Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 3, 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, 21443-21446 [2017-09196]

Download as PDF Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices notice by the Commission authorizing FICC to implement FICC’s advance notice proposal (SR–FICC–2017–803) that is consistent with this proposed rule change, whichever is later.37 SECURITIES AND EXCHANGE COMMISSION For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.38 Eduardo A. Aleman, Assistant Secretary. Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 3, 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 [Release No. 34–80579; File No. SR– NYSEArca–2016–120] [FR Doc. 2017–09193 Filed 5–5–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION May 2, 2017. Sunshine Act Meeting asabaliauskas on DSK3SPTVN1PROD with NOTICES 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 Advisory Committee on Small and Emerging Companies will hold a public meeting on Wednesday, May 10, 2017, in Multi-Purpose Room LL–006 at the Commission’s headquarters, 100 F Street NE., Washington, DC. The meeting will begin at 9:00 a.m. (EDT) and will be open to the public. Seating will be on a first-come, firstserved basis. Doors will open at 8:30 a.m. Visitors will be subject to security checks. The meeting will be webcast on the Commission’s Web site at www.sec.gov. On April 27, 2017, the Commission published notice of the Committee meeting (Release No. 33–10350), indicating that the meeting is open to the public and inviting the public to submit written comments to the Committee. This Sunshine Act notice is being issued because a majority of the Commission may attend the meeting. The agenda for the meeting includes matters relating to rules and regulations affecting small and emerging companies under the Federal securities laws. For further information, please contact Brent J. Fields from the Office of the Secretary at (202) 551–5400. Dated: May 3, 2017. Brent J. Fields, Secretary. BILLING CODE 8011–01–P 37 In approving the proposed rule change, the Commission considered the proposals’ impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 38 17 CFR 200.30–3(a)(12). 19:22 May 05, 2017 1 15 U.S.C. 78s(b)(1). 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 the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change. 6 See Securities Exchange Act Release No. 79914, 82 FR 9625 (February 7, 2017). 2 17 [FR Doc. 2017–09407 Filed 5–4–17; 4:15 pm] VerDate Sep<11>2014 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. On February 1, 2017, the Commission instituted proceedings to determine whether to approve or disapprove the proposed rule change.6 On February 15, 2017, the Exchange filed Amendment No. 2 to the proposed rule change, which replaced and Jkt 241001 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 21443 superseded the proposed rule change as modified by Amendment No. 1. On April 20, 2017, the Exchange filed Amendment No. 3 to the proposed rule change, which replaced and superseded the proposed rule change as modified by Amendment No. 2.7 The Commission received no comments on the proposed rule change. This order approves the proposed rule change, as modified by Amendment No. 3. II. Description of the Proposed Rule Change, as Modified by Amendment No. 3 8 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 (‘‘Trust’’).9 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’’). 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 results, before fees and expenses, that correspond to approximately four times (400%) the daily performance of the 7 In Amendment No. 3, the Exchange: (1) Clarified the permissible investments of the Funds; (2) clarified the prices that will be used to calculate the net asset value (‘‘NAV’’) for each Fund; (3) stated that the indicative fund value (‘‘IFV’’) will be calculated and disseminated throughout the Exchange Core Trading Session; (4) amended and clarified the description of the creation and redemption process for the Shares; (5) added a discussion regarding the impact on the arbitrage mechanism as a result of the use of derivatives; (6) amended and supplemented the description of the information that will be provided to ETP Holders through the Information Bulletin; (7) provided information regarding the obligations of ETP Holders to follow FINRA guidance relating to increased sales practice and customer margin requirements applicable to inverse, leveraged, and inverse leveraged securities; and (8) made various technical changes. Amendment No. 3 is not subject to notice and comment because it does not materially alter the substance of the proposed rule change or raise unique or novel regulatory issues. All of the amendments to the proposed rule change are available at: https://www.sec.gov/comments/srnysearca-2016-120/nysearca2016120.shtml. 8 The Commission notes that additional information regarding the Trust (defined below), the Funds, their investments, and the Shares, including investment strategies, risks, creation and redemption procedures, fees, portfolio holdings disclosure policies, and taxes, among other information, can be found in Amendment No. 3, supra note 7, and the Registration Statement, infra note 9. 