Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To Amend Commentary .01 and Commentary .02 to NYSE Arca Equities Rule 5.2(j)(3) To Provide for the Inclusion of Cash in an Index Underlying a Series of Investment Company Units, 18067-18070 [2017-07528]

Download as PDF Federal Register / Vol. 82, No. 71 / Friday, April 14, 2017 / Notices mechanism of a free and open market and a national market system and, in general, protect investors and the public interest because the changes would eliminate obsolete references, thereby reducing potential confusion. Market participants and investors would not be harmed and in fact could benefit from the increased clarity and transparency in the ICE Certificate and ICE Bylaws. Such increased clarity and transparency would ensure that persons subject to the Exchange’s jurisdiction, regulators, and the investing public can more easily navigate and understand the ICE governing documents. The Exchange believes that the proposed amendments to Article II of the ICE Bylaws, regarding meetings of stockholders, would also remove impediments to, and perfect the mechanism of a free and open market and a national market system and, in general, protect investors and the public interest because the changes would increase the clarity of the relevant sections of Article II, thereby reducing potential confusion. Market participants and investors would not be harmed and in fact could benefit from the increased clarity and transparency regarding the location of stockholder meetings and advance notice requirements, and the conformance of the quorum requirements with those in the ICE Certificate, and so would more easily navigate and understand the ICE Bylaws. sradovich on DSK3GMQ082PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act. The proposed rule change is not designed to address any competitive issue but rather update and streamline the ICE Certificate and Bylaws, delete obsolete or unnecessary references and make other simplifying or clarifying changes to the ICE governing documents. The Exchange believes that the proposed rule change will serve to promote clarity and consistency, thereby reducing burdens on the marketplace and facilitating investor protection. The proposed rule change would result in no concentration or other changes of ownership of exchanges. VerDate Sep<11>2014 16:21 Apr 13, 2017 Jkt 241001 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 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 the 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, as modified by Amendment No. 1, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSENAT–2017–01 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–NYSENAT–2017–01. 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 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 18067 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– NYSENAT–2017–01 and should be submitted on or before May 5, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.36 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–07530 Filed 4–13–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80415; File No. SR– NYSEArca–2017–30] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To Amend Commentary .01 and Commentary .02 to NYSE Arca Equities Rule 5.2(j)(3) To Provide for the Inclusion of Cash in an Index Underlying a Series of Investment Company Units April 10, 2017. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on March 29, 2017, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 36 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 E:\FR\FM\14APN1.SGM 14APN1 18068 Federal Register / Vol. 82, No. 71 / Friday, April 14, 2017 / Notices I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to amend Commentary .01 and Commentary .02 to NYSE Arca Equities Rule 5.2(j)(3) to provide for the inclusion of cash in an index underlying a series of Investment Company Units. The proposed change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change sradovich on DSK3GMQ082PROD with NOTICES 1. Purpose The Exchange proposes to amend Commentary .01 and Commentary .02 to NYSE Arca Equities Rule 5.2(j)(3) to provide for the inclusion of cash in an index underlying a series of Investment Company Units (‘‘Units’’).4 NYSE Arca Equities Rule 5.2(j)(3) provides ‘‘generic’’ criteria permitting listing and trading of Units pursuant to Rule 19b– 4(e) under the Act 5 when the underlying index or portfolio satisfies the criteria set forth in NYSE Arca Equities Rule 5.2(j)(3). The Exchange understands that certain index providers have included, or intend to include, cash as a component in indexes that also include equity or fixed income securities components. An index provider may, for example, provide a certain index weighting allocation to cash or may periodically change an allocation to 4 Investment Company Units are securities that represent interests in a unit investment trust, an open-end management investment company securities or a similar entity registered under the investment Company Act of 1940 (15 U.S.C. 80a– 1). A series of Investment Company Units seeks to provide investment results that correspond generally to the price and yield performance of a specific foreign or domestic stock index, fixed income securities index or combination thereof. 