Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To List and Trade the Shares of the VanEck Vectors Long/Flat Commodity ETF, 54634-54639 [2016-19442]
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Federal Register / Vol. 81, No. 158 / Tuesday, August 16, 2016 / Notices
is anticipated to help offset the
increased expenses incurred by OCC to
make such enhancements. These
enhancements would strengthen the
Program’s operational resiliency and
risk management capabilities,
potentially enabling the introduction of
further enhancements that would allow
the Program to service a broader market
of participants, which in turn would
provide economic benefits and lower
risk for both borrowers and lenders.
Moreover, OCC believes that the
proposed fee schedule would provide
for an equitable allocation of clearing
fees to users of the Program.
Specifically, OCC would retain the $1
new loan transaction clearing fee for
both lenders and borrowers, and the
proposed fee change would impose an
additional monthly 0.4 basis point
annualized charge for borrowers based
on average daily notional outstanding
balances to more appropriately allocate
costs of the Program to those users
benefiting most from the Program. The
proposed fee change would therefore
better align Program fees with the
industry, in which is it common
practice for borrowers to bear additional
costs associated with stock loan
transactions. The proposed rule change
is not inconsistent with the existing
rules of OCC, including any other rules
proposed to be amended.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
(B) Clearing Agency’s Statement on
Burden on Competition
OCC does not believe that the
proposed rule change would have any
impact or impose a burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.10 Although this
proposed rule change would assess an
additional fee against borrowers
utilizing the Program that is not
assessed against lenders, as explained
above, OCC believes that the proposed
rule change appropriately aligns how
fees are assessed with the economic and
risk management benefits of the
Program, and enables OCC to provide a
more robust Program that will expand
its user base and benefit borrowers.
Also, the proposed fee changes would
not disadvantage or favor any particular
borrower or lender utilizing the Program
in relationship to another borrower or
lender, respectively, because the
proposed clearing fees apply equally to
all users of the Program. Accordingly,
OCC does not believe that the proposed
rule change would have any impact or
impose a burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants or Others
Written comments were not and are
not intended to be solicited with respect
to the proposed rule change, and none
have been received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act 11 and Rule
19b–4(f)(2) thereunder.12 At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Robert W. Errett,
Deputy Secretary.
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–
OCC–2016–008 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–OCC–2016–008. 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
U.S.C. 78s(b)(3)(A)(ii).
12 17 CFR 240.19b–4(f)(2).
U.S.C. 78q–1(b)(3)(I).
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[FR Doc. 2016–19431 Filed 8–15–16; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–78533; File No. SR–
NASDAQ–2016–086]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Order
Granting Approval of a Proposed Rule
Change, as Modified by Amendment
No. 1 Thereto, To List and Trade the
Shares of the VanEck Vectors Long/
Flat Commodity ETF
August 10, 2016.
I. Introduction
On June 10, 2016, 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 (‘‘Act’’ or ‘‘Exchange Act’’),1 and
Rule 19b–4 thereunder,2 a proposed rule
change to list and trade shares
(‘‘Shares’’) of the VanEck Vectors Long/
Flat Commodity ETF (‘‘Fund’’) under
Nasdaq Rule 5735. The Commission
13 17
11 15
10 15
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 also will be available for
inspection and copying at the principal
office of OCC and on OCC’s Web site at
https://www.theocc.com/components/
docs/legal/rules_and_bylaws/sr_occ_16_
008.pdf.
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–OCC–2016–008 and should
be submitted on or before September 6,
2016.
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CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Bank of New York Mellon will act as the
custodian of the Fund’s assets and
provide transfer agency and fund
accounting services to the Fund.
The Exchange has made the following
representations and statements in
describing the Fund and its investment
strategies, including the Fund’s
portfolio holdings and investment
restrictions.7
II. Exchange’s Description of the
Proposal
The Exchange proposes to list and
trade the Shares under Nasdaq Rule
5735, which governs the listing and
trading of Managed Fund Shares on the
Exchange. The Shares will be offered by
VanEck Vectors ETF Trust (‘‘Trust’’),
which was organized as a Delaware
statutory trust on March 15, 2001.5 The
investment adviser and the
administrator to the Fund will be Van
Eck Absolute Return Advisers
Corporation (‘‘Adviser’’), and the Fund
currently does not intend to use a subadviser.6 Van Eck Securities
Corporation (‘‘Distributor’’) will be the
distributor of the Fund’s Shares. The
asabaliauskas on DSK3SPTVN1PROD with NOTICES
published notice of the proposed rule
change in the Federal Register on June
30, 2016.3 On July 15, 2016, the
Exchange submitted Amendment No. 1
to the proposed rule change.4 The
Commission received no comments on
the proposed rule change. This order
grants approval of the proposed rule
change, as modified by Amendment No.
1 thereto.
A. Exchange’s Description of the Fund’s
Principal Investments
The Fund’s investment objective will
be to seek long-term capital appreciation
while seeking to manage volatility and
reduce downside risk during sustained
market declines. The Fund will seek to
achieve its investment objective by
investing, under normal circumstances,
in exchange-traded commodity futures
contracts and, under certain limited
circumstances, other commodity-linked
instruments as set forth in ‘‘Other
Investments’’ hereunder (collectively,
‘‘Commodities Instruments’’). The Fund
will invest in Commodities Instruments
primarily through a wholly-owned
subsidiary of the Fund organized under
the laws of the Cayman Islands
(‘‘Subsidiary’’).8
The Fund (directly or indirectly
through the Subsidiary) will normally
3 See Securities Exchange Act Release No. 78150
(Jun. 24, 2016), 81 FR 42768 (‘‘Notice’’).
4 In Amendment No. 1 the Exchange clarified the
usage of the defined terms used for commodities
instruments in the portfolio and clarified the
application of the percentage limitation on equity
securities that trade in markets that are not
members of the Intermarket Surveillance Group
(‘‘ISG’’) or are not parties to a comprehensive
surveillance sharing agreement with the Exchange.
Amendment No. 1 is available at https://
www.sec.gov/comments/sr-nasdaq-2016-086/
nasdaq2016086-1.pdf. Because Amendment No. 1
to the proposed rule change does not materially
alter the substance of the proposed rule change or
raise unique or novel regulatory issues, Amendment
No. 1 is not subject to notice and comment.
5 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 Registration Statement
on Form N–1A for the Trust, dated November 12,
2015 (File Nos. 333–123257 and 811–10325). In
addition, the Exchange states that the Trust has
obtained certain exemptive relief under the
Investment Company Act of 1940 (‘‘1940 Act’’). See
Investment Company Act Release No. 29571 (Jan.
24, 2011) (File No. 812–13601).
6 According to the Exchange, the Adviser is not
a broker-dealer, although it is affiliated with Van
Eck Securities Corporation, a broker-dealer, and has
implemented a fire wall with respect to its brokerdealer affiliate regarding access to information
concerning the composition and/or changes to a
portfolio. In the event (a) the Adviser becomes
newly affiliated with a broker-dealer or registers as
a broker-dealer, or (b) any new adviser or subadviser to the Fund is a registered broker-dealer or
becomes affiliated with a broker-dealer, it will
implement a fire wall with respect to its relevant
personnel or such broker-dealer affiliate, if
applicable, regarding access to information
concerning the composition of, and changes to, the
portfolio. In addition, personnel who make
decisions on each Fund’s portfolio composition will
be subject to procedures designed to prevent the use
and dissemination of material, non-public
information regarding such portfolio.
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7 The Commission notes that additional
information regarding the Trust, the Fund, and the
Shares, including investment strategies, risks, net
asset value (‘‘NAV’’) calculation, creation and
redemption procedures, fees, Fund holdings
disclosure policies, distributions, and taxes, among
other information, is included in the Notice, as
modified by Amendment No. 1 thereto, and the
Registration Statement, as applicable. See Notice,
Amendment No. 1 to the proposed rule change, and
Registration Statement, supra notes 3, 4, and 5,
respectively, and accompanying text.
8 The Subsidiary will be wholly-owned and
controlled by the Fund and will be advised by the
Adviser. The Exchange represents that the Fund’s
investment in the Subsidiary may not exceed 25%
of the value of the Fund’s total assets at each
quarter-end of the Fund’s fiscal year. The Fund’s
investment in the Subsidiary is expected to provide
the Fund with exposure to Commodities
Instruments within the limits of the federal tax
laws, which limit the ability of investment
companies like the Fund to invest directly in such
instruments. The Subsidiary will have the same
investment objective as the Fund and will follow
the same general investment policies and
restrictions, except that unlike the Fund, it may
invest without limit in Commodities Instruments.
