Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To List and Trade of Shares of the First Trust Enhanced Short Maturity ETF of First Trust Exchange-Traded Fund IV, 34805-34808 [2014-14202]

Download as PDF Federal Register / Vol. 79, No. 117 / Wednesday, June 18, 2014 / Notices remainder of the definition of ADV would remain unchanged. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from Members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 11 and Rule 19b–4(f)(2) 12 thereunder. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: emcdonald on DSK67QTVN1PROD with NOTICES 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– EDGX–2014–16 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–EDGX–2014–16. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–EDGX– 2014–16, and should be submitted on or before July 9, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–14197 Filed 6–17–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72382; File No. SR– NASDAQ–2014–041] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To List and Trade of Shares of the First Trust Enhanced Short Maturity ETF of First Trust ExchangeTraded Fund IV June 12, 2014. I. Introduction On April 11, 2014, The NASDAQ Stock Market LLC (‘‘Exchange’’ or ‘‘Nasdaq’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change relating to the listing and trading of shares (‘‘Shares’’) of the First Trust Enhanced Short Maturity ETF (‘‘Fund’’) of First Trust Exchange-Traded Fund IV (‘‘Trust’’). On April 24, 2014, the Exchange filed Amendment No. 1 to the proposed rule 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 11 15 U.S.C. 78s(b)(3)(A). 12 17 CFR 240.19b–4(f)(2). VerDate Mar<15>2010 16:35 Jun 17, 2014 1 15 Jkt 232001 PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 34805 change.3 The Commission published for comment in the Federal Register notice of the proposed rule change, as modified by Amendment No. 1 thereto, on May 1, 2014.4 The Commission received no comments on the proposed rule change. This order approves the proposed rule change, as modified by Amendment No. 1 thereto. II. Description of the Proposed Rule Change The Exchange proposes to list and trade Shares pursuant to Nasdaq Rule 5735, which governs the listing and trading of Managed Fund Shares.5 The Exchange deems the Shares to be equity securities, rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities.6 The Shares will be offered by the Trust, which is organized as a Massachusetts business trust and is registered with the Commission as an investment company.7 First Trust Advisors L.P. is the investment adviser (‘‘Adviser’’) to the Fund. First Trust Portfolios L.P. is the principal underwriter and distributor of the Shares (‘‘Distributor’’). The Bank of New York Mellon Corporation will act as the administrator, accounting agent, custodian, and transfer agent to the Fund. The Adviser is affiliated with the 3 In Amendment No. 1, the Exchange: (1) Clarified that the Fund (defined below) will limit its investments in asset-backed securities and nonagency mortgage-backed securities (in the aggregate) to 20% of its net assets; (2) modified its description of how asset-backed or mortgage-backed securities will be priced in certain circumstances; and (3) made certain grammatical corrections. 4 See Securities Exchange Act Release No. 72030 (April 25, 2014), 79 FR 24765 (‘‘Notice’’). 5 Under Nasdaq’s Rules, a Managed Fund Share is a security that (a) represents an interest in a registered investment company (‘‘Investment Company’’) organized as an open-end management investment company or similar entity, that invests in a portfolio of securities selected by the Investment Company’s investment adviser consistent with the Investment Company’s investment objectives and policies; (b) is issued in a specified aggregate minimum number in return for a deposit of a specified portfolio of securities and/ or a cash amount with a value equal to the next determined net asset value; and (c) when aggregated in the same specified minimum number, may be redeemed at a holder’s request, which holder will be paid a specified portfolio of securities and/or cash with a value equal to the next determined net asset value. See Nasdaq Rule 5735(c)(1). 6 See Notice, supra note 4, 79 FR at 24770. 7 The Trust is registered under the Investment Company Act of 1940 (‘‘1940 Act’’). See PostEffective Amendment No. 66 to Registration Statement on Form N–1A for the Trust, dated April 10, 2014 (File Nos. 333–174332 and 811–22559) (‘‘Registration Statement’’). The Exchange represents that the Trust has obtained certain exemptive relief under the 1940 Act. See Investment Company Act Release No. 30029 (April 10, 2012) (File No. 812–13795) (‘‘Exemptive Order’’). E:\FR\FM\18JNN1.SGM 18JNN1 34806 Federal Register / Vol. 79, No. 117 / Wednesday, June 18, 2014 / Notices Distributor, a broker-dealer. As required by Nasdaq Rule 5735(g),8 the Adviser has implemented a firewall with respect to its broker-dealer affiliate regarding access to information concerning the composition of or changes to the portfolio.9 First Trust Enhanced Short Maturity ETF 10 The investment objective of the Fund will be to seek current income, consistent with preservation of capital and daily liquidity. Under normal market conditions,11 the Fund will seek to achieve its investment objective by investing in a portfolio of U.S. dollardenominated fixed- and variable-rate 12 instruments (collectively, ‘‘Fixed Income Securities’’) issued by U.S. and non-U.S. public- and private-sector entities. The Fund will hold Fixed Income Securities of at least 13 nonaffiliated issuers. emcdonald on DSK67QTVN1PROD with NOTICES Principal Investments The Fund intends to achieve its investment objective by investing, under 8 Nasdaq Rule 5735(g) also requires that Adviser personnel who make decisions regarding the Fund’s portfolio be subject to procedures designed to prevent the use and dissemination of material, nonpublic information regarding the Fund’s portfolio. 