Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade the Shares of the Tuttle Tactical Management Multi-Strategy Income ETF of ETFis Series Trust I, 30508-30511 [2015-12835]
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Federal Register / Vol. 80, No. 102 / Thursday, May 28, 2015 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
A. significantly affect the protection
of investors or the public interest;
B. impose any significant burden on
competition; and
C. become operative for 30 days from
the date on which it was filed, or such
shorter time as the Commission may
designate, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 16 and Rule 19b–4(f)(6) 17
thereunder. At any time within 60 days
of the filing of the proposed rule change,
the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
asabaliauskas on DSK5VPTVN1PROD 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–
CBOE–2015–051 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–CBOE-2015–051. 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–CBOE2015–051 and should be submitted on
or before June 18, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–12833 Filed 5–27–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75031; File No. SR–
NASDAQ–2015–023]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Order
Approving a Proposed Rule Change,
as Modified by Amendment No. 1, To
List and Trade the Shares of the Tuttle
Tactical Management Multi-Strategy
Income ETF of ETFis Series Trust I
May 21, 2015.
I. Introduction
On March 25, 2015, The NASDAQ
Stock Market LLC (‘‘Exchange’’ or
‘‘Nasdaq’’) filed with the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (‘‘Act’’
or ‘‘Exchange Act’’) 2 and Rule 19b–4
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
16 15
U.S.C. 78s(b)(3)(A).
17 17 CFR 240.19b–4(f)(6).
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thereunder,3 a proposed rule change to
list and trade shares (‘‘Shares’’) of the
Tuttle Tactical Management MultiStrategy Income ETF (‘‘Fund’’), a series
of ETFis Series Trust I (‘‘Trust’’) under
NASDAQ Rule 5735. The proposed rule
change was published for comment in
the Federal Register on April 10, 2015.4
On May 20, 2015, the Exchange filed
Amendment No. 1 to the proposed rule
change.5 The Commission received no
comments on the proposed rule change.
This order approves the proposed rule
change, as modified by Amendment No.
1.
II. Description of the Proposal
The Exchange proposes to list and
trade the Shares under Nasdaq Rule
5735, which governs the listing and
trading of Managed Fund Shares on the
Exchange. The Fund will be an activelymanaged exchange-traded fund (‘‘ETF’’).
The Shares will be offered by the Trust.6
The Trust is registered with the
Commission as an investment company
and has filed a registration statement on
Form N–1A (‘‘Registration Statement’’)
with the Commission.7 The Fund is a
series of the Trust.
Etfis Capital LLC will be the
investment adviser (‘‘Adviser’’) to the
Fund. Tuttle Tactical Management, LLC
will be the investment sub-adviser
(‘‘Sub-Adviser’’) to the Fund. ETF
Distributors LLC will be the principal
underwriter and distributor of the
Fund’s Shares. The Bank of New York
Mellon will act as the administrator,
accounting agent, custodian, and
transfer agent to the Fund. The
Exchange states that the Adviser and
Sub-Adviser are not registered as
broker-dealers but that the Adviser is
affiliated with a broker-dealer.8 In
addition, the Exchange states that the
Adviser has implemented a fire wall
with respect to its broker-dealer affiliate
regarding access to information
concerning the composition and/or
changes to the portfolio, and will be
3 17
CFR 240.19b–4.
Securities Exchange Act Release No. 74653
(April 6, 2015), 80 FR 19371 (‘‘Notice’’).
5 In Amendment No. 1, the Exchange clarified
that under normal market conditions, the Fund will
invest only in those assets listed under the
‘‘Principal Investments’’ section of the Notice.
Amendment No. 1 is not subject to notice and
comment because it is a technical amendment that
does not materially alter the substance of the
proposed rule change or raise any novel regulatory
issues.
6 The Commission has issued an order granting
certain exemptive relief to the Trust under the 1940
Act. See Investment Company Act Release No.
30607 (July 23, 2013).
7 See Registration Statement on Form N–1A for
the Trust filed on January 30, 2015 (File Nos. 333–
187668 and 811–22819).
