Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Amendments Nos. 1 and 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendments Nos. 1 and 2, To List and Trade Shares of Eight PIMCO Exchange-Traded Funds, 25723-25727 [2015-10412]
Download as PDF
Federal Register / Vol. 80, No. 86 / Tuesday, May 5, 2015 / Notices
consider and resolve requests for access
to SUNSI, and motions for protective
orders, in a timely fashion in order to
minimize any unnecessary delays in
identifying those petitioners who have
standing and who have propounded
contentions meeting the specificity and
basis requirements in 10 CFR part 2.
Attachment 1 to this Order summarizes
the general target schedule for
processing and resolving requests under
these procedures.
It is so ordered.
Dated at Rockville, Maryland, this 21st day
of April, 2015.
25723
For the Nuclear Regulatory Commission.
Annette L. Vietti-Cook,
Secretary of the Commission.
Attachment 1—General Target
Schedule for Processing and Resolving
Requests for Access to Sensitive
Unclassified Non-Safeguards
Information in this Proceeding
Day
Event/activity
0 ........................
Publication of Federal Register notice of hearing and opportunity to petition for leave to intervene, including order with instructions for access requests.
Deadline for submitting requests for access to Sensitive Unclassified Non-Safeguards Information (SUNSI) with information:
supporting the standing of a potential party identified by name and address; describing the need for the information in order
for the potential party to participate meaningfully in an adjudicatory proceeding.
Deadline for submitting petition for intervention containing: (i) demonstration of standing; and (ii) all contentions whose formulation does not require access to SUNSI (+25 Answers to petition for intervention; +7 petitioner/requestor reply).
U.S. Nuclear Regulatory Commission (NRC) staff informs the requester of the staff’s determination whether the request for
access provides a reasonable basis to believe standing can be established and shows need for SUNSI. (NRC staff also informs any party to the proceeding whose interest independent of the proceeding would be harmed by the release of the information.) If NRC staff makes the finding of need for SUNSI and likelihood of standing, NRC staff begins document processing (preparation of redactions or review of redacted documents).
If NRC staff finds no ‘‘need’’ or no likelihood of standing, the deadline for petitioner/requester to file a motion seeking a ruling
to reverse the NRC staff’s denial of access; NRC staff files copy of access determination with the presiding officer (or Chief
Administrative Judge or other designated officer, as appropriate). If NRC staff finds ‘‘need’’ for SUNSI, the deadline for any
party to the proceeding whose interest independent of the proceeding would be harmed by the release of the information to
file a motion seeking a ruling to reverse the NRC staff’s grant of access.
Deadline for NRC staff reply to motions to reverse NRC staff determination(s).
(Receipt +30) If NRC staff finds standing and need for SUNSI, deadline for NRC staff to complete information processing and
file motion for Protective Order and draft Non-Disclosure Affidavit. Deadline for applicant/licensee to file Non-Disclosure
Agreement for SUNSI.
If access granted: issuance of presiding officer or other designated officer decision on motion for protective order for access
to sensitive information (including schedule for providing access and submission of contentions) or decision reversing a
final adverse determination by the NRC staff.
Deadline for filing executed Non-Disclosure Affidavits. Access provided to SUNSI consistent with decision issuing the protective order.
Deadline for submission of contentions whose development depends upon access to SUNSI. However, if more than 25 days
remain between the petitioner’s receipt of (or access to) the information and the deadline for filing all other contentions (as
established in the notice of hearing or opportunity for hearing), the petitioner may file its SUNSI contentions by that later
deadline.
(Contention receipt +25) Answers to contentions whose development depends upon access to SUNSI.
(Answer receipt +7) Petitioner/Intervenor reply to answers.
Decision on contention admission.
10 ......................
60 ......................
20 ......................
25 ......................
30 ......................
40 ......................
A .......................
A + 3 .................
A + 28 ...............
A + 53 ...............
A + 60 ...............
>A + 60 .............
[FR Doc. 2015–09761 Filed 5–4–15; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
asabaliauskas on DSK5VPTVN1PROD with NOTICES
[Release No. 34–74842; File No. SR–
NYSEArca–2014–89]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of
Amendments Nos. 1 and 2 and Order
Granting Accelerated Approval of a
Proposed Rule Change, as Modified by
Amendments Nos. 1 and 2, To List and
Trade Shares of Eight PIMCO
Exchange-Traded Funds
April 29, 2015.
I. Introduction
On August 15, 2014, NYSE Arca, Inc.
(‘‘NYSEArca’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
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to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’ or
‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
list and trade shares (‘‘Shares’’) of the
following eight PIMCO exchange-traded
funds, pursuant to NYSE Arca Equities
Rule 8.600: PIMCO StocksPLUS®
Absolute Return Exchange-Traded Fund
(‘‘StocksPLUS AR Fund’’), PIMCO Small
Cap StocksPLUS® AR Strategy
Exchange-Traded Fund (‘‘Small Cap
StocksPLUS AR Fund’’), PIMCO
Fundamental IndexPLUS® AR
Exchange-Traded Fund (‘‘Fundamental
IndexPLUS Fund’’), PIMCO Small
Company Fundamental IndexPLUS® AR
Strategy Exchange-Traded Fund (‘‘Small
Company Fundamental IndexPLUS
Fund’’), PIMCO EM Fundamental
IndexPLUS® AR Strategy ExchangeTraded Fund (‘‘EM Fundamental
3 See Securities Exchange Act Release No. 72937
(Aug. 27, 2014), 79 FR 52385).
4 15 U.S.C. 78s(b)(2).
1 15
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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IndexPLUS Fund’’), PIMCO
International Fundamental IndexPLUS®
AR Strategy Exchange-Traded Fund
(‘‘International Fundamental
IndexPLUS Fund’’), PIMCO EM
StocksPLUS® AR Strategy ExchangeTraded Fund (‘‘EM StocksPLUS Fund’’),
and PIMCO International StocksPLUS®
AR Strategy Exchange-Traded Fund
(Unhedged) (‘‘International StocksPLUS
Fund’’) (each a ‘‘Fund’’ and collectively
the ‘‘Funds’’). The proposed rule change
was published for comment in the
Federal Register on September 3, 2014.3
The Commission received no comments
on the proposal. On October 15, 2014,
pursuant to Section 19(b)(2) of the Act,4
the Commission designated a longer
period within which to either approve
the proposed rule change, disapprove
the proposed rule change, or institute
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05MYN1
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asabaliauskas on DSK5VPTVN1PROD with NOTICES
proceedings to determine whether to
disapprove the proposed rule change.5
On December 1, 2014, the Commission
instituted proceedings to determine
whether to approve or disapprove the
proposed rule change.6 On December
23, 2014, the Exchange filed
Amendment No. 1 to the proposed rule
change, which entirely replaced and
superseded its proposal as originally
filed.7 On March 2, 2015, the
Commission designated a longer period
for Commission action.8 On April 20,
2015, the Exchange filed Amendment
No. 2 to the proposed rule change.9 The
Commission is publishing this notice to
5 See Securities Exchange Act Release No. 73364,
79 FR 62988 (Oct. 21, 2014). The Commission
determined that it was appropriate to designate a
longer period within which to take action on the
proposed rule change so that it would have
sufficient time to consider the proposed rule
change. Accordingly, the Commission designated
December 2, 2014 as the date by which it should
approve, disapprove, or institute proceedings to
determine whether to disapprove the proposed rule
change.