9 Additionally, the Exchange represents that, in the event (a) the Adviser becomes newly affiliated with a broker-dealer, or (b) any new adviser or subadviser becomes affiliated with a broker-dealer, it will implement a fire wall with respect to such broker-dealer regarding access to information concerning the composition of or changes to the portfolio, and it will be subject to procedures designed to prevent the use and dissemination of material, non-public information regarding such portfolio. 10 Additional information regarding the Trust, the Fund, and the Shares, including investment strategies, risks, creation and redemption procedures, fees, Fund holdings disclosure policies, distributions and taxes, among other things, is included in the Notice and Registration Statements, as applicable. See Notice and Registration Statement, supra notes 4 and 7, respectively. 11 According to the Exchange, the term ‘‘under normal market conditions includes, but is not limited to, the absence of adverse market, economic, political or other conditions, including extreme volatility or trading halts in the fixed income markets or the financial markets generally; operational issues causing dissemination of inaccurate market information; or force majeure type events such as systems failure, natural or manmade disaster, act of God, armed conflict, act of terrorism, riot or labor disruption or any similar intervening circumstance. For temporary defensive purposes, during the initial invest-up period and during periods of high cash inflows or outflows, the Fund may depart from its principal investment strategies; for example, it may hold a higher than normal proportion of its assets in cash. During such periods, the Fund may not be able to achieve its investment objective. The Fund may adopt a defensive strategy when the Adviser believes securities in which the Fund normally invests have elevated risks due to political or economic factors and in other extraordinary circumstances. 12 For these purposes, the term ‘‘variable-rate’’ also includes similar terms such as ‘‘floating-rate’’ and ‘‘adjustable-rate.’’ VerDate Mar<15>2010 16:35 Jun 17, 2014 Jkt 232001 normal market conditions, at least 80% of its net assets in a portfolio of U.S. dollar-denominated Fixed Income Securities issued by U.S. and non-U.S. public- and private-sector entities. At least 80% of the Fund’s net assets will be invested in Fixed Income Securities that are, at the time of purchase, investment grade. Fixed Income Securities will include the following types of fixed- and variable-rate debt securities: corporate 13 and government bonds and notes; agency securities; instruments of non-U.S. issuers in developed markets; privately-issued securities; 14 asset-backed securities; 15 mortgage-backed securities; 16 municipal bonds; money market securities; and investment companies 17 (including investment companies advised by the Adviser) that invest primarily in the foregoing types of Fixed Income Securities. The Fund will limit its investments in asset-backed securities and non-agency mortgagebacked securities (in the aggregate) to 20% of its net assets.18 Under normal market conditions, the Fund’s duration 19 is expected to be below one year and the maturity 20 of 13 While the Fund is permitted to invest without restriction in corporate bonds, the Adviser expects that, under normal market conditions, generally, with respect to at least 75% of the Fund’s portfolio, a corporate bond will have, at the time of original issuance, $100 million or more par amount outstanding to be considered as an eligible investment. 14 ‘‘Privately-issued securities’’ for these purposes generally includes Rule 144A securities and, in this context, may include both mortgage-backed and non-mortgage Rule 144A securities. 15 Asset-backed securities are Fixed Income Securities that are backed by a pool of assets. The Fund currently intends to invest in asset-backed securities that are consumer asset-backed securities. 16 Mortgage-backed securities are Fixed Income Securities that are backed by a pool of mortgage loans. There are a wide variety of mortgage-backed securities involving commercial or residential, fixed-rate or adjustable-rate mortgages and mortgages issued by banks or government agencies. 17 Currently, the Fund anticipates investing only in registered open-end investment companies that are listed and traded in the U.S. on registered exchanges (i.e., other exchange traded funds). 18 See Amendment No. 1, supra note3. There is no limit applicable to agency mortgage-backed securities. 19 Duration is a measure of the expected price volatility of a debt instrument as a result of changes in market rates of interest, based on, among other factors, the weighted average timing of the instrument’s expected principal and interest payments. Duration differs from maturity in that it considers a security’s yield, coupon payments, principal payments, call features and coupon adjustments in addition to the amount of time until the security finally matures. 20 Maturity is measured relative to the type of security. For Fixed Income Securities (exclusive of asset-backed securities and mortgage-backed securities), maturity shall be calculated using dollar-weighted average maturity, which is calculated by taking the average length of time to maturity. For asset-backed securities and mortgage- PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 the Fund’s portfolio is expected to be below three years. Other Investments Under normal market conditions, the Fund will invest primarily in the Fixed Income Securities described above to meet its investment objective. In addition, the Fund may invest up to 20% of its net assets in floating rate loans. The floating rate loans in which the Fund will invest will represent amounts borrowed by companies or other entities from banks and other lenders and a significant portion of such floating rate loans may be rated below investment grade or unrated. Floating rate loans held by the Fund may be senior or subordinate obligations of the borrower and may or may not be secured by collateral. Investment Restrictions The Fund will not invest 25% or more of the value of its total assets in securities of issuers in any one industry. This restriction does not apply to (a) obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities or (b) securities of other investment companies. 