Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to a Representation Regarding Investment in Certain Mortgage-Related Securities by the AdvisorShares Sage Core Reserves ETF, 32187-32190 [2015-13723]
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Federal Register / Vol. 80, No. 108 / Friday, June 5, 2015 / Notices
consider the Request pertaining to the
proposed Priority Mail Contract 124
product and the related contract,
respectively.
The Commission invites comments on
whether the Postal Service’s filings in
the captioned dockets are consistent
with the policies of 39 U.S.C. 3632,
3633, or 3642, 39 CFR part 3015, and 39
CFR part 3020, subpart B. Comments are
due no later than June 8, 2015. The
public portions of these filings can be
accessed via the Commission’s Web site
(https://www.prc.gov).
The Commission appoints Kenneth R.
Moeller to serve as Public
Representative in these dockets.
III. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket
Nos. MC2015–53 and CP2015–81 to
consider the matters raised in each
docket.
2. Pursuant to 39 U.S.C. 505, Kenneth
R. Moeller is appointed to serve as an
officer of the Commission to represent
the interests of the general public in
these proceedings (Public
Representative).
3. Comments are due no later than
June 8, 2015.
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2015–13751 Filed 6–4–15; 8:45 am]
BILLING CODE 7710–FW–P
[Release No. 34–75087; File No. SR–
NYSEArca–2015–46]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to a
Representation Regarding Investment
in Certain Mortgage-Related Securities
by the AdvisorShares Sage Core
Reserves ETF
June 1, 2015.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Pursuant to Section
of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on May 27,
2015, NYSE Arca, Inc. (the ‘‘Exchange’’
or ‘‘NYSE Arca’’) filed with the
Securities and Exchange Commission
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to change a
representation regarding investment in
certain mortgage-related securities by
the AdvisorShares Sage Core Reserves
ETF. Shares of the AdvisorShares Sage
Core Reserves ETF have been approved
for listing and trading on the Exchange
under NYSE Arca Equities Rule 8.600.
The text of the proposed rule change is
available on the Exchange’s Web site at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
19(b)(1) 1
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
1. Purpose
The Commission has approved a
proposed rule change relating to listing
and trading on the Exchange of shares
(‘‘Shares’’) of the AdvisorShares Sage
Core Reserves ETF (the ‘‘Fund’’) under
NYSE Arca Equities Rule 8.600,4 which
governs the listing and trading of
Managed Fund Shares.5 The Fund’s
4 See Securities Exchange Act Release No. 71263
(January 9, 2014), 79 FR 2715 (January 15, 2014)
(SR–NYSEArca–2013–121) (the ‘‘Prior Order’’). The
notice with respect to the Prior Order was
published in Securities Exchange Act Release No.
70902 (November 19, 2013), 78 FR 70370
(November 25, 2013) (‘‘Prior Notice’’ and, together
with the Prior Order, the ‘‘Prior Release’’).
5 A Managed Fund Share is a security that
represents an interest in an investment company
registered under the Investment Company Act of
1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as
an open-end investment company or similar entity
that invests in a portfolio of securities selected by
its investment adviser consistent with its
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32187
Shares are currently listed and traded
on the Exchange under NYSE Arca
Equities Rule 8.600.
The Shares are offered by
AdvisorShares Trust (the ‘‘Trust’’), a
statutory trust organized under the laws
of the State of Delaware and registered
with the Commission as an open-end
management investment company.6 The
investment adviser to the Fund is
AdvisorShares Investments, LLC (the
‘‘Adviser’’). Sage Advisory Services Ltd.
Co. (‘‘Sub-Adviser’’) is the Fund’s subadviser and provides day-to-day
portfolio management of the Fund.
According to the Registration
Statement, the Fund will seek to
preserve capital while maximizing
income. Under normal market
conditions, the Sub-Adviser will seek to
achieve the Fund’s investment objective
by investing at least 80% of the Fund’s
net assets in a variety of fixed income
securities issued by U.S. and foreign
issuers. Such fixed income securities
will be U.S. dollar-denominated
investment grade debt securities rated
Baa or higher by Moody’s Investors
Service, Inc. (‘‘Moody’s’’), or
equivalently rated by Standard & Poor’s
Ratings Services (‘‘S&P’’) or Fitch, Inc.