5 17 CFR 240.19b–4(e). VerDate Sep<11>2014 16:21 Apr 13, 2017 Jkt 241001 cash based on the index provider’s assessment of market risk associated with other asset classes in the applicable index.6 Accordingly, the Exchange proposes to amend Commentaries .01 and .02 to permit listing and trading of Units based on an index or portfolio that includes cash as a component. While Units, like mutual funds, will generally hold an amount of cash, NYSE Arca Equities Rule 5.2(j)(3) currently provides that components of an index or portfolio underlying a series of Units consist of securities—namely, U.S. Component Stocks, Non-U.S. Component Stocks, Fixed Income Securities or a combination thereof. As described below, the proposed amendments to Commentary .01 and Commentary .02 to Rule 5.2(j)(3)would permit inclusion of cash as an index or portfolio component. Currently, Commentary .01(a)(A) provides that an underlying index or portfolio of U.S. Component Stocks 7 must meet specified criteria. The Exchange proposes to amend Commentary .01(a)(A) to provide that the components of an index or portfolio underlying a series of Units may also include cash. In addition, the percentage weighting criteria in Commentary .01(a)(A)(1) through (4) each would be amended to make clear that such criteria would be applied only to the U.S. Component Stocks portion of an index or portfolio. For example, in applying the criteria in proposed Commentary .01(a)(A)(1),8 if 85% of the weight of an index consists of U.S. Component Stocks and 15% of the index weight is cash, the requirement that component stocks accounting for 90% of the weight of the index or portfolio have a minimum market value of $75 million minimum would be applied only to the 85% portion consisting of U.S. Component Stocks. 6 The Exchange notes that shares of the following exchange-traded funds based on indexes that include cash as a component are currently listed and traded on the BATS BZX Exchange, Inc.: QuantX Risk Managed Growth ETF; QuantX Risk Managed Multi-Asset Income ETF; QuantX Risk Managed Multi-Asset Total Return ETF; and QuantX Risk Managed Real Return ETF. 7 Rule 5.2(j)(3) defines ‘‘U.S. Component Stock’’ as an equity security that is registered under Sections 12(b) or 12(g) of the Act or an American Depositary Receipt, the underlying equity security of which is registered under Sections 12(b) or 12(g) of the Act. 8 Proposed Commentary .01(a)(A)(1) would provide that component stocks (excluding Units and Derivative Securities Products) that in the aggregate account for at least 90% of the weight of the U.S. Component Stocks portion of the index or portfolio (excluding such Derivative Securities Products) each shall have a minimum market value of at least $75 million. PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 Commentary .01(a)(B), which relates to international or global indexes or portfolios, would be amended to provide that components of an index or portfolio underlying a series of Units may consist of (a) only Non-U.S. Component Stocks, (b) Non-U.S. Component Stocks and cash, (c) both U.S. Component Stocks and Non-U.S. Component Stocks, or (d) U.S. Component Stocks, Non-U.S. Component Stocks and cash. In addition, the percentage weighting criteria in Commentary .01(a)(B)(1) through (4) each would be amended to make clear that such criteria would be applied only to the combined U.S. and Non-U.S. Component Stocks portions of an index or portfolio. Commentary .02 to NYSE Arca Equities Rule 5.2(j)(3) provides generic criteria applicable to listing and trading of Units whose underlying index or portfolio includes Fixed Income Securities.9 Currently, Commentary .02(a)(1) provides that an underlying index or portfolio must consist of Fixed Income Securities. The Exchange proposes to amend Commentary .02(a)(1) to provide that the index or portfolio may also include cash. In addition, the percentage weighting criteria in Commentary .02(a)(2), (a)(4) and (a)(6) each would be amended to make clear that such criteria would be applied only to the Fixed Income Securities portion of an index or portfolio. For example, in applying the criteria in proposed Commentary .01(a)(2),10 if 90% of the weight of an index or portfolio consists of Fixed Income Securities and 10% of the index weight is cash, the requirement that Fixed Income Securities accounting for at least 75% of the weight of the index or portfolio have a minimum original principal amount outstanding of $100 million would be applied only to the 90% portion consisting of Fixed Income Securities. The Exchange notes that the Commission has previously approved Exchange rules allowing portfolios held by issues of Managed Fund Shares 9 As defined in Commentary .02 to NYSE Arca Equities Rule 5.2(j)(3), Fixed Income Securities are debt securities that are notes, bonds, debentures or evidence of indebtedness that include, but are not limited to, U.S. Department of Treasury securities (‘‘Treasury Securities’’), government-sponsored entity securities (‘‘GSE Securities’’), municipal securities, trust preferred securities, supranational debt and debt of a foreign country or a subdivision thereof. 