Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving a Proposed Rule Change To List and Trade Shares of the Active Alts Contrarian ETF of ETFis Series Trust I, 76335-76338 [2015-30835]
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Federal Register / Vol. 80, No. 235 / Tuesday, December 8, 2015 / Notices
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should refer to File Number SR–
NYSEMKT–2015–97 and should be
submitted on or before December 29,
2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–30837 Filed 12–7–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
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Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold an Open Meeting
on Friday, December 11, 2015 at 10:00
a.m., in the Auditorium, Room L–002.
The subject matter of the Open
Meeting will be:
• The Commission will consider
whether to propose a new rule and
amendments to certain proposed forms
related to the use of derivatives by
registered investment companies and
business development companies.
• The Commission will consider
whether to propose rules to require
disclosure of certain payments made to
governments by resource extraction
issuers, as mandated by Section 1504 of
the Dodd-Frank Wall Street Reform and
Consumer Protection Act.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted, or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
Dated: December 4, 2015.
Brent J. Fields,
Secretary.
BILLING CODE 8011–01–P
14:17 Dec 07, 2015
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold a Closed Meeting
on Thursday, December 10, 2015 at 2:00
p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters also may be present.
The General Counsel of the
Commission, or her designee, has
certified that, in her opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
and 17 CFR 200.402(a)(3), (5), (7), 9(ii)
and (10), permit consideration of the
scheduled matter at the Closed Meeting.
Commissioner Stein, as duty officer,
voted to consider the items listed for the
Closed Meeting in closed session.
The subject matter of the Closed
Meeting will be:
Settlement of injunctive actions;
Institution and settlement of
administrative proceedings;
Resolution of litigation claims; and
Other matters relating to enforcement
proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact the Office of the Secretary at
(202) 551–5400.
Dated: December 3, 2015.
Brent J. Fields,
Secretary.
[FR Doc. 2015–30946 Filed 12–4–15; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76538; File No. SR–
NASDAQ–2015–124]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Order
Approving a Proposed Rule Change To
List and Trade Shares of the Active
Alts Contrarian ETF of ETFis Series
Trust I
I. Introduction
On October 19, 2015, The NASDAQ
Stock Market LLC (‘‘Nasdaq’’ or
CFR 200.30–3(a)(12).
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Sunshine Act Meeting
December 2, 2015.
[FR Doc. 2015–31071 Filed 12–4–15; 4:15 pm]
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SECURITIES AND EXCHANGE
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76335
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Exchange Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares
(‘‘Shares’’) of the Active Alts Contrarian
ETF (‘‘Fund’’) of ETFis Series Trust I
(‘‘Trust’’) under Nasdaq Rule 5735. The
proposed rule change was published for
comment in the Federal Register on
October 29, 2015.3 The Commission
received no comments on the proposal.
This order approves the proposed rule
change.
II. The Exchange’s Description of the
Proposal 4
Nasdaq proposes to list and trade the
Shares under Nasdaq Rule 5735, which
governs the listing and trading of
Managed Fund Shares.5 The Fund will
be an actively-managed exchange-traded
fund (‘‘ETF’’). The Shares will be
offered by the Trust, which was
established as a Delaware series trust on
September 20, 2012.6 The Fund will be
a series of the Trust. Etfis Capital LLC
will be the investment adviser
(‘‘Adviser’’) to the Fund. Active Alts
Inc. will be the investment sub-adviser
to the Fund (‘‘Sub-Adviser’’).7 ETF
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 76245
(Oct. 23, 2015), 80 FR 66594 (‘‘Notice’’).
4 Additional information regarding, among other
things, the Shares, the Fund, its investment
objective, its investments, its investment strategies,
its investment methodology, its fees, its creation
and redemption procedures, availability of
information, trading rules and halts, and
surveillance procedures can be found in the Notice
and in the Registration Statement. See Notice, supra
note 3, and Registration Statement, infra note 6,
respectively.
5 A Managed Fund Share is a security that
represents an interest in an investment company
registered under the Investment Company Act of
1940, as amended (15 U.S.C. 80a–1) (the ‘‘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.
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. See Post-Effective
Amendment No. 70 to Registration Statement on
Form N–1A for the Trust, dated Oct. 16, 2015 (File
Nos. 333–187668 and 811–22819). The description
of the Fund and the Shares contained herein is
based, in part, on information in the Registration
Statement. The Commission has issued an order,
upon which the Trust may rely (‘‘Exemptive
Order’’), granting certain exemptive relief to the
investment adviser to the Fund under the 1940 Act.
See Investment Company Act Release No. 30607
(Jul. 23, 2013) (File No. 812–14080).