(‘‘Fitch’’), or, if unrated, determined by
the Sub-Adviser to be of comparable
quality.7 The Fund may retain a security
if its rating falls below investment grade
and the Sub-Adviser determines that
retention of the security is in the Fund’s
best interest. The Exchange notes that
the Fund’s investment portfolio of fixed
income securities will meet certain
criteria for index-based, fixed income
exchange-traded funds (‘‘ETFs’’)
contained in NYSE Arca Equities Rule
5.2(j)(3), Commentary .02.8
The Fund may invest, among other
securities and financial instruments, in
investment objectives and policies. In contrast, an
open-end investment company that issues
Investment Company Units, listed and traded on
the Exchange under NYSE Arca Equities Rule
5.2(j)(3), seeks to provide investment results that
correspond generally to the price and yield
performance of a specific foreign or domestic stock
index, fixed income securities index or combination
thereof.
6 The Trust is registered under the 1940 Act. On
August 13, 2013, the Trust filed with the
Commission an amendment to its registration
statement on Form N–1A under the Securities Act
of 1933 (15 U.S.C. 77a) (‘‘Securities Act’’), and
under the 1940 Act relating to the Fund (File Nos.
333–157876 and 811–22110) (‘‘Registration
Statement’’). The description of the operation of the
Trust and the Fund herein is based, in part, on the
Registration Statement. In addition, the
Commission has issued an order granting certain
exemptive relief to the Trust under the 1940 Act.
See Investment Company Act Release No. 29291
(May 28, 2010) (File No. 812–13677) (‘‘Exemptive
Order’’).
7 See note 9 of the Prior Notice.
8 See note 10 of the Prior Notice.
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asabaliauskas on DSK5VPTVN1PROD with NOTICES
mortgage-related securities and assetbacked securities (‘‘ABSs’’). Mortgagerelated securities are interests in pools
of residential or commercial mortgage
loans, including mortgage loans made
by savings and loan institutions,
mortgage bankers, commercial banks,
and others. Pools of mortgage loans are
assembled as securities for sale to
investors by various governmental,
government-related and private
organizations. The Fund also may invest
in debt securities which are secured
with collateral consisting of mortgage
related securities. Interests in pools of
mortgage-related securities differ from
other forms of debt securities, which
normally provide for periodic payment
of interest in fixed amounts with
principal payments at maturity or
specified call dates. Instead, these
securities provide a monthly payment
which consists of both interest and
principal payments.
The Prior Release stated that the Fund
may invest up to 10% of its net assets
in privately issued (non-government
sponsored entity (‘‘GSE’’)) mortgagerelated securities, including commercial
mortgage-backed securities,
collateralized mortgage obligations
(‘‘CMOs’’), and adjustable rate mortgage
backed securities (‘‘ARMBSs’’) (the
‘‘10% Representation’’). The Prior
Release further stated that the Fund will
not purchase mortgage-related securities
(including non-GSE mortgage-related
securities) or any other assets which in
the Sub-Adviser’s opinion are illiquid if,
as a result, more than 15% of the Fund’s
net assets will be invested in illiquid
securities.9
The Exchange has notified the Fund
that it currently is not in compliance
with the 10% Representation.10 In order
to permit the continued listing and
trading of Shares of the Fund, the
9 As stated in the Prior Release, the Sub-Adviser
seeks to manage the portion of the Fund’s assets
committed to privately issued mortgage-related
securities in a manner consistent with the Fund’s
investment objective, policies and overall portfolio
risk profile. In determining whether and how much
to invest in privately issued mortgage-related
securities, and how to allocate those assets, the SubAdviser considers a number of factors. These
include, but are not limited to: (1) The nature of the
borrowers (e.g., residential vs. commercial); (2) the
collateral loan type (e.g., for residential: First Lien—
Jumbo/Prime, First Lien—Alt-A, First Lien—
Subprime, First Lien—Pay-Option or Second Lien;
for commercial: Conduit, Large Loan or Single
Asset/Single Borrower); and (3) in the case of
residential loans, whether they are fixed rate or
adjustable mortgages. Each of these criteria can
cause privately issued mortgage-related securities to
have differing primary economic characteristics and
distinguishable risk factors and performance
characteristics.
10 The Trust issued a press release, dated March
24, 2015, relating to the non-compliance. The
Exchange also has added a ‘‘below compliance’’
(‘‘.BC’’) indicator to the Fund’s trading symbol.
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18:31 Jun 04, 2015
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Exchange proposes to amend such
statement in the Prior Release to provide
that the Fund may invest up to 20% of
its net assets in privately issued (nonGSE) mortgage-related securities,
including commercial mortgage-backed
securities, CMOs, and adjustable rate
mortgage backed securities.