6 See Securities Exchange Act Release No. 73706,
79 FR 72223 (Dec. 5, 2014) (‘‘Order Instituting
Proceedings’’). In the Order Instituting Proceedings,
the Commission noted, among other things that
questions remained as to whether the Exchange’s
proposal is consistent with the requirement of
Section (6)(b)(5) of the Act, which requires, among
other things, that the rules of a 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.
7 In Amendment No. 1, the Exchange: (1) Clarified
the definition of Fixed Income Instruments; (2)
clarified that the types of securities and instruments
specified as permitted investments may be
economically tied to foreign countries; (3) clarified
that the types of securities specified as permitted
investments may be denominated in foreign
currencies; (4) clarified that the Funds may invest
in OTC foreign currency options contracts; (5)
eliminated the ability of the Funds to enter into any
series of purchase and sale contracts; (6) modified
the proposal to exclude from the Funds’ permitted
investments variable and floating rate securities and
floaters and inverse floaters that are not Fixed
Income Instruments, as defined in the proposal; (7)
modified the proposal to provide that a Fund may
invest up to 20% of its total assets in (a) trade
claims, (b) junior bank loans, (c) exchange-traded
and OTC-traded structured products, and (d)
privately placed and unregistered securities (except
that no limit will apply to privately placed and
unregistered securities that satisfy the listing
requirements in the Exchange’s Rule 5.2(j)(3),
Commentary .02(a)(6)); and (8) clarified that each
Fund may invest up to 20% of its total assets in
senior bank loans.
8 See Securities Exchange Act Release No. 74407,
80 FR 12228 (Mar. 6, 2015). The Commission
designated May 1, 2015 as the date by which it
would either approve or disapprove the proposed
rule change.
9 In Amendment No. 2, the Exchange provided
more information about the Funds’ use of
derivatives, specifying that each Fund may employ
derivatives as part of a strategy intended to provide
total notional exposure that exceeds the value of the
Fund’s net assets. Additionally, the Exchange noted
that each Fund will segregate assets determined to
be liquid by the Adviser in accordance with
procedures established by the Trust’s board and in
accordance with the 1940 Act.
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17:18 May 04, 2015
Jkt 235001
solicit comments on Amendments Nos.
1 and 2 from interested persons, and is
approving the proposed rule change, as
modified by Amendments Nos. 1 and 2,
on an accelerated basis.
II. Description of Proposed Rule Change
A. In General
The Exchange proposes to list and
trade the Shares under NYSE Arca
Equities Rule 8.600, which governs the
listing and trading of Managed Fund
Shares. The Shares will be offered by
PIMCO ETF Trust (‘‘Trust’’),10 a
registered open-end management
investment company. Pacific Investment
Management Company LLC will be the
investment adviser for the Funds (the
‘‘Adviser’’).11 Research Affiliates, LLC
will be the sub-adviser with respect to
the Fundamental IndexPLUS Fund,
Small Company Fundamental
IndexPLUS Fund, EM Fundamental
IndexPLUS Fund, and the International
Fundamental IndexPLUS Fund (the
‘‘Sub-Adviser’’). PIMCO Investments
LLC will serve as the distributor for the
Funds. State Street Bank & Trust Co.
will serve as the custodian and transfer
agent for the Funds.
B. The Exchange’s Description of the
Funds
The Exchange has made the following
representations and statements in
describing the Funds and its investment
strategies, including other portfolio
holdings and investment restrictions.12
10 The Trust is registered under the 1940 Act.
According to the Exchange, on January 27, 2014, the
Trust filed with the Commission an amendment to
its registration statement on Form N–1A (File Nos.
333–155395 and 811–22250) (‘‘Registration
Statements’’). 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. 28993 (File No. 812–
13571) (Nov. 10, 2009).
11 The Exchange represents that the Adviser is not
registered as a broker-dealer, but is affiliated with
a broker-dealer. The Exchange further represents
that the Adviser will implement a ‘‘fire wall’’ with
respect to that broker-dealer affiliate regarding
access to information concerning the composition
of and changes to the Funds’ portfolios. The
Exchange further represents that the Sub-Adviser is
not registered as a broker-dealer or affiliated with
a broker-dealer. In addition, according to the
Exchange, in the event (a) the Adviser or SubAdviser becomes, or becomes newly affiliated with,
a broker-dealer, or (b) any new adviser or subadviser is, or becomes affiliated with, a brokerdealer, the Adviser or any new adviser or SubAdviser or new sub-adviser, as applicable, will
implement a fire wall with respect to its relevant
personnel or its broker-dealer affiliate regarding
access to information concerning the composition
of and changes to the Funds’ portfolios, and will be
subject to procedures designed to prevent the use
and dissemination of material, non-public
information regarding the portfolios.
12 Additional information regarding the Trust, the
Funds, and the Shares, including investment
strategies, risks, net asset value (‘‘NAV’’)
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1. Principal Investments of Funds
Each Fund will seek total return that
exceeds the total return of its equity
securities index benchmark, and under
normal circumstances would seek to
achieve its investment objective by
investing in derivatives overlying its
benchmark and a portfolio of Fixed
Income Instruments (defined below),
which would be managed using an
absolute return approach. Typically, the
Funds would use derivative instruments
as a substitute for taking a position in
the underlying asset 13 or as part of a
strategy designed to reduce exposure to
other risks. The Funds may also use
derivative instruments to enhance
returns.
‘‘Fixed Income Instruments’’ are:
Securities issued or guaranteed by the
U.S. Government, its agencies, or
government-sponsored enterprises
(‘‘U.S. Government Securities’’);
corporate debt securities of U.S. and
non-U.S. issuers, including convertible
securities and corporate commercial
paper; mortgage-backed and other assetbacked securities; inflation-indexed
bonds issued both by governments and
corporations; structured notes,
including hybrid or ‘‘indexed’’
securities, and event-linked bonds; 14
bank capital and trust preferred
securities; loan participations and
assignments; 15 delayed funding loans
and revolving credit facilities; bank
certificates of deposit, fixed time
deposits and bankers’ acceptances;
repurchase agreements on Fixed Income
Instruments and reverse repurchase
agreements on Fixed Income
Instruments; debt securities issued by
states or local governments and their
agencies, authorities and other
government-sponsored enterprises;
obligations of non-U.S. governments or
their subdivisions, agencies, and
government-sponsored enterprises; and
obligations of international agencies or
supranational entities. Derivative
instruments may include the following:
Forwards; exchange-traded and overcalculation, creation and redemption procedures,
fees, portfolio holdings disclosure policies,
distributions, and taxes, among other information,
is included in Amendment No. 1 and the
Registration Statements, as applicable. See
Amendment No. 1, supra note 7 and Registration
Statements, supra note 10.
13 Derivatives may be purchased with a small
fraction of the assets that would be needed to
purchase the benchmark index securities directly,
and the remainder of the Funds’ assets may be
invested in Fixed Income Instruments. Although
the Funds generally will not invest directly in
benchmark index component stocks, the Funds may
invest in stocks and exchange-traded funds.