10 Proposed Commentary .01(a)(2) would provide that Fixed Income Security components that in aggregate account for at least 75% of the Fixed Income Securities portion of the weight of the index or portfolio each shall have a minimum original principal amount outstanding of $100 million or more. E:\FR\FM\14APN1.SGM 14APN1 Federal Register / Vol. 82, No. 71 / Friday, April 14, 2017 / Notices (actively-managed exchange-traded funds) under Commentary .01 to NYSE Arca Equities Rule 8.600 to include cash.11 Like the provision in Commentary .01(c) to Rule 8.600, which states that there is no limit to cash holdings by an issue of Managed Fund Shares listed under Commentary .01 to Rule 8.600, there is no proposed limit to the weighting of cash in an index underlying a series of Units. The Exchange believes this is appropriate in that cash does not, in itself, impose investment or market risk. The Exchange believes the proposed amendments, by permitting inclusion of cash as a component of indexes underlying series of Units, would provide issuers of Units with additional choice in indexes permitted to underlie Units that are permitted to list and trade on the Exchange pursuant to the Rule 19b–4(e), which would enhance competition among market participants, to the benefit of investors and the marketplace. In addition, the proposed amendments would provide investors with greater ability to hold Units based on underlying indexes that may accord more closely with an investor’s assessment of market risk, in that some investors may view cash as a desirable component of an underlying index under certain market conditions. sradovich on DSK3GMQ082PROD with NOTICES 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,12 in general, and furthers the objectives of Sections 6(b)(5) of the Act,13 in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, to protect investors and the public interest and because it is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange has in place surveillance procedures that are adequate to properly monitor trading in Units in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. 11 See Commentary .01(c) to NYSE Arca Equities Rule 8.600. 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 16:21 Apr 13, 2017 Jkt 241001 The Exchange notes that, as described above, the percentage weighting criteria in Commentary .01(a)(B)(1) through (4) to Rule 5.2(j)(3) each would be amended to make clear that such criteria would be applied only to the combined U.S. and Non-U.S. Component Stocks portions of an index or portfolio. The percentage weighting criteria in Commentary .02(a)(2), (a)(4) and (a)(6) to Rule 5.2(j)(3) each would be amended to make clear that such criteria would be applied only to the Fixed Income Securities portion of an index or portfolio. Such applications of the proposed amendments would assure that the weighting requirements in Commentary .01 and Commentary .02 would continue to be applied only to securities in an index or portfolio, and would not be diluted as a result of inclusion of a cash component. In addition, the addition of cash as a permitted component of indexes underlying Units listed and traded on the Exchange pursuant to Rule 19b–4(e) does not raise regulatory issues because cash does not, in itself, impose investment or market risk and is not susceptible to manipulation. The Exchange believes the proposed amendments, by permitting inclusion of cash as a component of indexes underlying series of Units, would provide issuers of Units with additional choice in indexes permitted to underlie Units that are permitted to list and trade on the Exchange pursuant to the Rule 19b–4(e), which would enhance competition among market participants, to the benefit of investors and the marketplace. In addition, the proposed amendments would provide investors with greater ability to hold Units based on underlying indexes that may accord more closely with an investor’s assessment of market risk. B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,14 the Exchange believes that the proposed rule change would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change would permit Exchange listing and trading under Rule 19b–4(e) of Units based on indexes that include cash as a component, which would enhance competition among market participants, to the benefit of investors and the marketplace. 14 15 PO 00000 U.S.C. 78f(b)(8). Frm 00103 Fmt 4703 Sfmt 4703 18069 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: 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–2017–30 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–2017–30. 