8 See Notice, supra note 4, 80 FR at 19372.
4 See
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subject to procedures designed to
prevent the use and dissemination of
material non-public information
regarding the Fund’s portfolio.9 In the
event (a) the Adviser or the Sub-Adviser
becomes newly affiliated with a brokerdealer or registers as a broker-dealer, or
(b) any new adviser or sub-adviser is a
registered broker-dealer or becomes
affiliated with a broker-dealer, it will
implement a fire wall with respect to its
relevant personnel and/or such brokerdealer affiliate, if applicable, regarding
access to information concerning the
composition and/or changes to the
portfolio and will be subject to
procedures designed to prevent the use
and dissemination of material nonpublic information regarding such
portfolio.10
The Exchange has made the following
representations and statements
regarding the Fund.11
Investments for the Fund
The Fund’s investment objective will
be to seek current income while
maintaining a secondary emphasis on
long-term capital appreciation and low
volatility. The Fund will seek to achieve
its investment objective by utilizing a
long-only, multi-strategy, tacticallymanaged exposure to the U.S. equity
market. To obtain such exposure, the
Sub-Adviser will invest, under normal
market conditions,12 the Fund’s assets
in ETFs, exchange-traded notes
(‘‘ETNs’’),13 exchange-traded trusts that
hold commodities (‘‘ETTs’’)
(collectively, ETFs, ETNs and ETTs are
referred to hereinafter as ‘‘exchangetraded products’’ or ‘‘ETPs’’),
individually selected U.S. exchangetraded common stocks (when the SubAdviser determines that is more
efficient or otherwise advantageous to
do so), money market funds, U.S.
9 See
id.
id.
11 Additional information regarding, among other
things, the Fund, the Shares, the Fund’s investment
objectives, the Fund’s strategies, methodology and
restrictions, risks; fees and expenses associated
with the Shares, creations and redemptions of
Shares, availability of price information, trading
rules and halts, and surveillance procedures can be
found in the Notice and the Registration Statement.
See Notice, supra note 4, and Registration
Statement, supra note 7, respectively.
12 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.
13 The Exchange states that ETNs are limited to
those described in Nasdaq Rule 5710.
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10 See
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treasuries or money market instruments.
The Exchange states that, to the extent
that the Fund invests in ETFs or money
market funds to gain domestic exposure,
the Fund is considered, in part, a ‘‘fund
of funds.’’
Investment Restrictions
• The Fund will not use derivative
instruments, including options, swaps,
forwards and futures contracts.
• The Fund will not invest in
leveraged, inverse, or leveraged inverse
ETPs.
• The Fund’s net assets that are
invested in exchange-traded equities,
including ETPs and common stock, will
be invested in instruments that trade in
markets that are members of the
Intermarket Surveillance Group (‘‘ISG’’)
or are parties to a comprehensive
surveillance sharing agreement with the
Exchange.14
• The Fund may hold up to an
aggregate amount of 15% of its net
assets in illiquid securities and other
illiquid assets (calculated at the time of
investment).15
• The Fund does not presently intend
to engage in any form of borrowing for
investment purposes, and will not be
operated as a ‘‘leveraged ETF’’, i.e., it
will not be operated in a manner
designed to seek a multiple of the
performance of an underlying reference
index.
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the Exchange’s proposal to list
and trade the Shares is consistent with
the Exchange Act and the rules and
regulations thereunder applicable to a
national securities exchange.16 In
particular, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) of the Exchange
Act,17 which requires, among other
things, that the Exchange’s rules be
designed to promote just and equitable
14 See
Notice, supra note 4, 80 FR at 19375.
Fund will monitor its portfolio liquidity on
an ongoing basis to determine whether, in light of
current circumstances, an adequate level of
liquidity is being maintained, and will consider
taking appropriate steps in order to maintain
adequate liquidity if, through a change in values,
net assets, or other circumstances, more than 15%
of the Fund’s net assets are held in illiquid
securities or other illiquid assets. Illiquid securities
and other 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.
16 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).
17 15 U.S.C. 78f(b)(5).
15 The
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30509
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 finds that the
proposal to list and trade the Shares on
the Exchange is consistent with Section
11A(a)(1)(C)(iii) of the Exchange Act,18
which sets forth Congress’ finding that
it is in the public interest and
appropriate for the protection of
investors and the maintenance of fair
and orderly markets to assure the
availability to brokers, dealers and
investors of information with respect to
quotations for and transactions in
securities. Quotation and last-sale
information for the Shares and any
underlying exchange-traded products
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.