The Adviser represents that an
increase to 20% in Fund assets that may
be invested in the mortgage-related
instruments enumerated above will
provide the Fund with added flexibility
to invest in instruments in furtherance
of the Fund’s investment objective. In
addition, such increase will permit the
Fund to invest in such instruments
consistent with investment parameters
approved by the Commission for other
actively-managed ETFs. The Exchange
notes that the Commission has
previously approved similar percentage
limitations for other funds listed on the
Exchange under NYSE Arca Equities
Rule 8.600.11
Except for the change described
above, all other representations made in
the Prior Release remain unchanged.12
The Fund will comply with all initial
and continued listing requirements
under NYSE Arca Equities Rule 8.600.
The Exchange represents that the
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.13 The Exchange
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 federal
securities laws applicable to trading on
the Exchange. FINRA, on behalf of the
Exchange, will communicate as needed
regarding trading in the Shares and
exchange-listed equity securities
(including ADRs) with other markets
and other entities that are members of
the ISG, and FINRA, on behalf of the
Exchange, may obtain trading
information regarding trading in the
Shares and exchange-listed equity
11 See, e.g., Securities Exchange Act Release No.
71125 (December 18, 2013), 78 FR 77743 (December
24, 2013) (SR–NYSEArca–2013–106) (order
approving listing and trading on the Exchange of
shares of the PIMCO Diversified Income ExchangeTraded Fund and the PIMCO Low Duration
Exchange-Traded Fund).
12 See notes 4 and 9, supra. All terms referenced
but not defined herein are defined in the Prior
Release.
13 FINRA surveils trading on the Exchange
pursuant to a regulatory services agreement. The
Exchange is responsible for FINRA’s performance
under this regulatory services agreement.
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securities (including ADRs) from such
markets and other entities. The
Exchange may obtain information
regarding trading in the Shares and
exchange-listed equity securities
(including ADRs) from markets and
other entities that are members of ISG or
with which the Exchange has in place
a comprehensive surveillance sharing
agreement.14 In addition, as stated in the
Prior Release, investors have ready
access to information regarding the
Fund’s holdings, the Portfolio Indicative
Value, the Disclosed Portfolio, and
quotation and last sale information for
the Shares.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 15 that an
exchange have rules that are designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to remove
impediments to, and perfect the
mechanism of a free and open market
and, in general, to protect investors and
the public interest.
The Exchange believes that the
proposed rule change is designed to
prevent fraudulent and manipulative
acts and practices in that the Shares are
listed and traded on the Exchange
pursuant to the initial and continued
listing criteria in NYSE Arca Equities
Rule 8.600.
The Adviser represents that an
increase to 20% in Fund assets that may
be invested in the mortgage-related
instruments enumerated above will
provide the Fund with added flexibility
to invest in instruments in furtherance
of the Fund’s investment objective. In
addition, such increase will permit the
Fund to invest in such instruments
consistent with investment parameters
approved by the Commission for other
actively-managed ETFs. The
Commission has previously approved
similar percentage limitations for other
funds listed on the Exchange under
NYSE Arca Equities Rule 8.600.16 The
Exchange has in place surveillance
procedures that are adequate to properly
monitor trading in the Shares in all
trading sessions and to deter and detect
violations of Exchange rules and
applicable federal securities laws. The
Exchange may obtain information via
the ISG from other exchanges that are
14 For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all
of the components of the portfolio for the Fund may
trade on exchanges that are members of the ISG or
with which the Exchange has in place a
comprehensive surveillance sharing agreement.
15 15 U.S.C. 78f(b)(5).
16 See note 11, supra.
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asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 108 / Friday, June 5, 2015 / Notices
members of ISG or with which the
Exchange has entered into a
comprehensive surveillance sharing
agreement. FINRA, on behalf of the
Exchange, will communicate as needed
regarding trading in the Shares,
underlying exchange-traded equity
securities (including, without
limitation, ETFs, equity-related
financial instruments and other
exchange-traded products, REITs and
mortgage-related securities), futures,
options on futures, and exchange-traded
options with other markets and other
entities that are members of the ISG, and
FINRA, on behalf of the Exchange, may
obtain trading information regarding
trading in the Shares, underlying
exchange-traded equity securities,
futures, options on futures, and
exchange-traded options from such
markets and other entities. In addition,
the Exchange may obtain information
regarding trading in the Shares,
underlying exchange-traded equity
securities (including, without
limitation, ETFs, equity-related
financial instruments and other
exchange-traded products, REITs and
mortgage-related securities), futures,
options on futures, and exchange-traded
options from markets and other entities
that are members of ISG or with which
the Exchange has in place a
comprehensive surveillance sharing
agreement.17 In addition, FINRA, on
behalf of the Exchange, is able to access,
as needed, trade information for certain
fixed income securities held by the
Fund reported to FINRA’s Trade
Reporting and Compliance Engine
(‘‘TRACE’’).
