Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the ForceShares Daily 4X US Market Futures Long Fund and ForceShares Daily 4X US Market Futures Short Fund Under Commentary .02 to NYSE Arca Equities Rule 8.200, 9625-9627 [2017-02442]
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Federal Register / Vol. 82, No. 24 / Tuesday, February 7, 2017 / Notices
notes that the proposed rule change will
facilitate the listing and trading of
additional types of Trust Issued
Receipts based on oil prices and that
will enhance competition among market
participants, to the benefit of investors
and the marketplace.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will: (a) By
order approve or disapprove such
proposed rule change; or (b) institute
proceedings to determine whether the
proposed rule change should be
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Lhorne on DSK30JT082PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule4comments@
sec.gov. Please include File Number SR–
NYSEArca–2017–07 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEArca–2017–07. 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
VerDate Sep<11>2014
14:31 Feb 06, 2017
Jkt 241001
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing will also be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEArca–2017–07 and should be
submitted on or before February 28,
2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–02445 Filed 2–6–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79914; File No. SR–
NYSEArca–2016–120]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Instituting
Proceedings To Determine Whether To
Approve or Disapprove a Proposed
Rule Change, as Modified by
Amendment No. 1, To List and Trade
Shares of the ForceShares Daily 4X US
Market Futures Long Fund and
ForceShares Daily 4X US Market
Futures Short Fund Under
Commentary .02 to NYSE Arca Equities
Rule 8.200
February 1, 2017.
I. Introduction
On October 17, 2016, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Fmt 4703
Sfmt 4703
9625
(‘‘Shares’’) of the ForceShares Daily 4X
US Market Futures Long Fund (‘‘Fund’’
or ‘‘Long Fund’’) and ForceShares Daily
4X US Market Futures Short Fund
(‘‘Fund’’ or ‘‘Short Fund’’ and, together
with the Long Fund, the ‘‘Funds’’)
under Commentary .02 to NYSE Arca
Equities Rule 8.200. The proposed rule
change was published for comment in
the Federal Register on November 4,
2016.3 On December 14, 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 December
22, 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 has received no
comments on the proposed rule change.
This order institutes proceedings under
Section 19(b)(2)(B) of the Act 7 to
determine whether to approve or
disapprove the proposed rule change.
II. Exchange’s Description of the
Proposal, as Modified by Amendment
No. 1
The Exchange proposes to list and
trade the Shares under Commentary .02
to NYSE Arca Equities Rule 8.200,
which governs the listing and trading of
Trust Issued Receipts on the Exchange.
Each Fund is a commodity pool that is
a series of the ForceShares Trust.
ForceShares LLC will be the sponsor of
the Funds (‘‘Sponsor’’). ALPS
Distributors, Inc. will be the marketing
agent for the Shares. U.S. Bank National
Association will be the Funds’
custodian (‘‘Custodian’’) and will hold
the Funds’ cash and cash equivalents.
The Custodian will also be the registrar
and transfer agent for the Shares.
The Long Fund’s primary investment
objective is to seek daily investment
3 See Securities Exchange Act Release No. 79201
(October 31, 2016), 81 FR 76977.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 79550,
81 FR 92892 (December 20, 2016). The Commission
designated February 2, 2017, as the date by which
it shall approve, disapprove, or institute
proceedings to determine whether to disapprove the
proposed rule change.
6 In Amendment No. 1, the Exchange: (a) Clarified
the permissible investments of the Funds; (b) added
that a creation basket may not differ in size from
a redemption basket, and that basket sizes may be
between 10,000 and 100,000 Shares; (c) modified
when purchase orders may be rejected, when the
right of redemption may be suspended, and when
the redemption settlement date may be postponed;
and (d) made various technical changes.
Amendment No. 1 is available at: https://
www.sec.gov/comments/sr-nysearca-2016-120/
nysearca2016120-1442225-130027.pdf.
7 15 U.S.C. 78s(b)(2)(B).