Price information regarding the ETPs,
equity securities, U.S. treasuries, money
market instruments and money market
Funds held by the Fund will be
available through the U.S. exchanges
trading such assets, in the case of
exchange-traded securities, as well as
automated quotation systems, published
or other public sources, or on-line
information services such as Bloomberg
or Reuters. Intra-day price information
for all assets held by the Fund will also
be available through subscription
services, such as Bloomberg, Markit and
Thomson Reuters, which can be
accessed by authorized participants and
other investors. Information regarding
market price and volume of the Shares
will be continually available on a realtime basis throughout the day on
brokers’ computer screens and other
electronic services. The previous day’s
closing price and trading volume
information for the Shares will be
published daily in the financial section
of newspapers.
The Commission also 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. On
each business day, before
commencement of trading in Shares in
the Regular Market Session 19 on the
18 15
U.S.C. 78k–1(a)(1)(C)(iii).
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
19 See
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asabaliauskas on DSK5VPTVN1PROD with NOTICES
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.20 The Web site
information will be publicly available at
no charge. The NAV will be determined
as of the close of trading (normally 4:00
p.m., E.T.) on each day the New York
Stock Exchange is open for business.
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.21 The Intraday Indicative
Value, available on the NASDAQ OMX
Information LLC proprietary index data
service,22 will be based upon the current
value for the components of the
Disclosed Portfolio and will be updated
and widely disseminated by one or
more major market data vendors and
broadly displayed at least every 15
seconds during the Regular Market
Session.23 The Fund’s Web site will
include a form of the prospectus for the
Fund and additional data relating to
NAV and other applicable quantitative
information.24
The Exchange represents that it may
consider all relevant factors in
exercising its discretion to halt or
suspend trading in the Shares of the
Fund. Nasdaq will halt trading in the
Shares under the conditions specified in
Nasdaq Rules 4120 and 4121, including
the trading pauses under Nasdaq Rules
4120(a)(11) and (12). Trading also may
be halted because of market conditions
or for reasons that, in the view of the
time (‘‘E.T.’’); (2) Regular Market Session from 9:30
a.m. to 4 p.m. or 4:15 p.m. E.T.; and (3) Post-Market
Session from 4 p.m. or 4:15 p.m. to 8 p.m. E.T.).
20 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’’). Notwithstanding the
foregoing, portfolio trades that are executed prior to
the opening of the Exchange on any business day
may be booked and reflected in NAV on such
business day. 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.
21 See Notice, supra note 4, 80 FR at 19375.
22 Currently, the NASDAQ OMX Global Index
Data Service (‘‘GIDS’’) is the NASDAQ OMX global
index data feed service. The Exchange represents
that GIDS offers real-time updates, daily summary
messages, and access to widely followed indexes
and Intraday Indicative Values for ETFs, and that
GIDS provides investment professionals with the
daily information needed to track or trade NASDAQ
OMX indexes, listed ETFs, or third-party partner
indexes and ETFs.
23 See id. at 19374.
24 See id.
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Exchange, make trading in the Shares
inadvisable.25 Trading in the Shares also
will be subject to Rule 5735(d)(2)(D),
which sets forth circumstances under
which Shares of the Fund may be
halted.