14 Such investments will constitute only up to
20% of a Fund’s total assets.
15 Such investments will constitute only up to
20% of a Fund’s total assets.
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Federal Register / Vol. 80, No. 86 / Tuesday, May 5, 2015 / Notices
the-counter (‘‘OTC’’) options contracts;
exchange-traded futures contracts;
exchange-traded and OTC swap
agreements; exchange-traded and OTC
options on futures contracts; and OTC
options on swap agreements.16
2. Other Investments of the Funds
asabaliauskas on DSK5VPTVN1PROD with NOTICES
While each of the Funds, under
normal circumstances,17 will invest in
investments as described above, the
Funds may also invest in other certain
investments as described below.
The Funds may invest in securities
and instruments that are economically
tied to foreign (non-U.S.) countries. The
Funds may invest in securities
denominated in foreign (non-U.S.)
currencies and in U.S. dollardenominated securities of foreign (nonU.S.) issuers, subject to applicable
limitations set forth in the proposed rule
change. With respect to the Funds’
absolute return investments, each Fund
will normally limit its foreign currency
exposure (from non-U.S. dollardenominated securities or currencies) to
20% of its total assets. With respect to
the Funds’ absolute return investments,
each Fund may invest up to 25% of its
total assets in securities and instruments
that are economically tied to emerging
market countries.
Each of the Funds may also engage in
foreign currency transactions on a spot
(cash) basis or forward basis, and each
of the Funds may invest in foreign
currency futures contracts and options
contracts. The Funds may enter into
these contracts to hedge against foreign
exchange risk, to increase exposure to a
foreign currency, or to shift exposure to
foreign currency fluctuations from one
currency to another. Suitable hedging
transactions may not be available in all
circumstances and there can be no
assurance that the Funds will engage in
such transactions at any given time or
from time to time.
The Funds may purchase or sell
securities on a when-issued, delayed
delivery or forward commitment basis
and may engage in short sales.
16 All investment guidelines and limitations will
apply to a Fund’s aggregate investment exposure to
a particular type of investment that is the subject
of the guideline or limitation, whether that
exposure is obtained through direct holdings or
through derivative instruments.
17 The term ‘‘under normal circumstances’’
includes, but is not limited to, the absence of
extreme volatility or trading halts in the equity
markets or the financial markets generally;
operational issues causing dissemination of
inaccurate market information; or force majeure
type events such as systems failure, natural or manmade disaster, act of God, armed conflict, act of
terrorism, riot or labor disruption or any similar
intervening circumstance.
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17:18 May 04, 2015
Jkt 235001
3. Additional Investment Limits of the
Funds
Each of the Funds may invest up to
10% of its total assets in preferred
stocks, convertible securities, and other
equity-related securities. Each Fund
may invest up to 20% of its total assets
in: (i) Trade claims; (ii) junior bank
loans; (iii) exchange-traded and OTCtraded structured products, including
credit-linked securities and commoditylinked notes; and (iv) privately placed
and unregistered securities. This 20%
limitation, however, does not apply to
privately placed and unregistered
securities that comply with the generic
fixed income initial listing requirements
in NYSE Arca Equities Rule 5.2(j)(3),
Commentary .02(a)(6).18
Each Fund may, with up to 20% of its
total assets, enter into repurchase
agreements on instruments other than
Fixed Income Instruments. Each Fund
may also, with up to 20% of its total
assets, enter into reverse repurchase
agreements on instruments other than
Fixed Income Instruments, subject to
the Fund’s limitations on borrowings.
Each Fund may invest up to 20% of
its total assets in ‘‘high yield securities’’
or unrated securities determined by
PIMCO to be of comparable quality
(except that within this limitation, the
Fund may invest in mortgage-related
securities rated below B).
Each Fund may invest up to 20% of
its assets in mortgage-related and other
asset-backed securities, although this
20% limitation does not apply to
securities issued or guaranteed by
Federal agencies or U.S. government
sponsored instrumentalities. Each Fund
may invest up to 20% of its total assets
in senior bank loans.
III. Discussion and Commission’s
Findings
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of
Section 6 of the Act 19 and the rules and
regulations thereunder applicable to a
national securities exchange.20 In
particular, the Commission finds that
the proposal is consistent with Section
18 NYSE Arca Equities Rule 5.2(j)(3), Commentary
.02 provides for listing on the Exchange pursuant
to Rule 19b–4(e) under the Act of a series of Units
with an underlying index or portfolio of Fixed
Income Securities meeting specified criteria. Units
meeting these criteria can be listed and traded on
the Exchange without Commission approval of each
individual product pursuant to Section 19(b)(2) of
the Act.
19 15 U.S.C. 78f.
20 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).
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Fmt 4703
Sfmt 4703
25725
6(b)(5) of the Act,21 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 also
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,22 which sets forth Congress’ finding
that it is in the public interest and
appropriate for the protection of
investors and the maintenance of fair
and orderly markets to assure the
availability to brokers, dealers, and
investors of information with respect to
quotations for, and transactions in,
securities.
Quotation and last-sale information
for the Shares will be available via the
Consolidated Tape Association (‘‘CTA’’)
high-speed line. In addition, the
Portfolio Indicative Value (‘‘PIV’’) as
defined in NYSE Arca Equities Rule
8.600(c)(3), will be widely disseminated
at least every fifteen seconds during the
NYSE Arca Core Trading Session by one
or more major market data vendors.23
On a daily basis, the Funds will disclose
for each portfolio holding, as applicable
to the type of holding, the following
information on the Funds’ Web site:
Ticker symbol, CUSIP number or other
identifier, if any; a description of the
holding (including the type of holding,
such as the type of swap); the identity
of the security or other asset or
instrument underlying the holding,24 if
any; for options, the option strike price;
quantity held (as measured by, for
example, par value, notional value or
number of shares, contracts or units);
maturity date, if any; coupon rate, if
any; effective date, if any; market value
of the holding; and the percentage
weighting of the holding in the
portfolio. The Web site information will
be publicly available at no charge.
In addition, a basket composition file,
which includes the security names and
share quantities required to be delivered
in exchange for each of the Funds’
Shares, together with estimates and
actual cash components, will be
publicly disseminated daily prior to the
opening of the Exchange via National
Securities Clearing Corporation. The
NAV of each of the Funds will be
21 15
U.S.C. 78f(b)(5).
U.S.C. 78k–1(a)(1)(C)(iii).
23 The Exchange understands that several major
market data vendors display or make widely
available PIV taken from CTA or other data feeds.
24 Derivatives that reference or allow delivery of
more than one asset, such as U.S. Treasury futures,
will name the underlying asset generically.
22 15
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Federal Register / Vol. 80, No. 86 / Tuesday, May 5, 2015 / Notices
determined as of the close of trading
(normally 4:00 p.m., Eastern Time) on
each day the Exchange is open for
business.
