Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings to Determine Whether To Approve or Disapprove Proposed Rule Change, as Modified by Amendment No. 1, Relating to Amendments to NYSE MKT Rules 1600 et seq. and the Listing Rules Applicable to the Shares of the Nuveen Diversified Commodity Fund and the Nuveen Long/Short Commodity Total Return Fund, 63543-63547 [2016-22153]
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Federal Register / Vol. 81, No. 179 / Thursday, September 15, 2016 / Notices
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Brent J. Fields,
Secretary.
[FR Doc. 2016–22126 Filed 9–14–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78809; File No. SR–
NYSEArca–2016–104]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Approving Proposed
Rule Change Amending NYSE Arca
Equities Rules 2.16(c) and 2.21(i)
Regarding the Timing for Submission
of a Uniform Termination Notice for
Securities Industry Registration
(‘‘Form U5’’) by an ETP Holder
September 9, 2016.
sradovich on DSK3GMQ082PROD with NOTICES
I. Introduction
On July 14, 2016, NYSE Arca, Inc.
(‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) 1 of the Securities Exchange Act
of 1934 (‘‘Act’’) 2 and Rule 19b–4
thereunder,3 a proposed rule change to
amend NYSE Arca Equities Rules 2.16,
Amendments to ETP Documents, and
2.21, Employees of ETP Holders
Registration. The proposed rule change
was published for comment in the
Federal Register on July 27, 2016.4 The
Commission received no comment
letters on the proposed rule change.
This order approves the proposed rule
change.
II. Description of the Proposed Rule
Change
The Exchange currently has two
different requirements in its rules
governing when a Form U5 must be
filed: NYSE Arca Equities Rule 2.16(c)
requires an ETP Holder to file a Form
U5 and any amendment thereto within
1 15
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
4 See Securities Exchange Act Release No. 78383
(July 21, 2016), 81 FR 49309 (‘‘Notice’’).
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30 days of ‘‘when a person associated
with that ETP Holder terminates their
[sic] affiliation with an ETP Holder’’;
Rule 2.21(i) requires an ETP Holder to
file a Form U5 and any amendment
thereto within 30 business days of the
termination date, ‘‘when a person’s
employment by such ETP Holder
terminates.’’
The Exchange proposed to amend
these two rules to make the time frame
within which a Form U5 must be
submitted the same. As revised, an ETP
Holder must promptly file a Form U5
with the Central Registration Depository
(‘‘CRD’’), but not later than 30 calendar
days after the date of termination of a
person associated with the ETP Holder
or of an employee, as applicable. The
proposed rule change also requires that
any amendment to a Form U5 be filed
promptly with CRD, but not later than
30 calendar days after learning of the
facts or circumstances giving rise to the
amendment. Finally, the proposed rule
change requires that all Forms U5 be
provided to the terminated person
concurrently with filing with CRD. This
last requirement is new but is consistent
with the rules of other SROs.
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange.5 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b) of the Act,6 in general, and with the
objectives of Section 6(b)(5),7 in
particular, which requires, among other
things, that the rules of a national
securities exchange be designed to
prevent fraudulent and manipulative
acts and practices, to remove
impediments to, and perfect the
mechanism of, a free and open market
and, in general, to protect investors and
the public interest.
The Commission notes that the
change to Rule 2.21 shortens the time
within which the Form U5 must be
submitted from 30 business days to 30
calendar days. (The change to Rule 2.16
merely adds ‘‘calendar’’ to modify the
number of days. The Exchange made
this change so that the two rules would
be consistent.) Shortening the time
within which a Form U5 must be
submitted is important, as the Form U5
5 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).
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
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63543
must be filed by member firms when
they terminate the association of a
registered person, or employee. The
Form U5 includes the reason for
termination of the registered person,
which is important when a firm has
terminated a registered person for cause.
State regulators use the information on
Form U5 to determine whether to
approve requests by a firm to have an
associated person registered in a
particular state. Broker-dealer firms
review the information on Form U5
when they are deciding whether to hire
a registered person. Therefore, the
sooner the Form U5 is filed the sooner
regulators and broker-dealers will have
access to the information. Thus,
shortening the time within which a
Form U5 must be submitted, so that
regulators and broker-dealers can have
access to the information sooner, would
remove impediments to, and perfect the
mechanism of, a free and open market
and protect investors and the public
interest. For these reasons, the
Commission believes that the proposed
rule change is consistent with the Act.
IV. Conclusion
It Is Therefore Ordered, pursuant to
Section 19(b)(2) of the Act,8 that the
proposed rule change (SR–NYSEArca–
2016–104) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Brent J. Fields,
Secretary.
[FR Doc. 2016–22158 Filed 9–14–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78804; File No. SR–
NYSEMKT–2016–58]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Instituting
Proceedings to Determine Whether To
Approve or Disapprove Proposed Rule
Change, as Modified by Amendment
No. 1, Relating to Amendments to
NYSE MKT Rules 1600 et seq. and the
Listing Rules Applicable to the Shares
of the Nuveen Diversified Commodity
Fund and the Nuveen Long/Short
Commodity Total Return Fund
September 9, 2016.
On May 24, 2016, NYSE MKT LLC
(‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
8 15
9 17
E:\FR\FM\15SEN1.SGM
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
15SEN1
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Federal Register / Vol. 81, No. 179 / Thursday, September 15, 2016 / Notices
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend the listing rules applicable to the
shares (‘‘Shares’’) of the Nuveen
Diversified Commodity Fund and the
Nuveen Long/Short Commodity Total
Return Fund (collectively, ‘‘Funds’’),
which the Exchange currently lists and
trades. The Commission published
notice of the proposed rule change in
the Federal Register on June 13, 2016.3
On July 28, 2016, pursuant to Section
19(b)(2) of the Act,4 the Commission
designated a longer period within which
to approve the proposed rule change,
disapprove the proposed rule change, or
institute proceedings to determine
whether to disapprove the proposed
rule change.5 On September 2, 2016, the
Exchange filed Amendment No. 1 to the
proposed rule change, which replaced
and superseded the proposed rule
change as originally filed.6 The
Commission received one comment on
the proposed rule change.7 This order
institutes proceedings under Section
19(b)(2)(B) of the Act 8 to determine
whether to approve or disapprove the
proposed rule change, as modified by
Amendment No. 1.