The proposed rule change is designed
to promote just and equitable principles
of trade and to protect investors and the
public interest in that the net asset value
(‘‘NAV’’) per Share is calculated daily
and that the NAV and the Disclosed
Portfolio is made available to all market
participants at the same time. In
addition, a large amount of information
is publicly available regarding the Fund
and the Shares, thereby promoting
market transparency. The Portfolio
Indicative Value, as defined in NYSE
Arca Equities Rule 8.600(c)(3), is
disseminated by one or more major
market data vendors at least every 15
seconds during the Exchange’s Core
Trading Session. On a daily basis, the
Fund’s Web site discloses for each
portfolio security and other financial
instrument of the Fund the following
17 For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all
components of the Disclosed Portfolio for the Fund
may trade on markets that are members of ISG or
with which the Exchange has in place a
comprehensive surveillance sharing agreement.
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18:31 Jun 04, 2015
Jkt 235001
information: Ticker symbol (if
applicable); name and, when available,
the individual identifier (CUSIP) of the
security and/or financial instrument;
number of shares (if applicable) and
dollar value of securities and financial
instruments held in the portfolio; and
percentage weighting of the security and
financial instrument in the portfolio.
Information regarding market price and
trading volume of the Shares is
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 is
published daily in the financial section
of newspapers. Quotation and last-sale
information for the Shares and U.S.
exchange-listed equity securities,
including ETFs, ETNs, exchange-traded
pooled vehicles, ADRs, equity-related
financial instruments and other
exchange-traded products, REITs and
mortgage-related securities, is available
via the Consolidated Tape Association
high-speed line, and is available from
the national securities exchange on
which they are listed. Information
regarding unsponsored ADRs is
available from major market data
vendors. Intra-day and closing price
information relating to the fixed income
and equities investments of the Fund, as
well as Fund investments in spot
currencies and derivatives, including
futures, forwards, options, options on
futures and swaps, is available from
major market data vendors and from
securities and futures exchanges, as
applicable. Information relating to U.S.
exchange-listed options is available via
the Options Price Reporting Authority.
In addition, the Portfolio Indicative
Value, as defined in NYSE Arca Equities
Rule 8.600(c)(3), is widely disseminated
at least every 15 seconds during the
Core Trading Session by one or more
major market data vendors. Trading in
Shares of the Fund 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. Trading in the Shares is
subject to NYSE Arca Equities Rule
8.600(d)(2)(D), which sets forth
circumstances under which Shares of
the Fund may be halted. The Web site
for the Fund includes a form of the
prospectus for the Fund and additional
data relating to NAV and other
applicable quantitative information. In
addition, as stated in the Prior Notice,
investors have ready access to
information regarding the Fund’s
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32189
holdings, the Portfolio Indicative Value,
the Disclosed Portfolio, and quotation
and last sale information for the Shares.
The proposed rule change is designed
to perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest. As
noted above, the Exchange represents
that the trading in the Shares is subject
to the existing trading surveillances,
administered by FINRA on behalf of the
Exchange, which are designed to detect
violations of Exchange rules and
applicable federal securities laws. The
Exchange 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
federal securities laws applicable to
trading on the Exchange. In addition, as
stated in the Prior Release, investors
have ready access to information
regarding the Fund’s holdings, the
Portfolio Indicative Value, the Disclosed
Portfolio, and quotation and last sale
information for the Shares. The Adviser
represents that the proposed change, as
described above, is consistent with the
Fund’s investment objective, and will
further assist the Adviser and SubAdviser to achieve such investment
objective.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purpose of the Act. The Exchange
believes the proposed rule change is
designed to allow the Fund to invest in
a broader range of mortgage-related
securities thereby helping the Fund to
achieve its investment objective, and
will enhance competition among issues
of Managed Fund Shares that invest in
fixed income securities.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, if
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consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 18 and Rule 19b–4(f)(6)
thereunder.19
At any time within 60 days of the
filing of the proposed rule change, the
Commission 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 shall
institute proceedings to determine
whether the proposed rule 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:
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing will also be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEArca–2015–46 and should be
submitted on or before June 26, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Brent J. Fields,
Secretary.