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 E:\FR\FM\14APN1.SGM 14APN1 18070 Federal Register / Vol. 82, No. 71 / Friday, April 14, 2017 / Notices provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of 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–2017–30, and should be submitted on or before May 5, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–07528 Filed 4–13–17; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE [Public Notice: 9961] sradovich on DSK3GMQ082PROD with NOTICES U.S. Department of State Advisory Committee on Private International Law (ACPIL): Public Meeting on Micro-, Small-, and Medium Sized Enterprises Michael J. Dennis, Attorney-Adviser, Office of Private International Law, Office of the Legal Adviser, Department of State. [FR Doc. 2017–07564 Filed 4–13–17; 8:45 am] The Office of the Assistant Legal Adviser for Private International Law, Department of State, hereby gives notice that the Micro-, Small-, and Medium sized enterprises (MSMEs) study group of the Advisory Committee on Private International Law (ACPIL) will hold a public meeting via teleconference. The ACPIL UNCITRAL MSME Study Group will hold the teleconference meeting to discuss the next session of the UNCITRAL Working Group I–MSME scheduled for May 1–9 in New York. This is not a meeting of the full Advisory Committee. UNCITRAL has established a working group aimed at reducing the legal obstacles faced by MSMEs throughout their life cycle, and in particular those in developing countries. UNCITRAL further directed that the work should start with a focus on the legal issues surrounding the simplification of registration and incorporation. At its upcoming session, the UNCITRAL Working Group I–MSME will consider a draft legislative guide on key principles of business registration (UN Doc. A/ CN.9/WG.I/WP.101) (from May 1–5) and 15 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:21 Apr 13, 2017 Jkt 241001 a draft legislative guide on a simplified business entity (UN Doc. A/CN.9/WG.I/ WP.99 and Add.1) (from May 8–9). The Working Group will also consider future work. At its first session, the Working Group ‘‘acknowledged and welcomed the Commission’s mandate relative to the establishment of an enabling legal environment to facilitate the life cycle of MSMEs, beginning with the implementation of simplified rules of registration, incorporation and operation of such enterprises, in addition to other topics such as financial inclusion, including mobile payments, access to credit, alternative dispute resolution and simplified insolvency rules.’’ (UN Doc. A/CN.9/ 800, para 66). The draft texts, along with the reports of earlier sessions of the Working Group will be available at https://www.uncitral.org/uncitral/en/ commission/working_groups/ 1MSME.html. Time and Place: The meeting of the ACPIL UNCITRAL MSME Study Group will take place on Friday April 28, from 10 a.m. to 12:00 p.m. EDT via teleconference. Public Participation: Those planning to participate should email pil@state.gov to obtain the call-in number. BILLING CODE 4710–08–P ecosystems’’ and for the ‘‘IPCC Special Report on the Ocean and Cryosphere in a Changing Climate’’ were adopted at the 45th session of the IPCC Plenary. Nominations may be submitted at https://contribute.globalchange.gov/; additional information can be found at https://www.globalchange.gov/notices. This is an Open Call. All registered users can nominate U.S. citizens and permanent lawful residents to be considered by the IPCC Science Steering Committee (SSC). The call for nominations will close on May 15th, 2017, and a nominations package will be transmitted on behalf of the U.S. IPCC Focal Point on May 17th. The SSC will complete its work and issue appointment memos in late July 2017. The United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) established the IPCC in 1988. In accordance with its mandate and as reaffirmed in various decisions by the Panel, the major activity of the IPCC is to prepare comprehensive and up-todate assessments of policy-relevant scientific, technical, and socioeconomic information for understanding the scientific basis of climate change, potential impacts, and options for mitigation and adaptation. Christopher Allison, Director, Acting, Office of Global Change, Bureau of Oceans and International Environmental and Scientific Affairs, Department of State. [FR Doc. 2017–07596 Filed 4–13–17; 8:45 am] BILLING CODE 4710–09–P DEPARTMENT OF STATE [Public Notice: 9924] TENNESSEE VALLEY AUTHORITY Nominations for Coordinating Lead Authors, Lead Authors, or Review Editors on the Second and Third Special Reports to be Undertaken by the Intergovernmental Panel on Climate Change During the Sixth Assessment Report (AR6) Cycle The United States Department of State, in cooperation with the United States Global Change Research Program, seeks nominations for U.S. scientists with requisite expertise to serve as Coordinating Lead Authors, Lead Authors, or Review Editors on the second and third Special Reports to be undertaken by the Intergovernmental Panel on Climate Change (IPCC) during the Sixth Assessment Report (AR6) cycle. The outlines for ‘‘Climate Change and Land: An IPCC Special Report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 Meeting of the Regional Energy Resource Council Tennessee Valley Authority (TVA). ACTION: Notice of meeting. AGENCY: The TVA Regional Energy Resource Council (RERC) will hold a meeting on Tuesday, May 2 and Wednesday, May 3, 2017, regarding regional energy related issues in the Tennessee Valley. The RERC was established to advise TVA on its energy resource activities and the priorities among competing objectives and values. Notice of this meeting is given under the Federal Advisory Committee Act (FACA), 5 U.S.C. App.2. The meeting agenda includes the following: SUMMARY: 1. Welcome and Introductions 2. TVA Updates E:\FR\FM\14APN1.SGM 14APN1