I. The Exchange’s Description of the
Proposal 9
The Exchange currently lists and
trades the Shares pursuant to NYSE
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 78000
(June 7, 2016), 81 FR 38232.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 78432,
81 FR 51248 (August 3, 2016). The Commission
designated September 9, 2016, as the date by which
the Commission would either approve or
disapprove, or institute proceedings to determine
whether to disapprove, the proposed rule change.
6 In Amendment No. 1, the Exchange amended
Commentary .01 to Exchange Rule 1602 to add the
following new text: (1) All statements and
representations contained in such proposal
regarding (a) the description of the portfolio
holdings, (b) limitations on portfolio holdings, or (c)
the applicability of Exchange rules and surveillance
procedures shall be complied with on a continuing
basis and the issuer of such issue of Trust Units
shall notify the Exchange of any material
noncompliance with such statements and
representations; and (2) the Exchange will consider
the suspension of trading and delisting (if
applicable) of an issue of Trust Units under
Sections 1001 through 1010 of the NYSE MKT
Company Guide if the issuer of such security
notifies the Exchange of an event of material
noncompliance. Amendment No. 1 is available at:
https://www.nyse.com/publicdocs/nyse/markets/
nyse-mkt/rule-filings/filings/2016/NYSEMKT-201658.pdf.
7 See comment letter dated July 4, 2016, available
at: https://www.sec.gov/comments/sr-nysemkt2016-58/nysemkt201658-1.pdf.
8 15 U.S.C. 78s(b)(2)(B).
9 For additional information regarding, among
other things, the Funds, the Shares, investment
strategies, risks, creation and redemption
procedures, fees, portfolio holdings, disclosure
sradovich on DSK3GMQ082PROD with NOTICES
2 17
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securities; and (2) providing that Trust
Units be issued and redeemed
continuously in specified aggregate
amounts at the next determined NAV.
The Exchange also proposes to amend
Rule 1602(a)(ii) to provide that the
Exchange will obtain a representation
from the issuer of each series of Trust
Units that the NAV and the ‘‘Disclosed
Portfolio’’ 12 will be made available to
all market participants at the same time.
Further, the Exchange proposes to
amend Rule 1602(b)(ii) to provide that,
if the Exchange becomes aware that the
Disclosed Portfolio or NAV per share
with respect to a series of Trust Units is
not disseminated to all market
participants at the same time, it will halt
trading in such series until such time as
the Disclosed Portfolio or NAV per
share is available to all market
participants.
The Exchange also proposes to
provide in Rule 1602(b)(iii) that each
series of Trust Units will be listed or
traded subject to application of the
following criteria: (1) The ‘‘Intraday
Indicative Value’’ for shares 13 will be
widely disseminated by one or more
A. Amendments to NYSE MKT Rules
major market data vendors at least every
1600 et seq.
15 seconds during the time when the
Under NYSE MKT Rule 1600, a Trust
Trust Units trade on the Exchange; (2)
Unit is a security that is issued by a trust the Disclosed Portfolio will be
(‘‘Trust’’), or other similar entity, that is disseminated at least once daily and
constituted as a commodity pool and
will be made available to all market
holds investments comprising, or
participants at the same time; and (3)
otherwise based on, any combination of the ‘‘Reporting Authority’’ that provides
futures contracts, options on futures
the Disclosed Portfolio must implement
contracts, forward contracts, swap
and maintain, or be subject to,
contracts, and/or commodities. The
procedures designed to prevent the use
Exchange proposes to amend Rules 1600 and dissemination of material, nonpublic information regarding the actual
et seq. in several respects.
Among other things, the Exchange
components of the portfolio.14
Moreover, the Exchange proposes in
proposes to amend its Rule 1600(b)(ii)
Commentary .04 to Rule 1600 that, if a
by: (1) Allowing Trusts to invest in
Trust’s advisor is affiliated with a
MKT Rules 1600 et seq. (Trading of
Trust Units).10 To accommodate certain
changes to the Funds discussed below,
the Exchange proposes to amend NYSE
MKT Rules 1600 et seq. and certain
representations made in support of the
listing rules for the Shares upon which
the Prior Orders were conditioned.
Currently, the Funds are structured as
actively managed closed-end
commodity pools. On December 19,
2014, Nuveen Investments, parent
company of Nuveen Commodities Asset
Management, LLC (‘‘Manager’’),
announced that it had approved a plan
to convert the Funds into open-end
exchange-traded products (each such
plan, a ‘‘Conversion’’), which would
involve instituting processes for
continual creation and redemption of
the Shares at net asset value (‘‘NAV’’) on
any business day. At meetings of
shareholders in 2015, the shareholders
of each Fund approved the Conversions.
According to the Exchange, the purpose
of the Conversions is to promote the
trading of the Funds’ Shares at prices
equal to or near their NAV.11
policies, calculation of net asset value,
distributions, taxes, see Amendment No. 1, supra
note 6; Pre-Effective Amendment No. 1 to the
registration statement on Form S–3 (File No. 333–
205590), filed on November 30, 2015 (the
Diversified Fund); and Pre-Effective Amendment
No. 1 to the registration statement on Form S–3
(File No. 333–205587), filed on November 30, 2015
(the Long/Short Fund).
10 See also Securities Exchange Act Release No.
61807 (March 31, 2010), 75 FR 17818 (April 7,
2010) (SR–NYSEAmex–2010–09) (order approving
listing and trading of shares of the Nuveen
Diversified Commodity Fund) (‘‘Prior Diversified
Order’’); and Securities Exchange Act Release No
67223 (June 20, 2012) (SR–NYSEAmex–2012–24)
(order approving listing and trading of shares of the
Nuveen Long/Short Commodity Total Return Fund)
(‘‘Prior Long/Short Order’’ and, together with the
Prior Diversified Order, ‘‘Prior Orders’’). The
Exchange was formerly known as NYSE Amex LLC.
11 Since the Conversion Plan Announcement,
each Fund has traded at a reduced discount to
NAV: from December 18, 2014, to March 9, 2016,
the discount to NAV has been reduced for the
Diversified Fund from 18.02% to 5.11% and for the
Long/Short Fund from 19.80% to 3.75%. See
Amendment No. 1, supra note 6, at 5, n.5.