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 illiquid by the 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 securities subject to contractual or other restrictions on resale and other instruments that lack readily available markets as determined in accordance with Commission staff guidance.21 The Fund will not invest in non-U.S. equity securities. III. Discussion and Commission’s Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 1 thereto, is consistent with the requirements of Section 6 of the Act 22 and the rules and backed securities, maturity shall be calculated using weighted average life, which is the estimated time to principal paydown for each underlying instrument held by the Fund, weighted according to the relative holdings per instrument. 21 See Notice, supra note 4, 79 FR at 24768, n.26. 22 15 U.S.C. 78f. E:\FR\FM\18JNN1.SGM 18JNN1 emcdonald on DSK67QTVN1PROD with NOTICES Federal Register / Vol. 79, No. 117 / Wednesday, June 18, 2014 / Notices regulations thereunder applicable to a national securities exchange.23 In particular, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,24 which requires, among other things, that the Exchange’s rules be designed 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 will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in Nasdaq’s Rule 5735. 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 Act,25 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. 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. Quotation and last-sale information for the Shares will be available via Nasdaq proprietary quote and trade services, as well as in accordance with the Unlisted Trading Privileges and the Consolidated Tape Association plans for the Shares. Intraday executable price quotations on Fixed Income Securities and other assets not traded on an exchange will be available from major broker-dealer firms or market data vendors, as well as from automated quotation systems, published or other public sources, or online information services. For exchangelisted assets, intraday pricing information will be available directly from the applicable listing exchange. Intraday price information will also be available through subscription services, such as Bloomberg, Markit, and Thomson Reuters, which can be accessed by authorized participants and other investors. 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 23 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). 24 17 U.S.C. 78f(b)(5). 25 15 U.S.C. 78k–1(a)(1)(C)(iii). VerDate Mar<15>2010 16:35 Jun 17, 2014 Jkt 232001 when a reasonable degree of transparency cannot be assured. The NAV of the Shares generally will be calculated once daily Monday through Friday as of the close of regular trading on the New York Stock Exchange, generally 4:00 p.m., Eastern time. On each business day, before commencement of trading in Shares in the Regular Market Session 26 on the Exchange, the Fund will disclose on its Web site the identities and quantities of the portfolio of securities and other assets (‘‘Disclosed Portfolio’’ as defined in Nasdaq Rule 5735(c)(2)) held by the Fund that will form the basis for the Fund’s calculation of NAV at the end of the business day.27 The Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the Disclosed Portfolio will be made available to all market participants at the same time.28 Moreover, the Intraday Indicative Value, available on the NASDAQ OMX Information LLC proprietary index data service, will be widely disseminated by one or more major market data vendors and broadly displayed at least every 15 seconds during the Regular Market Session.29 Trading in Shares will be halted if the circuit breaker parameters in Nasdaq Rule 4120(a)(11) have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable, and trading in the Shares will be subject to Nasdaq Rule 5735(d)(2)(D), which sets forth circumstances under which trading in the Shares may be halted. The Exchange states that it has a general policy prohibiting the distribution of material, non-public information by its employees. 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, nonpublic information regarding the actual components of the portfolio.30 The 26 See Nasdaq Rule 4120(b)(4) (describing the three trading sessions on the Exchange: (1) PreMarket Session from 4 a.m. to 9:30 a.m., Eastern time; (2) Regular Market Session from 9:30 a.m. to 4 p.m. or 4:15 p.m., Eastern time; and (3) PostMarket Session from 4 p.m. or 4:15 p.m. to 8 p.m., Eastern time). 27 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. 28 See Notice, supra note 4, 79 FR at 24770. 29 See id. 30 See Nasdaq Rule 5735(d)(2)(B)(ii). PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 34807 Adviser is affiliated with a broker-dealer and has implemented a firewall with respect to that broker-dealer regarding access to information concerning the composition and/or changes to the Fund’s portfolio.31 Further, regarding trading in the Shares and the exchange-traded securities held by the Fund, the Commission notes that the Financial Industry Regulatory Authority (‘‘FINRA’’) will communicate as needed on behalf of the Exchange 32 with other markets and other entities that are members of the Intermarket Surveillance Group (‘‘ISG’’),33 and FINRA may obtain trading information regarding trading in the Shares and the exchange-traded securities held by the Fund from such markets and other entities that are members of the ISG, which includes securities and futures exchanges, or from markets which the Exchange has in place a comprehensive surveillance sharing agreement.34 Moreover, the Exchange states that FINRA will be able to access on its behalf, as needed, trade information for certain Fixed Income Securities held by the Fund reported to FINRA’s Trade Reporting and Compliance Engine.35 The Exchange states that trading in the Shares will be subject to the existing trading surveillances, administered by FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws, and represents that these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws.36 In support of this proposal, the Exchange has made representations, including: (1) The Shares will conform to the initial and continued listing criteria under Nasdaq Rule 5735. (2) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. 