Agencies

[Federal Register Volume 82, Number 71 (Friday, April 14, 2017)]
[Notices]
[Pages 18067-18070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07528]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80415; File No. SR-NYSEArca-2017-30]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change To Amend Commentary .01 and Commentary .02 to 
NYSE Arca Equities Rule 5.2(j)(3) To Provide for the Inclusion of Cash 
in an Index Underlying a Series of Investment Company Units

April 10, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on March 29, 2017, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.

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[[Page 18068]]

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Commentary .01 and Commentary .02 to 
NYSE Arca Equities Rule 5.2(j)(3) to provide for the inclusion of cash 
in an index underlying a series of Investment Company Units. The 
proposed change is available on the Exchange's Web site at 
www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Commentary .01 and Commentary .02 to 
NYSE Arca Equities Rule 5.2(j)(3) to provide for the inclusion of cash 
in an index underlying a series of Investment Company Units 
(``Units'').\4\ NYSE Arca Equities Rule 5.2(j)(3) provides ``generic'' 
criteria permitting listing and trading of Units pursuant to Rule 19b-
4(e) under the Act \5\ when the underlying index or portfolio satisfies 
the criteria set forth in NYSE Arca Equities Rule 5.2(j)(3).
---------------------------------------------------------------------------

    \4\ Investment Company Units are securities that represent 
interests in a unit investment trust, an open-end management 
investment company securities or a similar entity registered under 
the investment Company Act of 1940 (15 U.S.C. 80a-1). A series of 
Investment Company Units seeks to provide investment results that 
correspond generally to the price and yield performance of a 
specific foreign or domestic stock index, fixed income securities 
index or combination thereof.
    \5\ 17 CFR 240.19b-4(e).
---------------------------------------------------------------------------

    The Exchange understands that certain index providers have 
included, or intend to include, cash as a component in indexes that 
also include equity or fixed income securities components. An index 
provider may, for example, provide a certain index weighting allocation 
to cash or may periodically change an allocation to cash based on the 
index provider's assessment of market risk associated with other asset 
classes in the applicable index.\6\
---------------------------------------------------------------------------

    \6\ The Exchange notes that shares of the following exchange-
traded funds based on indexes that include cash as a component are 
currently listed and traded on the BATS BZX Exchange, Inc.: QuantX 
Risk Managed Growth ETF; QuantX Risk Managed Multi-Asset Income ETF; 
QuantX Risk Managed Multi-Asset Total Return ETF; and QuantX Risk 
Managed Real Return ETF.
---------------------------------------------------------------------------