9 The Trust is registered under the Securities Act of 1933. On September 30, 2016, the Trust filed with the Commission a registration statement on Form S–1 under the Securities Act of 1933 relating to the Funds (File No. 333–213911) (‘‘Registration Statement’’). E:\FR\FM\08MYN1.SGM 08MYN1 21444 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices asabaliauskas on DSK3SPTVN1PROD with NOTICES 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 (‘‘CME’’). This closing settlement price is referred to as the ‘‘Benchmark.’’10 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 Benchmark. Each Fund will not seek to achieve its primary investment objective over a period of time greater than a single day.11 Under normal market conditions, each Fund will seek to achieve its primary investment objective primarily by investing in Big S&P Contracts. Each Fund will also invest in E-Mini 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 will be lead month or deferred month Primary S&P Interests. Subsequently, 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’’ and, together with Primary S&P Interests, ‘‘S&P Interests’’).12 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, which will be options on Primary S&P Interests, in pursuing its secondary investment objective of recouping a small amount of a Fund’s losses from an extreme, short term movement in the Benchmark.13 Stop 10 The design of the Funds’ Benchmark is such that it will change four times per year in connection with the expiration of the lead month Big S&P Contracts, and each Fund’s positions in S&P Interests (defined below) will be rolled on a regular basis in order to track the changing nature of the Benchmark. 11 The Exchange states that the return of each Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from four times the total performance, in the case of the Long Fund, or four times the inverse of the total performance, in the case of the Short Fund, of the Benchmark over the same period. 12 The Sponsor will assess or review, as appropriate, the creditworthiness of each potential or existing counterparty to an over-the-counter contract. 13 The Long Fund will hold put options, and the Short Fund will hold call options, with respect to VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 3, is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange.14 In particular, the Commission finds that the proposed rule change, as modified by Amendment No. 3, is consistent with Section 6(b)(5) of the Act,15 which requires, among other things, that the Exchange’s rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission also finds that the proposal to list and trade the Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the Act,16 which sets forth Congress’s finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for, and transactions in, securities. Quotation and last-sale information for the Shares will be disseminated through the facilities of the Consolidated Tape Association (‘‘CTA’’). The indicative fund value (‘‘IFV’’) will be disseminated every 15 seconds during the Exchange’s Core Trading Session.17 The Exchange will make available on its Web site daily trading volume, closing prices, and the NAV of the Shares.18 The Exchange will also disseminate on a daily basis via the CTA information with respect to the NAV and Shares outstanding. Intraday and closing price information from brokers and dealers or independent pricing services, among other sources, will be available for S&P Interests, Stop Options, and Cash Equivalents. The Benchmark will be disseminated by one or more major market data vendors every 15 seconds during the NYSE Arca Core Trading Session. On a daily basis, the Sponsor will disclose on the Funds’ Web site the following information regarding each portfolio holding, as applicable to the type of holding: Ticker symbol, CUSIP number or other identifier, if any; a description of the holding (including the type of holding, such as the type of swap); the identity of the security, index or other asset or instrument underlying the holding, if any; for options, the option strike price; quantity held (as measured by, for example, par value, notional value or number of shares, contracts or units); maturity date, if any; market value of the holding; and the percentage weighting of the holding in a Fund’s portfolio.19 The Funds’ Web site will also include the prospectus, data relating to the NAV, and other applicable quantitative information for each Fund. The Commission also believes that the proposal to list and trade the Shares is reasonably designed to promote fair disclosure of information that may be necessary to price the Shares appropriately and to prevent trading when a reasonable degree of transparency cannot be assured. If the Exchange becomes aware that the NAV with respect to the Shares is not disseminated to all market participants at the same time, it will halt trading in all or substantially all of its S&P Interests with strike prices at approximately 75%, in the case of the Long Fund, or 125%, in the case of the Short Fund, of the value of the applicable underlying S&P Interest as of the end of the preceding business day. These Stop Options will serve primarily to (a) prevent the Fund’s NAV from going to zero in the event of a 25% adverse move in the Benchmark, and (b) recoup a small portion of substantial losses of a Fund that may result from large movements in the Benchmark. 14 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). 15 15 U.S.C. 78f(b)(5). 16 15 U.S.C. 78k–1(a)(1)(C)(iii). 17 The Exchange will disseminate the IFV through the facilities of the CTA high speed line. In addition, the IFV will be published on the Exchange’s Web site and will be available through on-line information services. 18 Each Fund’s NAV will be calculated as of the earlier of 4:00 p.m. E.T. or the close of the Exchange each day. The NAV for a particular trading day will be released after 4:15 p.m. E.T. The NAV for the Funds will be disseminated daily to all market participants at the same time. 19 The disclosure of the Funds’ portfolio composition on the Funds’ Web site will occur at the same time as the disclosure by the Sponsor of the portfolio composition to Authorized Purchasers so that all market participants are provided portfolio composition information at the same time. Options are expected to average less than approximately 5% of each Fund’s portfolio. 