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12 ‘‘Disclosed Portfolio’’ is defined as the
identities and quantities of the assets held by a
Trust that will form the basis for that Trust’s
calculation of the NAV at the end of the business
day. See proposed NYSE MKT Rule 1600(b)(iii).
13 ‘‘Intraday Indicative Value’’ is defined as the
estimated indicative value of a Trust Unit based on
current information regarding the value of the assets
in the Disclosed Portfolio. See proposed Rule
1600(b)(iv).
14 Proposed Rule 1600(b)(v) defines ‘‘Reporting
Authority’’ as, in respect of a particular series of
Trust Units, the Exchange, an institution, or a
reporting or information service designated by the
Trust or the Exchange or by the exchange that lists
a particular series of Trust Units (if the Exchange
is trading such series pursuant to unlisted trading
privileges) as the official source for calculating and
reporting information relating to such series,
including, but not limited to, (i) the Intraday
Indicative Value, (ii) the Disclosed Portfolio, (iii)
the amount of any cash distribution to holders of
Trust Units, (iv) NAV, and (v) other information
relating to the issuance, redemption, or trading of
Trust Units. A series of Trust Units may have more
than one Reporting Authority, each having different
functions.
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Federal Register / Vol. 81, No. 179 / Thursday, September 15, 2016 / Notices
broker-dealer, the broker-dealer shall
erect a ‘‘fire wall’’ around the personnel
who have access to information
concerning changes and adjustments to
the Disclosed Portfolio. Personnel who
make decisions on the Trust’s portfolio
composition must be subject to
procedures designed to prevent the use
and dissemination of material nonpublic information regarding the
applicable portfolio.
B. Descriptions of the Funds
Each Fund currently is a commodity
pool managed by the Manager. The
Manager is a Delaware limited liability
company that is registered as a
commodity pool operator (‘‘CPO’’) with
the Commodity Futures Trading
Commission (‘‘CFTC’’). The Manager is
a wholly-owned subsidiary of Nuveen
Investments, Inc. (‘‘Nuveen
Investments’’). The Manager is
responsible for determining the Funds’
overall investment strategies and
overseeing their implementation. The
Manager also manages the Funds’
business affairs and provides certain
legal, accounting, and other
administrative services.
Gresham Investment Management
LLC (‘‘Commodity Subadviser’’), an
affiliate of the Manager, manages each
Fund’s commodity futures investment
strategy. The Commodity Subadviser is
a Delaware limited liability company
and is registered with the CFTC as a
commodity trading advisor and as a
CPO and is a member of the National
Futures Association. Additionally, the
Commodity Subadviser is registered
with the Commission as an investment
adviser under the Investment Advisers
Act of 1940, as amended (‘‘Advisers
Act’’).
Nuveen Asset Management, LLC
(‘‘Collateral Subadviser’’ and, together
with the Commodity Subadviser, the
‘‘Subadvisers’’), an affiliate of the
Manager, manages each Fund’s
investments in U.S. government
securities, other short-term, high grade
fixed income securities, and cash
equivalents (‘‘collateral’’). The Collateral
Subadviser is registered with the
Commission as an investment adviser
under the Advisers Act.
State Street Bank and Trust Company
serves as transfer agent, registrar for the
Shares, and custodian and administrator
of the assets of each Fund, pursuant to
which it performs NAV calculations,
accounting and other fund
administrative services. After the
Conversions, it also will receive and
process orders from Authorized
Participants to create and redeem Shares
of each Fund.
C. Post-Conversion Changes and
Amended Representations Regarding
the Funds
At the time of the Conversions, the
Shares would be assigned new CUSIP
Before conversion
63545
numbers, and the name of the Funds
would change: The name of the
Diversified Fund would change to the
NuShares Gresham Adaptive
Commodity ETF, and the name of the
Long/Short Fund would change to the
NuShares Gresham Long/Short
Commodity ETF. Currently, the Funds
are not investment companies within
the meaning of the Investment Company
Act of 1940, as amended (‘‘Investment
Company Act’’), and they would not
become investment companies after the
Conversions. The Manager would
announce in advance the expected
effective date of the Conversions via
press releases and Form 8–K filings.
Those press releases would include a
summary of changes to the Funds that
would occur in connection with the
Conversions. The Exchange also would
issue a notice to members
approximately 10 days prior to the date
of effectiveness of the Conversion, and
another notice to members on the
business day prior to the date Shares
would trade under the new CUSIP.
In connection with the Conversions,
the Manager intends to implement
additional changes to both Funds that
the Manager believes will better align
the Funds’ features with their newlyadopted ETP structure. The charts
below summarize those changes.
After conversion
Changes to Diversified Fund
Fund name:
Nuveen Diversified Commodity Fund ...............................................
Ticker:
CFD ...................................................................................................
Distribution Policy:
Pays regular monthly distributions ....................................................
Share Repurchases:
Active share repurchase program .....................................................
Investment Strategy:
Long-only commodity strategy ..........................................................
sradovich on DSK3GMQ082PROD with NOTICES
Invest in forwards ..............................................................................
Option writing program ......................................................................
Collateral invested in cash equivalents, U.S. government securities
and other short-term high-grade debt securities, including corporate debt, with terms not exceeding one year.
NuShares Gresham Adaptive Commodity ETF.
GAC.
Discontinue regular monthly Distributions.
Discontinue share repurchase Program.
Long-biased commodity strategy-weightings determined on a monthly
basis; if the price of a commodity contract is higher than its sixmonth simple moving average, the commodity contract will be held
at its target weight; conversely, if the price is below the six-month
simple moving average, the commodity weight will be reduced by
half.
No longer invest in forwards.
Discontinue option writing program.
Collateral invested in U.S. government securities, with terms not exceeding one year, and cash equivalents.
Changes to Long/Short Fund
Fund name:
Nuveen Long/Short Commodity Total Return Fund .........................
Ticker:
CTF ....................................................................................................
Distribution Policy:
Pays regular monthly distributions ....................................................
Share Repurchases:
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NuShares Gresham Long/Short Commodity ETF.
GLS.
Discontinue regular monthly distributions.
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Federal Register / Vol. 81, No. 179 / Thursday, September 15, 2016 / Notices
Before conversion
After conversion
Active share repurchase Program ....................................................
Investment Strategy:
Long/short commodity futures strategy based on the Morningstar
Long/Short Commodity Index.