7 An investment adviser to an open-end fund is
required to be registered under the Investment
Advisers Act of 1940 (‘‘Advisers Act’’). As a result,
2 17
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Federal Register / Vol. 80, No. 235 / Tuesday, December 8, 2015 / Notices
Distributors LLC (‘‘Distributor’’) will be
the principal underwriter and
distributor of the Shares. The Bank of
New York Mellon Corporation (‘‘BNY’’)
will act as the administrator, accounting
agent, custodian and transfer agent to
the Fund.
The Exchange represents that the
Adviser is not a broker-dealer, although
it is affiliated with the Distributor, a
broker-dealer. 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. The Exchange represents that
the Sub-Adviser is not a broker-dealer
and is not affiliated with a brokerdealer.8
A. Principal Investments of the Fund
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The Exchange states that the Fund’s
investment objective is to seek current
income and capital appreciation. The
Fund will seek to achieve its investment
objective by primarily investing in U.S.
exchange-traded equity securities
(referred to herein as ‘‘Equities’’ 9) that
the Sub-Adviser believes have a higher
potential for capital appreciation as a
the Adviser, the Sub-Adviser and each such party’s
related personnel are subject to the provisions of
Rule 204A–1 under the Advisers Act relating to
codes of ethics. This Rule requires investment
advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as
well as compliance with applicable federal
securities laws as defined in Rule 204A–1(e)(4).
Accordingly, procedures designed to prevent the
communication and misuse of nonpublic
information by an investment adviser must be
consistent with Rule 204A–1 under the Advisers
Act. In addition, Rule 206(4)–7 under the Advisers
Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such
investment adviser has (i) adopted and
implemented written policies and procedures
reasonably designed to prevent violation, by the
investment adviser and its supervised persons, of
the Advisers Act and the Commission rules adopted
thereunder; (ii) implemented, at a minimum, an
annual review regarding the adequacy of the
policies and procedures established pursuant to
subparagraph (i) above and the effectiveness of their
implementation; and (iii) designated an individual
(who is a supervised person) responsible for
administering the policies and procedures adopted
under subparagraph (i) above.
8 See Notice, supra note 3, 80 FR at 66595. 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 new subadviser is a registered broker-dealer or is 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, as
applicable, regarding access to information
concerning the composition and/or changes to the
Fund portfolio and will be subject to procedures
designed to prevent the use and dissemination of
material nonpublic information regarding such
portfolio.
9 The term ‘‘Equities’’ includes American
Depository Receipts, but does not include shares of
ETFs or closed-end investment companies that are
U.S. exchange-traded.
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result of a ‘‘short squeeze.’’ 10 The SubAdviser’s process for identifying short
squeeze opportunities involves analysis
of both fundamental factors (e.g., quality
of earnings, fundamental stability of
business, etc.) and technical factors
(e.g., price and volume characteristics,
relative strength, etc.). Using this
analysis, the Sub-Adviser seeks to
identify securities where, in the opinion
of the Sub-Adviser, short interest is
significant, is increasing or is expected
to increase, but is unjustified based on
the Sub-Adviser’s analysis.
The Exchange states that, to the extent
the Sub-Adviser has not identified
Equities suitable for investment, the
Fund principally will be invested in
cash or money market instruments,11
and to the extent permitted by
applicable law and the Fund’s
investment restrictions, the Fund may
invest in shares of money-market
mutual funds.
The Fund may also determine to lend
out portfolio securities that the SubAdviser believes to be strong candidates
for a short squeeze to short sellers and
other market participants for a premium
recognized as income.
B. Other Investments
The Exchange states that the Fund
may invest in any type of ETF that is
U.S. exchange-traded, including index
based ETFs, sector based ETFs, and
fixed-income ETFs. The Fund also may
invest in closed-end investment
companies that are U.S. exchangetraded.
C. Investment Restrictions
The Fund will not be limited with
respect to its investments in any sector
or industry, but the Fund will limit
investments in a single issuer to no
more than five percent of the total assets
of the Fund and to no more than five
percent of the security’s public float. In
addition, the Fund will limit its Equities
investments to companies with a market
capitalization of $250 million or more.
The Fund will be prevented from
purchasing more than 3% of an ETF’s
outstanding shares, unless: (i) The ETF
10 The Exchange describes a ‘‘short squeeze’’ as
occurring when investors who have sold short
shares of an equity security seek to rapidly cover
or buy back the short position due to actual or
perceived appreciation in the security, which may
occur because of positive news or events related to
the company, its market sector or the market
generally. The Exchange states that often, the
additional buying momentum created by short
sellers covering their short positions escalates the
increase in the price of the shares.