31 See note 9, supra and accompanying text. Exchange states that, while 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. See Notice, supra note 4, 79 FR at 24771, n.34. 33 For a list of the current members of ISG, see www.isgportal.org. The Exchange states that not all components of the Disclosed Portfolio may trade on markets that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. See id. at 24771, n.35. 34 See id. at 24771. 35 See id. 36 See id. at 24770–71. 32 The E:\FR\FM\18JNN1.SGM 18JNN1 emcdonald on DSK67QTVN1PROD with NOTICES 34808 Federal Register / Vol. 79, No. 117 / Wednesday, June 18, 2014 / Notices (3) The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws and that these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. (4) Prior to the commencement of trading, the Exchange will inform its members in an Information Circular of the special characteristics and risks associated with trading the Shares. Specifically, the Information Circular will discuss the following: (a) The procedures for purchases and redemptions of Shares in Creation Units (and that Shares are not individually redeemable); (b) Nasdaq Rule 2310, which imposes suitability obligations on Nasdaq members with respect to recommending transactions in the Shares to customers; (c) how information regarding the Intraday Indicative Value is disseminated; (d) the risks involved in trading the Shares during the Pre-Market and Post-Market Sessions when an updated Intraday Indicative Value will not be calculated or publicly disseminated; (e) the requirement that members deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (f) trading information.37 (5) For initial and continued listing, the Fund will be in compliance with Rule 10A–3 under the Act.38 (6) While the Fund is permitted to invest without restriction in corporate bonds, the Adviser expects that, under normal market conditions, generally, with respect to at least 75% of the Fund’s portfolio, a corporate bond will have, at the time of original issuance, $100 million or more par amount outstanding to be considered as an eligible investment. (7) 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 illiquid by the Adviser. (8) The Fund will limit its investments in asset-backed securities and non-agency mortgage-backed securities (in the aggregate) to 20% of its net assets. 37 See 38 17 id. at 24771. CFR 240.10A–3. VerDate Mar<15>2010 16:35 Jun 17, 2014 Jkt 232001 (9) The Fund will not invest in nonU.S. equity securities. (10) A minimum of 100,000 Shares will be outstanding at the commencement of trading. This approval order is based on all of the Exchange’s representations, including those set forth in the Notice. IV. Conclusion For the foregoing reasons, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act 39 and the rules and regulations thereunder applicable to a national securities exchange. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,40 that the proposed rule change (SR–NASDAQ– 2014–041), as modified by Amendment No. 1, be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.41 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–14202 Filed 6–17–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72375; File No. SR–EDGA– 2014–14] Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments to the EDGA Exchange, Inc. Fee Schedule June 12, 2014. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on June 2, 2014, EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 39 15 U.S.C. 78f(b)(5). U.S.C. 78s(b)(2). 41 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 40 15 PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its fees and rebates applicable to Members 3 of the Exchange pursuant to EDGA Rule 15.1(a) and (c) (‘‘Fee Schedule’’) to: (i) Delete Flag RC, which routes to the National Stock Exchange, Inc. (‘‘NSX’’) and adds Liquidity; and (ii) make a corrective change to the definition of Average Daily Trading Volume (‘‘ADV’’) to state that ADV includes shared routed by the Exchange. The text of the proposed rule change is available on the Exchange’s Internet Web site at www.directedge.com, at the Exchange’s principal office, and at the Public Reference Room of the Commission. 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Fee Schedule to: (i) Delete Flag RC, which routes to the NSX and adds liquidity; and (ii) make a corrective change to the definition of ADV to state that ADV includes shared routed by the Exchange. Flag RC The Exchange proposes to amend its Fee Schedule to delete Flag RC, which routes to the NSX and adds liquidity, in response to the NSX’s announcement that it will cease market operations and its last day of trading will be Friday, May 30, 2014.4 The Exchange currently 3 The term ‘‘Member’’ is defined as ‘‘any registered broker or dealer, or any person associated with a registered broker or dealer, that has been admitted to membership in the Exchange. A Member will have the status of a ‘‘member’’ of the Exchange as that term is defined in Section 3(a)(3) of the Act.’’ See Exchange Rule 1.5(n). 4 See Securities Exchange Act Release No. 72107 (May 6, 2014), 79 FR 27017 (May 12, 2014) (SR– NSX–2014–14) (Notice of Filing and Immediate E:\FR\FM\18JNN1.SGM 18JNN1