Uses momentum-based model to calculate 12-month moving price
averages that are used to determine whether a commodity futures position is held long or short.
Will not short energy futures—if model signals to short energy futures, positions will instead be held ‘‘flat’’ (i.e., in cash).
Invest in forwards ..............................................................................
Option writing program ......................................................................
Collateral invested in cash equivalents, U.S. government securities
and other short-term high-grade debt securities, including corporate debt, with terms not exceeding one year.
sradovich on DSK3GMQ082PROD with NOTICES
After the Conversions, each Fund’s
principal investments are not expected
to change. Under normal market
conditions,15 each Fund will continue
to invest in (i) commodity futures
contracts that provide exposure to the
global commodity markets
(‘‘Commodity Futures’’) listed on U.S.
and non-U.S. futures exchanges 16
having various expiration dates, and (ii)
collateral consisting of U.S. government
securities and cash equivalents, some of
which are maintained on deposit with a
Fund’s commodity broker as margin, to
collateralize a Fund’s positions in the
Commodity Futures. Moreover, as stated
above, the Funds will not invest in
forwards or options following the
Conversions. In addition, each Fund’s
Commodity Futures investments will, at
all times, be fully collateralized (i.e., the
‘‘notional value’’—the value of the
underlying commodity at the contract’s
spot price—of the Fund’s commodity
15 With respect to each Fund, the term ‘‘under
normal market conditions’’ includes, but is not
limited to, the absence of extreme volatility or
trading halts in the financial markets generally;
operational issues causing dissemination of
inaccurate market information; or force majeure
type events such as a systems failure, natural or
man-made disaster, act of God, armed conflict, act
of terrorism, riot or labor disruption or any similar
intervening circumstance.
16 Each Fund would make investments in
Commodity Futures in agriculture, energy, foods
and fibers, industrial metals, livestock, and
precious metals, and would take positions in
Commodity Futures related to approximately 30
commodities. Each Fund would continue to allocate
its investments to Commodity Futures pursuant to
the Commodity Subadviser’s proprietary strategy.
See Amendment No. 1, supra note 6, at 17. Not
more than 10% of the net assets of a Fund, in the
aggregate, shall consist of futures contracts whose
principal market is not a member of the Intermarket
Surveillance Group (‘‘ISG’’) or with which the
Exchange has in place a comprehensive
surveillance sharing agreement. See Amendment
No. 1, supra note 6, at 15, n.17.
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Discontinue share repurchase Program.
Long/short commodity futures strategy based on the Gresham Long/
Short Commodity Index.
Long/short commodity strategy—Momentum-based model will employ
shorter-term moving averages (such as 6-months) to determine
whether a commodity futures position in the Index is held long or
short (or flat, for petroleum-related commodities). Weightings are determined on a monthly basis; if the price of a commodity contract is
higher than its six-month simple moving average, the commodity is
assigned a long position; conversely, if the price is below the sixmonth simple moving average, it is assigned a short position.
Will not short petroleum-based futures—if model signals to short petroleum-based futures, positions will instead be held ‘‘flat’’ (i.e., in
cash).
No longer invest in forwards.
Discontinue option writing program.
Collateral invested in short-term U.S. government securities and cash
equivalents.
exposure will not exceed the market
value of the Fund’s net assets).
Whereas in support of the Prior
Orders the Exchange represented that
25% of each Fund’s collateral will be
committed as ‘‘initial’’ and ‘‘variation’’
margin, the Funds now represent that,
following the Conversions,
approximately 10–25% of each Fund’s
collateral would be committed as initial
and variation margin and be segregated
pursuant to the Commodity Exchange
Act, and the regulations thereunder, to
secure the futures contract positions.17
The remaining 75–90% of a Fund’s
collateral (as opposed to a set 75%, as
represented in support of the Prior
Orders) would continue be held in a
separate collateral investment account
managed by the Collateral Subadviser.
The eligible collateral investments
would also change following the
Conversion—the Funds would no longer
invest in money market funds or
repurchase agreements. Instead, they
would invest in short-term U.S.
government securities and cash
equivalents.
II. Proceedings To Determine Whether
To Approve or Disapprove SR–
NYSEMKT–2016–58 and Grounds for
Disapproval Under Consideration
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Act 18 to determine
whether the proposed rule change, as
modified by Amendment No. 1 should
be approved or disapproved. Institution
17 Those assets would be held in a commodity
futures account maintained by SG Americas
Securities, LLC, the Funds’ clearing broker, which
serves as a futures commission merchant and
broker-dealer registered with the CFTC and the
Commission.
18 15 U.S.C. 78s(b)(2)(B).
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Sfmt 4703
of such proceedings is appropriate at
this time in view of the legal and policy
issues raised by the proposed rule
change. Institution of proceedings does
not indicate that the Commission has
reached any conclusions with respect to
any of the issues involved. Rather, as
described below, the Commission seeks
and encourages interested persons to
provide comments on the proposed rule
change.
Pursuant to Section 19(b)(2)(B) of the
Act,19 the Commission is providing
notice of the grounds for disapproval
under consideration. The Commission is
instituting proceedings to allow for the
submission of additional analysis
regarding the proposed rule change’s
consistency with Section 6(b)(5) of the
Act, which requires, among other
things, that the rules of a national
securities exchange be ‘‘designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade,’’ and ‘‘to
protect investors and the public
interest.’’ 20
The pre-existing Shares after the
Conversions would not be deemed new
securities but would continue to trade
on the Exchange without interruption.
As discussed above, the Exchange states
that: (1) Ahead of the Conversions, the
Manager would announce via press
releases and Form 8–K filings the
expected effective date of the
Conversions; (2) those press releases
would include a summary of changes to
the Funds that would occur in
connection with the Conversions; (3)
NYSE MKT would issue a notice to
members approximately 10 days prior to
the date of effectiveness of the
19 Id.
20 15
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U.S.C. 78f(b)(5).
15SEN1
Federal Register / Vol. 81, No. 179 / Thursday, September 15, 2016 / Notices
sradovich on DSK3GMQ082PROD with NOTICES
Conversion, and another notice to
members on the business day prior to
the date Shares would trade under the
new CUSIP. Because the Shares will
continue to be listed and traded on the
Exchange without interruption as the
Funds transition from a closed-end to an
open-end structure, the Commission
seeks comment on whether the
Exchange’s proposal is designed to
sufficiently ensure that the trading of
the Shares during the Conversions will
be orderly and without undue market
confusion or disruption.