Information regarding market price
and trading volume of the Shares will be
continually available on a real-time
basis throughout the day on brokers’
computer screens and other electronic
services. Information regarding the
previous day’s closing price and trading
volume information for the Shares will
be published daily in the financial
section of newspapers. Intra-day and
closing prices of equity securities traded
on a national securities exchange,
including common stocks, preferred
stocks, securities convertible into
stocks, closed-end funds, exchange
traded-funds, and other equity-related
securities, as well as any options
(including options on futures) and
futures, will be available from the
exchange on which those securities and
instruments are traded. U.S. exchangetraded options quotation and last sale
information is available via the Options
Price Reporting Authority. Intra-day and
closing price information for Fixed
Income Instruments will be available
from major market data vendors. In
addition, price information for debt
securities and other financial
instruments, forwards, OTC options,
swaps, money market instruments, trade
claims, privately placed and
unregistered securities, bank loans, and
structured products held by each Fund
will be available through major market
data vendors. Price information
regarding other investment company
securities will be available from on-line
information services and from the Web
site for the applicable investment
company security. The Trust’s Web site
will include a form of the prospectus for
each of the Funds and additional data
relating to NAV and other applicable
quantitative information for the Funds.
The Exchange will obtain a
representation from the issuer of the
Shares that the NAV per Share will be
calculated daily and the NAV and the
Disclosed Portfolio will be made
available to all market participants at
the same time. Trading in Shares will be
halted if the circuit breaker parameters
in NYSE Arca Equities Rule 7.12 have
been reached or because of market
conditions or for reasons that, in the
view of the Exchange, make trading in
the Shares inadvisable,25 and trading in
25 These reasons may include: (1) The extent to
which trading is not occurring in the securities or
the financial instruments composing the Disclosed
Portfolio of the Funds; or (2) the presence of other
unusual conditions or circumstances detrimental to
the maintenance of a fair and orderly market. With
respect to trading halts, the Exchange may consider
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17:18 May 04, 2015
Jkt 235001
the Shares will be subject to NYSE Arca
Equities Rule 8.600(d)(2)(D), which sets
forth additional 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.
Consistent with NYSE Arca Equities
Rule 8.600(d)(2)(B)(ii), the Commission
notes that the Reporting Authority 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 each Fund’s portfolio. In
addition, the Exchange states that the
Adviser is affiliated with a broker-dealer
and that the Adviser will implement a
fire wall with respect to that brokerdealer affiliate regarding access to
information concerning the composition
of and changes to the Funds’
portfolios.26 The Exchange represents
that trading in the Shares will be subject
to the existing trading surveillances,
administered by the Financial Industry
Regulatory Authority (‘‘FINRA’’) on
behalf of the Exchange, which are
designed to detect violations of
Exchange rules and applicable federal
securities laws.27 The Exchange further
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 of
federal securities laws applicable to
all relevant factors in exercising its discretion to
halt or suspend trading in the Shares.
26 See supra note 7. The Exchange states that an
investment adviser to an open-end fund is required
to be registered under the Investment Advisers Act
of 1940 (‘‘Advisers Act’’). As a result, the Adviser
and its related personnel are subject to the
provisions of Rule 204A–1 under the Advisers Act
relating to codes of ethics. This Rule requires
investment advisers to adopt a code of ethics that
reflects the fiduciary nature of the relationship to
clients, as well as compliance with other applicable
securities laws. Accordingly, procedures designed
to prevent the communication and misuse of nonpublic information by an investment adviser must
be consistent with Rule 204A–1 under the Advisers
Act. In addition, Rule 206(4)–7 under the Advisers
Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such
investment adviser has (i) adopted and
implemented written policies and procedures
reasonably designed to prevent violation, by the
investment adviser and its supervised persons, of
the Advisers Act and the Commission rules adopted
thereunder; (ii) implemented, at a minimum, an
annual review regarding the adequacy of the
policies and procedures established pursuant to
subparagraph (i) above and the effectiveness of their
implementation; and (iii) designated an individual
(who is a supervised person) responsible for
administering the policies and procedures adopted
under subparagraph (i) above.
27 The Exchange states that FINRA surveils
trading on the Exchange pursuant to a regulatory
services agreement and that the Exchange is
responsible for FINRA’s performance under this
regulatory services agreement.
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
trading on the Exchange. Moreover,
prior to the commencement of trading,
the Exchange states that it will inform
its Equity Trading Permit Holders in an
Information Bulletin of the special
characteristics and risks associated with
trading the Shares.
The Commission notes that the Shares
and the Funds must comply with the
initial and continued listing criteria in
NYSE Arca Equities Rule 8.600 for the
Shares to be listed and traded on the
Exchange. The Exchange represents that
it deems the Shares to be equity
securities, thus rendering trading in the
Shares subject to the Exchange’s
existing rules governing the trading of
equity securities. In support of this
proposal, the Exchange has also made
the following representations:
(1) The Shares will be subject to
NYSE Arca Equities Rule 8.600, which
sets forth the initial and continued
listing criteria applicable to Managed
Fund Shares.
(2) The Exchange has appropriate
rules to facilitate transactions in the
Shares during all trading sessions.
(3) FINRA, on behalf of the Exchange,
will communicate as needed regarding
trading in the Shares, exchange-traded
options, equity securities, futures and
options on futures with other markets
and other entities that are members of
ISG, and FINRA, on behalf of the
Exchange, may obtain trading
information regarding trading in the
Shares, exchange-traded options, equity
securities, futures and options on
futures from these markets and other
entities. In addition, the Exchange may
obtain information regarding trading in
the Shares, exchange-traded options,
equity securities, futures and options on
futures from ISG member markets or
markets with which the Exchange has in
place a comprehensive surveillance
sharing agreement.
(4) With respect to its exchangetraded equity securities investments, the
Funds will invest not more than 10% of
its net assets in equity securities that
trade in markets that are neither
members of the ISG nor parties to a
comprehensive surveillance sharing
agreement with the Exchange. To the
extent that any of the Funds invest in
futures contracts or exchange-traded
options, not more than 10% of such
investments will be in futures contracts
or exchange-traded options whose
principal trading market is neither a
member of ISG nor a market with which
the Exchange does not have a
comprehensive surveillance sharing
agreement.
(5) Prior to the commencement of
trading, the Exchange will inform its
Equity Trading Permit Holders in an
E:\FR\FM\05MYN1.SGM
05MYN1
Federal Register / Vol. 80, No. 86 / Tuesday, May 5, 2015 / Notices
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Information Bulletin of the special
characteristics and risks associated with
trading the Shares. Specifically, the
Information Bulletin will discuss the
following: (a) The procedures for
purchases and redemptions of Shares in
creation units (and that Shares are not
individually redeemable); (b) NYSE
Arca Equities Rule 9.2(a), which
imposes a duty of due diligence on its
Equity Trading Permit Holders to learn
the essential facts relating to every
customer prior to trading the Shares; (c)
the risks involved in trading the Shares
during the Opening and Late Trading
Sessions when an updated Portfolio
Indicative Value will not be calculated
or publicly disseminated; (d) how
information regarding the Portfolio
Indicative Value and Disclosed Portfolio
is disseminated; (e) the requirement that
Equity Trading Permit Holders deliver a
prospectus to investors purchasing
newly issued Shares prior to or
concurrently with the confirmation of a
transaction; and (f) trading information.