Agencies

[Federal Register Volume 79, Number 117 (Wednesday, June 18, 2014)]
[Notices]
[Pages 34805-34808]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-14202]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72382; File No. SR-NASDAQ-2014-041]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Approving a Proposed Rule Change, as Modified by Amendment No. 1 
Thereto, To List and Trade of Shares of the First Trust Enhanced Short 
Maturity ETF of First Trust Exchange-Traded Fund IV

June 12, 2014.

I. Introduction

    On April 11, 2014, The NASDAQ Stock Market LLC (``Exchange'' or 
``Nasdaq'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change relating to the listing and trading of shares 
(``Shares'') of the First Trust Enhanced Short Maturity ETF (``Fund'') 
of First Trust Exchange-Traded Fund IV (``Trust''). On April 24, 2014, 
the Exchange filed Amendment No. 1 to the proposed rule change.\3\ The 
Commission published for comment in the Federal Register notice of the 
proposed rule change, as modified by Amendment No. 1 thereto, on May 1, 
2014.\4\ The Commission received no comments on the proposed rule 
change. This order approves the proposed rule change, as modified by 
Amendment No. 1 thereto.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange: (1) Clarified that the 
Fund (defined below) will limit its investments in asset-backed 
securities and non-agency mortgage-backed securities (in the 
aggregate) to 20% of its net assets; (2) modified its description of 
how asset-backed or mortgage-backed securities will be priced in 
certain circumstances; and (3) made certain grammatical corrections.
    \4\ See Securities Exchange Act Release No. 72030 (April 25, 
2014), 79 FR 24765 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade Shares pursuant to Nasdaq 
Rule 5735, which governs the listing and trading of Managed Fund 
Shares.\5\ The Exchange deems the Shares to be equity securities, 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities.\6\
---------------------------------------------------------------------------

    \5\ Under Nasdaq's Rules, a Managed Fund Share is a security 
that (a) represents an interest in a registered investment company 
(``Investment Company'') organized as an open-end management 
investment company or similar entity, that invests in a portfolio of 
securities selected by the Investment Company's investment adviser 
consistent with the Investment Company's investment objectives and 
policies; (b) is issued in a specified aggregate minimum number in 
return for a deposit of a specified portfolio of securities and/or a 
cash amount with a value equal to the next determined net asset 
value; and (c) when aggregated in the same specified minimum number, 
may be redeemed at a holder's request, which holder will be paid a 
specified portfolio of securities and/or cash with a value equal to 
the next determined net asset value. See Nasdaq Rule 5735(c)(1).
    \6\ See Notice, supra note 4, 79 FR at 24770.
---------------------------------------------------------------------------

    The Shares will be offered by the Trust, which is organized as a 
Massachusetts business trust and is registered with the Commission as 
an investment company.\7\ First Trust Advisors L.P. is the investment 
adviser (``Adviser'') to the Fund. First Trust Portfolios L.P. is the 
principal underwriter and distributor of the Shares (``Distributor''). 
The Bank of New York Mellon Corporation will act as the administrator, 
accounting agent, custodian, and transfer agent to the Fund. The 
Adviser is affiliated with the

[[Page 34806]]

Distributor, a broker-dealer. As required by Nasdaq Rule 5735(g),\8\ 
the Adviser has implemented a firewall with respect to its broker-
dealer affiliate regarding access to information concerning the 
composition of or changes to the portfolio.\9\
---------------------------------------------------------------------------

    \7\ The Trust is registered under the Investment Company Act of 
1940 (``1940 Act''). See Post-Effective Amendment No. 66 to 
Registration Statement on Form N-1A for the Trust, dated April 10, 
2014 (File Nos. 333-174332 and 811-22559) (``Registration 
Statement''). The Exchange represents that the Trust has obtained 
certain exemptive relief under the 1940 Act. See Investment Company 
Act Release No. 30029 (April 10, 2012) (File No. 812-13795) 
(``Exemptive Order'').
    \8\ Nasdaq Rule 5735(g) also requires that Adviser personnel who 
make decisions regarding the Fund's portfolio be subject to 
procedures designed to prevent the use and dissemination of 
material, non-public information regarding the Fund's portfolio.
    \9\ Additionally, the Exchange represents that, in the event (a) 
the Adviser becomes newly affiliated with a broker-dealer, or (b) 
any new adviser or sub-adviser becomes affiliated with a broker-
dealer, it will implement a fire wall with respect to such broker-
dealer regarding access to information concerning the composition of 
or changes to the portfolio, and it will be subject to procedures 
designed to prevent the use and dissemination of material, non-
public information regarding such portfolio.
---------------------------------------------------------------------------

