current income; that, ordinarily, at 
least 80% of the Fund's net assets (plus the amount of any borrowings 
for investment purposes) would be invested in equity securities of 
large market capitalization U.S. companies; and that these companies 
generally have market capitalizations similar to the market 
capitalizations of the companies in the Russell 1000[supreg] Index at 
the time of investment.\8\ The Prior Release further stated that the 
Fund's investment sub-advisers will select stocks that, in their 
opinion, have most or all of the following characteristics (relative to 
the Russell 1000[supreg] Index): Above-average earnings growth 
potential; below-average price to earnings ratio; below-average price 
to book value ratio; and above-average dividend yields.\9\
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    \8\ The Russell 1000 Index measures the performance of the 1,000 
largest U.S. companies based on total market capitalization. The 
Prior Release stated that the Fund's investments may include common 
stocks, preferred stocks, securities convertible into U.S. common 
stocks, U.S. dollar-denominated American Depositary Receipts, and 
U.S. dollar-denominated foreign stocks traded on U.S. exchanges, and 
that the Fund will not purchase or sell securities in markets 
outside the U.S.
    \9\ The Fund currently does not have a sub-adviser. The 
activities of the sub-advisers described in the Prior Release have 
been assumed by the Investment Manager, but the Investment Manager 
may, in the future, employ for the Fund the services of an 
investment sub-adviser or sub-advisers. The Investment Manager is 
not registered as a broker-dealer, but 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 Fund's portfolio. If the 
Investment Manager elects to hire a sub-adviser for the Fund that is 
registered as a broker-dealer or is affiliated with a broker-dealer, 
such sub-adviser will implement a fire wall with respect to its 
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.
    In the event (a) the Investment Manager becomes registered as a 
broker-dealer or 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 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.
---------------------------------------------------------------------------

    Going forward, whether day-to-day portfolio management of the Fund 
is provided by the Investment Manager or a sub-adviser selected by the 
Investment Manager, the Investment Manager wishes to revise the 
description of what constitutes equity securities of ``large market 
capitalization U.S. companies'' from the market capitalization range of 
the Russell 1000[supreg] Index to companies with market capitalizations 
similar to the market capitalizations of the companies in the Russell 
1000[supreg] Value Index at the time of investment.\10\ The Investment 
Manager represents that it has managed the Fund consistent with the 
range of the Russell 1000[supreg] Index; however, the Investment 
Manager believes that the Russell 1000 Value[supreg] Index will better 
reflect the Fund's ``value'' style of investing.\11\
---------------------------------------------------------------------------

    \10\ The Russell 1000 Value[supreg] Index, which is a subset of 
the Russell[supreg] 1000 Index, measures the performance of the 
large-cap value segment of the U.S. equity universe. It includes 
those Russell 1000 companies with lower price-to-book ratios and 
lower expected growth values. The Russell 1000 Value Index is 
reconstituted annually. The Fund's current performance benchmark is 
the Russell 1000 Value[supreg] Index, as reflected in the 
Registration Statement.
    \11\ According to the Registration Statement, the Investment 
Manager considers a variety of factors in identifying opportunities 
and constructing the Fund's portfolio which may include, among 
others, a low price-to-earnings ratio; positive change in senior 
management; positive corporate restructuring; temporary setback in 
price due to factors that no longer exist or are ending; a positive 
shift in the company's business cycle; and/or a catalyst for 
increase in the rate of the company's earnings growth. These factors 
may change over time.
---------------------------------------------------------------------------

    The Investment Manager represents that there is no change to the 
Fund's investment objective. The Fund will

[[Page 33975]]

continue to comply with all initial and continued listing requirements 
under NYSE Arca Equities Rule 8.600.
    Except for the changes noted above, all other facts presented and 
representations made in the Prior Release remain unchanged.
    All terms referenced but not defined herein are defined in the 
Prior Release.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \12\ 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices, and is designed 
to promote just and equitable principles of trade and to protect 
investors and the public interest, in that the Investment Manager 
represents that there is no change to the Fund's investment objective 
and the Investment Manager believes that the Russell 1000 Value[supreg] 
Index better reflects the Fund portfolio managers' value style of 
investing. In addition, the Investment Manager notes that the Fund's 
current performance benchmark is the Russell 1000 Value[supreg] Index.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that the Fund will continue to comply with all 
initial and continued listing requirements under NYSE Arca Equities 
Rule 8.600. The Investment Manager represents that there is no change 
to the Fund's investment objective. Except for the changes noted above, 
all other representations made in the Prior Release remain unchanged.

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 purposes of the Act. The proposed changes will 
accommodate continued listing and trading of an issue of Managed Fund 
Shares that, ordinarily, principally holds large-capitalization, U.S. 
exchange-listed equities.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\13\ and Rule 19b-4(f)(6)(iii) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally 
does not become operative for 30 days after the date of the filing. 
However, Rule 19b-4(f)(6)(iii) \16\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange requests that the 
Commission waive the 30-day operative delay to accommodate the proposed 
change without delay. The Exchange states that the Shares of the Fund 
are currently listed and trading.
---------------------------------------------------------------------------

    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public 
interest.\17\ As stated in this proposal, the proposed change does not 
alter the Fund's investment objective. Under the proposal, the Exchange 
seeks to change the description of what constitutes equity securities 
of ``large market capitalization U.S. companies'' from the market 
capitalization range of the Russell 1000[supreg] Index to companies 
with market capitalizations similar to the market capitalizations of 
the companies in the Russell 1000[supreg] Value Index at the time of 
investment. The Commission notes that the Russell 1000 Value[supreg] 
Index, which measures the performance of the large-cap value segment of 
the U.S. equity universe, is a subset of the Russell[supreg] 1000 
Index. The Commission further notes that the Fund's current performance 
benchmark is the Russell 1000 Value[supreg] Index, as reflected in the 
Registration Statement. The Exchange represents that, except for this 
change, all other facts and representations made in the Prior Release 
remain unchanged, and the Fund will continue to comply with all initial 
and continued listing requirements under NYSE Arca Equities Rule 8.600. 
Because the proposed change does not alter the Fund's investment 
objective and does not raise any novel or unique regulatory issues, the 
Commission designates the proposed rule change as operative upon 
filing.
---------------------------------------------------------------------------

    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the 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:

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-2014-66 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2014-66. 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

[[Page 33976]]

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 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-2014-66 and should be submitted on or before 
July 7, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-13821 Filed 6-12-14; 8:45 am]
BILLING CODE 8011-01-P
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