In addition, the Subsidiary will not be registered
under the 1940 Act and will not be directly subject
to its investor protections, except as noted in the
Registration Statement. The Trust’s board (‘‘Board’’)
will have oversight responsibility for the
investment activities of the Fund, including its
investment in the Subsidiary, and the Fund’s role
as the sole shareholder of the Subsidiary. The
Adviser will receive certain fees for managing the
Subsidiary’s assets, and the Adviser will waive or
credit such amounts against the fees payable to the
Adviser by the Fund. It is expected that the
Subsidiary will become party to the existing
custody agreement, transfer agency agreement and
accounting agreement of the Trust and Fund.
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54635
invest in exchange-traded commodity
futures contracts that are components of
the Morningstar® Long/Flat Commodity
IndexSM (‘‘Benchmark’’), an index
composed of futures contracts on 20
heavily traded commodities across the
energy, agriculture, industrial metals,
precious metals, and livestock sectors.
The Adviser will employ a rules-based
investment approach when selecting
Commodities Instruments based upon
momentum characteristics of the
Commodities Instruments. Commodities
Instruments are assessed on a monthly
basis by comparing current prices to 12month moving averages. The Fund’s
positions will be either long 9 or flat.10
The Fund intends to take long positions
in those Commodities Instruments
whose prices are above their 12-month
moving average. Conversely, the Fund
intends to take flat positions to manage
volatility and reduce downside risk for
those Commodities Instruments whose
prices are below their 12-month moving
average. The Fund will not be an ‘‘index
tracking’’ ETF and may not always
invest in all of the Benchmark’s
components, or in the same proportion,
and it may invest in Commodities
Instruments outside the Benchmark.11
B. Exchange’s Description of the Fund’s
Non-Principal Investments
As noted above, the Fund intends to
invest first in exchange-traded
commodity futures contracts. However,
in the event the Fund reaches the
position limits applicable to one or
more exchange-traded commodity
futures contracts or a futures exchange
imposes limitations on the Fund’s
ability to maintain or increase its
positions in an exchange-traded
commodity futures contract after
reaching accountability levels or a price
limit is in effect on an exchange-traded
commodity futures contract during the
last 30 minutes of its regular trading
session, the Fund’s intention is to invest
first in commodity-based swap
agreements cleared through a central
clearing house or the clearing house’s
affiliate (‘‘Cleared Swaps’’) to the extent
9 For the purposes of this filing, a ‘‘long’’ position
is a position that will increase in market price if the
price of the commodity futures contract is rising
during the period when the position is open.
10 For the purposes of this filing, a ‘‘flat’’ position
is a position that will not increase or decrease in
market price whether the price of the commodity
futures contract to which it relates is rising or
falling.
11 See Notice, supra note 3, 81 FR at 42770
(providing, in table format, detailed information
relating to each of the commodity futures contracts
in the Benchmark, including each instrument’s
trading hours, futures exchange, and ticker symbol).
The Exchange represents that all of the futures
exchanges represented in the Benchmark are
members of ISG.
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permitted under the position limits
applicable to Cleared Swaps and
appropriate in light of the liquidity in
the Cleared Swaps market, and then,
using its commercially reasonable
judgment, in forward contracts on
commodities, exchange-traded options
on futures contracts, and commoditybased swaps other than Cleared Swaps
(collectively, including Cleared Swaps,
‘‘Other Commodity Instruments’’).
The Fund (and the Subsidiary, as
applicable) expects to invest its
remaining assets in any one or more of
the following: U.S. government
securities; 12 money market funds; cash
and other cash equivalents; 13 treasury
inflation-protected securities; sovereign
debt obligations of non-U.S. countries;
and repurchase agreements that provide
liquidity, serve as margin, or
collateralize the Fund’s or the
Subsidiary’s investments in exchangetraded commodity futures contracts.
The Fund also may invest directly in
exchange-traded funds (‘‘ETFs’’),14
exchange-traded closed end funds (to
the extent permitted by the 1940 Act
and certain exemptive relief issued in
thereunder), and exchange-traded notes
(‘‘ETNs’’) that provide exposure to
commodities.15 The Fund may also
invest in commodity-related foreign and
domestic equity securities.16
12 Such securities will include securities that are
issued or guaranteed by the U.S. Treasury, by
various agencies of the U.S. government, or by
various instrumentalities, which have been
established or sponsored by the U.S. government.
U.S. Treasury obligations are backed by the ‘‘full
faith and credit’’ of the U.S. government. Securities
issued or guaranteed by federal agencies and U.S.
government-sponsored instrumentalities may or
may not be backed by the full faith and credit of
the U.S. government.
13 Cash equivalents will include banker’s
acceptances, commercial paper, and certificates of
deposit.
14 ETFs in which the Fund invests will be listed
and traded in the U.S. on registered exchanges. The
ETFs in which the Fund will invest include Index
Fund Shares (as described in Nasdaq Rule 5705),
Portfolio Depositary Receipts (as described in
Nasdaq Rule 5705), and Managed Fund Shares (as
described in Nasdaq Rule 5735). The shares of ETFs
in which the Fund may invest will be limited to
securities that trade in markets that are members of
the ISG, which includes all U.S. national securities
exchanges, or exchanges that are parties to a
comprehensive surveillance sharing agreement with
the Exchange. The Exchange represents that the
Fund will not hold inverse, leveraged, and inverse
leveraged ETFs. See Notice, supra note 3, 81 FR at
42770, n.14.
15 ETNs in which the Fund invests will be listed
and traded in the U.S. on registered exchanges. The
ETNs in which the Fund will invest include
Securities Linked to the Performance of Indexes and
Commodities, Including Currencies (as described in
Nasdaq Rule 5710), and Index-Linked Exchangeable
Notes (as described in Nasdaq Rule 5711). The
Exchange represents that the Fund will not hold
inverse, leveraged, and inverse leveraged ETNs. See
id.
16 Commodity-related foreign and domestic
equity securities will be comprised of exchange-
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C. Exchange’s Descriptions of the
Fund’s Investment Restrictions
According to the Exchange, the Fund
may not make loans, except that it may
(i) lend portfolio securities, (ii) enter
into repurchase agreements, (iii)
purchase all or a portion of an issue of
debt securities, bank loan or
participation interests, bank certificates
of deposit, bankers’ acceptances,
debentures or other securities, whether
or not the purchase is made upon the
original issuance of the securities, and
(iv) participate in an interfund lending
program with other registered
investment companies, all in
accordance with the 1940 Act. In
addition, the Fund may not borrow
money, except as permitted under the
1940 Act, and as interpreted or modified
by regulation from time to time. The
Fund also may not issue senior
securities, except as permitted under the
1940 Act, and as interpreted or modified
by regulation from time to time.
The Fund may hold up to an aggregate
amount of 15% of its net assets in
illiquid assets (calculated at the time of
investment).17 The Fund will monitor
its portfolio liquidity on an ongoing
basis to determine whether, in light of
current circumstances, an adequate
level of liquidity is being maintained,
and will consider taking appropriate
steps in order to maintain adequate
liquidity if, through a change in values,
net assets, or other circumstances, more
than 15% of the Fund’s net assets are
held in illiquid assets. Illiquid assets
include securities subject to contractual
or other restrictions on resale and other
instruments that lack readily available
markets as determined in accordance
with Commission staff guidance. An
illiquid security is generally considered
to be a security that cannot be sold or
disposed of in the ordinary course of
business within seven days at or near its
carrying value.
The Fund may not purchase any
security if, as a result of that purchase,
25% or more of its total assets would be
invested in securities of issuers having
their principal business activities in the
traded common stocks of companies that operate in
commodities, natural resources and energy
businesses, and in associated businesses, as well as
companies that provide services or have exposure
to such businesses.
17 In reaching liquidity decisions, the Adviser
may consider factors such as but not limited to the
following: The frequency of trades and quotes for
the security; the number of dealers wishing to
purchase or sell the security and the number of
other potential purchasers; dealer undertakings to
make a market in the security; and the nature of the
security and the nature of the marketplace in which
it trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the
mechanics of transfer).