11 The following is a list of the money market
instruments in which the Fund may invest: shortterm (less than one-year) notes issued by (i) the U.S.
government, (ii) an agency of the U.S. government,
or (iii) a U.S. corporation.
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or the Fund has received an order for
exemptive relief from the 3% limitation
from the Commission that is applicable
to the Fund; and (ii) the ETF and the
Fund take appropriate steps to comply
with any conditions in such order.
The Fund’s investments (including
investments in ETFs) will not be
utilized to seek to achieve a leveraged
return on the Fund’s net assets.
The Fund will not invest in futures
contracts, will not invest in options,
will not invest in swaps, and will not
invest in other derivative instruments.
The Fund also will not invest in
leveraged ETFs.
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.12 In
particular, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) of the Exchange
Act,13 which requires, among other
things, that the Exchange’s rules be
designed to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest.
The Commission 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,14
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 for the
Equities and any other exchange-traded
securities held by the Fund will be
available via UTP Level 1, as well as
Nasdaq proprietary quote and trade
services. Intra-day, executable price
quotations of the Equities, any other
exchange-traded securities, and money
market instruments and money-market
mutual funds held by the Fund are
available from major broker-dealer firms
or on the exchanges on which they are
traded, if applicable. The foregoing
12 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).
13 15 U.S.C. 78f(b)(5).
14 15 U.S.C. 78k–1(a)(1)(C)(iii).
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intra-day price information is available
through subscription services, such as
Bloomberg and Thomson Reuters,
which can be accessed by authorized
participants and other investors.
Information regarding market price and
volume of the Shares is and 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
previous day’s closing price and trading
volume information for the Equities and
any other exchange-traded securities
held by the Fund 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 15 on the
Exchange, the Fund will disclose on its
Web site the Disclosed Portfolio that
will form the basis for the Fund’s
calculation of NAV at the end of the
business day.16
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. Moreover, the Intraday
Indicative Value, available on the
NASDAQ OMX Information LLC
proprietary index data service,17 will be
15 See Nasdaq Rule 4120(b)(4) (describing the
three trading sessions on the Exchange: (1) PreMarket Session from 7 a.m. to 9:30 a.m. Eastern
time; (2) Regular Market Session from 9:30 a.m. to
4 p.m. or 4:15 p.m. Eastern time; and (3) PostMarket Session from 4 p.m. or 4:15 p.m. to 8 p.m.
Eastern time).
16 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.
17 Currently, the NASDAQ OMX Global Index
Data Service (‘‘GIDS’’) is the NASDAQ OMX global
index data feed service, offering real-time updates,
daily summary messages, and access to widely
followed indexes and Intraday Indicative Values for
ETFs. 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.
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based upon the current value for the
components of the Disclosed Portfolio
and will be updated and widely
disseminated and broadly displayed at
least every 15 seconds during the
Regular Market Session. In addition,
during hours when the local markets for
foreign securities in the Fund’s portfolio
are closed, the Intraday Indicative Value
will be updated at least every 15
seconds during the Regular Market
Session to reflect currency exchange
fluctuations.
BNY, through the National Securities
Clearing Corporation, will make
available on each business day,
immediately prior to the opening of
business on the Exchange’s Regular
Market Session (currently 9:30 a.m.
Eastern time), the list of the names and
the required number of shares of each
Deposit Security to be included in the
current Fund Deposit (based on
information at the end of the previous
business day) for the Fund. The NAV of
the Fund will be calculated by BNY and
determined at the close of regular
trading on the New York Stock
Exchange (ordinarily 4:00 p.m. Eastern
time) on each day that such exchange is
open. The Web site for the Fund will
include a form of the prospectus for the
Fund and additional data relating to
NAV and other applicable quantitative
information.
The Exchange represents that trading
in Shares will be halted if the circuit
breaker parameters in Nasdaq Rule
4120(a)(11) have been reached or
because of market conditions or for
reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable, and trading in the Shares
will be subject to Nasdaq Rule
5735(d)(2)(D), which sets forth
circumstances under which Shares of
the Fund may be halted. The Exchange
states that it has a general policy
prohibiting the distribution of material,
nonpublic information by its
employees.18 The Exchange represents
that the Adviser is affiliated with a
broker-dealer and has implemented a
‘‘fire wall’’ with respect to such brokerdealer regarding access to information
concerning the composition and/or
changes to the Fund’s portfolio. The
Exchange has represented that the SubAdviser is not a broker-dealer and is not
affiliated with a broker-dealer.19
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. The
Exchange states that trading in the
18 See
19 See
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Notice, supra note 3, 80 FR at 66598.
note 8, supra, and accompanying text.