Separately, the Exchange proposes to
amend Commentary .01 to its Rule 1602,
which pertains to initial and continued
listing requirements for Trust Units, to
provide that ‘‘the issuer of [an] issue of
Trust Units shall notify the Exchange of
any material noncompliance with [any]
statements and representations’’ and
that ‘‘the Exchange will consider
suspending trading in and, if applicable,
delisting of, an issue of Trust Units if
the issuer of such security notifies the
Exchange of material noncompliance’’
(emphasis added). The Commission
believes that it is critical that listed
issues, including those of exchange
traded products such as the Funds,
comply with exchange listing standards
on an ongoing basis and that listing
exchanges rigorously enforce those
rules. Accordingly, the Commission,
seeks comment on whether the
Exchange’s proposed amendment to
Commentary .01 that proposes to
‘‘consider’’ suspension and delisting
only for ‘‘material’’ noncompliance of
the Exchange’s listing standards is
consistent with Section 6(b)(5) of the
Act, which, among other things,
requires that the rules of an exchange be
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, and to protect investors and the
public interest.
III. Procedure: Request for Written
Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the issues
identified above, as well as any other
concerns they may have with the
proposal. In particular, the Commission
invites the written views of interested
persons concerning whether the
proposal is consistent with Section
6(b)(5) or any other provision of the Act,
or the rules and regulations thereunder.
Although there do not appear to be any
issues relevant to approval or
disapproval that would be facilitated by
an oral presentation of views, data, and
arguments, the Commission will
VerDate Sep<11>2014
17:34 Sep 14, 2016
Jkt 238001
consider, pursuant to Rule 19b–4, any
request for an opportunity to make an
oral presentation.21
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposal should be approved or
disapproved by October 6, 2016. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by October 20, 2016. The
Commission asks that commenters
address the sufficiency of the
Exchange’s statements in support of the
proposal, which are set forth in
Amendment No. 1, in addition to any
other comments they may wish to
submit about the proposed rule change.
Comments may be submitted by any
of the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEMKT–2016–58 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Numbers SR–NYSEMKT–2016–58. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
21 Section 19(b)(2) of the Act, as amended by the
Securities Act Amendments of 1975, Public Law
94–29 (June 4, 1975), grants the Commission
flexibility to determine what type of proceeding—
either oral or notice and opportunity for written
comments—is appropriate for consideration of a
particular proposal by a self-regulatory
organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban
Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30
(1975).
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
63547
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of these
filings also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEMKT–2016–58 and should be
submitted on or before October 6, 2016.
Rebuttal comments should be submitted
by October 20, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Brent J. Fields,
Secretary.
[FR Doc. 2016–22153 Filed 9–14–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32255; 812–14665]
Dhandho ETF Trust and Dhandho
Funds LLC; Notice of Application
September 9, 2016.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under section 6(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from sections
2(a)(32), 5(a)(1), 22(d), and 22(e) of the
Act and rule 22c–1 under the Act, under
sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and
17(a)(2) of the Act, and under section
12(d)(1)(J) for an exemption from
sections 12(d)(1)(A) and 12(d)(1)(B) of
the Act. The requested order would
permit (a) index-based series of certain
open-end management investment
companies (‘‘Funds’’) to issue shares
redeemable in large aggregations only
(‘‘Creation Units’’); (b) secondary market
transactions in Fund shares to occur at
negotiated market prices rather than at
net asset value (‘‘NAV’’); (c) certain
Funds to pay redemption proceeds,
under certain circumstances, more than
seven days after the tender of shares for
redemption; (d) certain affiliated
persons of a Fund to deposit securities
into, and receive securities from, the
Fund in connection with the purchase
and redemption of Creation Units; (e)
certain registered management
investment companies and unit
AGENCY:
22 17
E:\FR\FM\15SEN1.SGM
CFR 200.30–3(a)(57).
15SEN1
]]>Agencies
[Federal Register Volume 81, Number 179 (Thursday, September 15, 2016)]
[Notices]
[Pages 63543-63547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22153]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78804; File No. SR-NYSEMKT-2016-58]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting
Proceedings to Determine Whether To Approve or Disapprove Proposed Rule
Change, as Modified by Amendment No. 1, Relating to Amendments to NYSE
MKT Rules 1600 et seq. and the Listing Rules Applicable to the Shares
of the Nuveen Diversified Commodity Fund and the Nuveen Long/Short
Commodity Total Return Fund
September 9, 2016.
On May 24, 2016, NYSE MKT LLC (``Exchange'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act
[[Page 63544]]
of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule
change to amend the listing rules applicable to the shares (``Shares'')
of the Nuveen Diversified Commodity Fund and the Nuveen Long/Short
Commodity Total Return Fund (collectively, ``Funds''), which the
Exchange currently lists and trades. The Commission published notice of
the proposed rule change in the Federal Register on June 13, 2016.\3\
On July 28, 2016, pursuant to Section 19(b)(2) of the Act,\4\ the
Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\5\ On September 2, 2016, the Exchange filed Amendment No. 1 to
the proposed rule change, which replaced and superseded the proposed
rule change as originally filed.\6\ The Commission received one comment
on the proposed rule change.\7\ This order institutes proceedings under
Section 19(b)(2)(B) of the Act \8\ to determine whether to approve or
disapprove the proposed rule change, as modified by Amendment No. 1.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 78000 (June 7,
2016), 81 FR 38232.
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 78432, 81 FR 51248
(August 3, 2016). The Commission designated September 9, 2016, as
the date by which the Commission would either approve or disapprove,
or institute proceedings to determine whether to disapprove, the
proposed rule change.
\6\ In Amendment No. 1, the Exchange amended Commentary .01 to
Exchange Rule 1602 to add the following new text: (1) All statements
and representations contained in such proposal regarding (a) the
description of the portfolio holdings, (b) limitations on portfolio
holdings, or (c) the applicability of Exchange rules and
surveillance procedures shall be complied with on a continuing basis
and the issuer of such issue of Trust Units shall notify the
Exchange of any material noncompliance with such statements and
representations; and (2) the Exchange will consider the suspension
of trading and delisting (if applicable) of an issue of Trust Units
under Sections 1001 through 1010 of the NYSE MKT Company Guide if
the issuer of such security notifies the Exchange of an event of
material noncompliance. Amendment No. 1 is available at: https://www.nyse.com/publicdocs/nyse/markets/nyse-mkt/rule-filings/filings/2016/NYSEMKT-2016-58.pdf.