[FR Doc. 2015–13723 Filed 6–4–15; 8:45 am]
BILLING CODE 8011–01–P
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–2015–46 on the subject line.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
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–2015–46. 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
18 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
19 17
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75085; File No. SR–BATS–
2015–39]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule To Amend Fees Applicable to
Securities Listed on BATS Exchange,
Inc. Pursuant to BATS Rule 14.13
June 1, 2015.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on May 22,
2015, BATS Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BATS’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the 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 filed a proposal to
amend the fees applicable to securities
listed on the Exchange pursuant to
BATS Rule 14.13. Changes to the
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Sfmt 4703
Exchange’s fees pursuant to this
proposal are effective upon filing.
The text of the proposed rule change
is available at the Exchange’s Web site
at www.batstrading.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On August 30, 2011, the Exchange
received approval of rules applicable to
the qualification, listing, and delisting
of companies on the Exchange,3 which
it modified on February 8, 2012 in order
to adopt pricing for the listing of
exchange traded products (‘‘ETPs’’) 4 on
the Exchange,5 which it subsequently
modified again on June 4, 2014.6 On
October 16, 2014, the Exchange
modified Rule 14.13, entitled ‘‘Company
Listing Fees’’ to eliminate the annual
fees for ETPs that are not participating
in the competitive liquidity provider
program under Interpretation and Policy
.02 to Rule 11.8, but did not eliminate
the $5,000 application fee for ETPs.7
The Exchange is now proposing to
eliminate the $5,000 application fee for
all ETPs, which would eliminate all
compulsory fees for both new ETP
issues and transfer listings in ETPs on
the Exchange.
3 See Securities Exchange Act Release No. 65225
(August 30, 2011) 76 FR 55148 (September 6, 2011)
(SR–BATS–2011–018).
4 As defined in BATS Rule 11.8(e)(1)(A), the term
‘‘ETP’’ means any security listed pursuant to
Exchange Rule 14.11.
5 See Securities Exchange Act Release No. 66422
(February 17, 2012) 77 FR 11179 (February 24,
2012) (SR–BATS–2012–010).
6 See Securities Exchange Act Release No. 72377
(June 12, 2014) 79 FR 34822 (June 18, 2014) (SR–
BATS–2014–024).
7 See Securities Exchange Act Release No. 73414
(October 23, 2014) 79 FR 64434 (October 29, 2014)
(SR–BATS–2014–050).
E:\FR\FM\05JNN1.SGM
05JNN1
Agencies
[Federal Register Volume 80, Number 108 (Friday, June 5, 2015)]
[Notices]
[Pages 32187-32190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-13723]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75087; File No. SR-NYSEArca-2015-46]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to a
Representation Regarding Investment in Certain Mortgage-Related
Securities by the AdvisorShares Sage Core Reserves ETF
June 1, 2015.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on May 27, 2015, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to change a representation regarding
investment in certain mortgage-related securities by the AdvisorShares
Sage Core Reserves ETF. Shares of the AdvisorShares Sage Core Reserves
ETF have been approved for listing and trading on the Exchange under
NYSE Arca Equities Rule 8.600. The text of the proposed rule change is
available on the Exchange's Web site at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Commission has approved a proposed rule change relating to
listing and trading on the Exchange of shares (``Shares'') of the
AdvisorShares Sage Core Reserves ETF (the ``Fund'') under NYSE Arca
Equities Rule 8.600,\4\ which governs the listing and trading of
Managed Fund Shares.\5\ The Fund's Shares are currently listed and
traded on the Exchange under NYSE Arca Equities Rule 8.600.
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\4\ See Securities Exchange Act Release No. 71263 (January 9,
2014), 79 FR 2715 (January 15, 2014) (SR-NYSEArca-2013-121) (the
``Prior Order''). The notice with respect to the Prior Order was
published in Securities Exchange Act Release No. 70902 (November 19,
2013), 78 FR 70370 (November 25, 2013) (``Prior Notice'' and,
together with the Prior Order, the ``Prior Release'').
\5\ A Managed Fund Share is a security that represents an
interest in an investment company registered under the Investment
Company Act of 1940 (15 U.S.C. 80a-1) (``1940 Act'') organized as an
open-end investment company or similar entity that invests in a
portfolio of securities selected by its investment adviser
consistent with its investment objectives and policies. In contrast,
an open-end investment company that issues Investment Company Units,
listed and traded on the Exchange under NYSE Arca Equities Rule
5.2(j)(3), seeks to provide investment results that correspond
generally to the price and yield performance of a specific foreign
or domestic stock index, fixed income securities index or
combination thereof.