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76337
Shares will be subject to the existing
trading surveillances, administered by
both Nasdaq and also 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.20 On behalf of the
Exchange, FINRA will communicate as
needed regarding trading in the Shares,
Equities, or other exchange-traded
securities with other markets and other
entities that are Intermarket
Surveillance Group (‘‘ISG’’) members,
and FINRA, on behalf of the Exchange,
may obtain trading information
regarding trading in the Shares,
Equities, or other exchange-traded
securities from such markets and other
entities. In addition, the Exchange may
obtain information regarding trading in
the Shares, Equities, or other exchangetraded securities from markets and other
entities that are members of ISG or with
which the Exchange has in place a
comprehensive surveillance sharing
agreement.21 FINRA, on behalf of the
Exchange, is able to access, as needed,
trade information for certain money
market instruments held by the Fund
reported to FINRA’s Trade Reporting
and Compliance Engine.
The Exchange represents that it 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.22 In support
of this proposal, the Exchange has also
made the following representations:
(1) The Shares will be subject to Rule
5735, which sets forth the initial and
continued listing criteria applicable to
Managed Fund Shares.23
(2) The Exchange has appropriate
rules to facilitate transactions in the
Shares during all trading sessions.24
(3) Trading in the Shares will be
subject to the existing trading
surveillances, administered by both
Nasdaq and also the 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
20 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.
21 For a list of the current members of ISG, see
www.isgportal.org.
22 See Notice, supra note 3, 80 FR at 66598.
23 See id. at 66594.
24 See id. at 66598.
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rules and applicable federal securities
laws.25
(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 and by
whom information regarding the
Intraday Indicative Value and the
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.26
(5) For initial and/or continued
listing, the Fund must be in compliance
with Rule 10A–3under the Act.27
(6) The Fund will limit its Equities
investments to companies with a market
capitalization of $250 million or more.28
(7) All Equities and any shares of
ETFs or closed-end investment
companies held by the Fund will be
listed on a U.S. exchange that is a
member of the ISG or a party to a
comprehensive surveillance sharing
agreement with the Exchange.29
(8) The Fund will not invest in
leveraged ETFs.30
(9) The Fund will not invest in futures
contracts, will not invest in options,
will not invest in swaps, and will not
invest in other derivative instruments.31
(10) A minimum of 100,000 Shares
will be outstanding at the
commencement of trading on the
Exchange.32
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
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25 See
id.
id. at 66598–66599.
27 See 17 CFR 240.10A–3. See also Notice, supra
note 3, 80 FR at 66598.
28 See id. at 66595.
29 See id. at 66598.
30 See id. at 66595.
31 See id. at 66596.
32 See id. at 66598.
26 See
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rule change is consistent with Section
6(b)(5) of the Act 33 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,
that the proposed rule change (SR–
NASDAQ–2015–124) be, and it hereby
is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–30835 Filed 12–7–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31924; File No. 812–14258]
Nuveen Fund Advisors, LLC, et al.;
Notice of Application
December 2, 2015.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order pursuant to sections 6(c) and 17(b)
of the Investment Company Act of 1940
(the ‘‘Act’’) for an exemption from
section 17(a) of the Act permitting
certain transactions.
AGENCY:
SUMMARY OF THE APPLICATION:
Applicants request an order (the
‘‘Order’’) that would permit certain
registered management investment
companies to engage in certain primary
and secondary market transactions in
fixed income instruments on a principal
basis (the ‘‘Transactions’’) with a USB
Trading Entity (defined below).
APPLICANTS: Nuveen Fund Advisors,
LLC (the ‘‘Adviser’’), Nuveen
Investments, Inc. (‘‘Nuveen’’), Nuveen
All Cap Energy MLP Opportunities
Fund, Nuveen AMT-Free Municipal
Income Fund, Nuveen AMT-Free
Municipal Value Fund, Nuveen Arizona
Premium Income Municipal Fund,
Nuveen Build America Bond Fund,
Nuveen Build America Bond
Opportunity Fund, Nuveen California
AMT-Free Municipal Income Fund,
Nuveen California Dividend Advantage
Municipal Fund, Nuveen California
Dividend Advantage Municipal Fund 2,
Nuveen California Dividend Advantage
Municipal Fund 3, Nuveen California
Municipal Value Fund 2, Nuveen
33 15
34 17
PO 00000
U.S.C. 78f(b)(5).
CFR 200.30–3(a)(12).