(6) For initial and continued listing,
the Funds will be in compliance with
Rule 10A–3 under the Act,28 as
provided by NYSE Arca Equities Rule
5.3.
(7) Each of the Funds may hold up to
an aggregate amount of 15% of its net
assets in illiquid assets (calculated at
the time of investment).
(8) A minimum of 100,000 Shares for
each of the Funds will be outstanding at
the commencement of trading on the
Exchange.
This approval order is based on all of
the Exchange’s representations,
including those set forth above and in
Amendments Nos. 1 and 2.
For the foregoing reasons, the
Commission finds that the proposed
rule change, as modified by
Amendments Nos. 1 and 2, is consistent
with Section 6(b)(5) of the Act 29 and the
rules and regulations thereunder
applicable to a national securities
exchange.
IV. Solicitation of Comments on
Amendments Nos. 1 and 2
Interested persons are invited to
submit written data, views, and
arguments concerning whether
Amendments Nos. 1 and 2 are
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
28 17
29 15
CFR 240.10A–3.
U.S.C. 78f(b)(5).
VerDate Sep<11>2014
17:18 May 04, 2015
Jkt 235001
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2014–89 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–2014–89. 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–
NYSEArca–2014–89 and should be
submitted on or before May 26, 2015.
V. Accelerated Approval of Proposed
Rule Change as Modified by
Amendments Nos. 1 and 2
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendments Nos. 1 and 2,
prior to the thirtieth day after the date
of publication of notice of the
amendments in the Federal Register.
Amendment No. 1 modifies the
proposed rule change by, among other
things, limiting each Fund’s
investments trade claims, junior bank
loans, exchange-traded and OTC-traded
structured products, and certain
privately placed and unregistered
securities. Additionally, Amendment
No. 2 modifies the propose rule change
by expanding the description of the
Funds’ use of derivatives. The
PO 00000
Frm 00068
Fmt 4703
Sfmt 4703
25727
Commission believes that these changes
should facilitate arbitrage opportunities,
which may result in narrower spreads
between the market prices of the Shares
and the intraday values of the Funds’
portfolios. Accordingly, the Commission
finds good cause, pursuant to Section
19(b)(2) of the Act,30 to approve the
proposed rule change, as modified by
Amendments Nos. 1 and 2, on an
accelerated basis.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,31 that the
proposed rule change as modified by
Amendments Nos. 1 and 2 (SR–
NYSEArca–2014–89) be, and it hereby
is, approved on an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
Brent J. Fields,
Secretary.
[FR Doc. 2015–10412 Filed 5–4–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–74830; File No. SR–DTC–
2015–003]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing of Proposed Rule Change
Regarding the Acknowledgment of
End-of-Day Net-Net Settlement
Balances by Settling Banks
April 29, 2015.
Pursuant to section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (‘‘Act’’)
and Rule 19b–4 2 thereunder, notice is
hereby given that on April 15, 2015, The
Depository Trust Company (‘‘DTC’’)
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 DTC. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change consists of
proposed revisions to the DTC
Settlement Service Guide (‘‘Guide’’) to
provide that any Settling Bank that does
not timely acknowledge its end-of-day
30 15
U.S.C. 78s(b)(2).
U.S.C. 78s(b)(2).
32 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
31 15
E:\FR\FM\05MYN1.SGM
05MYN1
Agencies
[Federal Register Volume 80, Number 86 (Tuesday, May 5, 2015)]
[Notices]
[Pages 25723-25727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-10412]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74842; File No. SR-NYSEArca-2014-89]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Amendments Nos. 1 and 2 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendments Nos. 1 and 2, To List
and Trade Shares of Eight PIMCO Exchange-Traded Funds
April 29, 2015.
I. Introduction
On August 15, 2014, NYSE Arca, Inc. (``NYSEArca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to list and trade shares (``Shares'') of the
following eight PIMCO exchange-traded funds, pursuant to NYSE Arca
Equities Rule 8.600: PIMCO StocksPLUS[supreg] Absolute Return Exchange-
Traded Fund (``StocksPLUS AR Fund''), PIMCO Small Cap
StocksPLUS[supreg] AR Strategy Exchange-Traded Fund (``Small Cap
StocksPLUS AR Fund''), PIMCO Fundamental IndexPLUS[supreg] AR Exchange-
Traded Fund (``Fundamental IndexPLUS Fund''), PIMCO Small Company
Fundamental IndexPLUS[supreg] AR Strategy Exchange-Traded Fund (``Small
Company Fundamental IndexPLUS Fund''), PIMCO EM Fundamental
IndexPLUS[supreg] AR Strategy Exchange-Traded Fund (``EM Fundamental
IndexPLUS Fund''), PIMCO International Fundamental IndexPLUS[supreg] AR
Strategy Exchange-Traded Fund (``International Fundamental IndexPLUS
Fund''), PIMCO EM StocksPLUS[supreg] AR Strategy Exchange-Traded Fund
(``EM StocksPLUS Fund''), and PIMCO International StocksPLUS[supreg] AR
Strategy Exchange-Traded Fund (Unhedged) (``International StocksPLUS
Fund'') (each a ``Fund'' and collectively the ``Funds''). The proposed
rule change was published for comment in the Federal Register on
September 3, 2014.\3\ The Commission received no comments on the
proposal. On October 15, 2014, pursuant to Section 19(b)(2) of the
Act,\4\ the Commission designated a longer period within which to
either approve the proposed rule change, disapprove the proposed rule
change, or institute
[[Page 25724]]
proceedings to determine whether to disapprove the proposed rule
change.\5\ On December 1, 2014, the Commission instituted proceedings
to determine whether to approve or disapprove the proposed rule
change.\6\ On December 23, 2014, the Exchange filed Amendment No. 1 to
the proposed rule change, which entirely replaced and superseded its
proposal as originally filed.\7\ On March 2, 2015, the Commission
designated a longer period for Commission action.\8\ On April 20, 2015,
the Exchange filed Amendment No. 2 to the proposed rule change.\9\ The
Commission is publishing this notice to solicit comments on Amendments
Nos. 1 and 2 from interested persons, and is approving the proposed
rule change, as modified by Amendments Nos. 1 and 2, on an accelerated
basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 72937 (Aug. 27,
2014), 79 FR 52385).
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 73364, 79 FR 62988
(Oct. 21, 2014). The Commission determined that it was appropriate
to designate a longer period within which to take action on the
proposed rule change so that it would have sufficient time to
consider the proposed rule change. Accordingly, the Commission
designated December 2, 2014 as the date by which it should approve,
disapprove, or institute proceedings to determine whether to
disapprove the proposed rule change.
\6\ See Securities Exchange Act Release No. 73706, 79 FR 72223
(Dec. 5, 2014) (``Order Instituting Proceedings''). In the Order
Instituting Proceedings, the Commission noted, among other things
that questions remained as to whether the Exchange's proposal is
consistent with the requirement of Section (6)(b)(5) of the Act,
which requires, among other things, that the rules of a 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.