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The Shares are offered by AdvisorShares Trust (the ``Trust''), a
statutory trust organized under the laws of the State of Delaware and
registered with the Commission as an open-end management investment
company.\6\ The investment adviser to the Fund is AdvisorShares
Investments, LLC (the ``Adviser''). Sage Advisory Services Ltd. Co.
(``Sub-Adviser'') is the Fund's sub-adviser and provides day-to-day
portfolio management of the Fund.
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\6\ The Trust is registered under the 1940 Act. On August 13,
2013, the Trust filed with the Commission an amendment to its
registration statement on Form N-1A under the Securities Act of 1933
(15 U.S.C. 77a) (``Securities Act''), and under the 1940 Act
relating to the Fund (File Nos. 333-157876 and 811-22110)
(``Registration Statement''). The description of the operation of
the Trust and the Fund herein is based, in part, on the Registration
Statement. In addition, the Commission has issued an order granting
certain exemptive relief to the Trust under the 1940 Act. See
Investment Company Act Release No. 29291 (May 28, 2010) (File No.
812-13677) (``Exemptive Order'').
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According to the Registration Statement, the Fund will seek to
preserve capital while maximizing income. Under normal market
conditions, the Sub-Adviser will seek to achieve the Fund's investment
objective by investing at least 80% of the Fund's net assets in a
variety of fixed income securities issued by U.S. and foreign issuers.
Such fixed income securities will be U.S. dollar-denominated investment
grade debt securities rated Baa or higher by Moody's Investors Service,
Inc. (``Moody's''), or equivalently rated by Standard & Poor's Ratings
Services (``S&P'') or Fitch, Inc. (``Fitch''), or, if unrated,
determined by the Sub-Adviser to be of comparable quality.\7\ The Fund
may retain a security if its rating falls below investment grade and
the Sub-Adviser determines that retention of the security is in the
Fund's best interest. The Exchange notes that the Fund's investment
portfolio of fixed income securities will meet certain criteria for
index-based, fixed income exchange-traded funds (``ETFs'') contained in
NYSE Arca Equities Rule 5.2(j)(3), Commentary .02.\8\
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\7\ See note 9 of the Prior Notice.
\8\ See note 10 of the Prior Notice.
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The Fund may invest, among other securities and financial
instruments, in
[[Page 32188]]
mortgage-related securities and asset-backed securities (``ABSs'').
Mortgage-related securities are interests in pools of residential or
commercial mortgage loans, including mortgage loans made by savings and
loan institutions, mortgage bankers, commercial banks, and others.
Pools of mortgage loans are assembled as securities for sale to
investors by various governmental, government-related and private
organizations. The Fund also may invest in debt securities which are
secured with collateral consisting of mortgage related securities.
Interests in pools of mortgage-related securities differ from other
forms of debt securities, which normally provide for periodic payment
of interest in fixed amounts with principal payments at maturity or
specified call dates. Instead, these securities provide a monthly
payment which consists of both interest and principal payments.
The Prior Release stated that the Fund may invest up to 10% of its
net assets in privately issued (non-government sponsored entity
(``GSE'')) mortgage-related securities, including commercial mortgage-
backed securities, collateralized mortgage obligations (``CMOs''), and
adjustable rate mortgage backed securities (``ARMBSs'') (the ``10%
Representation''). The Prior Release further stated that the Fund will
not purchase mortgage-related securities (including non-GSE mortgage-
related securities) or any other assets which in the Sub-Adviser's
opinion are illiquid if, as a result, more than 15% of the Fund's net
assets will be invested in illiquid securities.\9\
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\9\ As stated in the Prior Release, the Sub-Adviser seeks to
manage the portion of the Fund's assets committed to privately
issued mortgage-related securities in a manner consistent with the
Fund's investment objective, policies and overall portfolio risk
profile. In determining whether and how much to invest in privately
issued mortgage-related securities, and how to allocate those
assets, the Sub-Adviser considers a number of factors. These
include, but are not limited to: (1) The nature of the borrowers
(e.g., residential vs. commercial); (2) the collateral loan type
(e.g., for residential: First Lien--Jumbo/Prime, First Lien--Alt-A,
First Lien--Subprime, First Lien--Pay-Option or Second Lien; for
commercial: Conduit, Large Loan or Single Asset/Single Borrower);
and (3) in the case of residential loans, whether they are fixed
rate or adjustable mortgages. Each of these criteria can cause
privately issued mortgage-related securities to have differing
primary economic characteristics and distinguishable risk factors
and performance characteristics.