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Fmt 4703
Sfmt 4703
same industry. This limit does not apply
to securities issued or guaranteed by the
U.S. Government, its agencies or
instrumentalities, or securities of other
investment companies.
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.18 In
particular, the Commission finds that
the proposed rule change, as modified
by Amendment No. 1 thereto, is
consistent with Section 6(b)(5) of the
Exchange Act,19 which requires, among
other things, that the Exchange’s rules
be 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 a national market
system, and, in general, to protect
investors and the public interest.
The Commission also finds that the
proposal to list and trade the Shares on
the Exchange is consistent with Section
11A(a)(1)(C)(iii) of the Exchange Act,20
which sets forth the finding of Congress
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. According to the Exchange,
quotation and last-sale information for
the Shares will be available via Nasdaq
proprietary quote and trade services, as
well as in accordance with the Unlisted
Trading Privileges and the Consolidated
Tape Association plans for the Shares.
Quotation and last-sale information for
any underlying exchange-traded equity
will also be available via the quote and
trade service of their respective primary
exchanges, as well as in accordance
with the Unlisted Trading Privileges
and the Consolidated Tape Association
plans. Quotation and last-sale
information for any underlying
exchange-traded options will also be
available via the quote and trade service
of their respective primary exchanges.
Quotation and last-sale information for
any underlying exchange-traded futures
contracts will be available via the quote
and trade service of their respective
18 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).
19 15 U.S.C. 78f(b)(5).
20 15 U.S.C. 78k–1(a)(1)(C)(iii).
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primary exchanges. Information on the
Morningstar Long/Flat Commodity
IndexSM will be available on the
Morningstar Indexes Web site.
On each business day, before
commencement of trading in Shares in
the Regular Market Session on the
Exchange, the Fund will disclose on its
Web site the ‘‘Disclosed Portfolio,’’ as
defined in Nasdaq Rule 5735(c)(2), that
will form the basis for the Fund’s
calculation of NAV at the end of the
business day.21 In addition, an
estimated value of the Fund, defined in
Exchange Rule 5735(c)(3) as ‘‘Intraday
Indicative Value,’’ that reflects an
estimated intraday value of the Fund’s
portfolio (including the Subsidiary’s
portfolio), will be disseminated. The
Intraday Indicative Value, available on
the NASDAQ OMX Information LLC
proprietary index data service 22 will be
based upon the current value for the
components of the Disclosed Portfolio
and will be updated and widely
disseminated by one or more major
market data vendors and broadly
displayed at least every 15 seconds
during the Regular Market Session.23
The NAV of the Fund will be
determined each business day as of the
close of trading (ordinarily 4:00 p.m.
Eastern Time) on Nasdaq.24 In addition,
21 Under accounting procedures to be followed by
the Fund, trades made on the prior business day
(‘‘T’’) will be booked and reflected in NAV on the
current business day (‘‘T+1’’). Accordingly, the
Fund will be able to disclose at the beginning of the
business day the portfolio that will form the basis
for the NAV calculation at the end of the business
day. On a daily basis, the Fund will disclose on the
Fund’s Web site the following information
regarding each portfolio holding, as applicable to
the type of holding: Ticker symbol, CUSIP number
or other identifier, if any; a description of the
holding (including the type of holding), the identity
of the security or other asset or instrument
underlying the holding, if any; for options, the
option strike price; quantity held (as measured by,
for example, par value, notional value or number
of shares, contracts or units); maturity date, if any;
coupon rate, if any; effective date, if any; market
value of the holding; and percentage weighting of
the holding in the Fund’s portfolio. The Web site
information will be publicly available at no charge.
22 The Exchange states that the NASDAQ OMX
Global Index Data Service (‘‘GIDS’’) is the NASDAQ
OMX global index data feed service, offering realtime updates, daily summary messages, and access
to widely followed indexes and Intraday Indicative
Values for ETFs. See Notice, supra note 3, 81 FR
at 42773, n.26.
23 The Exchange represents that the
dissemination of the Intraday Indicative Value,
together with the Disclosed Portfolio, will allow
investors to determine the value of the underlying
portfolio of the Fund on a daily basis and will
provide a close estimate of that value throughout
the trading day. See id. at 42773.
24 According to the Exchange, ETFs, exchangetraded closed-end funds, ETNs, and commodityrelated foreign and domestic equity securities, will
be based on the securities’ closing prices on local
markets, when available. Due to the time
differences between the United States and certain
countries, securities on these non-U.S. exchanges
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a basket composition file, which
includes the security names and
quantities required to be delivered in
exchange for the Fund’s Shares, together
with estimates and actual cash
components, will be publicly
disseminated daily prior to the opening
of the Exchange via NSCC.
Intra-day, executable price quotations
on the exchange-traded assets held by
the Fund and the Subsidiary, including
futures contracts, options on futures
contracts, ETFs, ETNs, closed-end
funds, and foreign and domestic equity
securities are expected to be available
on the exchange on which they are
traded. Intra-day, executable price
quotations on swaps, money market
funds, forward contracts, U.S.
government securities, cash and other
cash equivalents, treasury inflationprotected securities, sovereign debt
obligations of non-U.S. countries, and
repurchase agreements will be available
from major broker-dealer firms. Intraday price information will also be
available through subscription services,
such as Bloomberg and Reuters.
Additionally, the Trade Reporting and
Compliance Engine (‘‘TRACE’’) of the
may not trade at times when Shares of the Fund
will trade. In the absence of a last reported sales
price, or if no sales were reported, and for other
assets for which market quotes are not readily
available, values may be based on quotes obtained
from a quotation reporting system, established
market makers or by an outside independent
pricing service using data reflecting the earlier
closing of the principal markets for those securities.
U.S. government securities, treasury inflationprotected securities, and sovereign debt obligations
of non-U.S. countries will normally be valued on
the basis of quotes from brokers or dealers,
established market makers, or an outside
independent pricing service. Short-term
investments purchased with a remaining maturity
of 60 days or less, including repurchase agreements
and cash equivalents, will be valued on the basis
of quotes from broker dealers, established major
market makers, an independent pricing service, or
at amortized cost. Money market funds will be
valued at their reported closing NAV. Futures
contracts and options on futures contracts, which
are traded on exchanges, will be valued at the
current settle price for like contracts acquired on
the day on which the futures contract will be
valued as of the close of such exchanges. Other
Commodity Instruments not traded on exchanges
will generally be valued daily based upon
quotations from market makers or by a pricing
service and in accordance with the Trust’s
valuation policies and procedures. Prices obtained
by an outside independent pricing service may use
information provided by market makers or
estimates of market values obtained from yield data
related to investments or securities with similar
characteristics and may use a computerized grid
matrix of securities and its evaluations in
determining what it believes is the fair value of the
portfolio securities. If a market quotation for a
security is not readily available or the Adviser
believes it does not otherwise accurately reflect the
market value of the security at the time the Fund
calculates its NAV, the security will be fair valued
by the Adviser in accordance with the Trust’s
valuation policies and procedures approved by the
Board.
PO 00000
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Sfmt 4703
54637
Financial Industry Regulatory Authority
(‘‘FINRA’’) will be a source of price
information for certain fixed income
securities held by the Fund.
The Commission believes that the
proposal to list and trade the Shares is
reasonably designed to promote fair
disclosure of information that may be
necessary to price the Shares
appropriately and to prevent trading
when a reasonable degree of
transparency cannot be assured. The
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.
Nasdaq will halt trading in the Shares
under the conditions specified in
Nasdaq Rules 4120 and 4121, including
the trading pauses under Nasdaq Rules
4120(a)(11) and (12). Trading may be
halted because of market conditions or
for reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable.25 Trading in the Shares also
will be subject to Rule 5735(d)(2)(D),
which sets forth circumstances under
which trading in the Shares of the Fund
may be halted. The Exchange represents
that it has a general policy prohibiting
the distribution of material, non-public
information by its employees. Further,
the Commission notes that the
Reporting Authority 26 that provides the
Disclosed Portfolio must implement and
maintain, or be subject to, procedures
designed to prevent the use and
dissemination of material, non-public
information regarding the actual
components of the portfolio.27 In
addition, Nasdaq Rule 5735(g) further
requires that personnel who make
decisions on the open-end fund’s
portfolio composition must be subject to
procedures designed to prevent the use
and dissemination of material, nonpublic information regarding the openend fund’s portfolio. The Exchange
states that the Adviser is affiliated with
the Distributor, a broker-dealer, and has
implemented a fire wall with respect to
its broker-dealer affiliate regarding
access to information concerning the
composition of, and changes to, the
portfolio.28
25 These may include: (1) The extent to which
trading is not occurring in the securities and other
assets constituting the Disclosed Portfolio of the
Fund and the Subsidiary; or (2) whether other
unusual conditions or circumstances detrimental to
the maintenance of a fair and orderly market are
present.