\7\ See comment letter dated July 4, 2016, available at: https://www.sec.gov/comments/sr-nysemkt-2016-58/nysemkt201658-1.pdf.
\8\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
I. The Exchange's Description of the Proposal \9\
---------------------------------------------------------------------------
\9\ For additional information regarding, among other things,
the Funds, the Shares, investment strategies, risks, creation and
redemption procedures, fees, portfolio holdings, disclosure
policies, calculation of net asset value, distributions, taxes, see
Amendment No. 1, supra note 6; Pre-Effective Amendment No. 1 to the
registration statement on Form S-3 (File No. 333-205590), filed on
November 30, 2015 (the Diversified Fund); and Pre-Effective
Amendment No. 1 to the registration statement on Form S-3 (File No.
333-205587), filed on November 30, 2015 (the Long/Short Fund).
---------------------------------------------------------------------------
The Exchange currently lists and trades the Shares pursuant to NYSE
MKT Rules 1600 et seq. (Trading of Trust Units).\10\ To accommodate
certain changes to the Funds discussed below, the Exchange proposes to
amend NYSE MKT Rules 1600 et seq. and certain representations made in
support of the listing rules for the Shares upon which the Prior Orders
were conditioned.
---------------------------------------------------------------------------
\10\ See also Securities Exchange Act Release No. 61807 (March
31, 2010), 75 FR 17818 (April 7, 2010) (SR-NYSEAmex-2010-09) (order
approving listing and trading of shares of the Nuveen Diversified
Commodity Fund) (``Prior Diversified Order''); and Securities
Exchange Act Release No 67223 (June 20, 2012) (SR-NYSEAmex-2012-24)
(order approving listing and trading of shares of the Nuveen Long/
Short Commodity Total Return Fund) (``Prior Long/Short Order'' and,
together with the Prior Diversified Order, ``Prior Orders''). The
Exchange was formerly known as NYSE Amex LLC.
---------------------------------------------------------------------------
Currently, the Funds are structured as actively managed closed-end
commodity pools. On December 19, 2014, Nuveen Investments, parent
company of Nuveen Commodities Asset Management, LLC (``Manager''),
announced that it had approved a plan to convert the Funds into open-
end exchange-traded products (each such plan, a ``Conversion''), which
would involve instituting processes for continual creation and
redemption of the Shares at net asset value (``NAV'') on any business
day. At meetings of shareholders in 2015, the shareholders of each Fund
approved the Conversions. According to the Exchange, the purpose of the
Conversions is to promote the trading of the Funds' Shares at prices
equal to or near their NAV.\11\
---------------------------------------------------------------------------
\11\ Since the Conversion Plan Announcement, each Fund has
traded at a reduced discount to NAV: from December 18, 2014, to
March 9, 2016, the discount to NAV has been reduced for the
Diversified Fund from 18.02% to 5.11% and for the Long/Short Fund
from 19.80% to 3.75%. See Amendment No. 1, supra note 6, at 5, n.5.
---------------------------------------------------------------------------
A. Amendments to NYSE MKT Rules 1600 et seq.
Under NYSE MKT Rule 1600, a Trust Unit is a security that is issued
by a trust (``Trust''), or other similar entity, that is constituted as
a commodity pool and holds investments comprising, or otherwise based
on, any combination of futures contracts, options on futures contracts,
forward contracts, swap contracts, and/or commodities. The Exchange
proposes to amend Rules 1600 et seq. in several respects.
Among other things, the Exchange proposes to amend its Rule
1600(b)(ii) by: (1) Allowing Trusts to invest in securities; and (2)
providing that Trust Units be issued and redeemed continuously in
specified aggregate amounts at the next determined NAV. The Exchange
also proposes to amend Rule 1602(a)(ii) to provide that the Exchange
will obtain a representation from the issuer of each series of Trust
Units that the NAV and the ``Disclosed Portfolio'' \12\ will be made
available to all market participants at the same time. Further, the
Exchange proposes to amend Rule 1602(b)(ii) to provide that, if the
Exchange becomes aware that the Disclosed Portfolio or NAV per share
with respect to a series of Trust Units is not disseminated to all
market participants at the same time, it will halt trading in such
series until such time as the Disclosed Portfolio or NAV per share is
available to all market participants.
---------------------------------------------------------------------------
\12\ ``Disclosed Portfolio'' is defined as the identities and
quantities of the assets held by a Trust that will form the basis
for that Trust's calculation of the NAV at the end of the business
day. See proposed NYSE MKT Rule 1600(b)(iii).
---------------------------------------------------------------------------
The Exchange also proposes to provide in Rule 1602(b)(iii) that
each series of Trust Units will be listed or traded subject to
application of the following criteria: (1) The ``Intraday Indicative
Value'' for shares \13\ will be widely disseminated by one or more
major market data vendors at least every 15 seconds during the time
when the Trust Units trade on the Exchange; (2) the Disclosed Portfolio
will be disseminated at least once daily and will be made available to
all market participants at the same time; and (3) the ``Reporting
Authority'' 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.\14\
---------------------------------------------------------------------------
\13\ ``Intraday Indicative Value'' is defined as the estimated
indicative value of a Trust Unit based on current information
regarding the value of the assets in the Disclosed Portfolio. See
proposed Rule 1600(b)(iv).
\14\ Proposed Rule 1600(b)(v) defines ``Reporting Authority''
as, in respect of a particular series of Trust Units, the Exchange,
an institution, or a reporting or information service designated by
the Trust or the Exchange or by the exchange that lists a particular
series of Trust Units (if the Exchange is trading such series
pursuant to unlisted trading privileges) as the official source for
calculating and reporting information relating to such series,
including, but not limited to, (i) the Intraday Indicative Value,
(ii) the Disclosed Portfolio, (iii) the amount of any cash
distribution to holders of Trust Units, (iv) NAV, and (v) other
information relating to the issuance, redemption, or trading of
Trust Units. A series of Trust Units may have more than one
Reporting Authority, each having different functions.