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The Exchange has notified the Fund that it currently is not in
compliance with the 10% Representation.\10\ In order to permit the
continued listing and trading of Shares of the Fund, the Exchange
proposes to amend such statement in the Prior Release to provide that
the Fund may invest up to 20% of its net assets in privately issued
(non-GSE) mortgage-related securities, including commercial mortgage-
backed securities, CMOs, and adjustable rate mortgage backed
securities.
---------------------------------------------------------------------------
\10\ The Trust issued a press release, dated March 24, 2015,
relating to the non-compliance. The Exchange also has added a
``below compliance'' (``.BC'') indicator to the Fund's trading
symbol.
---------------------------------------------------------------------------
The Adviser represents that an increase to 20% in Fund assets that
may be invested in the mortgage-related instruments enumerated above
will provide the Fund with added flexibility to invest in instruments
in furtherance of the Fund's investment objective. In addition, such
increase will permit the Fund to invest in such instruments consistent
with investment parameters approved by the Commission for other
actively-managed ETFs. The Exchange notes that the Commission has
previously approved similar percentage limitations for other funds
listed on the Exchange under NYSE Arca Equities Rule 8.600.\11\
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\11\ See, e.g., Securities Exchange Act Release No. 71125
(December 18, 2013), 78 FR 77743 (December 24, 2013) (SR-NYSEArca-
2013-106) (order approving listing and trading on the Exchange of
shares of the PIMCO Diversified Income Exchange-Traded Fund and the
PIMCO Low Duration Exchange-Traded Fund).
---------------------------------------------------------------------------
Except for the change described above, all other representations
made in the Prior Release remain unchanged.\12\ The Fund will comply
with all initial and continued listing requirements under NYSE Arca
Equities Rule 8.600.
---------------------------------------------------------------------------
\12\ See notes 4 and 9, supra. All terms referenced but not
defined herein are defined in the Prior Release.
---------------------------------------------------------------------------
The Exchange represents that the 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.\13\ The Exchange 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 federal securities laws applicable to trading on
the Exchange. FINRA, on behalf of the Exchange, will communicate as
needed regarding trading in the Shares and exchange-listed equity
securities (including ADRs) with other markets and other entities that
are members of the ISG, and FINRA, on behalf of the Exchange, may
obtain trading information regarding trading in the Shares and
exchange-listed equity securities (including ADRs) from such markets
and other entities. The Exchange may obtain information regarding
trading in the Shares and exchange-listed equity securities (including
ADRs) from markets and other entities that are members of ISG or with
which the Exchange has in place a comprehensive surveillance sharing
agreement.\14\ In addition, as stated in the Prior Release, investors
have ready access to information regarding the Fund's holdings, the
Portfolio Indicative Value, the Disclosed Portfolio, and quotation and
last sale information for the Shares.
---------------------------------------------------------------------------
\13\ FINRA surveils trading on the Exchange pursuant to a
regulatory services agreement. The Exchange is responsible for
FINRA's performance under this regulatory services agreement.
\14\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all of the components
of the portfolio for the Fund may trade on exchanges that are
members of the ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.
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2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \15\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares are listed and traded on the Exchange pursuant to the initial
and continued listing criteria in NYSE Arca Equities Rule 8.600.
The Adviser represents that an increase to 20% in Fund assets that
may be invested in the mortgage-related instruments enumerated above
will provide the Fund with added flexibility to invest in instruments
in furtherance of the Fund's investment objective. In addition, such
increase will permit the Fund to invest in such instruments consistent
with investment parameters approved by the Commission for other
actively-managed ETFs. The Commission has previously approved similar
percentage limitations for other funds listed on the Exchange under
NYSE Arca Equities Rule 8.600.\16\ The Exchange has in place
surveillance procedures that are adequate to properly monitor trading
in the Shares in all trading sessions and to deter and detect
violations of Exchange rules and applicable federal securities laws.