26 Nasdaq Rule 5730(c)(4) defines ‘‘Reporting
Authority.’’
27 See Nasdaq Rule 5735(d)(2)(B)(ii).
28 See supra note 6. The Exchange further
represents that an investment adviser to an open-
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asabaliauskas on DSK3SPTVN1PROD with NOTICES
The Exchange represents that the
Shares are deemed to be equity
securities, thus rendering trading in the
Shares subject to the Exchange’s
existing rules governing the trading of
equity securities. In support of this
proposal, the Exchange has made
representations, including the
following:
(1) The Shares will conform to the
initial and continued listing criteria
under Nasdaq Rule 5735.29
(2) 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, and these procedures are
adequate to properly monitor Exchange
trading of the Shares in all trading
sessions and to deter and detect
violations of Exchange rules and
applicable federal securities laws.30
(3) FINRA, on behalf of the Exchange,
will communicate as needed regarding
trading information it can obtain
relating to the Shares, other exchangetraded securities and other assets held
by the Fund and the Subsidiary, which
include exchange-traded commodityrelated equity securities, exchangetraded futures contracts, exchangetraded options on futures contracts,
ETNs, ETFs and exchange-traded
closed-end funds, with other markets
and other entities that are members of
the ISG, and FINRA may obtain trading
information regarding trading in the
Shares, and such exchange-traded
securities and other assets held by the
end fund is required to be registered under the
Investment Advisers Act of 1940 (‘‘Advisers Act’’).
As a result, the Adviser and its related personnel
are subject to the provisions of Rule 204A–1 under
the Advisers Act relating to codes of ethics. This
Rule requires investment advisers to adopt a code
of ethics that reflects the fiduciary nature of the
relationship to clients as well as compliance with
other applicable securities laws. Accordingly,
procedures designed to prevent the communication
and misuse of non-public information by an
investment adviser must be consistent with Rule
204A–1 under the Advisers Act. In addition, Rule
206(4)–7 under the Advisers Act makes it unlawful
for an investment adviser to provide investment
advice to clients unless such investment adviser has
(i) adopted and implemented written policies and
procedures reasonably designed to prevent
violation, by the investment adviser and its
supervised persons, of the Advisers Act and the
Commission rules adopted thereunder; (ii)
implemented, at a minimum, an annual review
regarding the adequacy of the policies and
procedures established pursuant to subparagraph (i)
above and the effectiveness of their
implementation; and (iii) designated an individual
(who is a supervised person) responsible for
administering the policies and procedures adopted
under subparagraph (i) above.
29 See Notice, supra note 3, 81 FR at 42774.
30 See id. FINRA surveils trading on the Exchange
pursuant to a regulatory services agreement. The
Exchange is responsible for FINRA’s performance
under this regulatory services agreement. See id. at
42774, n.28.
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18:36 Aug 15, 2016
Jkt 238001
Fund and the Subsidiary from such
markets and other entities. In addition,
the Exchange may obtain information
regarding trading in the Shares, and
such exchange-traded securities and
other assets held by the Fund and the
Subsidiary from markets and other
entities that are members of ISG, which
includes securities and futures
exchanges, or with which the Exchange
has in place a comprehensive
surveillance sharing agreement.
Moreover, FINRA, on behalf of the
Exchange, will be able to access, as
needed, trade information for certain
fixed income securities held by the
Fund reported to FINRA’s TRACE.31
(4) With respect to the exchangetraded commodity futures contracts and
options on futures contracts (if
applicable) held, not more than 10% of
the weight of such futures contracts and
options on futures contracts in the
aggregate shall consist of instruments
whose principal trading market is not a
member of the ISG or is a market with
which the Exchange does not have a
comprehensive surveillance sharing
agreement. In addition, not more than
10% of the equity securities (including
shares of ETFs, closed-end funds, and
commodity-related foreign and domestic
equity securities) and ETNs in which
the Fund may invest will, in the
aggregate, be invested in securities that
trade in markets that are not members
of the ISG or are not parties to a
comprehensive surveillance sharing
agreement with the Exchange.
(5) The Exchange has appropriate
rules to facilitate transactions in the
Shares during all trading sessions.
(6) 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 the 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.
(7) For initial and/or continued
listing, the Fund and the Subsidiary
must be in compliance with Rule 10A–
3 under the Exchange Act.32
(8) The Fund will not hold inverse,
leveraged, and inverse leveraged ETFs
or ETNs.33
(9) As noted above, the Fund (directly
or indirectly through the Subsidiary)
intends to invest principally in
exchange-traded commodity futures
contracts. Only in the event the Fund
reaches the position limits applicable to
one or more exchange-traded
commodity futures contracts or a futures
exchange imposes limitations on the
Fund’s ability to maintain or increase its
positions in an exchange-traded
commodity futures contract after
reaching accountability levels or a price
limit is in effect on an exchange-traded
commodity futures contract during the
last 30 minutes of its regular trading
session, the Fund’s intention is to invest
first in Cleared Swaps, to the extent
permitted under the position limits
applicable to Cleared Swaps and
appropriate in light of the liquidity in
the Cleared Swaps market, and then,
using its commercially reasonable
judgment, in Other Commodity
Instruments (other than Cleared Swaps).
(10) The Fund may hold up to an
aggregate amount of 15% of its net
assets in illiquid assets (calculated at
the time of investment), deemed illiquid
by the Adviser.
(11) A minimum of 100,000 Shares
will be outstanding at the
commencement of trading on the
Exchange.
The Commission notes that the Fund
and the Shares must comply with the
initial and continued listing criteria in
Nasdaq Rule 5735 for the Shares to be
listed and traded on the Exchange. In
addition, the Exchange represents that
all statements and representations made
in this filing regarding (a) the
description of the portfolio, (b)
limitations on portfolio holdings or
reference assets, or (c) the applicability
of Exchange rules and surveillance
procedures shall constitute continued
listing requirements for listing the
Shares on the Exchange. In addition, the
issuer has represented to the Exchange
that it will advise the Exchange of any
failure by the Fund to comply with the
continued listing requirements, and,
pursuant to its obligations under
Section 19(g)(1) of the Act, the Exchange
will monitor for compliance with the
32 See
31 See
PO 00000
id. at 42774.
Frm 00089
Fmt 4703
33 See
Sfmt 4703
E:\FR\FM\16AUN1.SGM
17 CFR 240.10A–3.
supra notes 14 and 15.
16AUN1
Federal Register / Vol. 81, No. 158 / Tuesday, August 16, 2016 / Notices
continued listing requirements.34 If the
Fund is not in compliance with the
applicable listing requirements, the
Exchange will commence delisting
procedures under the Nasdaq 5800
Series.35 This approval order is based on
all of the Exchange’s representations,
including those set forth above and in
the Notice, as modified by Amendment
No. 1 to the proposed rule change.
For the foregoing reasons, the
Commission finds that the proposed
rule change, as modified by Amendment
No. 1 thereto, is consistent with Section
6(b)(5) of the Act 36 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,37
that the proposed rule change (SR–
NASDAQ–2016–086), as modified by
Amendment No. 1 thereto, be, and it
hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.38
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–19442 Filed 8–15–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78530; File No. SR–DTC–
2016–006]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Add a
Participants Fund Maintenance Fee
August 10, 2016.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Commission notes that certain other
proposals for the listing and trading of Managed
Fund Shares include a representation that the
exchange will ‘‘surveil’’ for compliance with the
continued listing requirements. See, e.g., Securities
Exchange Act Release No. 78005 (Jun. 7, 2016), 81
FR 38247 (Jun. 13, 2016) (SR–BATS–2015–100). In
the context of this representation, it is the
Commission’s view that ‘‘monitor’’ and ‘‘surveil’’
both mean ongoing oversight of a fund’s compliance
with the continued listing requirements. Therefore,
the Commission does not view ‘‘monitor’’ as a more
or less stringent obligation than ‘‘surveil’’ with
respect to the continued listing requirements.