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. PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 E:\FR\FM\08MYN1.SGM 08MYN1 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices asabaliauskas on DSK3SPTVN1PROD with NOTICES the Shares until such time as the NAV is available to all market participants. Trading in the Shares will also be subject to NYSE Arca Equities Rule 7.12, which sets forth circumstances under which trading in the Shares may be halted. In addition, trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable.20 Moreover, the Exchange may halt trading during the day in which an interruption to the dissemination of the IFV or the value of the underlying futures contracts occurs. If the interruption to the dissemination of the IFV or the value of the underlying futures contracts persists past the trading day in which it occurred, the Exchange will halt trading no later than the beginning of the trading day following the interruption. The Exchange represents that it has a general policy prohibiting the distribution of material, non-public information by its employees. The Exchange represents that it deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. In support of this proposal, the Exchange has made the following representations: (1) The Funds will meet the initial and continued listing requirements applicable to Trust Issued Receipts in NYSE Arca Equities Rule 8.200 and Commentary .02 thereto. (2) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. (3) Trading in the Shares will be subject to the existing trading surveillances administered by the Exchange, as well as cross-market surveillances administered by the Financial Industry Regulatory Authority (‘‘FINRA’’) on behalf of the Exchange, and these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws.21 (4) The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares, Primary S&P 20 These may include: (1) The extent to which trading is not occurring in the underlying futures contracts; or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. 21 The Exchange states that FINRA conducts cross-market surveillances on behalf of the Exchange pursuant to a regulatory services agreement, and that the Exchange is responsible for FINRA’s performance under this regulatory services agreement. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 Interests, and options on futures with other markets or other entities that are members of the Intermarket Surveillance Group (‘‘ISG’’), and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in such securities and financial instruments from such markets or entities. In addition, the Exchange may obtain information regarding trading in such securities and financial instruments from markets or other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement (‘‘CSSA’’). (5) Not more than 10% of the net assets of a Fund in the aggregate invested in futures contracts or exchange-traded options contracts shall consist of futures contracts or exchangetraded options contracts whose principal market is not a member of ISG or is a market with which the Exchange does not have a CSSA. (6) Prior to the commencement of trading, the Exchange will inform its ETP Holders in an Information Bulletin of the special characteristics and risks associated with trading the Shares. Specifically, the Information Bulletin will discuss the following: (a) The risks involved in trading the Shares during the Opening and Late Trading Sessions when an updated IFV will not be calculated or publicly disseminated; (b) the procedures for purchases and redemptions of Shares in Creation Baskets and Redemption Baskets (and that Shares are not individually redeemable); (c) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading the Shares; (d) how information regarding the IFV and the portfolio is disseminated; (e) applicable prospectus delivery requirements; and (f) trading information. (7) Prior to the commencement of trading, the Exchange will inform its ETP Holders of the suitability requirements of NYSE Arca Equities Rule 9.2(a) in an Information Bulletin. Specifically, ETP Holders will be reminded in the Information Bulletin that, in recommending transactions in the Shares, they must have a reasonable basis to believe that (a) the recommendation is suitable for a customer given reasonable inquiry concerning the customer’s investment objectives, financial situation, needs, and any other information known by such ETP Holder, and (b) the customer can evaluate the special characteristics, and is able to bear the financial risks, of PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 21445 an investment in the Shares. In connection with the suitability obligation, the Information Bulletin will also provide that ETP Holders must make reasonable efforts to obtain the following information: (a) The customer’s financial status; (b) the customer’s tax status; (c) the customer’s investment objectives; and (d) such other information used or considered to be reasonable by such ETP Holder or registered representative in making recommendations to the customer. (8) A minimum of 100,000 Shares for each Fund will be outstanding at the start of trading on the Exchange. The Exchange represents that all statements and representations made in the filing regarding (a) the description of the portfolios; (b) limitations on portfolio holdings or reference assets; or (c) the applicability of Exchange listing rules specified in the rule filing constitute continued listing requirements for listing the Shares on the Exchange. In addition, the issuer has represented to the Exchange that it will advise the Exchange of any failure by a Fund to comply with the continued listing requirements and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor 22 for compliance with the continued listing requirements. If a Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Equities Rule 5.5(m). This approval order is based on all of the Exchange’s statements and representations, including those set forth above and in Amendment No. 3. For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendment No. 3, is consistent with Section 6(b)(5) of the Act 23 and Section 11A(a)(1)(C)(iii) of the Act 24 and the rules and regulations thereunder applicable to a national securities exchange. 