The Exchange states that it has a
general policy prohibiting the
distribution of material, non-public
information by its employees.26 The
Exchange states that the Adviser and
Sub-Adviser are not registered as
broker-dealers, but that the Adviser is
affiliated with a broker-dealer. In
addition, the Exchange states that the
Adviser has implemented a fire wall
with respect to its broker-dealer affiliate
regarding access to information
concerning the composition and/or
changes to the portfolio, and will be
subject to procedures designed to
prevent the use and dissemination of
material non-public information
regarding the Fund’s portfolio.27 In the
event (a) the Adviser or the Sub-Adviser
becomes newly affiliated with a brokerdealer or registers as a broker-dealer, or
(b) any new adviser or sub-adviser is a
registered broker-dealer or becomes
affiliated with a broker-dealer, it will
implement a fire wall with respect to its
relevant personnel and/or such brokerdealer affiliate, if applicable, regarding
access to information concerning the
composition and/or changes to the
portfolio and will be subject to
procedures designed to prevent the use
and dissemination of material nonpublic information regarding such
portfolio.28
FINRA, on behalf of the Exchange,
will communicate as needed regarding
trading in the Shares and other
exchange-traded securities and
instruments held by the Fund with
other markets and other entities that are
members of ISG,29 and FINRA may
obtain trading information regarding
trading in the Shares and other
exchange-traded securities and
instruments held by the Fund from such
markets and other entities. In addition,
the Exchange may obtain information
regarding trading in the Shares and the
25 These may include: (1) The extent to which
trading is not occurring in the securities and/or the
other assets constituting the Disclosed Portfolio of
the Fund; or (2) whether other unusual conditions
or circumstances detrimental to the maintenance of
a fair and orderly market are present. See id. at
19375.
26 See id.
27 See id. at 19372.
28 See supra text accompanying note 10.
29 For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes 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.
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exchange-traded securities and
instruments held by the Fund from
markets and other entities that are
members of ISG, or with which the
Exchange has in place a comprehensive
surveillance sharing agreement.
The Commission notes that the Fund
and the Shares must comply with the
requirements of Nasdaq Rule 5735 to be
listed and traded on the Exchange.
Nasdaq deems the Shares to be equity
securities, thus rendering trading in the
Shares subject to Nasdaq’s existing rules
governing the trading of equity
securities. In support of this proposal,
the Exchange represented that:
(1) The Shares will be subject to
Nasdaq Rule 5735, which sets forth the
initial and continued listing criteria
applicable to Managed Fund Shares.
(2) Trading in the Shares will be
subject to the existing trading
surveillances administered by both
Nasdaq and FINRA on behalf of the
Exchange, which are designed to detect
violations of Exchange rules and
applicable federal securities laws, and
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.
(3) The Exchange has appropriate
rules to facilitate transactions in the
Shares during all trading sessions.
(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 2111A,
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 and Disclosed Portfolio
is disseminated; (d) the risks involved
in trading the Shares during the PreMarket 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.
(5) For initial and/or continued
listing, the Fund must be in compliance
with Rule 10A–3 30 under the Act.
30 See
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Federal Register / Vol. 80, No. 102 / Thursday, May 28, 2015 / Notices
(6) The Fund will not use derivative
instruments, including options, swaps,
forwards and futures contracts, both
listed and OTC.
(7) The Fund’s net assets that are
invested in exchange-traded equities,
including ETPs and common stock, will
be invested in instruments that trade in
markets that are members of ISG or are
parties to a comprehensive surveillance
sharing agreement with the Exchange.
(8) The Fund may hold up to an
aggregate amount of 15% of its net
assets in illiquid securities and other
illiquid assets (calculated at the time of
investment).
(9) A minimum of 100,000 Shares 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
the Notice. For the foregoing reasons,
the Commission finds that the proposed
rule change, as modified by Amendment
No. 1, is consistent with Section 6(b)(5)
of the Act 31 and the rules and
regulations thereunder applicable to a
national securities exchange.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,32
that the proposed rule change (SR–
NASDAQ–2015–023), as modified by
Amendment No. 1, is hereby approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–12835 Filed 5–27–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75032; File No. SR–
NYSEArca–2015–17]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Designation of a
Longer Period for Commission Action
on a Proposed Rule Change To Modify
the Appointment Process Utilized by
the Exchange
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to modify the
Market Maker appointment and
withdrawal process used by the
Exchange. The proposed rule change
was published for comment in the
Federal Register on April 8, 2015.3 The
Commission received no comment
letters on the proposed rule change.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is May 23, 2015. The Commission is
extending this 45-day time period.
The Commission finds it appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider this proposed rule change.
The proposed rule change, if approved,
would modify the Market Maker
appointment and withdrawal process
used by the Exchange.