First Trust Enhanced Short Maturity ETF 10
---------------------------------------------------------------------------

    \10\ Additional information regarding the Trust, the Fund, and 
the Shares, including investment strategies, risks, creation and 
redemption procedures, fees, Fund holdings disclosure policies, 
distributions and taxes, among other things, is included in the 
Notice and Registration Statements, as applicable. See Notice and 
Registration Statement, supra notes 4 and 7, respectively.
---------------------------------------------------------------------------

    The investment objective of the Fund will be to seek current 
income, consistent with preservation of capital and daily liquidity. 
Under normal market conditions,\11\ the Fund will seek to achieve its 
investment objective by investing in a portfolio of U.S. dollar-
denominated fixed- and variable-rate \12\ instruments (collectively, 
``Fixed Income Securities'') issued by U.S. and non-U.S. public- and 
private-sector entities. The Fund will hold Fixed Income Securities of 
at least 13 non-affiliated issuers.
---------------------------------------------------------------------------

    \11\ According to the Exchange, the term ``under normal market 
conditions includes, but is not limited to, the absence of adverse 
market, economic, political or other conditions, including extreme 
volatility or trading halts in the fixed income 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. For temporary 
defensive purposes, during the initial invest-up period and during 
periods of high cash inflows or outflows, the Fund may depart from 
its principal investment strategies; for example, it may hold a 
higher than normal proportion of its assets in cash. During such 
periods, the Fund may not be able to achieve its investment 
objective. The Fund may adopt a defensive strategy when the Adviser 
believes securities in which the Fund normally invests have elevated 
risks due to political or economic factors and in other 
extraordinary circumstances.
    \12\ For these purposes, the term ``variable-rate'' also 
includes similar terms such as ``floating-rate'' and ``adjustable-
rate.''
---------------------------------------------------------------------------

Principal Investments

    The Fund intends to achieve its investment objective by investing, 
under normal market conditions, at least 80% of its net assets in a 
portfolio of U.S. dollar-denominated Fixed Income Securities issued by 
U.S. and non-U.S. public- and private-sector entities. At least 80% of 
the Fund's net assets will be invested in Fixed Income Securities that 
are, at the time of purchase, investment grade. Fixed Income Securities 
will include the following types of fixed- and variable-rate debt 
securities: corporate \13\ and government bonds and notes; agency 
securities; instruments of non-U.S. issuers in developed markets; 
privately-issued securities; \14\ asset-backed securities; \15\ 
mortgage-backed securities; \16\ municipal bonds; money market 
securities; and investment companies \17\ (including investment 
companies advised by the Adviser) that invest primarily in the 
foregoing types of Fixed Income Securities. The Fund will limit its 
investments in asset-backed securities and non-agency mortgage-backed 
securities (in the aggregate) to 20% of its net assets.\18\
---------------------------------------------------------------------------

    \13\ While the Fund is permitted to invest without restriction 
in corporate bonds, the Adviser expects that, under normal market 
conditions, generally, with respect to at least 75% of the Fund's 
portfolio, a corporate bond will have, at the time of original 
issuance, $100 million or more par amount outstanding to be 
considered as an eligible investment.
    \14\ ``Privately-issued securities'' for these purposes 
generally includes Rule 144A securities and, in this context, may 
include both mortgage-backed and non-mortgage Rule 144A securities.
    \15\ Asset-backed securities are Fixed Income Securities that 
are backed by a pool of assets. The Fund currently intends to invest 
in asset-backed securities that are consumer asset-backed 
securities.
    \16\ Mortgage-backed securities are Fixed Income Securities that 
are backed by a pool of mortgage loans. There are a wide variety of 
mortgage-backed securities involving commercial or residential, 
fixed-rate or adjustable-rate mortgages and mortgages issued by 
banks or government agencies.
    \17\ Currently, the Fund anticipates investing only in 
registered open-end investment companies that are listed and traded 
in the U.S. on registered exchanges (i.e., other exchange traded 
funds).
    \18\ See Amendment No. 1, supra note3. There is no limit 
applicable to agency mortgage-backed securities.
---------------------------------------------------------------------------

    Under normal market conditions, the Fund's duration \19\ is 
expected to be below one year and the maturity \20\ of the Fund's 
portfolio is expected to be below three years.
---------------------------------------------------------------------------