35 See id. at 42775.
36 15 U.S.C. 78f(b)(5).
37 15 U.S.C. 78s(b)(2).
38 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
VerDate Sep<11>2014
18:36 Aug 15, 2016
Jkt 238001
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change consists of
modifications to the Fee Schedule 5 of
DTC in order to add a new fee that will
be charged to Participants in connection
with the maintenance of the Participants
Fund, as described in greater detail
below.6
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency 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
clearing agency has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
The proposed rule change will add a
fee that will be charged to Participants
in connection with the maintenance of
the Participants Fund.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 29,
2016, The Depository Trust Company
34 The
(‘‘DTC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I, II and III below, which Items
have been prepared by the clearing
agency. DTC filed the proposed rule
change pursuant to section 19(b)(3)(A)
of the Act 3 and Rule 19b–4(f)(2)
thereunder.4 The proposed rule change
was effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
Participants Fund Maintenance Fee
Pursuant to the proposed rule change,
DTC proposes to introduce a new fee, to
be known as the Participants Fund
Maintenance Fee, which will be charged
to Participants in arrears on a monthly
basis.
The proposed rule change will (i)
diversify DTC’s revenue sources and
3 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
5 Available at https://www.dtcc.com/∼/media/
Files/Downloads/legal/fee-guides/
dtcfeeguide.pdf?la=en.
6 Capitalized terms not defined herein are defined
in the Rules, By-Laws and Organization Certificate
of DTC (the ‘‘Rules’’), available at www.dtcc.com/
∼/media/Files/Downloads/legal/rules/dtc_rules.pdf.
4 17
PO 00000
Frm 00090
Fmt 4703
Sfmt 4703
54639
mitigate DTC’s dependence on revenues
driven by settlement volumes and (ii)
add a stable revenue source that will
contribute to DTC’s operating margin by
offsetting increasing costs and expenses,
as further described below.
Diversify Revenue Sources
DTC’s current revenues from
settlement are variable, but, as a utility,
DTC’s expenses are largely fixed. The
combination of fixed costs and variable
revenues represents a financial risk for
DTC. To mitigate such financial risk,
DTC is seeking to further diversify its
variable revenues with the proposed
new fee, which will introduce a revenue
source that is not dependent on
settlement volumes. The Participants
Fund Maintenance Fee will be ratably
based on the Participant’s average
Actual Participants Fund Deposit.
Offset Increasing Costs and Expenses
DTC seeks to achieve a target
operating margin to cover operating
expenses and fund capital expenditures
as well as investments in its services
and risk management infrastructure;
however, DTC faces continued
increasing risk management costs as
well as regulatory and compliancerelated expenses that need to be offset
by revenue growth in order to meet the
target operating margin. Such increased
costs and expenses, if not offset by
revenue growth, could weaken DTC’s
financial position over time. As such,
DTC is seeking to implement the
Participants Fund Maintenance Fee to
add an additional revenue source to
offset increasing costs and expenses.
Proceeds of the Participants Fund
Maintenance Fee will be used primarily
to offset risk management costs,
regulatory and compliance expenses
and for general operating expenses.
Calculation
The amount of the monthly
Participants Fund Maintenance Fee for
a Participant will be calculated
monthly, in arrears, as the product of
0.25% and the average of the
Participant’s Actual Participants Fund
Deposit as of the end of each day of the
month, multiplied by the number of
days in that month and divided by 360;
provided that, the investment rate of
return on investment by DTC of the
Participants Fund for that month is
equal to or greater than 0.25%. No fee
will be charged to any Participant for a
month in which the monthly rate of
return on investment of the Participants
Fund is less than 0.25%.
Based on the 2015 average Actual
Participants Fund Deposit, the expected
annual revenue to be generated by the
E:\FR\FM\16AUN1.SGM
16AUN1
]]>Agencies
[Federal Register Volume 81, Number 158 (Tuesday, August 16, 2016)]
[Notices]
[Pages 54634-54639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19442]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78533; File No. SR-NASDAQ-2016-086]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Granting Approval of a Proposed Rule Change, as Modified by Amendment
No. 1 Thereto, To List and Trade the Shares of the VanEck Vectors Long/
Flat Commodity ETF
August 10, 2016.
I. Introduction
On June 10, 2016, 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 (``Act'' or ``Exchange Act''),\1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to list and trade shares
(``Shares'') of the VanEck Vectors Long/Flat Commodity ETF (``Fund'')
under Nasdaq Rule 5735. The Commission
[[Page 54635]]
published notice of the proposed rule change in the Federal Register on
June 30, 2016.\3\ On July 15, 2016, the Exchange submitted Amendment
No. 1 to the proposed rule change.\4\ The Commission received no
comments on the proposed rule change. This order grants approval of the
proposed rule change, as modified by Amendment No. 1 thereto.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 78150 (Jun. 24,
2016), 81 FR 42768 (``Notice'').
\4\ In Amendment No. 1 the Exchange clarified the usage of the
defined terms used for commodities instruments in the portfolio and
clarified the application of the percentage limitation on equity
securities that trade in markets that are not members of the
Intermarket Surveillance Group (``ISG'') or are not parties to a
comprehensive surveillance sharing agreement with the Exchange.
Amendment No. 1 is available at https://www.sec.gov/comments/sr-nasdaq-2016-086/nasdaq2016086-1.pdf. Because Amendment No. 1 to the
proposed rule change does not materially alter the substance of the
proposed rule change or raise unique or novel regulatory issues,
Amendment No. 1 is not subject to notice and comment.
---------------------------------------------------------------------------
II. Exchange's Description of the Proposal
The Exchange proposes to list and trade the Shares under Nasdaq
Rule 5735, which governs the listing and trading of Managed Fund Shares
on the Exchange. The Shares will be offered by VanEck Vectors ETF Trust
(``Trust''), which was organized as a Delaware statutory trust on March
15, 2001.\5\ The investment adviser and the administrator to the Fund
will be Van Eck Absolute Return Advisers Corporation (``Adviser''), and
the Fund currently does not intend to use a sub-adviser.\6\ Van Eck
Securities Corporation (``Distributor'') will be the distributor of the
Fund's Shares. The Bank of New York Mellon will act as the custodian of
the Fund's assets and provide transfer agency and fund accounting
services to the Fund.
---------------------------------------------------------------------------
\5\ 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 Registration
Statement on Form N-1A for the Trust, dated November 12, 2015 (File
Nos. 333-123257 and 811-10325). In addition, the Exchange states
that the Trust has obtained certain exemptive relief under the
Investment Company Act of 1940 (``1940 Act''). See Investment
Company Act Release No. 29571 (Jan. 24, 2011) (File No. 812-13601).
\6\ According to the Exchange, the Adviser is not a broker-
dealer, although it is affiliated with Van Eck Securities
Corporation, a broker-dealer, and has implemented a fire wall with
respect to its broker-dealer affiliate regarding access to
information concerning the composition and/or changes to a
portfolio. In the event (a) the Adviser becomes newly affiliated
with a broker-dealer or registers as a broker-dealer, or (b) any new
adviser or sub-adviser to the Fund is a registered broker-dealer or
becomes affiliated with a broker-dealer, it will implement a fire
wall with respect to its relevant personnel or such broker-dealer
affiliate, if applicable, regarding access to information concerning
the composition of, and changes to, the portfolio. In addition,
personnel who make decisions on each Fund's portfolio composition
will be subject to procedures designed to prevent the use and
dissemination of material, non-public information regarding such
portfolio.
---------------------------------------------------------------------------
The Exchange has made the following representations and statements
in describing the Fund and its investment strategies, including the
Fund's portfolio holdings and investment restrictions.\7\
---------------------------------------------------------------------------
\7\ The Commission notes that additional information regarding
the Trust, the Fund, and the Shares, including investment
strategies, risks, net asset value (``NAV'') calculation, creation
and redemption procedures, fees, Fund holdings disclosure policies,
distributions, and taxes, among other information, is included in
the Notice, as modified by Amendment No. 1 thereto, and the
Registration Statement, as applicable. See Notice, Amendment No. 1
to the proposed rule change, and Registration Statement, supra notes
3, 4, and 5, respectively, and accompanying text.