---------------------------------------------------------------------------
Moreover, the Exchange proposes in Commentary .04 to Rule 1600
that, if a Trust's advisor is affiliated with a
[[Page 63545]]
broker-dealer, the broker-dealer shall erect a ``fire wall'' around the
personnel who have access to information concerning changes and
adjustments to the Disclosed Portfolio. Personnel who make decisions on
the Trust's portfolio composition must be subject to procedures
designed to prevent the use and dissemination of material non-public
information regarding the applicable portfolio.
B. Descriptions of the Funds
Each Fund currently is a commodity pool managed by the Manager. The
Manager is a Delaware limited liability company that is registered as a
commodity pool operator (``CPO'') with the Commodity Futures Trading
Commission (``CFTC''). The Manager is a wholly-owned subsidiary of
Nuveen Investments, Inc. (``Nuveen Investments''). The Manager is
responsible for determining the Funds' overall investment strategies
and overseeing their implementation. The Manager also manages the
Funds' business affairs and provides certain legal, accounting, and
other administrative services.
Gresham Investment Management LLC (``Commodity Subadviser''), an
affiliate of the Manager, manages each Fund's commodity futures
investment strategy. The Commodity Subadviser is a Delaware limited
liability company and is registered with the CFTC as a commodity
trading advisor and as a CPO and is a member of the National Futures
Association. Additionally, the Commodity Subadviser is registered with
the Commission as an investment adviser under the Investment Advisers
Act of 1940, as amended (``Advisers Act'').
Nuveen Asset Management, LLC (``Collateral Subadviser'' and,
together with the Commodity Subadviser, the ``Subadvisers''), an
affiliate of the Manager, manages each Fund's investments in U.S.
government securities, other short-term, high grade fixed income
securities, and cash equivalents (``collateral''). The Collateral
Subadviser is registered with the Commission as an investment adviser
under the Advisers Act.
State Street Bank and Trust Company serves as transfer agent,
registrar for the Shares, and custodian and administrator of the assets
of each Fund, pursuant to which it performs NAV calculations,
accounting and other fund administrative services. After the
Conversions, it also will receive and process orders from Authorized
Participants to create and redeem Shares of each Fund.
C. Post-Conversion Changes and Amended Representations Regarding the
Funds
At the time of the Conversions, the Shares would be assigned new
CUSIP numbers, and the name of the Funds would change: The name of the
Diversified Fund would change to the NuShares Gresham Adaptive
Commodity ETF, and the name of the Long/Short Fund would change to the
NuShares Gresham Long/Short Commodity ETF. Currently, the Funds are not
investment companies within the meaning of the Investment Company Act
of 1940, as amended (``Investment Company Act''), and they would not
become investment companies after the Conversions. The Manager would
announce in advance the expected effective date of the Conversions via
press releases and Form 8-K filings. Those press releases would include
a summary of changes to the Funds that would occur in connection with
the Conversions. The Exchange also would issue a notice to members
approximately 10 days prior to the date of effectiveness of the
Conversion, and another notice to members on the business day prior to
the date Shares would trade under the new CUSIP.
In connection with the Conversions, the Manager intends to
implement additional changes to both Funds that the Manager believes
will better align the Funds' features with their newly-adopted ETP
structure. The charts below summarize those changes.
------------------------------------------------------------------------
Before conversion After conversion
------------------------------------------------------------------------
Changes to Diversified Fund
------------------------------------------------------------------------
Fund name:
Nuveen Diversified Commodity Fund.. NuShares Gresham Adaptive
Commodity ETF.
Ticker:
CFD................................ GAC.
Distribution Policy:
Pays regular monthly distributions. Discontinue regular monthly
Distributions.
Share Repurchases:
Active share repurchase program.... Discontinue share repurchase
Program.
Investment Strategy:
Long-only commodity strategy....... Long-biased commodity strategy-
weightings determined on a
monthly basis; if the price of
a commodity contract is higher
than its six-month simple
moving average, the commodity
contract will be held at its
target weight; conversely, if
the price is below the six-
month simple moving average,
the commodity weight will be
reduced by half.
Invest in forwards................. No longer invest in forwards.
Option writing program............. Discontinue option writing
program.
Collateral invested in cash Collateral invested in U.S.
equivalents, U.S. government government securities, with
securities and other short-term terms not exceeding one year,
high-grade debt securities, and cash equivalents.
including corporate debt, with
terms not exceeding one year.
------------------------------------------------------------------------
Changes to Long/Short Fund
------------------------------------------------------------------------
Fund name:
Nuveen Long/Short Commodity Total NuShares Gresham Long/Short
Return Fund. Commodity ETF.
Ticker:
CTF................................ GLS.
Distribution Policy:
Pays regular monthly distributions. Discontinue regular monthly
distributions.
Share Repurchases:
[[Page 63546]]
Active share repurchase Program.... Discontinue share repurchase
Program.
Investment Strategy:
Long/short commodity futures Long/short commodity futures
strategy based on the Morningstar strategy based on the Gresham
Long/Short Commodity Index. Long/Short Commodity Index.
Uses momentum-based model to Long/short commodity strategy--
calculate 12-month moving price Momentum-based model will
averages that are used to employ shorter-term moving
determine whether a commodity averages (such as 6-months) to
futures position is held long or determine whether a commodity
short. futures position in the Index
is held long or short (or
flat, for petroleum-related
commodities). Weightings are
determined on a monthly basis;
if the price of a commodity
contract is higher than its
six-month simple moving
average, the commodity is
assigned a long position;
conversely, if the price is
below the six-month simple
moving average, it is assigned
a short position.
Will not short energy futures--if Will not short petroleum-based
model signals to short energy futures--if model signals to
futures, positions will instead be short petroleum-based futures,
held ``flat'' (i.e., in cash). positions will instead be held
``flat'' (i.e., in cash).
Invest in forwards................. No longer invest in forwards.
Option writing program............. Discontinue option writing
program.
Collateral invested in cash Collateral invested in short-
equivalents, U.S. government term U.S. government
securities and other short-term securities and cash
high-grade debt securities, equivalents.
including corporate debt, with
terms not exceeding one year.