    \19\ Duration is a measure of the expected price volatility of a 
debt instrument as a result of changes in market rates of interest, 
based on, among other factors, the weighted average timing of the 
instrument's expected principal and interest payments. Duration 
differs from maturity in that it considers a security's yield, 
coupon payments, principal payments, call features and coupon 
adjustments in addition to the amount of time until the security 
finally matures.
    \20\ Maturity is measured relative to the type of security. For 
Fixed Income Securities (exclusive of asset-backed securities and 
mortgage-backed securities), maturity shall be calculated using 
dollar-weighted average maturity, which is calculated by taking the 
average length of time to maturity. For asset-backed securities and 
mortgage-backed securities, maturity shall be calculated using 
weighted average life, which is the estimated time to principal 
paydown for each underlying instrument held by the Fund, weighted 
according to the relative holdings per instrument.
---------------------------------------------------------------------------

Other Investments

    Under normal market conditions, the Fund will invest primarily in 
the Fixed Income Securities described above to meet its investment 
objective. In addition, the Fund may invest up to 20% of its net assets 
in floating rate loans. The floating rate loans in which the Fund will 
invest will represent amounts borrowed by companies or other entities 
from banks and other lenders and a significant portion of such floating 
rate loans may be rated below investment grade or unrated. Floating 
rate loans held by the Fund may be senior or subordinate obligations of 
the borrower and may or may not be secured by collateral.

Investment Restrictions

    The Fund will not invest 25% or more of the value of its total 
assets in securities of issuers in any one industry. This restriction 
does not apply to (a) obligations issued or guaranteed by the U.S. 
government, its agencies or instrumentalities or (b) securities of 
other investment companies.
    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 illiquid by the 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 
securities subject to contractual or other restrictions on resale and 
other instruments that lack readily available markets as determined in 
accordance with Commission staff guidance.\21\
---------------------------------------------------------------------------

    \21\ See Notice, supra note 4, 79 FR at 24768, n.26.
---------------------------------------------------------------------------

    The Fund will not invest in non-U.S. equity securities.

III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change, as modified by Amendment No. 1 thereto, is consistent with the 
requirements of Section 6 of the Act \22\ and the rules and

[[Page 34807]]

regulations thereunder applicable to a national securities 
exchange.\23\ In particular, the Commission finds that the proposal is 
consistent with Section 6(b)(5) of the Act,\24\ which requires, among 
other things, that the Exchange's rules be designed 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 will be listed and traded 
on the Exchange pursuant to the initial and continued listing criteria 
in Nasdaq's Rule 5735.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78f.
    \23\ 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).
    \24\ 17 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 
Act,\25\ 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. 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. Quotation and last-sale 
information for the Shares will be available via Nasdaq proprietary 
quote and trade services, as well as in accordance with the Unlisted 
Trading Privileges and the Consolidated Tape Association plans for the 
Shares. Intraday executable price quotations on Fixed Income Securities 
and other assets not traded on an exchange will be available from major 
broker-dealer firms or market data vendors, as well as from automated 
quotation systems, published or other public sources, or online 
information services. For exchange-listed assets, intraday pricing 
information will be available directly from the applicable listing 
exchange. Intraday price information will also be available through 
subscription services, such as Bloomberg, Markit, and Thomson Reuters, 
which can be accessed by authorized participants and other investors.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    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 
NAV of the Shares generally will be calculated once daily Monday 
through Friday as of the close of regular trading on the New York Stock 
Exchange, generally 4:00 p.m., Eastern time. On each business day, 
before commencement of trading in Shares in the Regular Market Session 
\26\ on the Exchange, the Fund will disclose on its Web site the 
identities and quantities of the portfolio of securities and other 
assets (``Disclosed Portfolio'' as defined in Nasdaq Rule 5735(c)(2)) 
held by the Fund that will form the basis for the Fund's calculation of 
NAV at the end of the business day.\27\ The Exchange will obtain a 
representation from the issuer of the Shares that the NAV per Share 
will be calculated daily and that the NAV and the Disclosed Portfolio 
will be made available to all market participants at the same time.\28\ 
Moreover, the Intraday Indicative Value, available on the NASDAQ OMX 
Information LLC proprietary index data service, will be widely 
disseminated by one or more major market data vendors and broadly 
displayed at least every 15 seconds during the Regular Market 
Session.\29\ Trading in Shares will be halted if the circuit breaker 
parameters in Nasdaq Rule 4120(a)(11) have been reached or because of 
market conditions or for reasons that, in the view of the Exchange, 
make trading in the Shares inadvisable, and trading in the Shares will 
be subject to Nasdaq Rule 5735(d)(2)(D), which sets forth circumstances 
under which trading in the Shares may be halted. The Exchange states 
that it has a general policy prohibiting the distribution of material, 
non-public information by its employees. 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.\30\ The Adviser is 
affiliated with a broker-dealer and has implemented a firewall with 
respect to that broker-dealer regarding access to information 
concerning the composition and/or changes to the Fund's portfolio.\31\
---------------------------------------------------------------------------