\7\ In Amendment No. 1, the Exchange: (1) Clarified the
definition of Fixed Income Instruments; (2) clarified that the types
of securities and instruments specified as permitted investments may
be economically tied to foreign countries; (3) clarified that the
types of securities specified as permitted investments may be
denominated in foreign currencies; (4) clarified that the Funds may
invest in OTC foreign currency options contracts; (5) eliminated the
ability of the Funds to enter into any series of purchase and sale
contracts; (6) modified the proposal to exclude from the Funds'
permitted investments variable and floating rate securities and
floaters and inverse floaters that are not Fixed Income Instruments,
as defined in the proposal; (7) modified the proposal to provide
that a Fund may invest up to 20% of its total assets in (a) trade
claims, (b) junior bank loans, (c) exchange-traded and OTC-traded
structured products, and (d) privately placed and unregistered
securities (except that no limit will apply to privately placed and
unregistered securities that satisfy the listing requirements in the
Exchange's Rule 5.2(j)(3), Commentary .02(a)(6)); and (8) clarified
that each Fund may invest up to 20% of its total assets in senior
bank loans.
\8\ See Securities Exchange Act Release No. 74407, 80 FR 12228
(Mar. 6, 2015). The Commission designated May 1, 2015 as the date by
which it would either approve or disapprove the proposed rule
change.
\9\ In Amendment No. 2, the Exchange provided more information
about the Funds' use of derivatives, specifying that each Fund may
employ derivatives as part of a strategy intended to provide total
notional exposure that exceeds the value of the Fund's net assets.
Additionally, the Exchange noted that each Fund will segregate
assets determined to be liquid by the Adviser in accordance with
procedures established by the Trust's board and in accordance with
the 1940 Act.
---------------------------------------------------------------------------
II. Description of Proposed Rule Change
A. In General
The Exchange proposes to list and trade the Shares under NYSE Arca
Equities Rule 8.600, which governs the listing and trading of Managed
Fund Shares. The Shares will be offered by PIMCO ETF Trust
(``Trust''),\10\ a registered open-end management investment company.
Pacific Investment Management Company LLC will be the investment
adviser for the Funds (the ``Adviser'').\11\ Research Affiliates, LLC
will be the sub-adviser with respect to the Fundamental IndexPLUS Fund,
Small Company Fundamental IndexPLUS Fund, EM Fundamental IndexPLUS
Fund, and the International Fundamental IndexPLUS Fund (the ``Sub-
Adviser''). PIMCO Investments LLC will serve as the distributor for the
Funds. State Street Bank & Trust Co. will serve as the custodian and
transfer agent for the Funds.
---------------------------------------------------------------------------
\10\ The Trust is registered under the 1940 Act. According to
the Exchange, on January 27, 2014, the Trust filed with the
Commission an amendment to its registration statement on Form N-1A
(File Nos. 333-155395 and 811-22250) (``Registration Statements'').
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. 28993 (File No. 812-13571) (Nov. 10, 2009).
\11\ The Exchange represents that the Adviser is not registered
as a broker-dealer, but is affiliated with a broker-dealer. The
Exchange further represents that the Adviser will implement a ``fire
wall'' with respect to that broker-dealer affiliate regarding access
to information concerning the composition of and changes to the
Funds' portfolios. The Exchange further represents that the Sub-
Adviser is not registered as a broker-dealer or affiliated with a
broker-dealer. In addition, according to the Exchange, in the event
(a) the Adviser or Sub-Adviser becomes, or becomes newly affiliated
with, a broker-dealer, or (b) any new adviser or sub-adviser is, or
becomes affiliated with, a broker-dealer, the Adviser or any new
adviser or Sub-Adviser or new sub-adviser, as applicable, will
implement a fire wall with respect to its relevant personnel or its
broker-dealer affiliate regarding access to information concerning
the composition of and changes to the Funds' portfolios, and will be
subject to procedures designed to prevent the use and dissemination
of material, non-public information regarding the portfolios.
---------------------------------------------------------------------------
B. The Exchange's Description of the Funds
The Exchange has made the following representations and statements
in describing the Funds and its investment strategies, including other
portfolio holdings and investment restrictions.\12\
---------------------------------------------------------------------------
\12\ Additional information regarding the Trust, the Funds, and
the Shares, including investment strategies, risks, net asset value
(``NAV'') calculation, creation and redemption procedures, fees,
portfolio holdings disclosure policies, distributions, and taxes,
among other information, is included in Amendment No. 1 and the
Registration Statements, as applicable. See Amendment No. 1, supra
note 7 and Registration Statements, supra note 10.
---------------------------------------------------------------------------
1. Principal Investments of Funds
Each Fund will seek total return that exceeds the total return of
its equity securities index benchmark, and under normal circumstances
would seek to achieve its investment objective by investing in
derivatives overlying its benchmark and a portfolio of Fixed Income
Instruments (defined below), which would be managed using an absolute
return approach. Typically, the Funds would use derivative instruments
as a substitute for taking a position in the underlying asset \13\ or
as part of a strategy designed to reduce exposure to other risks. The
Funds may also use derivative instruments to enhance returns.
---------------------------------------------------------------------------
\13\ Derivatives may be purchased with a small fraction of the
assets that would be needed to purchase the benchmark index
securities directly, and the remainder of the Funds' assets may be
invested in Fixed Income Instruments. Although the Funds generally
will not invest directly in benchmark index component stocks, the
Funds may invest in stocks and exchange-traded funds.
---------------------------------------------------------------------------
``Fixed Income Instruments'' are: Securities issued or guaranteed
by the U.S. Government, its agencies, or government-sponsored
enterprises (``U.S. Government Securities''); corporate debt securities
of U.S. and non-U.S. issuers, including convertible securities and
corporate commercial paper; mortgage-backed and other asset-backed
securities; inflation-indexed bonds issued both by governments and
corporations; structured notes, including hybrid or ``indexed''
securities, and event-linked bonds; \14\ bank capital and trust
preferred securities; loan participations and assignments; \15\ delayed
funding loans and revolving credit facilities; bank certificates of
deposit, fixed time deposits and bankers' acceptances; repurchase
agreements on Fixed Income Instruments and reverse repurchase
agreements on Fixed Income Instruments; debt securities issued by
states or local governments and their agencies, authorities and other
government-sponsored enterprises; obligations of non-U.S. governments
or their subdivisions, agencies, and government-sponsored enterprises;
and obligations of international agencies or supranational entities.
Derivative instruments may include the following: Forwards; exchange-
traded and over-
[[Page 25725]]
the-counter (``OTC'') options contracts; exchange-traded futures
contracts; exchange-traded and OTC swap agreements; exchange-traded and
OTC options on futures contracts; and OTC options on swap
agreements.\16\
---------------------------------------------------------------------------
\14\ Such investments will constitute only up to 20% of a Fund's
total assets.
\15\ Such investments will constitute only up to 20% of a Fund's
total assets.
\16\ All investment guidelines and limitations will apply to a
Fund's aggregate investment exposure to a particular type of
investment that is the subject of the guideline or limitation,
whether that exposure is obtained through direct holdings or through
derivative instruments.
---------------------------------------------------------------------------
2. Other Investments of the Funds
While each of the Funds, under normal circumstances,\17\ will
invest in investments as described above, the Funds may also invest in
other certain investments as described below.