Accordingly, the Commission,
pursuant to Section 19(b)(2) of the Act,5
designates July 7, 2015, as the date by
which the Commission should either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–NYSEArca–2015–17).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–12836 Filed 5–27–15; 8:45 am]
asabaliauskas on DSK5VPTVN1PROD with NOTICES
[Release No. 34–75024; File No. SR–BX–
2015–029]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change Regarding
Penny Pilot Options Fees and Rebates
May 21, 2015.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on May 11,
2015, NASDAQ OMX BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Chapter XV, entitled ‘‘Options Pricing’’
and Section 2, entitled ‘‘Options
Market—Fees and Rebates’’.
Specifically, the Exchange proposes to:
(1) Decrease the Fee to Add Liquidity in
Penny Pilot Options; 3 (2) decrease the
Rebate to Remove Liquidity in Penny
Pilot Options; and (3) delete the
Monthly Volume Tiers that apply to
Lead Market Makers.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxbx.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1 15
31 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(2).
33 17 CFR 200.30–3(a)(12).
32 15
VerDate Sep<11>2014
SECURITIES AND EXCHANGE
COMMISSION
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
BILLING CODE 8011–01–P
May 21, 2015.
On March 20, 2015, NYSE Arca, Inc.,
(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
18:18 May 27, 2015
Jkt 235001
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Penny Pilot Options are options that quote and
trade pursuant to the Penny Pilot, an industry-wide
program. The Penny Pilot was established on the
Exchange in June 2012 and last extended in
December 2014. See Securities Exchange Act
Release Nos. 67256 (June 26, 2012), 77 FR 39277
(July 2, 2012) (SR–BX–2012–030) (order approving
BX option rules and establishing Penny Pilot); and
73689 (November 25, 2014), 79 FR 71488
(December 2, 2014) (SR–BX–2014–057) (notice of
filing and immediate effectiveness extending the
Penny Pilot through June 30, 2015).
2 17
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 74635
(April 2, 2015), 80 FR 18909.
4 15 U.S.C. 78s(b)(2).
5 Id.
6 17 CFR 200.30–3(a)(31).
2 17
PO 00000
Frm 00081
Fmt 4703
30511
Sfmt 4703
E:\FR\FM\28MYN1.SGM
28MYN1
]]>Agencies
[Federal Register Volume 80, Number 102 (Thursday, May 28, 2015)]
[Notices]
[Pages 30508-30511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12835]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75031; File No. SR-NASDAQ-2015-023]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Approving a Proposed Rule Change, as Modified by Amendment No. 1, To
List and Trade the Shares of the Tuttle Tactical Management Multi-
Strategy Income ETF of ETFis Series Trust I
May 21, 2015.
I. Introduction
On March 25, 2015, The NASDAQ Stock Market LLC (``Exchange'' or
``Nasdaq'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \2\ and Rule 19b-4
thereunder,\3\ a proposed rule change to list and trade shares
(``Shares'') of the Tuttle Tactical Management Multi-Strategy Income
ETF (``Fund''), a series of ETFis Series Trust I (``Trust'') under
NASDAQ Rule 5735. The proposed rule change was published for comment in
the Federal Register on April 10, 2015.\4\ On May 20, 2015, the
Exchange filed Amendment No. 1 to the proposed rule change.\5\ The
Commission received no comments on the proposed rule change. This order
approves the proposed rule change, as modified by Amendment No. 1.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ See Securities Exchange Act Release No. 74653 (April 6,
2015), 80 FR 19371 (``Notice'').
\5\ In Amendment No. 1, the Exchange clarified that under normal
market conditions, the Fund will invest only in those assets listed
under the ``Principal Investments'' section of the Notice. Amendment
No. 1 is not subject to notice and comment because it is a technical
amendment that does not materially alter the substance of the
proposed rule change or raise any novel regulatory issues.
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II. Description of the Proposal
The Exchange proposes to list and trade the Shares under Nasdaq
Rule 5735, which governs the listing and trading of Managed Fund Shares
on the Exchange. The Fund will be an actively-managed exchange-traded
fund (``ETF''). The Shares will be offered by the Trust.\6\ The Trust
is registered with the Commission as an investment company and has
filed a registration statement on Form N-1A (``Registration
Statement'') with the Commission.\7\ The Fund is a series of the Trust.