Frm 00079
Fmt 4703
Sfmt 4703
California Municipal Value Fund, Inc.,
Nuveen California Select Tax-Free
Income Portfolio, Nuveen Connecticut
Premium Income Municipal Fund,
Nuveen Core Equity Alpha Fund,
Nuveen Credit Strategies Income Fund,
Nuveen Diversified Dividend and
Income Fund, Nuveen Dividend
Advantage Municipal Fund, Nuveen
Dividend Advantage Municipal Fund 2,
Nuveen Dividend Advantage Municipal
Fund 3, Nuveen Dividend Advantage
Municipal Income Fund, Nuveen Dow
30SM Dynamic Overwrite Fund, Nuveen
Energy MLP Total Return Fund, Nuveen
Enhanced Municipal Value Fund,
Nuveen Flexible Investment Income
Fund, Nuveen Floating Rate Income
Fund, Nuveen Floating Rate Income
Opportunity Fund, Nuveen Georgia
Dividend Advantage Municipal Fund 2,
Nuveen Global High Income Fund,
Nuveen Global Equity Income Fund,
Nuveen High Income 2020 Target Term
Fund, Nuveen High Income December
2018 Target Term Fund, Nuveen High
Income December 2020 Target Term
Fund, Nuveen High Income December
2022 Target Term Fund, Nuveen
Intermediate Duration Municipal Term
Fund, Nuveen Intermediate Duration
Quality Municipal Term Fund, Nuveen
Investment Funds, Inc., Nuveen
Investment Quality Municipal Fund,
Inc., Nuveen Investment Trust, Nuveen
Investment Trust II, Nuveen Investment
Trust III, Nuveen Investment Trust V,
Nuveen Managed Accounts Portfolios
Trust, Nuveen Maryland Premium
Income Municipal Fund, Nuveen
Massachusetts Premium Income
Municipal Fund, Nuveen Michigan
Quality Income Municipal Fund,
Nuveen Minnesota Municipal Income
Fund, Nuveen Missouri Premium
Income Municipal Fund, Nuveen
Mortgage Opportunity Term Fund 2,
Nuveen Mortgage Opportunity Term
Fund, Nuveen Multi-Market Income
Fund, Nuveen Multistate Trust I,
Nuveen Multistate Trust II, Nuveen
Multistate Trust III, Nuveen Multistate
Trust IV, Nuveen Municipal Advantage
Fund, Inc., Nuveen Municipal High
Income Opportunity Fund, Nuveen
Municipal Income Fund, Inc., Nuveen
Municipal Market Opportunity Fund,
Inc., Nuveen Municipal Opportunity
Fund, Inc., Nuveen Municipal Trust,
Nuveen Municipal Value Fund, Inc.,
Nuveen Nasdaq 100 Dynamic Overwrite
Fund, Nuveen New Jersey Dividend
Advantage Municipal Fund, Nuveen
New Jersey Municipal Value Fund,
Nuveen New York AMT-Free Municipal
Income Fund, Nuveen New York
Dividend Advantage Municipal Fund,
Nuveen New York Municipal Value
E:\FR\FM\08DEN1.SGM
08DEN1
Agencies
[Federal Register Volume 80, Number 235 (Tuesday, December 8, 2015)]
[Notices]
[Pages 76335-76338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-30835]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76538; File No. SR-NASDAQ-2015-124]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Approving a Proposed Rule Change To List and Trade Shares of the Active
Alts Contrarian ETF of ETFis Series Trust I
December 2, 2015.
I. Introduction
On October 19, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to list and trade shares
(``Shares'') of the Active Alts Contrarian ETF (``Fund'') of ETFis
Series Trust I (``Trust'') under Nasdaq Rule 5735. The proposed rule
change was published for comment in the Federal Register on October 29,
2015.\3\ The Commission received no comments on the proposal. This
order approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 76245 (Oct. 23,
2015), 80 FR 66594 (``Notice'').
---------------------------------------------------------------------------
II. The Exchange's Description of the Proposal \4\
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\4\ Additional information regarding, among other things, the
Shares, the Fund, its investment objective, its investments, its
investment strategies, its investment methodology, its fees, its
creation and redemption procedures, availability of information,
trading rules and halts, and surveillance procedures can be found in
the Notice and in the Registration Statement. See Notice, supra note
3, and Registration Statement, infra note 6, respectively.
---------------------------------------------------------------------------
Nasdaq proposes to list and trade the Shares under Nasdaq Rule
5735, which governs the listing and trading of Managed Fund Shares.\5\
The Fund will be an actively-managed exchange-traded fund (``ETF'').