---------------------------------------------------------------------------
\17\ The term ``under normal circumstances'' includes, but is
not limited to, the absence of extreme volatility or trading halts
in the equity markets or the financial markets generally;
operational issues causing dissemination of inaccurate market
information; or force majeure type events such as systems failure,
natural or man-made disaster, act of God, armed conflict, act of
terrorism, riot or labor disruption or any similar intervening
circumstance.
---------------------------------------------------------------------------
The Funds may invest in securities and instruments that are
economically tied to foreign (non-U.S.) countries. The Funds may invest
in securities denominated in foreign (non-U.S.) currencies and in U.S.
dollar-denominated securities of foreign (non-U.S.) issuers, subject to
applicable limitations set forth in the proposed rule change. With
respect to the Funds' absolute return investments, each Fund will
normally limit its foreign currency exposure (from non-U.S. dollar-
denominated securities or currencies) to 20% of its total assets. With
respect to the Funds' absolute return investments, each Fund may invest
up to 25% of its total assets in securities and instruments that are
economically tied to emerging market countries.
Each of the Funds may also engage in foreign currency transactions
on a spot (cash) basis or forward basis, and each of the Funds may
invest in foreign currency futures contracts and options contracts. The
Funds may enter into these contracts to hedge against foreign exchange
risk, to increase exposure to a foreign currency, or to shift exposure
to foreign currency fluctuations from one currency to another. Suitable
hedging transactions may not be available in all circumstances and
there can be no assurance that the Funds will engage in such
transactions at any given time or from time to time.
The Funds may purchase or sell securities on a when-issued, delayed
delivery or forward commitment basis and may engage in short sales.
3. Additional Investment Limits of the Funds
Each of the Funds may invest up to 10% of its total assets in
preferred stocks, convertible securities, and other equity-related
securities. Each Fund may invest up to 20% of its total assets in: (i)
Trade claims; (ii) junior bank loans; (iii) exchange-traded and OTC-
traded structured products, including credit-linked securities and
commodity-linked notes; and (iv) privately placed and unregistered
securities. This 20% limitation, however, does not apply to privately
placed and unregistered securities that comply with the generic fixed
income initial listing requirements in NYSE Arca Equities Rule
5.2(j)(3), Commentary .02(a)(6).\18\
---------------------------------------------------------------------------
\18\ NYSE Arca Equities Rule 5.2(j)(3), Commentary .02 provides
for listing on the Exchange pursuant to Rule 19b-4(e) under the Act
of a series of Units with an underlying index or portfolio of Fixed
Income Securities meeting specified criteria. Units meeting these
criteria can be listed and traded on the Exchange without Commission
approval of each individual product pursuant to Section 19(b)(2) of
the Act.
---------------------------------------------------------------------------
Each Fund may, with up to 20% of its total assets, enter into
repurchase agreements on instruments other than Fixed Income
Instruments. Each Fund may also, with up to 20% of its total assets,
enter into reverse repurchase agreements on instruments other than
Fixed Income Instruments, subject to the Fund's limitations on
borrowings.
Each Fund may invest up to 20% of its total assets in ``high yield
securities'' or unrated securities determined by PIMCO to be of
comparable quality (except that within this limitation, the Fund may
invest in mortgage-related securities rated below B).
Each Fund may invest up to 20% of its assets in mortgage-related
and other asset-backed securities, although this 20% limitation does
not apply to securities issued or guaranteed by Federal agencies or
U.S. government sponsored instrumentalities. Each Fund may invest up to
20% of its total assets in senior bank loans.
III. Discussion and Commission's Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of Section 6 of the Act \19\
and the rules and regulations thereunder applicable to a national
securities exchange.\20\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(5) of the Act,\21\ 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 also 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,\22\ 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.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f.
\20\ 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).
\21\ 15 U.S.C. 78f(b)(5).
\22\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------
Quotation and last-sale information for the Shares will be
available via the Consolidated Tape Association (``CTA'') high-speed
line. In addition, the Portfolio Indicative Value (``PIV'') as defined
in NYSE Arca Equities Rule 8.600(c)(3), will be widely disseminated at
least every fifteen seconds during the NYSE Arca Core Trading Session
by one or more major market data vendors.\23\ On a daily basis, the
Funds will disclose for each portfolio holding, as applicable to the
type of holding, the following information on the Funds' Web site:
Ticker symbol, CUSIP number or other identifier, if any; a description
of the holding (including the type of holding, such as the type of
swap); the identity of the security or other asset or instrument
underlying the holding,\24\ if any; for options, the option strike
price; quantity held (as measured by, for example, par value, notional
value or number of shares, contracts or units); maturity date, if any;
coupon rate, if any; effective date, if any; market value of the
holding; and the percentage weighting of the holding in the portfolio.
The Web site information will be publicly available at no charge.
---------------------------------------------------------------------------
\23\ The Exchange understands that several major market data
vendors display or make widely available PIV taken from CTA or other
data feeds.
\24\ Derivatives that reference or allow delivery of more than
one asset, such as U.S. Treasury futures, will name the underlying
asset generically.
---------------------------------------------------------------------------
In addition, a basket composition file, which includes the security
names and share quantities required to be delivered in exchange for
each of the Funds' Shares, together with estimates and actual cash
components, will be publicly disseminated daily prior to the opening of
the Exchange via National Securities Clearing Corporation. The NAV of
each of the Funds will be
[[Page 25726]]
determined as of the close of trading (normally 4:00 p.m., Eastern
Time) on each day the Exchange is open for business.
Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers. Intra-day and closing prices of equity
securities traded on a national securities exchange, including common
stocks, preferred stocks, securities convertible into stocks, closed-
end funds, exchange traded-funds, and other equity-related securities,
as well as any options (including options on futures) and futures, will
be available from the exchange on which those securities and
instruments are traded. U.S. exchange-traded options quotation and last
sale information is available via the Options Price Reporting
Authority. Intra-day and closing price information for Fixed Income
Instruments will be available from major market data vendors. In
addition, price information for debt securities and other financial
instruments, forwards, OTC options, swaps, money market instruments,
trade claims, privately placed and unregistered securities, bank loans,
and structured products held by each Fund will be available through
major market data vendors. Price information regarding other investment
company securities will be available from on-line information services
and from the Web site for the applicable investment company security.
The Trust's Web site will include a form of the prospectus for each of
the Funds and additional data relating to NAV and other applicable
quantitative information for the Funds.
The Exchange will obtain a representation from the issuer of the
Shares that the NAV per Share will be calculated daily and the NAV and
the Disclosed Portfolio will be made available to all market
participants at the same time. Trading in Shares will be halted if the
circuit breaker parameters in NYSE Arca Equities Rule 7.12 have been
reached or because of market conditions or for reasons that, in the
view of the Exchange, make trading in the Shares inadvisable,\25\ and
trading in the Shares will be subject to NYSE Arca Equities Rule
8.600(d)(2)(D), which sets forth additional 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. Consistent with NYSE Arca Equities Rule
8.600(d)(2)(B)(ii), the Commission notes that the Reporting Authority
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 each Fund's portfolio. In addition,
the Exchange states that the Adviser is affiliated with a broker-dealer
and that the Adviser will implement a fire wall with respect to that
broker-dealer affiliate regarding access to information concerning the
composition of and changes to the Funds' portfolios.\26\ The Exchange
represents that trading in the Shares will be subject to the existing
trading surveillances, administered by the Financial Industry
Regulatory Authority (``FINRA'') on behalf of the Exchange, which are
designed to detect violations of Exchange rules and applicable federal
securities laws.\27\ The Exchange further 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 of federal securities laws applicable to trading on
the Exchange. Moreover, prior to the commencement of trading, the
Exchange states that it will inform its Equity Trading Permit Holders
in an Information Bulletin of the special characteristics and risks
associated with trading the Shares.