The Exchange may obtain information via the ISG from other exchanges
that are
[[Page 32189]]
members of ISG or with which the Exchange has entered into a
comprehensive surveillance sharing agreement. FINRA, on behalf of the
Exchange, will communicate as needed regarding trading in the Shares,
underlying exchange-traded equity securities (including, without
limitation, ETFs, equity-related financial instruments and other
exchange-traded products, REITs and mortgage-related securities),
futures, options on futures, and exchange-traded options with other
markets and other entities that are members of the ISG, and FINRA, on
behalf of the Exchange, may obtain trading information regarding
trading in the Shares, underlying exchange-traded equity securities,
futures, options on futures, and exchange-traded options from such
markets and other entities. In addition, the Exchange may obtain
information regarding trading in the Shares, underlying exchange-traded
equity securities (including, without limitation, ETFs, equity-related
financial instruments and other exchange-traded products, REITs and
mortgage-related securities), futures, options on futures, and
exchange-traded options from markets and other entities that are
members of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.\17\ In addition, FINRA, on behalf of
the Exchange, is able to access, as needed, trade information for
certain fixed income securities held by the Fund reported to FINRA's
Trade Reporting and Compliance Engine (``TRACE'').
---------------------------------------------------------------------------
\16\ See note 11, supra.
\17\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Disclosed Portfolio for the Fund may trade on markets that are
members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the net asset value (``NAV'') per Share is calculated daily and
that the NAV and the Disclosed Portfolio is made available to all
market participants at the same time. In addition, a large amount of
information is publicly available regarding the Fund and the Shares,
thereby promoting market transparency. The Portfolio Indicative Value,
as defined in NYSE Arca Equities Rule 8.600(c)(3), is disseminated by
one or more major market data vendors at least every 15 seconds during
the Exchange's Core Trading Session. On a daily basis, the Fund's Web
site discloses for each portfolio security and other financial
instrument of the Fund the following information: Ticker symbol (if
applicable); name and, when available, the individual identifier
(CUSIP) of the security and/or financial instrument; number of shares
(if applicable) and dollar value of securities and financial
instruments held in the portfolio; and percentage weighting of the
security and financial instrument in the portfolio. Information
regarding market price and trading volume of the Shares is 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 is published daily in the financial section of newspapers.
Quotation and last-sale information for the Shares and U.S. exchange-
listed equity securities, including ETFs, ETNs, exchange-traded pooled
vehicles, ADRs, equity-related financial instruments and other
exchange-traded products, REITs and mortgage-related securities, is
available via the Consolidated Tape Association high-speed line, and is
available from the national securities exchange on which they are
listed. Information regarding unsponsored ADRs is available from major
market data vendors. Intra-day and closing price information relating
to the fixed income and equities investments of the Fund, as well as
Fund investments in spot currencies and derivatives, including futures,
forwards, options, options on futures and swaps, is available from
major market data vendors and from securities and futures exchanges, as
applicable. Information relating to U.S. exchange-listed options is
available via the Options Price Reporting Authority. In addition, the
Portfolio Indicative Value, as defined in NYSE Arca Equities Rule
8.600(c)(3), is widely disseminated at least every 15 seconds during
the Core Trading Session by one or more major market data vendors.
Trading in Shares of the Fund 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. Trading in the Shares is
subject to NYSE Arca Equities Rule 8.600(d)(2)(D), which sets forth
circumstances under which Shares of the Fund may be halted. The Web
site for the Fund includes a form of the prospectus for the Fund and
additional data relating to NAV and other applicable quantitative
information. In addition, as stated in the Prior Notice, investors have
ready access to information regarding the Fund's holdings, the
Portfolio Indicative Value, the Disclosed Portfolio, and quotation and
last sale information for the Shares.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest. As noted above, the Exchange represents that the
trading in the Shares is subject to the existing trading surveillances,
administered by FINRA on behalf of the Exchange, which are designed to
detect violations of Exchange rules and applicable federal securities
laws. The Exchange 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 federal
securities laws applicable to trading on the Exchange. In addition, as
stated in the Prior Release, investors have ready access to information
regarding the Fund's holdings, the Portfolio Indicative Value, the
Disclosed Portfolio, and quotation and last sale information for the
Shares. The Adviser represents that the proposed change, as described
above, is consistent with the Fund's investment objective, and will
further assist the Adviser and Sub-Adviser to achieve such investment
objective.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange believes the
proposed rule change is designed to allow the Fund to invest in a
broader range of mortgage-related securities thereby helping the Fund
to achieve its investment objective, and will enhance competition among
issues of Managed Fund Shares that invest in fixed income securities.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, if
[[Page 32190]]
consistent with the protection of investors and the public interest,
the proposed rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission 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 shall institute proceedings to determine whether
the proposed rule 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:
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-2015-46 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-2015-46. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2015-46 and should
be submitted on or before June 26, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-13723 Filed 6-4-15; 8:45 am]
BILLING CODE 8011-01-P