The Shares will be offered by the Trust, which was established as a
Delaware series trust on September 20, 2012.\6\ The Fund will be a
series of the Trust. Etfis Capital LLC will be the investment adviser
(``Adviser'') to the Fund. Active Alts Inc. will be the investment sub-
adviser to the Fund (``Sub-Adviser'').\7\ ETF
[[Page 76336]]
Distributors LLC (``Distributor'') will be the principal underwriter
and distributor of the Shares. The Bank of New York Mellon Corporation
(``BNY'') will act as the administrator, accounting agent, custodian
and transfer agent to the Fund.
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\5\ A Managed Fund Share is a security that represents an
interest in an investment company registered under the Investment
Company Act of 1940, as amended (15 U.S.C. 80a-1) (the ``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.
\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. See Post-Effective
Amendment No. 70 to Registration Statement on Form N-1A for the
Trust, dated Oct. 16, 2015 (File Nos. 333-187668 and 811-22819). The
description of the Fund and the Shares contained herein is based, in
part, on information in the Registration Statement. The Commission
has issued an order, upon which the Trust may rely (``Exemptive
Order''), granting certain exemptive relief to the investment
adviser to the Fund under the 1940 Act. See Investment Company Act
Release No. 30607 (Jul. 23, 2013) (File No. 812-14080).
\7\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (``Advisers
Act''). As a result, the Adviser, the Sub-Adviser and each such
party's related personnel are subject to the provisions of Rule
204A-1 under the Advisers Act relating to codes of ethics. This Rule
requires investment advisers to adopt a code of ethics that reflects
the fiduciary nature of the relationship to clients as well as
compliance with applicable federal securities laws as defined in
Rule 204A-1(e)(4). Accordingly, procedures designed to prevent the
communication and misuse of nonpublic information by an investment
adviser must be consistent with Rule 204A-1 under the Advisers Act.
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful
for an investment adviser to provide investment advice to clients
unless such investment adviser has (i) adopted and implemented
written policies and procedures reasonably designed to prevent
violation, by the investment adviser and its supervised persons, of
the Advisers Act and the Commission rules adopted thereunder; (ii)
implemented, at a minimum, an annual review regarding the adequacy
of the policies and procedures established pursuant to subparagraph
(i) above and the effectiveness of their implementation; and (iii)
designated an individual (who is a supervised person) responsible
for administering the policies and procedures adopted under
subparagraph (i) above.
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The Exchange represents that the Adviser is not a broker-dealer,
although it is affiliated with the Distributor, a broker-dealer. 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. The Exchange represents that the Sub-
Adviser is not a broker-dealer and is not affiliated with a broker-
dealer.\8\
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\8\ See Notice, supra note 3, 80 FR at 66595. 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 new sub-adviser is a registered broker-dealer or is 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, as applicable, regarding access to information
concerning the composition and/or changes to the Fund portfolio and
will be subject to procedures designed to prevent the use and
dissemination of material nonpublic information regarding such
portfolio.
---------------------------------------------------------------------------
A. Principal Investments of the Fund
The Exchange states that the Fund's investment objective is to seek
current income and capital appreciation. The Fund will seek to achieve
its investment objective by primarily investing in U.S. exchange-traded
equity securities (referred to herein as ``Equities'' \9\) that the
Sub-Adviser believes have a higher potential for capital appreciation
as a result of a ``short squeeze.'' \10\ The Sub-Adviser's process for
identifying short squeeze opportunities involves analysis of both
fundamental factors (e.g., quality of earnings, fundamental stability
of business, etc.) and technical factors (e.g., price and volume
characteristics, relative strength, etc.). Using this analysis, the
Sub-Adviser seeks to identify securities where, in the opinion of the
Sub-Adviser, short interest is significant, is increasing or is
expected to increase, but is unjustified based on the Sub-Adviser's
analysis.
---------------------------------------------------------------------------
\9\ The term ``Equities'' includes American Depository Receipts,
but does not include shares of ETFs or closed-end investment
companies that are U.S. exchange-traded.
\10\ The Exchange describes a ``short squeeze'' as occurring
when investors who have sold short shares of an equity security seek
to rapidly cover or buy back the short position due to actual or
perceived appreciation in the security, which may occur because of
positive news or events related to the company, its market sector or
the market generally. The Exchange states that often, the additional
buying momentum created by short sellers covering their short
positions escalates the increase in the price of the shares.
---------------------------------------------------------------------------
The Exchange states that, to the extent the Sub-Adviser has not
identified Equities suitable for investment, the Fund principally will
be invested in cash or money market instruments,\11\ and to the extent
permitted by applicable law and the Fund's investment restrictions, the
Fund may invest in shares of money-market mutual funds.
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\11\ The following is a list of the money market instruments in
which the Fund may invest: short-term (less than one-year) notes
issued by (i) the U.S. government, (ii) an agency of the U.S.
government, or (iii) a U.S. corporation.