---------------------------------------------------------------------------
A. Exchange's Description of the Fund's Principal Investments
The Fund's investment objective will be to seek long-term capital
appreciation while seeking to manage volatility and reduce downside
risk during sustained market declines. The Fund will seek to achieve
its investment objective by investing, under normal circumstances, in
exchange-traded commodity futures contracts and, under certain limited
circumstances, other commodity-linked instruments as set forth in
``Other Investments'' hereunder (collectively, ``Commodities
Instruments''). The Fund will invest in Commodities Instruments
primarily through a wholly-owned subsidiary of the Fund organized under
the laws of the Cayman Islands (``Subsidiary'').\8\
---------------------------------------------------------------------------
\8\ The Subsidiary will be wholly-owned and controlled by the
Fund and will be advised by the Adviser. The Exchange represents
that the Fund's investment in the Subsidiary may not exceed 25% of
the value of the Fund's total assets at each quarter-end of the
Fund's fiscal year. The Fund's investment in the Subsidiary is
expected to provide the Fund with exposure to Commodities
Instruments within the limits of the federal tax laws, which limit
the ability of investment companies like the Fund to invest directly
in such instruments. The Subsidiary will have the same investment
objective as the Fund and will follow the same general investment
policies and restrictions, except that unlike the Fund, it may
invest without limit in Commodities Instruments. In addition, the
Subsidiary will not be registered under the 1940 Act and will not be
directly subject to its investor protections, except as noted in the
Registration Statement. The Trust's board (``Board'') will have
oversight responsibility for the investment activities of the Fund,
including its investment in the Subsidiary, and the Fund's role as
the sole shareholder of the Subsidiary. The Adviser will receive
certain fees for managing the Subsidiary's assets, and the Adviser
will waive or credit such amounts against the fees payable to the
Adviser by the Fund. It is expected that the Subsidiary will become
party to the existing custody agreement, transfer agency agreement
and accounting agreement of the Trust and Fund.
---------------------------------------------------------------------------
The Fund (directly or indirectly through the Subsidiary) will
normally invest in exchange-traded commodity futures contracts that are
components of the Morningstar[supreg] Long/Flat Commodity Index\SM\
(``Benchmark''), an index composed of futures contracts on 20 heavily
traded commodities across the energy, agriculture, industrial metals,
precious metals, and livestock sectors. The Adviser will employ a
rules-based investment approach when selecting Commodities Instruments
based upon momentum characteristics of the Commodities Instruments.
Commodities Instruments are assessed on a monthly basis by comparing
current prices to 12-month moving averages. The Fund's positions will
be either long \9\ or flat.\10\ The Fund intends to take long positions
in those Commodities Instruments whose prices are above their 12-month
moving average. Conversely, the Fund intends to take flat positions to
manage volatility and reduce downside risk for those Commodities
Instruments whose prices are below their 12-month moving average. The
Fund will not be an ``index tracking'' ETF and may not always invest in
all of the Benchmark's components, or in the same proportion, and it
may invest in Commodities Instruments outside the Benchmark.\11\
---------------------------------------------------------------------------
\9\ For the purposes of this filing, a ``long'' position is a
position that will increase in market price if the price of the
commodity futures contract is rising during the period when the
position is open.
\10\ For the purposes of this filing, a ``flat'' position is a
position that will not increase or decrease in market price whether
the price of the commodity futures contract to which it relates is
rising or falling.
\11\ See Notice, supra note 3, 81 FR at 42770 (providing, in
table format, detailed information relating to each of the commodity
futures contracts in the Benchmark, including each instrument's
trading hours, futures exchange, and ticker symbol). The Exchange
represents that all of the futures exchanges represented in the
Benchmark are members of ISG.
---------------------------------------------------------------------------
B. Exchange's Description of the Fund's Non-Principal Investments
As noted above, the Fund intends to invest first in exchange-traded
commodity futures contracts. However, in the event the Fund reaches the
position limits applicable to one or more exchange-traded commodity
futures contracts or a futures exchange imposes limitations on the
Fund's ability to maintain or increase its positions in an exchange-
traded commodity futures contract after reaching accountability levels
or a price limit is in effect on an exchange-traded commodity futures
contract during the last 30 minutes of its regular trading session, the
Fund's intention is to invest first in commodity-based swap agreements
cleared through a central clearing house or the clearing house's
affiliate (``Cleared Swaps'') to the extent
[[Page 54636]]
permitted under the position limits applicable to Cleared Swaps and
appropriate in light of the liquidity in the Cleared Swaps market, and
then, using its commercially reasonable judgment, in forward contracts
on commodities, exchange-traded options on futures contracts, and
commodity-based swaps other than Cleared Swaps (collectively, including
Cleared Swaps, ``Other Commodity Instruments'').
The Fund (and the Subsidiary, as applicable) expects to invest its
remaining assets in any one or more of the following: U.S. government
securities; \12\ money market funds; cash and other cash equivalents;
\13\ treasury inflation-protected securities; sovereign debt
obligations of non-U.S. countries; and repurchase agreements that
provide liquidity, serve as margin, or collateralize the Fund's or the
Subsidiary's investments in exchange-traded commodity futures
contracts.
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\12\ Such securities will include securities that are issued or
guaranteed by the U.S. Treasury, by various agencies of the U.S.
government, or by various instrumentalities, which have been
established or sponsored by the U.S. government. U.S. Treasury
obligations are backed by the ``full faith and credit'' of the U.S.
government. Securities issued or guaranteed by federal agencies and
U.S. government-sponsored instrumentalities may or may not be backed
by the full faith and credit of the U.S. government.
\13\ Cash equivalents will include banker's acceptances,
commercial paper, and certificates of deposit.
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The Fund also may invest directly in exchange-traded funds
(``ETFs''),\14\ exchange-traded closed end funds (to the extent
permitted by the 1940 Act and certain exemptive relief issued in
thereunder), and exchange-traded notes (``ETNs'') that provide exposure
to commodities.\15\ The Fund may also invest in commodity-related
foreign and domestic equity securities.\16\
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\14\ ETFs in which the Fund invests will be listed and traded in
the U.S. on registered exchanges. The ETFs in which the Fund will
invest include Index Fund Shares (as described in Nasdaq Rule 5705),
Portfolio Depositary Receipts (as described in Nasdaq Rule 5705),
and Managed Fund Shares (as described in Nasdaq Rule 5735). The
shares of ETFs in which the Fund may invest will be limited to
securities that trade in markets that are members of the ISG, which
includes all U.S. national securities exchanges, or exchanges that
are parties to a comprehensive surveillance sharing agreement with
the Exchange. The Exchange represents that the Fund will not hold
inverse, leveraged, and inverse leveraged ETFs. See Notice, supra
note 3, 81 FR at 42770, n.14.
\15\ ETNs in which the Fund invests will be listed and traded in
the U.S. on registered exchanges. The ETNs in which the Fund will
invest include Securities Linked to the Performance of Indexes and
Commodities, Including Currencies (as described in Nasdaq Rule
5710), and Index-Linked Exchangeable Notes (as described in Nasdaq
Rule 5711). The Exchange represents that the Fund will not hold
inverse, leveraged, and inverse leveraged ETNs. See id.
\16\ Commodity-related foreign and domestic equity securities
will be comprised of exchange-traded common stocks of companies that
operate in commodities, natural resources and energy businesses, and
in associated businesses, as well as companies that provide services
or have exposure to such businesses.
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C. Exchange's Descriptions of the Fund's Investment Restrictions
According to the Exchange, the Fund may not make loans, except that
it may (i) lend portfolio securities, (ii) enter into repurchase
agreements, (iii) purchase all or a portion of an issue of debt
securities, bank loan or participation interests, bank certificates of
deposit, bankers' acceptances, debentures or other securities, whether
or not the purchase is made upon the original issuance of the
securities, and (iv) participate in an interfund lending program with
other registered investment companies, all in accordance with the 1940
Act. In addition, the Fund may not borrow money, except as permitted
under the 1940 Act, and as interpreted or modified by regulation from
time to time. The Fund also may not issue senior securities, except as
permitted under the 1940 Act, and as interpreted or modified by
regulation from time to time.