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\6\ The Commission has issued an order granting certain
exemptive relief to the Trust under the 1940 Act. See Investment
Company Act Release No. 30607 (July 23, 2013).
\7\ See Registration Statement on Form N-1A for the Trust filed
on January 30, 2015 (File Nos. 333-187668 and 811-22819).
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Etfis Capital LLC will be the investment adviser (``Adviser'') to
the Fund. Tuttle Tactical Management, LLC will be the investment sub-
adviser (``Sub-Adviser'') to the Fund. ETF Distributors LLC will be the
principal underwriter and distributor of the Fund's Shares. The Bank of
New York Mellon will act as the administrator, accounting agent,
custodian, and transfer agent to the Fund. The Exchange states that the
Adviser and Sub-Adviser are not registered as broker-dealers but that
the Adviser is affiliated with a broker-dealer.\8\ In addition, the
Exchange states that the Adviser has implemented a fire wall with
respect to its broker-dealer affiliate regarding access to information
concerning the composition and/or changes to the portfolio, and will be
[[Page 30509]]
subject to procedures designed to prevent the use and dissemination of
material non-public information regarding the Fund's portfolio.\9\ In
the event (a) the Adviser or the Sub-Adviser becomes newly affiliated
with a broker-dealer or registers as a broker-dealer, or (b) any new
adviser or sub-adviser is a registered broker-dealer or becomes
affiliated with a broker-dealer, it will implement a fire wall with
respect to its relevant personnel and/or such broker-dealer affiliate,
if applicable, regarding access to information concerning the
composition and/or changes to the portfolio and will be subject to
procedures designed to prevent the use and dissemination of material
non-public information regarding such portfolio.\10\
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\8\ See Notice, supra note 4, 80 FR at 19372.
\9\ See id.
\10\ See id.
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The Exchange has made the following representations and statements
regarding the Fund.\11\
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\11\ Additional information regarding, among other things, the
Fund, the Shares, the Fund's investment objectives, the Fund's
strategies, methodology and restrictions, risks; fees and expenses
associated with the Shares, creations and redemptions of Shares,
availability of price information, trading rules and halts, and
surveillance procedures can be found in the Notice and the
Registration Statement. See Notice, supra note 4, and Registration
Statement, supra note 7, respectively.
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Investments for the Fund
The Fund's investment objective will be to seek current income
while maintaining a secondary emphasis on long-term capital
appreciation and low volatility. The Fund will seek to achieve its
investment objective by utilizing a long-only, multi-strategy,
tactically-managed exposure to the U.S. equity market. To obtain such
exposure, the Sub-Adviser will invest, under normal market
conditions,\12\ the Fund's assets in ETFs, exchange-traded notes
(``ETNs''),\13\ exchange-traded trusts that hold commodities (``ETTs'')
(collectively, ETFs, ETNs and ETTs are referred to hereinafter as
``exchange-traded products'' or ``ETPs''), individually selected U.S.
exchange-traded common stocks (when the Sub-Adviser determines that is
more efficient or otherwise advantageous to do so), money market funds,
U.S. treasuries or money market instruments. The Exchange states that,
to the extent that the Fund invests in ETFs or money market funds to
gain domestic exposure, the Fund is considered, in part, a ``fund of
funds.''
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\12\ 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.
\13\ The Exchange states that ETNs are limited to those
described in Nasdaq Rule 5710.
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Investment Restrictions
The Fund will not use derivative instruments, including
options, swaps, forwards and futures contracts.
The Fund will not invest in leveraged, inverse, or
leveraged inverse ETPs.
The Fund's net assets that are invested in exchange-traded
equities, including ETPs and common stock, will be invested in
instruments that trade in markets that are members of the Intermarket
Surveillance Group (``ISG'') or are parties to a comprehensive
surveillance sharing agreement with the Exchange.\14\
---------------------------------------------------------------------------
\14\ See Notice, supra note 4, 80 FR at 19375.
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The Fund may hold up to an aggregate amount of 15% of its
net assets in illiquid securities and other illiquid assets (calculated
at the time of investment).\15\
---------------------------------------------------------------------------
\15\ The Fund will monitor its portfolio liquidity on an ongoing
basis to determine whether, in light of current circumstances, an
adequate level of liquidity is being maintained, and will consider
taking appropriate steps in order to maintain adequate liquidity if,
through a change in values, net assets, or other circumstances, more
than 15% of the Fund's net assets are held in illiquid securities or
other illiquid assets. Illiquid securities and other 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.