---------------------------------------------------------------------------
The Fund may also determine to lend out portfolio securities that
the Sub-Adviser believes to be strong candidates for a short squeeze to
short sellers and other market participants for a premium recognized as
income.
B. Other Investments
The Exchange states that the Fund may invest in any type of ETF
that is U.S. exchange-traded, including index based ETFs, sector based
ETFs, and fixed-income ETFs. The Fund also may invest in closed-end
investment companies that are U.S. exchange-traded.
C. Investment Restrictions
The Fund will not be limited with respect to its investments in any
sector or industry, but the Fund will limit investments in a single
issuer to no more than five percent of the total assets of the Fund and
to no more than five percent of the security's public float. In
addition, the Fund will limit its Equities investments to companies
with a market capitalization of $250 million or more.
The Fund will be prevented from purchasing more than 3% of an ETF's
outstanding shares, unless: (i) The ETF or the Fund has received an
order for exemptive relief from the 3% limitation from the Commission
that is applicable to the Fund; and (ii) the ETF and the Fund take
appropriate steps to comply with any conditions in such order.
The Fund's investments (including investments in ETFs) will not be
utilized to seek to achieve a leveraged return on the Fund's net
assets.
The Fund will not invest in futures contracts, will not invest in
options, will not invest in swaps, and will not invest in other
derivative instruments. The Fund also will not invest in leveraged
ETFs.
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.\12\ In particular, the Commission finds that the
proposed rule change is consistent with Section 6(b)(5) of the Exchange
Act,\13\ 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.
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\12\ 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).
\13\ 15 U.S.C. 78f(b)(5).
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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,\14\ 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 for the Equities and any other exchange-
traded securities held by the Fund will be available via UTP Level 1,
as well as Nasdaq proprietary quote and trade services. Intra-day,
executable price quotations of the Equities, any other exchange-traded
securities, and money market instruments and money-market mutual funds
held by the Fund are available from major broker-dealer firms or on the
exchanges on which they are traded, if applicable. The foregoing
[[Page 76337]]
intra-day price information is available through subscription services,
such as Bloomberg and Thomson Reuters, which can be accessed by
authorized participants and other investors. Information regarding
market price and volume of the Shares is and 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 previous day's closing
price and trading volume information for the Equities and any other
exchange-traded securities held by the Fund will be published daily in
the financial section of newspapers.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------
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 \15\ on the Exchange, the Fund will
disclose on its Web site the Disclosed Portfolio that will form the
basis for the Fund's calculation of NAV at the end of the business
day.\16\
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\15\ See Nasdaq Rule 4120(b)(4) (describing the three trading
sessions on the Exchange: (1) Pre-Market Session from 7 a.m. to 9:30
a.m. Eastern time; (2) Regular Market Session from 9:30 a.m. to 4
p.m. or 4:15 p.m. Eastern time; and (3) Post-Market Session from 4
p.m. or 4:15 p.m. to 8 p.m. Eastern time).
\16\ 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.
---------------------------------------------------------------------------
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. Moreover, the Intraday Indicative Value,
available on the NASDAQ OMX Information LLC proprietary index data
service,\17\ will be based upon the current value for the components of
the Disclosed Portfolio and will be updated and widely disseminated and
broadly displayed at least every 15 seconds during the Regular Market
Session. In addition, during hours when the local markets for foreign
securities in the Fund's portfolio are closed, the Intraday Indicative
Value will be updated at least every 15 seconds during the Regular
Market Session to reflect currency exchange fluctuations.
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\17\ Currently, the NASDAQ OMX Global Index Data Service
(``GIDS'') is the NASDAQ OMX global index data feed service,
offering real-time updates, daily summary messages, and access to
widely followed indexes and Intraday Indicative Values for ETFs.
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.
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BNY, through the National Securities Clearing Corporation, will
make available on each business day, immediately prior to the opening
of business on the Exchange's Regular Market Session (currently 9:30
a.m. Eastern time), the list of the names and the required number of
shares of each Deposit Security to be included in the current Fund
Deposit (based on information at the end of the previous business day)
for the Fund. The NAV of the Fund will be calculated by BNY and
determined at the close of regular trading on the New York Stock
Exchange (ordinarily 4:00 p.m. Eastern time) on each day that such
exchange is open. The Web site for the Fund will include a form of the
prospectus for the Fund and additional data relating to NAV and other
applicable quantitative information.