    Accordingly, the Exchange proposes to amend Commentaries .01 and 
.02 to permit listing and trading of Units based on an index or 
portfolio that includes cash as a component. While Units, like mutual 
funds, will generally hold an amount of cash, NYSE Arca Equities Rule 
5.2(j)(3) currently provides that components of an index or portfolio 
underlying a series of Units consist of securities--namely, U.S. 
Component Stocks, Non-U.S. Component Stocks, Fixed Income Securities or 
a combination thereof. As described below, the proposed amendments to 
Commentary .01 and Commentary .02 to Rule 5.2(j)(3)would permit 
inclusion of cash as an index or portfolio component.
    Currently, Commentary .01(a)(A) provides that an underlying index 
or portfolio of U.S. Component Stocks \7\ must meet specified criteria. 
The Exchange proposes to amend Commentary .01(a)(A) to provide that the 
components of an index or portfolio underlying a series of Units may 
also include cash. In addition, the percentage weighting criteria in 
Commentary .01(a)(A)(1) through (4) each would be amended to make clear 
that such criteria would be applied only to the U.S. Component Stocks 
portion of an index or portfolio. For example, in applying the criteria 
in proposed Commentary .01(a)(A)(1),\8\ if 85% of the weight of an 
index consists of U.S. Component Stocks and 15% of the index weight is 
cash, the requirement that component stocks accounting for 90% of the 
weight of the index or portfolio have a minimum market value of $75 
million minimum would be applied only to the 85% portion consisting of 
U.S. Component Stocks.
---------------------------------------------------------------------------

    \7\ Rule 5.2(j)(3) defines ``U.S. Component Stock'' as an equity 
security that is registered under Sections 12(b) or 12(g) of the Act 
or an American Depositary Receipt, the underlying equity security of 
which is registered under Sections 12(b) or 12(g) of the Act.
    \8\ Proposed Commentary .01(a)(A)(1) would provide that 
component stocks (excluding Units and Derivative Securities 
Products) that in the aggregate account for at least 90% of the 
weight of the U.S. Component Stocks portion of the index or 
portfolio (excluding such Derivative Securities Products) each shall 
have a minimum market value of at least $75 million.
---------------------------------------------------------------------------

    Commentary .01(a)(B), which relates to international or global 
indexes or portfolios, would be amended to provide that components of 
an index or portfolio underlying a series of Units may consist of (a) 
only Non-U.S. Component Stocks, (b) Non-U.S. Component Stocks and cash, 
(c) both U.S. Component Stocks and Non-U.S. Component Stocks, or (d) 
U.S. Component Stocks, Non-U.S. Component Stocks and cash. In addition, 
the percentage weighting criteria in Commentary .01(a)(B)(1) through 
(4) each would be amended to make clear that such criteria would be 
applied only to the combined U.S. and Non-U.S. Component Stocks 
portions of an index or portfolio.
    Commentary .02 to NYSE Arca Equities Rule 5.2(j)(3) provides 
generic criteria applicable to listing and trading of Units whose 
underlying index or portfolio includes Fixed Income Securities.\9\ 
Currently, Commentary .02(a)(1) provides that an underlying index or 
portfolio must consist of Fixed Income Securities. The Exchange 
proposes to amend Commentary .02(a)(1) to provide that the index or 
portfolio may also include cash. In addition, the percentage weighting 
criteria in Commentary .02(a)(2), (a)(4) and (a)(6) each would be 
amended to make clear that such criteria would be applied only to the 
Fixed Income Securities portion of an index or portfolio. For example, 
in applying the criteria in proposed Commentary .01(a)(2),\10\ if 90% 
of the weight of an index or portfolio consists of Fixed Income 
Securities and 10% of the index weight is cash, the requirement that 
Fixed Income Securities accounting for at least 75% of the weight of 
the index or portfolio have a minimum original principal amount 
outstanding of $100 million would be applied only to the 90% portion 
consisting of Fixed Income Securities.
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    \9\ As defined in Commentary .02 to NYSE Arca Equities Rule 
5.2(j)(3), Fixed Income Securities are debt securities that are 
notes, bonds, debentures or evidence of indebtedness that include, 
but are not limited to, U.S. Department of Treasury securities 
(``Treasury Securities''), government-sponsored entity securities 
(``GSE Securities''), municipal securities, trust preferred 
securities, supranational debt and debt of a foreign country or a 
subdivision thereof.
    \10\ Proposed Commentary .01(a)(2) would provide that Fixed 
Income Security components that in aggregate account for at least 
75% of the Fixed Income Securities portion of the weight of the 
index or portfolio each shall have a minimum original principal 
amount outstanding of $100 million or more.
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    The Exchange notes that the Commission has previously approved 
Exchange rules allowing portfolios held by issues of Managed Fund 
Shares