The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid assets (calculated at the time of investment).\17\
The Fund will monitor its portfolio liquidity on an ongoing basis to
determine whether, in light of current circumstances, an adequate level
of liquidity is being maintained, and will consider taking appropriate
steps in order to maintain adequate liquidity if, through a change in
values, net assets, or other circumstances, more than 15% of the Fund's
net assets are held in illiquid assets. Illiquid assets include
securities subject to contractual or other restrictions on resale and
other instruments that lack readily available markets as determined in
accordance with Commission staff guidance. An illiquid security is
generally considered to be a security that cannot be sold or disposed
of in the ordinary course of business within seven days at or near its
carrying value.
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\17\ In reaching liquidity decisions, the Adviser may consider
factors such as but not limited to the following: The frequency of
trades and quotes for the security; the number of dealers wishing to
purchase or sell the security and the number of other potential
purchasers; dealer undertakings to make a market in the security;
and the nature of the security and the nature of the marketplace in
which it trades (e.g., the time needed to dispose of the security,
the method of soliciting offers and the mechanics of transfer).
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The Fund may not purchase any security if, as a result of that
purchase, 25% or more of its total assets would be invested in
securities of issuers having their principal business activities in the
same industry. This limit does not apply to securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities,
or securities of other investment companies.
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.\18\ In particular, the Commission finds that the
proposed rule change, as modified by Amendment No. 1 thereto, is
consistent with Section 6(b)(5) of the Exchange Act,\19\ which
requires, among other things, that the Exchange's rules be 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 a national market system,
and, in general, to protect investors and the public interest.
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\18\ 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).
\19\ 15 U.S.C. 78f(b)(5).
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The Commission also finds that the proposal to list and trade the
Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of
the Exchange Act,\20\ which sets forth the finding of Congress 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. According to
the Exchange, quotation and last-sale information for the Shares will
be available via Nasdaq proprietary quote and trade services, as well
as in accordance with the Unlisted Trading Privileges and the
Consolidated Tape Association plans for the Shares. Quotation and last-
sale information for any underlying exchange-traded equity will also be
available via the quote and trade service of their respective primary
exchanges, as well as in accordance with the Unlisted Trading
Privileges and the Consolidated Tape Association plans. Quotation and
last-sale information for any underlying exchange-traded options will
also be available via the quote and trade service of their respective
primary exchanges. Quotation and last-sale information for any
underlying exchange-traded futures contracts will be available via the
quote and trade service of their respective
[[Page 54637]]
primary exchanges. Information on the Morningstar Long/Flat Commodity
Index\SM\ will be available on the Morningstar Indexes Web site.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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On each business day, before commencement of trading in Shares in
the Regular Market Session on the Exchange, the Fund will disclose on
its Web site the ``Disclosed Portfolio,'' as defined in Nasdaq Rule
5735(c)(2), that will form the basis for the Fund's calculation of NAV
at the end of the business day.\21\ In addition, an estimated value of
the Fund, defined in Exchange Rule 5735(c)(3) as ``Intraday Indicative
Value,'' that reflects an estimated intraday value of the Fund's
portfolio (including the Subsidiary's portfolio), will be disseminated.
The Intraday Indicative Value, available on the NASDAQ OMX Information
LLC proprietary index data service \22\ will be based upon the current
value for the components of the Disclosed Portfolio and will be updated
and widely disseminated by one or more major market data vendors and
broadly displayed at least every 15 seconds during the Regular Market
Session.\23\ The NAV of the Fund will be determined each business day
as of the close of trading (ordinarily 4:00 p.m. Eastern Time) on
Nasdaq.\24\ In addition, a basket composition file, which includes the
security names and quantities required to be delivered in exchange for
the Fund's Shares, together with estimates and actual cash components,
will be publicly disseminated daily prior to the opening of the
Exchange via NSCC.
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\21\ Under accounting procedures to be followed by the Fund,
trades made on the prior business day (``T'') will be booked and
reflected in NAV on the current business day (``T+1''). Accordingly,
the Fund will be able to disclose at the beginning of the business
day the portfolio that will form the basis for the NAV calculation
at the end of the business day. On a daily basis, the Fund will
disclose on the Fund's Web site the following information regarding
each portfolio holding, as applicable to the type of holding: Ticker
symbol, CUSIP number or other identifier, if any; a description of
the holding (including the type of holding), the identity of the
security or other asset or instrument underlying the holding, if
any; for options, the option strike price; quantity held (as
measured by, for example, par value, notional value or number of
shares, contracts or units); maturity date, if any; coupon rate, if
any; effective date, if any; market value of the holding; and
percentage weighting of the holding in the Fund's portfolio. The Web
site information will be publicly available at no charge.
\22\ The Exchange states that 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. See
Notice, supra note 3, 81 FR at 42773, n.26.
\23\ The Exchange represents that the dissemination of the
Intraday Indicative Value, together with the Disclosed Portfolio,
will allow investors to determine the value of the underlying
portfolio of the Fund on a daily basis and will provide a close
estimate of that value throughout the trading day. See id. at 42773.
\24\ According to the Exchange, ETFs, exchange-traded closed-end
funds, ETNs, and commodity-related foreign and domestic equity
securities, will be based on the securities' closing prices on local
markets, when available. Due to the time differences between the
United States and certain countries, securities on these non-U.S.
exchanges may not trade at times when Shares of the Fund will trade.
In the absence of a last reported sales price, or if no sales were
reported, and for other assets for which market quotes are not
readily available, values may be based on quotes obtained from a
quotation reporting system, established market makers or by an
outside independent pricing service using data reflecting the
earlier closing of the principal markets for those securities. U.S.
government securities, treasury inflation-protected securities, and
sovereign debt obligations of non-U.S. countries will normally be
valued on the basis of quotes from brokers or dealers, established
market makers, or an outside independent pricing service. Short-term
investments purchased with a remaining maturity of 60 days or less,
including repurchase agreements and cash equivalents, will be valued
on the basis of quotes from broker dealers, established major market
makers, an independent pricing service, or at amortized cost. Money
market funds will be valued at their reported closing NAV. Futures
contracts and options on futures contracts, which are traded on
exchanges, will be valued at the current settle price for like
contracts acquired on the day on which the futures contract will be
valued as of the close of such exchanges. Other Commodity
Instruments not traded on exchanges will generally be valued daily
based upon quotations from market makers or by a pricing service and
in accordance with the Trust's valuation policies and procedures.
Prices obtained by an outside independent pricing service may use
information provided by market makers or estimates of market values
obtained from yield data related to investments or securities with
similar characteristics and may use a computerized grid matrix of
securities and its evaluations in determining what it believes is
the fair value of the portfolio securities. If a market quotation
for a security is not readily available or the Adviser believes it
does not otherwise accurately reflect the market value of the
security at the time the Fund calculates its NAV, the security will
be fair valued by the Adviser in accordance with the Trust's
valuation policies and procedures approved by the Board.
---------------------------------------------------------------------------
Intra-day, executable price quotations on the exchange-traded
assets held by the Fund and the Subsidiary, including futures
contracts, options on futures contracts, ETFs, ETNs, closed-end funds,
and foreign and domestic equity securities are expected to be available
on the exchange on which they are traded. Intra-day, executable price
quotations on swaps, money market funds, forward contracts, U.S.
government securities, cash and other cash equivalents, treasury
inflation-protected securities, sovereign debt obligations of non-U.S.
countries, and repurchase agreements will be available from major
broker-dealer firms. Intra-day price information will also be available
through subscription services, such as Bloomberg and Reuters.
Additionally, the Trade Reporting and Compliance Engine (``TRACE'') of
the Financial Industry Regulatory Authority (``FINRA'') will be a
source of price information for certain fixed income securities held by
the Fund.
The Commission believes that the proposal to list and trade the
Shares is reasonably designed to promote fair disclosure of information
that may be necessary to price the Shares appropriately and to prevent
trading when a reasonable degree of transparency cannot be assured. The
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. Nasdaq will halt trading in the Shares
under the conditions specified in Nasdaq Rules 4120 and 4121, including
the trading pauses under Nasdaq Rules 4120(a)(11) and (12). Trading may
be halted because of market conditions or for reasons that, in the view
of the Exchange, make trading in the Shares inadvisable.\25\ Trading in
the Shares also will be subject to Rule 5735(d)(2)(D), which sets forth
circumstances under which trading in the Shares of the Fund may be
halted. The Exchange represents that it has a general policy
prohibiting the distribution of material, non-public information by its
employees. Further, the Commission notes that the Reporting Authority
\26\ that provides the Disclosed Portfolio must implement and maintain,
or be subject to, procedures designed to prevent the use and
dissemination of material, non-public information regarding the actual
components of the portfolio.\27\ In addition, Nasdaq Rule 5735(g)
further requires that personnel who make decisions on the open-end
fund's portfolio composition must be subject to procedures designed to
prevent the use and dissemination of material, non-public information
regarding the open-end fund's portfolio. The Exchange states that the
Adviser is affiliated with the Distributor, a broker-dealer, and has
implemented a fire wall with respect to its broker-dealer affiliate
regarding access to information concerning the composition of, and
changes to, the portfolio.\28\
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\25\ These may include: (1) The extent to which trading is not
occurring in the securities and other assets constituting the
Disclosed Portfolio of the Fund and the Subsidiary; or (2) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present.