The Exchange represents that trading in Shares will be halted if
the circuit breaker parameters in Nasdaq Rule 4120(a)(11) have been
reached or because of market conditions or for reasons that, in the
view of the Exchange, make trading in the Shares inadvisable, and
trading in the Shares will be subject to Nasdaq Rule 5735(d)(2)(D),
which sets forth circumstances under which Shares of the Fund may be
halted. The Exchange states that it has a general policy prohibiting
the distribution of material, nonpublic information by its
employees.\18\ The Exchange represents that the Adviser is affiliated
with a broker-dealer and has implemented a ``fire wall'' with respect
to such broker-dealer regarding access to information concerning the
composition and/or changes to the Fund's portfolio. The Exchange has
represented that the Sub-Adviser is not a broker-dealer and is not
affiliated with a broker-dealer.\19\
---------------------------------------------------------------------------
\18\ See Notice, supra note 3, 80 FR at 66598.
\19\ See note 8, supra, and accompanying text.
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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. The Exchange states that
trading in the Shares will be subject to the existing trading
surveillances, administered by both Nasdaq and also 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.\20\ On behalf of the Exchange,
FINRA will communicate as needed regarding trading in the Shares,
Equities, or other exchange-traded securities with other markets and
other entities that are Intermarket Surveillance Group (``ISG'')
members, and FINRA, on behalf of the Exchange, may obtain trading
information regarding trading in the Shares, Equities, or other
exchange-traded securities from such markets and other entities. In
addition, the Exchange may obtain information regarding trading in the
Shares, Equities, or other exchange-traded securities from markets and
other entities that are members of ISG or with which the Exchange has
in place a comprehensive surveillance sharing agreement.\21\ FINRA, on
behalf of the Exchange, is able to access, as needed, trade information
for certain money market instruments held by the Fund reported to
FINRA's Trade Reporting and Compliance Engine.
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\20\ 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.
\21\ For a list of the current members of ISG, see
www.isgportal.org.
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The Exchange represents that it 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.\22\ In
support of this proposal, the Exchange has also made the following
representations:
---------------------------------------------------------------------------
\22\ See Notice, supra note 3, 80 FR at 66598.
---------------------------------------------------------------------------
(1) The Shares will be subject to Rule 5735, which sets forth the
initial and continued listing criteria applicable to Managed Fund
Shares.\23\
---------------------------------------------------------------------------
\23\ See id. at 66594.
---------------------------------------------------------------------------
(2) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.\24\
---------------------------------------------------------------------------
\24\ See id. at 66598.
---------------------------------------------------------------------------
(3) Trading in the Shares will be subject to the existing trading
surveillances, administered by both Nasdaq and also the 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
[[Page 76338]]
rules and applicable federal securities laws.\25\
---------------------------------------------------------------------------
\25\ See id.
---------------------------------------------------------------------------
(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 and by whom
information regarding the Intraday Indicative Value and the 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.\26\
---------------------------------------------------------------------------
\26\ See id. at 66598-66599.
---------------------------------------------------------------------------
(5) For initial and/or continued listing, the Fund must be in
compliance with Rule 10A-3under the Act.\27\
---------------------------------------------------------------------------
\27\ See 17 CFR 240.10A-3. See also Notice, supra note 3, 80 FR
at 66598.
---------------------------------------------------------------------------
(6) The Fund will limit its Equities investments to companies with
a market capitalization of $250 million or more.\28\
---------------------------------------------------------------------------
\28\ See id. at 66595.
---------------------------------------------------------------------------
(7) All Equities and any shares of ETFs or closed-end investment
companies held by the Fund will be listed on a U.S. exchange that is a
member of the ISG or a party to a comprehensive surveillance sharing
agreement with the Exchange.\29\
---------------------------------------------------------------------------
\29\ See id. at 66598.
---------------------------------------------------------------------------
(8) The Fund will not invest in leveraged ETFs.\30\
---------------------------------------------------------------------------
\30\ See id. at 66595.
---------------------------------------------------------------------------
(9) The Fund will not invest in futures contracts, will not invest
in options, will not invest in swaps, and will not invest in other
derivative instruments.\31\
---------------------------------------------------------------------------
\31\ See id. at 66596.
---------------------------------------------------------------------------
(10) A minimum of 100,000 Shares will be outstanding at the
commencement of trading on the Exchange.\32\
---------------------------------------------------------------------------
\32\ See id. at 66598.
---------------------------------------------------------------------------
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 is consistent with Section 6(b)(5) of the Act \33\ and the
rules and regulations thereunder applicable to a national securities
exchange.
---------------------------------------------------------------------------
\33\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act, that the proposed rule change (SR-NASDAQ-2015-124) be,
and it hereby is, approved.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
---------------------------------------------------------------------------
\34\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-30835 Filed 12-7-15; 8:45 am]
BILLING CODE 8011-01-P