---------------------------------------------------------------------------
The Fund does not presently intend to engage in any form
of borrowing for investment purposes, and will not be operated as a
``leveraged ETF'', i.e., it will not be operated in a manner designed
to seek a multiple of the performance of an underlying reference index.
III. Discussion and Commission Findings
After careful review, the Commission finds that the Exchange's
proposal to list and trade the Shares is consistent with the Exchange
Act and the rules and regulations thereunder applicable to a national
securities exchange.\16\ In particular, the Commission finds that the
proposed rule change is consistent with Section 6(b)(5) of the Exchange
Act,\17\ 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.
---------------------------------------------------------------------------
\16\ 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).
\17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission finds that the proposal to list and trade the Shares
on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the
Exchange Act,\18\ which sets forth Congress' finding that it is in the
public interest and appropriate for the protection of investors and the
maintenance of fair and orderly markets to assure the availability to
brokers, dealers and investors of information with respect to
quotations for and transactions in securities. Quotation and last-sale
information for the Shares and any underlying exchange-traded products
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.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------
Price information regarding the ETPs, equity securities, U.S.
treasuries, money market instruments and money market Funds held by the
Fund will be available through the U.S. exchanges trading such assets,
in the case of exchange-traded securities, as well as automated
quotation systems, published or other public sources, or on-line
information services such as Bloomberg or Reuters. Intra-day price
information for all assets held by the Fund will also be available
through subscription services, such as Bloomberg, Markit and Thomson
Reuters, which can be accessed by authorized participants and other
investors. Information regarding market price and volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. The
previous day's closing price and trading volume information for the
Shares will be published daily in the financial section of newspapers.
The Commission also 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. On each business day, before commencement of trading in Shares
in the Regular Market Session \19\ on the
[[Page 30510]]
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.\20\ The Web site information will be publicly
available at no charge. The NAV will be determined as of the close of
trading (normally 4:00 p.m., E.T.) on each day the New York Stock
Exchange is open for business. 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.\21\
The Intraday Indicative Value, available on the NASDAQ OMX Information
LLC proprietary index data service,\22\ will be based upon the current
value for the components of the Disclosed Portfolio and will be updated
and widely disseminated by one or more major market data vendors and
broadly displayed at least every 15 seconds during the Regular Market
Session.\23\ The Fund's Web site will include a form of the prospectus
for the Fund and additional data relating to NAV and other applicable
quantitative information.\24\
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\19\ 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 (``E.T.''); (2) Regular Market Session from 9:30
a.m. to 4 p.m. or 4:15 p.m. E.T.; and (3) Post-Market Session from 4
p.m. or 4:15 p.m. to 8 p.m. E.T.).
\20\ 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'').
Notwithstanding the foregoing, portfolio trades that are executed
prior to the opening of the Exchange on any business day may be
booked and reflected in NAV on such business day. 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.
\21\ See Notice, supra note 4, 80 FR at 19375.
\22\ Currently, the NASDAQ OMX Global Index Data Service
(``GIDS'') is the NASDAQ OMX global index data feed service. The
Exchange represents that GIDS offers real-time updates, daily
summary messages, and access to widely followed indexes and Intraday
Indicative Values for ETFs, and that GIDS provides investment
professionals with the daily information needed to track or trade
NASDAQ OMX indexes, listed ETFs, or third-party partner indexes and
ETFs.
\23\ See id. at 19374.
\24\ See id.
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The Exchange represents that it may consider all relevant factors
in exercising its discretion to halt or suspend trading in the Shares
of the Fund. Nasdaq will halt trading in the Shares under the
conditions specified in Nasdaq Rules 4120 and 4121, including the
trading pauses under Nasdaq Rules 4120(a)(11) and (12). Trading also
may be halted because of market conditions or for reasons that, in the
view of the Exchange, make trading in the Shares inadvisable.\25\
Trading in the Shares also will be subject to Rule 5735(d)(2)(D), which
sets forth circumstances under which Shares of the Fund may be halted.