------------------------------------------------------------------------
After the Conversions, each Fund's principal investments are not
expected to change. Under normal market conditions,\15\ each Fund will
continue to invest in (i) commodity futures contracts that provide
exposure to the global commodity markets (``Commodity Futures'') listed
on U.S. and non-U.S. futures exchanges \16\ having various expiration
dates, and (ii) collateral consisting of U.S. government securities and
cash equivalents, some of which are maintained on deposit with a Fund's
commodity broker as margin, to collateralize a Fund's positions in the
Commodity Futures. Moreover, as stated above, the Funds will not invest
in forwards or options following the Conversions. In addition, each
Fund's Commodity Futures investments will, at all times, be fully
collateralized (i.e., the ``notional value''--the value of the
underlying commodity at the contract's spot price--of the Fund's
commodity exposure will not exceed the market value of the Fund's net
assets).
---------------------------------------------------------------------------
\15\ With respect to each Fund, the term ``under normal market
conditions'' includes, but is not limited to, the absence of extreme
volatility or trading halts in the financial markets generally;
operational issues causing dissemination of inaccurate market
information; or force majeure type events such as a systems failure,
natural or man-made disaster, act of God, armed conflict, act of
terrorism, riot or labor disruption or any similar intervening
circumstance.
\16\ Each Fund would make investments in Commodity Futures in
agriculture, energy, foods and fibers, industrial metals, livestock,
and precious metals, and would take positions in Commodity Futures
related to approximately 30 commodities. Each Fund would continue to
allocate its investments to Commodity Futures pursuant to the
Commodity Subadviser's proprietary strategy. See Amendment No. 1,
supra note 6, at 17. Not more than 10% of the net assets of a Fund,
in the aggregate, shall consist of futures contracts whose principal
market is not a member of the Intermarket Surveillance Group
(``ISG'') or with which the Exchange has in place a comprehensive
surveillance sharing agreement. See Amendment No. 1, supra note 6,
at 15, n.17.
---------------------------------------------------------------------------
Whereas in support of the Prior Orders the Exchange represented
that 25% of each Fund's collateral will be committed as ``initial'' and
``variation'' margin, the Funds now represent that, following the
Conversions, approximately 10-25% of each Fund's collateral would be
committed as initial and variation margin and be segregated pursuant to
the Commodity Exchange Act, and the regulations thereunder, to secure
the futures contract positions.\17\ The remaining 75-90% of a Fund's
collateral (as opposed to a set 75%, as represented in support of the
Prior Orders) would continue be held in a separate collateral
investment account managed by the Collateral Subadviser. The eligible
collateral investments would also change following the Conversion--the
Funds would no longer invest in money market funds or repurchase
agreements. Instead, they would invest in short-term U.S. government
securities and cash equivalents.
---------------------------------------------------------------------------
\17\ Those assets would be held in a commodity futures account
maintained by SG Americas Securities, LLC, the Funds' clearing
broker, which serves as a futures commission merchant and broker-
dealer registered with the CFTC and the Commission.
---------------------------------------------------------------------------
II. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEMKT-2016-58 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \18\ to determine whether the proposed rule
change, as modified by Amendment No. 1 should be approved or
disapproved. Institution of such proceedings is appropriate at this
time in view of the legal and policy issues raised by the proposed rule
change. Institution of proceedings does not indicate that the
Commission has reached any conclusions with respect to any of the
issues involved. Rather, as described below, the Commission seeks and
encourages interested persons to provide comments on the proposed rule
change.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
Pursuant to Section 19(b)(2)(B) of the Act,\19\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for the submission
of additional analysis regarding the proposed rule change's consistency
with Section 6(b)(5) of the Act, which requires, among other things,
that the rules of a national securities exchange be ``designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade,'' and ``to protect investors and the
public interest.'' \20\
---------------------------------------------------------------------------
\19\ Id.
\20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The pre-existing Shares after the Conversions would not be deemed
new securities but would continue to trade on the Exchange without
interruption. As discussed above, the Exchange states that: (1) Ahead
of the Conversions, the Manager would announce via press releases and
Form 8-K filings the expected effective date of the Conversions; (2)
those press releases would include a summary of changes to the Funds
that would occur in connection with the Conversions; (3) NYSE MKT would
issue a notice to members approximately 10 days prior to the date of
effectiveness of the
[[Page 63547]]
Conversion, and another notice to members on the business day prior to
the date Shares would trade under the new CUSIP. Because the Shares
will continue to be listed and traded on the Exchange without
interruption as the Funds transition from a closed-end to an open-end
structure, the Commission seeks comment on whether the Exchange's
proposal is designed to sufficiently ensure that the trading of the
Shares during the Conversions will be orderly and without undue market
confusion or disruption.
Separately, the Exchange proposes to amend Commentary .01 to its
Rule 1602, which pertains to initial and continued listing requirements
for Trust Units, to provide that ``the issuer of [an] issue of Trust
Units shall notify the Exchange of any material noncompliance with
[any] statements and representations'' and that ``the Exchange will
consider suspending trading in and, if applicable, delisting of, an
issue of Trust Units if the issuer of such security notifies the
Exchange of material noncompliance'' (emphasis added). The Commission
believes that it is critical that listed issues, including those of
exchange traded products such as the Funds, comply with exchange
listing standards on an ongoing basis and that listing exchanges
rigorously enforce those rules. Accordingly, the Commission, seeks
comment on whether the Exchange's proposed amendment to Commentary .01
that proposes to ``consider'' suspension and delisting only for
``material'' noncompliance of the Exchange's listing standards is
consistent with Section 6(b)(5) of the Act, which, among other things,
requires that the rules of an exchange be designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, and to protect investors and the public
interest.
III. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Act, or
the rules and regulations thereunder. Although there do not appear to
be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4, any request for an
opportunity to make an oral presentation.\21\
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\21\ Section 19(b)(2) of the Act, as amended by the Securities
Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Act Amendments of 1975, Senate Comm. on
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by October 6, 2016. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
October 20, 2016. The Commission asks that commenters address the
sufficiency of the Exchange's statements in support of the proposal,
which are set forth in Amendment No. 1, in addition to any other
comments they may wish to submit about the proposed rule change.
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEMKT-2016-58 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Numbers SR-NYSEMKT-2016-58. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of these filings also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEMKT-2016-58 and should
be submitted on or before October 6, 2016. Rebuttal comments should be
submitted by October 20, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(57).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-22153 Filed 9-14-16; 8:45 am]
BILLING CODE 8011-01-P