E:\FR\FM\07FEN1.SGM
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9626
Federal Register / Vol. 82, No. 24 / Tuesday, February 7, 2017 / Notices
Lhorne on DSK30JT082PROD with NOTICES
results, before fees and expenses, that
correspond to approximately four times
(400%) the daily performance, and the
Short Fund’s primary investment
objective is to seek daily investment
results, before fees and expenses, that
correspond to approximately four times
the inverse (¥400%) of the daily
performance, of the closing settlement
price for lead month (i.e., the ‘‘near
month’’ or next-to-expire) Standard &
Poor’s 500 Stock Price Index Futures
contracts (‘‘Big S&P Contracts’’) that are
traded on the Chicago Mercantile
Exchange. Each Fund will not seek to
achieve its primary investment objective
over a period of time greater than a
single day.
Under normal market condition, each
Fund will seek to achieve its primary
investment objective by investing
primarily in Big S&P Contracts such that
daily changes in the Fund’s net asset
value (‘‘NAV’’) are expected to closely
track the changes, in the case of the
Long Fund, or the inverse of the
changes, in the case of the Short Fund,
in the closing settlement price of the
lead month Big S&P Contracts
(‘‘Benchmark’’) on a leveraged basis.
Each Fund will also invest in E-MiniTM
S&P 500® Futures contracts (‘‘E-Minis’’
and, together with Big S&P Contracts,
‘‘Primary S&P Interests’’) to seek to
achieve its primary investment objective
where position limits prevent further
purchases of Big S&P Contracts. Each
Fund expects to apply approximately
10–25% of its portfolio toward
obtaining exposure to futures contracts,
all of which would be lead month or
deferred month Primary S&P Interests.
Each Fund may also invest in swap
agreements (cleared and over-thecounter) referencing Primary S&P
Interests or the S&P 500 Index, and
over-the-counter forward contracts
referencing Primary S&P Interests
(‘‘Other S&P Interests’’). Each Fund may
invest in Other S&P Interests in an
amount up to 25% of its net assets.
Each Fund may acquire or dispose of
Stop Options on Primary S&P Interests
in pursuing its secondary investment
objective of recouping a small amount of
a Fund’s losses that may result from
large movements in the Benchmark.
Stop Options are expected to average
less than approximately 5% of each
Fund’s portfolio.8
8 Not more than 10% of the net assets of each
Fund in the aggregate invested in futures contracts
or exchange-traded options contracts will consist of
futures contracts or exchange-traded options
contracts whose principal market is not a member
of the Intermarket Surveillance Group or is a market
with which the Exchange does not have a
comprehensive surveillance sharing agreement.
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14:31 Feb 06, 2017
Jkt 241001
On a day-to-day basis, each Fund will
invest the remainder of its assets in
money market funds, depository
accounts with institutions with high
quality credit ratings, or short-term debt
instruments that have terms-to-maturity
of less than 397 days and exhibit high
quality credit profiles, including U.S.
government securities and repurchase
agreements (collectively, ‘‘Cash
Equivalents’’). Cash Equivalents are
expected to comprise approximately 70–
85% of each Fund’s portfolio.9
III. Proceedings To Determine Whether
To Approve or Disapprove SR–
NYSEArca–2016–120 and Grounds for
Disapproval Under Consideration
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Act 10 to determine
whether the proposed rule change
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.
Pursuant to Section 19(b)(2)(B) of the
Act,11 the Commission is providing
notice of the grounds for disapproval
under consideration. The Commission is
instituting proceedings to allow for
additional analysis of 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.’’ 12
IV. 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
9 For more information regarding the Funds and
the Shares, see Amendment No. 1, supra note 6.
10 15 U.S.C. 78s(b)(2)(B).
11 Id.
12 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00068
Fmt 4703
Sfmt 4703
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.13
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposal should be approved or
disapproved by February 28, 2017. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by March 14, 2017. 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. 1,14 in addition to any
other comments they may wish to
submit about the proposed rule change.
The Commission notes that the proposal
sets forth certain conditions relating to
the creation and redemption of baskets
of Shares. In particular, under the
proposal, ‘‘[t]he Sponsor may, in its
discretion, suspend the right of
redemption, or postpone the redemption
settlement date with respect to a Fund
. . . for such other period as the
Sponsor determines to be necessary for
the protection of a Fund’s Shareholders.