---------------------------------------------------------------------------
\25\ These may include: (1) The extent to which trading is not
occurring in the securities and/or the other assets constituting the
Disclosed Portfolio of the Fund; or (2) whether other unusual
conditions or circumstances detrimental to the maintenance of a fair
and orderly market are present. See id. at 19375.
---------------------------------------------------------------------------
The Exchange states that it has a general policy prohibiting the
distribution of material, non-public information by its employees.\26\
The Exchange states that the Adviser and Sub-Adviser are not registered
as broker-dealers, but that the Adviser is affiliated with a broker-
dealer. In addition, the Exchange states that the Adviser has
implemented a fire wall with respect to its broker-dealer affiliate
regarding access to information concerning the composition and/or
changes to the portfolio, and will be subject to procedures designed to
prevent the use and dissemination of material non-public information
regarding the Fund's portfolio.\27\ In the event (a) the Adviser or the
Sub-Adviser becomes newly affiliated with a broker-dealer or registers
as a broker-dealer, or (b) any new adviser or sub-adviser is a
registered broker-dealer or becomes affiliated with a broker-dealer, it
will implement a fire wall with respect to its relevant personnel and/
or such broker-dealer affiliate, if applicable, regarding access to
information concerning the composition and/or changes to the portfolio
and will be subject to procedures designed to prevent the use and
dissemination of material non-public information regarding such
portfolio.\28\
---------------------------------------------------------------------------
\26\ See id.
\27\ See id. at 19372.
\28\ See supra text accompanying note 10.
---------------------------------------------------------------------------
FINRA, on behalf of the Exchange, will communicate as needed
regarding trading in the Shares and other exchange-traded securities
and instruments held by the Fund with other markets and other entities
that are members of ISG,\29\ and FINRA may obtain trading information
regarding trading in the Shares and other exchange-traded securities
and instruments held by the Fund from such markets and other entities.
In addition, the Exchange may obtain information regarding trading in
the Shares and the exchange-traded securities and instruments held by
the Fund from markets and other entities that are members of ISG, or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.
---------------------------------------------------------------------------
\29\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes 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.
---------------------------------------------------------------------------
The Commission notes that the Fund and the Shares must comply with
the requirements of Nasdaq Rule 5735 to be listed and traded on the
Exchange. Nasdaq deems the Shares to be equity securities, thus
rendering trading in the Shares subject to Nasdaq's existing rules
governing the trading of equity securities. In support of this
proposal, the Exchange represented that:
(1) The Shares will be subject to Nasdaq Rule 5735, which sets
forth the initial and continued listing criteria applicable to Managed
Fund Shares.
(2) Trading in the Shares will be subject to the existing trading
surveillances administered by both Nasdaq and FINRA on behalf of the
Exchange, which are designed to detect violations of Exchange rules and
applicable federal securities laws, and 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.
(3) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.
(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 2111A, 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 and Disclosed Portfolio 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.
(5) For initial and/or continued listing, the Fund must be in
compliance with Rule 10A-3 \30\ under the Act.
---------------------------------------------------------------------------
\30\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------
[[Page 30511]]
(6) The Fund will not use derivative instruments, including
options, swaps, forwards and futures contracts, both listed and OTC.
(7) The Fund's net assets that are invested in exchange-traded
equities, including ETPs and common stock, will be invested in
instruments that trade in markets that are members of ISG or are
parties to a comprehensive surveillance sharing agreement with the
Exchange.
(8) The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid securities and other illiquid assets (calculated at
the time of investment).
(9) A minimum of 100,000 Shares 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 the Notice. For
the foregoing reasons, the Commission finds that the proposed rule
change, as modified by Amendment No. 1, is consistent with Section
6(b)(5) of the Act \31\ and the rules and regulations thereunder
applicable to a national securities exchange.
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\31\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\32\ that the proposed rule change (SR-NASDAQ-2015-023),
as modified by Amendment No. 1, is hereby approved.
---------------------------------------------------------------------------
\32\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
---------------------------------------------------------------------------
\33\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-12835 Filed 5-27-15; 8:45 am]
BILLING CODE 8011-01-P