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\25\ These reasons may include: (1) The extent to which trading
is not occurring in the securities or the financial instruments
composing the Disclosed Portfolio of the Funds; or (2) the presence
of other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market. With respect to trading
halts, the Exchange may consider all relevant factors in exercising
its discretion to halt or suspend trading in the Shares.
\26\ See supra note 7. The Exchange states that an investment
adviser to an open-end fund is required to be registered under the
Investment Advisers Act of 1940 (``Advisers Act''). As a result, the
Adviser and its related personnel are subject to the provisions of
Rule 204A-1 under the Advisers Act relating to codes of ethics. This
Rule requires investment advisers to adopt a code of ethics that
reflects the fiduciary nature of the relationship to clients, as
well as compliance with other applicable securities laws.
Accordingly, procedures designed to prevent the communication and
misuse of non-public information by an investment adviser must be
consistent with Rule 204A-1 under the Advisers Act. In addition,
Rule 206(4)-7 under the Advisers Act makes it unlawful for an
investment adviser to provide investment advice to clients unless
such investment adviser has (i) adopted and implemented written
policies and procedures reasonably designed to prevent violation, by
the investment adviser and its supervised persons, of the Advisers
Act and the Commission rules adopted thereunder; (ii) implemented,
at a minimum, an annual review regarding the adequacy of the
policies and procedures established pursuant to subparagraph (i)
above and the effectiveness of their implementation; and (iii)
designated an individual (who is a supervised person) responsible
for administering the policies and procedures adopted under
subparagraph (i) above.
\27\ The Exchange states that FINRA surveils trading on the
Exchange pursuant to a regulatory services agreement and that the
Exchange is responsible for FINRA's performance under this
regulatory services agreement.
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The Commission notes that the Shares and the Funds must comply with
the initial and continued listing criteria in NYSE Arca Equities Rule
8.600 for the Shares to be listed and traded on the Exchange. The
Exchange represents that it deems the Shares to be equity securities,
thus rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. In support of this
proposal, the Exchange has also made the following representations:
(1) The Shares will be subject to NYSE Arca Equities Rule 8.600,
which sets forth the initial and continued listing criteria applicable
to Managed Fund Shares.
(2) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.
(3) FINRA, on behalf of the Exchange, will communicate as needed
regarding trading in the Shares, exchange-traded options, equity
securities, futures and options on futures with other markets and other
entities that are members of ISG, and FINRA, on behalf of the Exchange,
may obtain trading information regarding trading in the Shares,
exchange-traded options, equity securities, futures and options on
futures from these markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares,
exchange-traded options, equity securities, futures and options on
futures from ISG member markets or markets with which the Exchange has
in place a comprehensive surveillance sharing agreement.
(4) With respect to its exchange-traded equity securities
investments, the Funds will invest not more than 10% of its net assets
in equity securities that trade in markets that are neither members of
the ISG nor parties to a comprehensive surveillance sharing agreement
with the Exchange. To the extent that any of the Funds invest in
futures contracts or exchange-traded options, not more than 10% of such
investments will be in futures contracts or exchange-traded options
whose principal trading market is neither a member of ISG nor a market
with which the Exchange does not have a comprehensive surveillance
sharing agreement.
(5) Prior to the commencement of trading, the Exchange will inform
its Equity Trading Permit Holders in an
[[Page 25727]]
Information Bulletin of the special characteristics and risks
associated with trading the Shares. Specifically, the Information
Bulletin will discuss the following: (a) The procedures for purchases
and redemptions of Shares in creation units (and that Shares are not
individually redeemable); (b) NYSE Arca Equities Rule 9.2(a), which
imposes a duty of due diligence on its Equity Trading Permit Holders to
learn the essential facts relating to every customer prior to trading
the Shares; (c) the risks involved in trading the Shares during the
Opening and Late Trading Sessions when an updated Portfolio Indicative
Value will not be calculated or publicly disseminated; (d) how
information regarding the Portfolio Indicative Value and Disclosed
Portfolio is disseminated; (e) the requirement that Equity Trading
Permit Holders deliver a prospectus to investors purchasing newly
issued Shares prior to or concurrently with the confirmation of a
transaction; and (f) trading information.
(6) For initial and continued listing, the Funds will be in
compliance with Rule 10A-3 under the Act,\28\ as provided by NYSE Arca
Equities Rule 5.3.
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\28\ 17 CFR 240.10A-3.
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(7) Each of the Funds may hold up to an aggregate amount of 15% of
its net assets in illiquid assets (calculated at the time of
investment).
(8) A minimum of 100,000 Shares for each of the Funds will be
outstanding at the commencement of trading on the Exchange.
This approval order is based on all of the Exchange's representations,
including those set forth above and in Amendments Nos. 1 and 2.
For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendments Nos. 1 and 2, is consistent with
Section 6(b)(5) of the Act \29\ and the rules and regulations
thereunder applicable to a national securities exchange.
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\29\ 15 U.S.C. 78f(b)(5).
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IV. Solicitation of Comments on Amendments Nos. 1 and 2
Interested persons are invited to submit written data, views, and
arguments concerning whether Amendments Nos. 1 and 2 are 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-2014-89 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-2014-89. 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-NYSEArca-2014-89 and should
be submitted on or before May 26, 2015.
V. Accelerated Approval of Proposed Rule Change as Modified by
Amendments Nos. 1 and 2
The Commission finds good cause to approve the proposed rule
change, as modified by Amendments Nos. 1 and 2, prior to the thirtieth
day after the date of publication of notice of the amendments in the
Federal Register. Amendment No. 1 modifies the proposed rule change by,
among other things, limiting each Fund's investments trade claims,
junior bank loans, exchange-traded and OTC-traded structured products,
and certain privately placed and unregistered securities. Additionally,
Amendment No. 2 modifies the propose rule change by expanding the
description of the Funds' use of derivatives. The Commission believes
that these changes should facilitate arbitrage opportunities, which may
result in narrower spreads between the market prices of the Shares and
the intraday values of the Funds' portfolios. Accordingly, the
Commission finds good cause, pursuant to Section 19(b)(2) of the
Act,\30\ to approve the proposed rule change, as modified by Amendments
Nos. 1 and 2, on an accelerated basis.
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\30\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\31\ that the proposed rule change as modified by Amendments Nos. 1
and 2 (SR-NYSEArca-2014-89) be, and it hereby is, approved on an
accelerated basis.
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\31\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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\32\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-10412 Filed 5-4-15; 8:45 am]
BILLING CODE 8011-01-P