. . .’’ 15 What are commenters’ views on
the scope of this discretion with respect
to redemptions? Is the discretion likely
to have an effect on the arbitrage
mechanisms and, if so, how?
Comments may be submitted by any
of the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2016–120 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
13 Section 19(b)(2) of the Act, as amended by the
Securities Acts 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 Acts Amendments of
1975, Senate Comm. on Banking, Housing & Urban
Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30
(1975).
14 See supra note 6.
15 See Amendment No. 1, supra note 6, at 21.
E:\FR\FM\07FEN1.SGM
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Federal Register / Vol. 82, No. 24 / Tuesday, February 7, 2017 / Notices
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEArca–2016–120. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEArca–2016–120 and should be
submitted on or before February 28,
2017. Rebuttal comments should be
submitted by March 14, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Eduardo A. Aleman,
Assistant Secretary.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Lhorne on DSK30JT082PROD with NOTICES
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold a closed meeting
on Thursday, February 9, 2017 at 2 p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the closed meeting. Certain
CFR 200.30–3(a)(57).
VerDate Sep<11>2014
14:31 Feb 06, 2017
Jkt 241001
Dated: February 2, 2017.
Brent J. Fields,
Secretary.
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice: 9873]
Notice of Determinations; Culturally
Significant Object Imported for
Exhibition Determinations: ‘‘The Dutch
Fleet Assembling Before the Four
Days’ Battle’’ Exhibition
Notice is hereby given of the
following determinations: Pursuant to
the authority vested in me by the Act of
October 19, 1965 (79 Stat. 985; 22 U.S.C.
2459), E.O. 12047 of March 27, 1978, the
Foreign Affairs Reform and
Restructuring Act of 1998 (112 Stat.
2681, et seq.; 22 U.S.C. 6501 note, et
seq.), Delegation of Authority No. 234 of
October 1, 1999, Delegation of Authority
No. 236–3 of August 28, 2000 (and, as
appropriate, Delegation of Authority No.
257–1 of December 11, 2015), I hereby
determine that the object to be included
in the exhibition ‘‘The Dutch Fleet
Assembling Before the Four Days’
Battle,’’ imported from abroad for
temporary exhibition within the United
States, is of cultural significance. The
object is imported pursuant to a loan
PO 00000
Frm 00069
Fmt 4703
Sfmt 4703
agreement with the foreign owner or
custodian. I also determine that the
exhibition or display of the exhibit
object at The Metropolitan Museum of
Art, New York, New York, from on or
about March 1, 2017, until on or about
March 1, 2018, and at possible
additional exhibitions or venues yet to
be determined, is in the national
interest. I have ordered that Public
Notice of these Determinations be
published in the Federal Register.
FOR FURTHER INFORMATION CONTACT: For
further information, including an object
list, contact the Office of Public
Diplomacy and Public Affairs in the
Office of the Legal Adviser, U.S.
Department of State (telephone: 202–
632–6471; email: section2459@
state.gov). The mailing address is U.S.
Department of State, L/PD, SA–5, Suite
5H03, Washington, DC 20522–0505.
Alyson Grunder,
Deputy Assistant Secretary for Policy, Bureau
of Educational and Cultural Affairs,
Department of State.
[FR Doc. 2017–02436 Filed 2–6–17; 8:45 am]
BILLING CODE 4710–05–P
DEPARTMENT OF STATE
[Public Notice: 9872]
[FR Doc. 2017–02531 Filed 2–3–17; 11:15 am]
SUMMARY:
[FR Doc. 2017–02442 Filed 2–6–17; 8:45 am]
16 17
staff members who have an interest in
the matters also may be present.
The General Counsel of the
Commission, or her designee, has
certified that, in her opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
and 17 CFR 200.402(a)(3), (a)(5), (a)(7),
(a)(9)(ii) and (a)(10), permit
consideration of the scheduled matter at
the closed meeting.
Commissioner Stein, as duty officer,
voted to consider the items listed for the
closed meeting in closed session.
The subject matter of the closed
meeting will be:
Institution and settlement of
injunctive actions;
Institution and settlement of
administrative proceedings;
Resolution of litigation claims;
Litigation matters; and
Other matters relating to enforcement
proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed; please
contact Brent J. Fields from the Office of
the Secretary at (202) 551–5400.