[[Page 18069]]

(actively-managed exchange-traded funds) under Commentary .01 to NYSE 
Arca Equities Rule 8.600 to include cash.\11\ Like the provision in 
Commentary .01(c) to Rule 8.600, which states that there is no limit to 
cash holdings by an issue of Managed Fund Shares listed under 
Commentary .01 to Rule 8.600, there is no proposed limit to the 
weighting of cash in an index underlying a series of Units. The 
Exchange believes this is appropriate in that cash does not, in itself, 
impose investment or market risk.
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    \11\ See Commentary .01(c) to NYSE Arca Equities Rule 8.600.
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    The Exchange believes the proposed amendments, by permitting 
inclusion of cash as a component of indexes underlying series of Units, 
would provide issuers of Units with additional choice in indexes 
permitted to underlie Units that are permitted to list and trade on the 
Exchange pursuant to the Rule 19b-4(e), which would enhance competition 
among market participants, to the benefit of investors and the 
marketplace. In addition, the proposed amendments would provide 
investors with greater ability to hold Units based on underlying 
indexes that may accord more closely with an investor's assessment of 
market risk, in that some investors may view cash as a desirable 
component of an underlying index under certain market conditions.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Sections 6(b)(5) of the Act,\13\ in particular, because 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to, and 
perfect the mechanisms of, a free and open market and a national market 
system and, in general, to protect investors and the public interest 
and because it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Exchange has in place surveillance procedures that are adequate 
to properly monitor trading in Units in all trading sessions and to 
deter and detect violations of Exchange rules and applicable federal 
securities laws.
    The Exchange notes that, as described above, the percentage 
weighting criteria in Commentary .01(a)(B)(1) through (4) to Rule 
5.2(j)(3) each would be amended to make clear that such criteria would 
be applied only to the combined U.S. and Non-U.S. Component Stocks 
portions of an index or portfolio. The percentage weighting criteria in 
Commentary .02(a)(2), (a)(4) and (a)(6) to Rule 5.2(j)(3) each would be 
amended to make clear that such criteria would be applied only to the 
Fixed Income Securities portion of an index or portfolio. Such 
applications of the proposed amendments would assure that the weighting 
requirements in Commentary .01 and Commentary .02 would continue to be 
applied only to securities in an index or portfolio, and would not be 
diluted as a result of inclusion of a cash component. In addition, the 
addition of cash as a permitted component of indexes underlying Units 
listed and traded on the Exchange pursuant to Rule 19b-4(e) does not 
raise regulatory issues because cash does not, in itself, impose 
investment or market risk and is not susceptible to manipulation.
    The Exchange believes the proposed amendments, by permitting 
inclusion of cash as a component of indexes underlying series of Units, 
would provide issuers of Units with additional choice in indexes 
permitted to underlie Units that are permitted to list and trade on the 
Exchange pursuant to the Rule 19b-4(e), which would enhance competition 
among market participants, to the benefit of investors and the 
marketplace. In addition, the proposed amendments would provide 
investors with greater ability to hold Units based on underlying 
indexes that may accord more closely with an investor's assessment of 
market risk.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\14\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The proposed rule change would permit Exchange 
listing and trading under Rule 19b-4(e) of Units based on indexes that 
include cash as a component, which would enhance competition among 
market participants, to the benefit of investors and the marketplace.
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    \14\ 15 U.S.C. 78f(b)(8).
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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:

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-2017-30 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-2017-30. 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

[[Page 18070]]

provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of 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-2017-30, and should 
be submitted on or before May 5, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-07528 Filed 4-13-17; 8:45 am]
BILLING CODE 8011-01-P
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