    \26\ See Nasdaq Rule 4120(b)(4) (describing the three trading 
sessions on the Exchange: (1) Pre-Market Session from 4 a.m. to 9:30 
a.m., Eastern time; (2) Regular Market Session from 9:30 a.m. to 4 
p.m. or 4:15 p.m., Eastern time; and (3) Post-Market Session from 4 
p.m. or 4:15 p.m. to 8 p.m., Eastern time).
    \27\ 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.
    \28\ See Notice, supra note 4, 79 FR at 24770.
    \29\ See id.
    \30\ See Nasdaq Rule 5735(d)(2)(B)(ii).
    \31\ See note 9, supra and accompanying text.
---------------------------------------------------------------------------

    Further, regarding trading in the Shares and the exchange-traded 
securities held by the Fund, the Commission notes that the Financial 
Industry Regulatory Authority (``FINRA'') will communicate as needed on 
behalf of the Exchange \32\ with other markets and other entities that 
are members of the Intermarket Surveillance Group (``ISG''),\33\ and 
FINRA may obtain trading information regarding trading in the Shares 
and the exchange-traded securities held by the Fund from such markets 
and other entities that are members of the ISG, which includes 
securities and futures exchanges, or from markets which the Exchange 
has in place a comprehensive surveillance sharing agreement.\34\ 
Moreover, the Exchange states that FINRA will be able to access on its 
behalf, as needed, trade information for certain Fixed Income 
Securities held by the Fund reported to FINRA's Trade Reporting and 
Compliance Engine.\35\ The Exchange states that trading in the Shares 
will be subject to the existing trading surveillances, administered by 
FINRA on behalf of the Exchange, which are designed to detect 
violations of Exchange rules and applicable federal securities laws, 
and represents that these procedures are adequate to properly monitor 
Exchange trading of the Shares in all trading sessions and to deter and 
detect violations of Exchange rules and applicable federal securities 
laws.\36\
---------------------------------------------------------------------------

    \32\ The Exchange states that, while 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. See Notice, supra note 4, 79 FR at 
24771, n.34.
    \33\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange states that not all components of 
the Disclosed Portfolio may trade on markets that are members of ISG 
or with which the Exchange has in place a comprehensive surveillance 
sharing agreement. See id. at 24771, n.35.
    \34\ See id. at 24771.
    \35\ See id.
    \36\ See id. at 24770-71.
---------------------------------------------------------------------------

    In support of this proposal, the Exchange has made representations, 
including:
    (1) The Shares will conform to the initial and continued listing 
criteria under Nasdaq Rule 5735.
    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.

[[Page 34808]]

    (3) The Exchange represents that trading in the Shares will be 
subject to the existing trading surveillances, administered by FINRA on 
behalf of the Exchange, which are designed to detect violations of 
Exchange rules and applicable federal securities laws and that these 
procedures are adequate to properly monitor Exchange trading of the 
Shares in all trading sessions and to deter and detect violations of 
Exchange rules and applicable federal securities laws.
    (4) Prior to the commencement of trading, the Exchange will inform 
its members in an Information Circular of the special characteristics 
and risks associated with trading the Shares. Specifically, the 
Information Circular will discuss the following: (a) The procedures for 
purchases and redemptions of Shares in Creation Units (and that Shares 
are not individually redeemable); (b) Nasdaq Rule 2310, which imposes 
suitability obligations on Nasdaq members with respect to recommending 
transactions in the Shares to customers; (c) how information regarding 
the Intraday Indicative Value is disseminated; (d) the risks involved 
in trading the Shares during the Pre-Market and Post-Market Sessions 
when an updated Intraday Indicative Value will not be calculated or 
publicly disseminated; (e) the requirement that members deliver a 
prospectus to investors purchasing newly issued Shares prior to or 
concurrently with the confirmation of a transaction; and (f) trading 
information.\37\
---------------------------------------------------------------------------

    \37\ See id. at 24771.
---------------------------------------------------------------------------

    (5) For initial and continued listing, the Fund will be in 
compliance with Rule 10A-3 under the Act.\38\
---------------------------------------------------------------------------

    \38\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

    (6) While the Fund is permitted to invest without restriction in 
corporate bonds, the Adviser expects that, under normal market 
conditions, generally, with respect to at least 75% of the Fund's 
portfolio, a corporate bond will have, at the time of original 
issuance, $100 million or more par amount outstanding to be considered 
as an eligible investment.
    (7) 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 illiquid by the Adviser.
    (8) The Fund will limit its investments in asset-backed securities 
and non-agency mortgage-backed securities (in the aggregate) to 20% of 
its net assets.
    (9) The Fund will not invest in non-U.S. equity securities.
    (10) A minimum of 100,000 Shares will be outstanding at the 
commencement of trading.

This approval order is based on all of the Exchange's representations, 
including those set forth in the Notice.

IV. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act \39\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\40\ that the proposed rule change (SR-NASDAQ-2014-041), as 
modified by Amendment No. 1, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \40\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\41\
---------------------------------------------------------------------------

    \41\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-14202 Filed 6-17-14; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.