9627
Advisory Committee on International
Economic Policy; Notice of Open
Meeting
The Advisory Committee on
International Economic Policy (ACIEP)
will meet from 2:00 until 5:00 p.m., on
Tuesday, February 28, in Washington,
DC at the State Department, 320 21st St.
NW. The meeting will be hosted by the
Acting Assistant Secretary of State for
Economic and Business Affairs, Patricia
M. Haslach, and Committee Chair Paul
R. Charron. The ACIEP serves the U.S.
government in a solely advisory
capacity, and provides advice
concerning topics in international
economic policy. It is expected that
during this meeting, the ACIEP
subcommittee on sanctions policy and
the Stakeholder Advisory Board will
provide updates on their recent work.
This meeting is open to the public,
though seating is limited. Entry to the
building is controlled. To obtain preclearance for entry, members of the
public planning to attend must, no later
than Tuesday, February 21, provide
their full name and professional
affiliation (if any) to Alan Krill by email:
KrillA@state.gov. Requests for
reasonable accommodation should also
be made to Alan Krill before Tuesday,
February 21. Requests made after that
E:\FR\FM\07FEN1.SGM
07FEN1
]]>Agencies
[Federal Register Volume 82, Number 24 (Tuesday, February 7, 2017)]
[Notices]
[Pages 9625-9627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-02442]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79914; File No. SR-NYSEArca-2016-120]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting
Proceedings To Determine Whether To Approve or Disapprove a Proposed
Rule Change, as Modified by Amendment No. 1, To List and Trade Shares
of the ForceShares Daily 4X US Market Futures Long Fund and ForceShares
Daily 4X US Market Futures Short Fund Under Commentary .02 to NYSE Arca
Equities Rule 8.200
February 1, 2017.
I. Introduction
On October 17, 2016, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to list and trade shares (``Shares'') of the
ForceShares Daily 4X US Market Futures Long Fund (``Fund'' or ``Long
Fund'') and ForceShares Daily 4X US Market Futures Short Fund (``Fund''
or ``Short Fund'' and, together with the Long Fund, the ``Funds'')
under Commentary .02 to NYSE Arca Equities Rule 8.200. The proposed
rule change was published for comment in the Federal Register on
November 4, 2016.\3\ On December 14, 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 December 22, 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 has received no comments on the proposed rule change. This
order institutes proceedings under Section 19(b)(2)(B) of the Act \7\
to determine whether to approve or disapprove the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 79201 (October 31,
2016), 81 FR 76977.
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 79550, 81 FR 92892
(December 20, 2016). The Commission designated February 2, 2017, as
the date by which it shall approve, disapprove, or institute
proceedings to determine whether to disapprove the proposed rule
change.
\6\ In Amendment No. 1, the Exchange: (a) Clarified the
permissible investments of the Funds; (b) added that a creation
basket may not differ in size from a redemption basket, and that
basket sizes may be between 10,000 and 100,000 Shares; (c) modified
when purchase orders may be rejected, when the right of redemption
may be suspended, and when the redemption settlement date may be
postponed; and (d) made various technical changes. Amendment No. 1
is available at: https://www.sec.gov/comments/sr-nysearca-2016-120/nysearca2016120-1442225-130027.pdf.
\7\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
II. Exchange's Description of the Proposal, as Modified by Amendment
No. 1
The Exchange proposes to list and trade the Shares under Commentary
.02 to NYSE Arca Equities Rule 8.200, which governs the listing and
trading of Trust Issued Receipts on the Exchange. Each Fund is a
commodity pool that is a series of the ForceShares Trust. ForceShares
LLC will be the sponsor of the Funds (``Sponsor''). ALPS Distributors,
Inc. will be the marketing agent for the Shares. U.S. Bank National
Association will be the Funds' custodian (``Custodian'') and will hold
the Funds' cash and cash equivalents. The Custodian will also be the
registrar and transfer agent for the Shares.