\26\ Nasdaq Rule 5730(c)(4) defines ``Reporting Authority.''
\27\ See Nasdaq Rule 5735(d)(2)(B)(ii).
\28\ See supra note 6. The Exchange further represents that an
investment adviser to an open-end fund is required to be registered
under the Investment Advisers Act of 1940 (``Advisers Act''). As a
result, the Adviser and its related personnel are subject to the
provisions of Rule 204A-1 under the Advisers Act relating to codes
of ethics. This Rule requires investment advisers to adopt a code of
ethics that reflects the fiduciary nature of the relationship to
clients as well as compliance with other applicable securities laws.
Accordingly, procedures designed to prevent the communication and
misuse of non-public information by an investment adviser must be
consistent with Rule 204A-1 under the Advisers Act. In addition,
Rule 206(4)-7 under the Advisers Act makes it unlawful for an
investment adviser to provide investment advice to clients unless
such investment adviser has (i) adopted and implemented written
policies and procedures reasonably designed to prevent violation, by
the investment adviser and its supervised persons, of the Advisers
Act and the Commission rules adopted thereunder; (ii) implemented,
at a minimum, an annual review regarding the adequacy of the
policies and procedures established pursuant to subparagraph (i)
above and the effectiveness of their implementation; and (iii)
designated an individual (who is a supervised person) responsible
for administering the policies and procedures adopted under
subparagraph (i) above.
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[[Page 54638]]
The Exchange represents that the Shares are deemed to be equity
securities, thus rendering trading in the Shares subject to the
Exchange's existing rules governing the trading of equity securities.
In support of this proposal, the Exchange has made representations,
including the following:
(1) The Shares will conform to the initial and continued listing
criteria under Nasdaq Rule 5735.\29\
---------------------------------------------------------------------------
\29\ See Notice, supra note 3, 81 FR at 42774.
---------------------------------------------------------------------------
(2) 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, and these procedures are adequate to properly monitor
Exchange trading of the Shares in all trading sessions and to deter and
detect violations of Exchange rules and applicable federal securities
laws.\30\
---------------------------------------------------------------------------
\30\ See id. FINRA surveils trading on the Exchange pursuant to
a regulatory services agreement. The Exchange is responsible for
FINRA's performance under this regulatory services agreement. See
id. at 42774, n.28.
---------------------------------------------------------------------------
(3) FINRA, on behalf of the Exchange, will communicate as needed
regarding trading information it can obtain relating to the Shares,
other exchange-traded securities and other assets held by the Fund and
the Subsidiary, which include exchange-traded commodity-related equity
securities, exchange-traded futures contracts, exchange-traded options
on futures contracts, ETNs, ETFs and exchange-traded closed-end funds,
with other markets and other entities that are members of the ISG, and
FINRA may obtain trading information regarding trading in the Shares,
and such exchange-traded securities and other assets held by the Fund
and the Subsidiary from such markets and other entities. In addition,
the Exchange may obtain information regarding trading in the Shares,
and such exchange-traded securities and other assets held by the Fund
and the Subsidiary from markets and other entities that are members of
ISG, which includes securities and futures exchanges, or with which the
Exchange has in place a comprehensive surveillance sharing agreement.
Moreover, FINRA, on behalf of the Exchange, will be able to access, as
needed, trade information for certain fixed income securities held by
the Fund reported to FINRA's TRACE.\31\
---------------------------------------------------------------------------
\31\ See id. at 42774.
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(4) With respect to the exchange-traded commodity futures contracts
and options on futures contracts (if applicable) held, not more than
10% of the weight of such futures contracts and options on futures
contracts in the aggregate shall consist of instruments whose principal
trading market is not a member of the ISG or is a market with which the
Exchange does not have a comprehensive surveillance sharing agreement.
In addition, not more than 10% of the equity securities (including
shares of ETFs, closed-end funds, and commodity-related foreign and
domestic equity securities) and ETNs in which the Fund may invest will,
in the aggregate, be invested in securities that trade in markets that
are not members of the ISG or are not parties to a comprehensive
surveillance sharing agreement with the Exchange.
(5) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.
(6) 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 the
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.
(7) For initial and/or continued listing, the Fund and the
Subsidiary must be in compliance with Rule 10A-3 under the Exchange
Act.\32\
---------------------------------------------------------------------------
\32\ See 17 CFR 240.10A-3.
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(8) The Fund will not hold inverse, leveraged, and inverse
leveraged ETFs or ETNs.\33\
---------------------------------------------------------------------------
\33\ See supra notes 14 and 15.
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(9) As noted above, the Fund (directly or indirectly through the
Subsidiary) intends to invest principally in exchange-traded commodity
futures contracts. Only in the event the Fund reaches the position
limits applicable to one or more exchange-traded commodity futures
contracts or a futures exchange imposes limitations on the Fund's
ability to maintain or increase its positions in an exchange-traded
commodity futures contract after reaching accountability levels or a
price limit is in effect on an exchange-traded commodity futures
contract during the last 30 minutes of its regular trading session, the
Fund's intention is to invest first in Cleared Swaps, to the extent
permitted under the position limits applicable to Cleared Swaps and
appropriate in light of the liquidity in the Cleared Swaps market, and
then, using its commercially reasonable judgment, in Other Commodity
Instruments (other than Cleared Swaps).
(10) The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid assets (calculated at the time of investment),
deemed illiquid by the Adviser.
(11) A minimum of 100,000 Shares will be outstanding at the
commencement of trading on the Exchange.
The Commission notes that the Fund and the Shares must comply with
the initial and continued listing criteria in Nasdaq Rule 5735 for the
Shares to be listed and traded on the Exchange. In addition, the
Exchange represents that all statements and representations made in
this filing regarding (a) the description of the portfolio, (b)
limitations on portfolio holdings or reference assets, or (c) the
applicability of Exchange rules and surveillance procedures shall
constitute continued listing requirements for listing the Shares on the
Exchange. In addition, the issuer has represented to the Exchange that
it will advise the Exchange of any failure by the Fund to comply with
the continued listing requirements, and, pursuant to its obligations
under Section 19(g)(1) of the Act, the Exchange will monitor for
compliance with the
[[Page 54639]]
continued listing requirements.\34\ If the Fund is not in compliance
with the applicable listing requirements, the Exchange will commence
delisting procedures under the Nasdaq 5800 Series.\35\ This approval
order is based on all of the Exchange's representations, including
those set forth above and in the Notice, as modified by Amendment No. 1
to the proposed rule change.
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\34\ The Commission notes that certain other proposals for the
listing and trading of Managed Fund Shares include a representation
that the exchange will ``surveil'' for compliance with the continued
listing requirements. See, e.g., Securities Exchange Act Release No.
78005 (Jun. 7, 2016), 81 FR 38247 (Jun. 13, 2016) (SR-BATS-2015-
100). In the context of this representation, it is the Commission's
view that ``monitor'' and ``surveil'' both mean ongoing oversight of
a fund's compliance with the continued listing requirements.
Therefore, the Commission does not view ``monitor'' as a more or
less stringent obligation than ``surveil'' with respect to the
continued listing requirements.
\35\ See id. at 42775.
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For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendment No. 1 thereto, is consistent with
Section 6(b)(5) of the Act \36\ and the rules and regulations
thereunder applicable to a national securities exchange.
---------------------------------------------------------------------------
\36\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
IV. Conclusion
It is Therefore Ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\37\ that the proposed rule change (SR-NASDAQ-2016-086),
as modified by Amendment No. 1 thereto, be, and it hereby is, approved.
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\37\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
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\38\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19442 Filed 8-15-16; 8:45 am]
BILLING CODE 8011-01-P