The Long Fund's primary investment objective is to seek daily
investment
[[Page 9626]]
results, before fees and expenses, that correspond to approximately
four times (400%) the daily performance, and the Short Fund's primary
investment objective is to seek daily investment results, before fees
and expenses, that correspond to approximately four times the inverse
(-400%) of the daily performance, of the closing settlement price for
lead month (i.e., the ``near month'' or next-to-expire) Standard &
Poor's 500 Stock Price Index Futures contracts (``Big S&P Contracts'')
that are traded on the Chicago Mercantile Exchange. Each Fund will not
seek to achieve its primary investment objective over a period of time
greater than a single day.
Under normal market condition, each Fund will seek to achieve its
primary investment objective by investing primarily in Big S&P
Contracts such that daily changes in the Fund's net asset value
(``NAV'') are expected to closely track the changes, in the case of the
Long Fund, or the inverse of the changes, in the case of the Short
Fund, in the closing settlement price of the lead month Big S&P
Contracts (``Benchmark'') on a leveraged basis. Each Fund will also
invest in E-MiniTM S&P 500[supreg] Futures contracts (``E-
Minis'' and, together with Big S&P Contracts, ``Primary S&P
Interests'') to seek to achieve its primary investment objective where
position limits prevent further purchases of Big S&P Contracts. Each
Fund expects to apply approximately 10-25% of its portfolio toward
obtaining exposure to futures contracts, all of which would be lead
month or deferred month Primary S&P Interests. Each Fund may also
invest in swap agreements (cleared and over-the-counter) referencing
Primary S&P Interests or the S&P 500 Index, and over-the-counter
forward contracts referencing Primary S&P Interests (``Other S&P
Interests''). Each Fund may invest in Other S&P Interests in an amount
up to 25% of its net assets.
Each Fund may acquire or dispose of Stop Options on Primary S&P
Interests in pursuing its secondary investment objective of recouping a
small amount of a Fund's losses that may result from large movements in
the Benchmark. Stop Options are expected to average less than
approximately 5% of each Fund's portfolio.\8\
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\8\ Not more than 10% of the net assets of each Fund in the
aggregate invested in futures contracts or exchange-traded options
contracts will consist of futures contracts or exchange-traded
options contracts whose principal market is not a member of the
Intermarket Surveillance Group or is a market with which the
Exchange does not have a comprehensive surveillance sharing
agreement.
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On a day-to-day basis, each Fund will invest the remainder of its
assets in money market funds, depository accounts with institutions
with high quality credit ratings, or short-term debt instruments that
have terms-to-maturity of less than 397 days and exhibit high quality
credit profiles, including U.S. government securities and repurchase
agreements (collectively, ``Cash Equivalents''). Cash Equivalents are
expected to comprise approximately 70-85% of each Fund's portfolio.\9\
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\9\ For more information regarding the Funds and the Shares, see
Amendment No. 1, supra note 6.
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III. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEArca-2016-120 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \10\ to determine whether the proposed rule
change 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.
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\10\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\11\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of 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.'' \12\
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\11\ Id.
\12\ 15 U.S.C. 78f(b)(5).
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IV. 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.\13\
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\13\ Section 19(b)(2) of the Act, as amended by the Securities
Acts 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 Acts 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 February 28, 2017. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
March 14, 2017. 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,\14\ in addition to any other
comments they may wish to submit about the proposed rule change. The
Commission notes that the proposal sets forth certain conditions
relating to the creation and redemption of baskets of Shares. In
particular, under the proposal, ``[t]he Sponsor may, in its discretion,
suspend the right of redemption, or postpone the redemption settlement
date with respect to a Fund . . . for such other period as the Sponsor
determines to be necessary for the protection of a Fund's Shareholders.
. . .'' \15\ What are commenters' views on the scope of this discretion
with respect to redemptions? Is the discretion likely to have an effect
on the arbitrage mechanisms and, if so, how?
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\14\ See supra note 6.
\15\ See Amendment No. 1, supra note 6, at 21.
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Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2016-120 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange
[[Page 9627]]
Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2016-120. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2016-120 and should
be submitted on or before February 28, 2017. Rebuttal comments should
be submitted by March 14, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(57).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02442 Filed 2-6-17; 8:45 am]
BILLING CODE 8011-01-P