22 The Commission notes that certain proposals for the listing and trading of exchange-traded products include a representation that the exchange will ‘‘surveil’’ for compliance with the continued listing requirements. See, e.g., Securities Exchange Act Release No. 77499 (April 1, 2016), 81 FR 20428, 20432 (April 7, 2016) (SR–BATS–2016–04). In the context of this representation, it is the Commission’s view that ‘‘monitor’’ and ‘‘surveil’’ both mean ongoing oversight of compliance with the continued listing requirements. Therefore, the Commission does not view ‘‘monitor’’ as a more or less stringent obligation than ‘‘surveil’’ with respect to the continued listing requirements. 23 15 U.S.C. 78f(b)(5). 24 15 U.S.C. 78k–1(a)(1)(C)(iii). E:\FR\FM\08MYN1.SGM 08MYN1 21446 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,25 that the proposed rule change (SR–NYSEArca– 2016–120), as modified by Amendment No. 3, be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–09196 Filed 5–5–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80577; File No. SR– NYSEMKT–2017–04] Self-Regulatory Organizations; NYSE MKT LLC; Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1, Relating to Market Makers Applicable When the Exchange Transitions Trading to Pillar, the Exchange’s New Trading Technology Platform May 2, 2017. I. Introduction On January 25, 2017, NYSE MKT LLC (‘‘Exchange’’ or ‘‘NYSE MKT’’) 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 adopt rules relating to market makers that would be applicable when the Exchange transitions trading to Pillar, the Exchange’s new trading technology platform. The proposed rule change was published for comment in the Federal Register on February 13, 2017.3 On March 29, 2017, the Commission designated a longer period for action on the proposed rule change.4 On March 30, 2017, the Exchange filed Amendment No. 1 to the proposed rule change.5 The Commission received no 25 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 79982 (Feb. 7, 2017), 82 FR 10508 (Feb. 13, 2017) (‘‘Notice’’). 4 See Securities Exchange Act Release No. 80336 (Mar. 29, 2017), 82 FR 16447 (Apr. 4, 2017). 5 In Amendment No. 1, the Exchange: (1) Specified that proposed Exchange Rule 7.25E titled ‘‘DMM Security Allocation and Reallocation’’ is also based on New York Stock Exchange LLC (‘‘NYSE’’) Rule 103B; (2) modified proposed Exchange Rule 7.25E(b)(1), to read ‘‘Issuer Section [sic] of DMM Unit by Interview;’’ (3) modified proposed Exchange Rule 7.25E(b)(1)(B)(ii) by (a) adding the qualifier ‘‘eligible’’ to ‘‘DMMs’’ in the asabaliauskas on DSK3SPTVN1PROD with NOTICES 26 17 VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 comments on the proposal, as modified by Amendment No. 1. The Commission is approving the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. II. Description of the Proposed Rule Change, as Modified by Amendment No. 1 The Exchange proposes to adopt new rules relating to market makers that would be applicable when the Exchange transitions trading to Pillar, a new trading technology platform. As part of this transition, the Exchange would move from the current floor-based market with a parity allocation model to a fully automated market with a pricetime-priority allocation model. The Exchange’s floor-based traders, such as designated market makers (‘‘DMMs’’) and floor brokers, would not be retained in Pillar. Electronic DMMs would replace floor-based DMMs. The proposed rules would not assign securities to DMMs at the naturalperson level and would not require DMMs to facilitate the opening, reopening, or closing of assigned Exchange-listed securities. In addition, the proposed rules would not entitle DMMs to a parity allocation of executions, and also would not subject DMMs to heightened capital requirements. Finally, DMMs would continue to be subject to rules governing allocation of securities and combination of DMM units. The Exchange would first sentence, (b) adding the clause ‘‘or a designee of such senior official’’ at the end of the second sentence, (c) modifying the fourth sentence to ‘‘Representatives of each DMM must participate in the meeting,’’ and (d) adding a final sentence stating that ‘‘Meetings will normally be held at the Exchange, unless the Exchange has agreed that they may be held elsewhere;’’ (4) modified proposed Exchange Rule 7.25(b)(2) by (a) changing the title to ‘‘Exchange Selection of DMM by Delegation,’’ (b) deleting from the first sentence of paragraph (A) the phrase ‘‘based on a review of all information available to the issuer,’’ and (c) modifying paragraph (B) to state that ‘‘The ESP will select the DMM and inform the issuer of its selection’’; (5) modified proposed Exchange Rule 7.25E(b)(11) to state that ‘‘If the issuer of an initial Fund lists additional funds within nine months from the date of its initial listing, the issuer may choose to maintain the same DMM for those subsequently listed funds or it may select a different DMM from the group of eligible DMMs that the issuer interviewed or reviewed in the allocation process for its initial fund’’; (6) modified proposed Exchange Rule 7.25E(d)(1) to state ‘‘loses its registration as a DMM in a security as a result of proceedings under the Rule 8000 or 9000 Series, as applicable; or’’; and (7) changed proposed Exchange Rule 7.25E(e) to make listing-company DMM allocation decisions for purposes of an initial public offering sunset after 18 months, made a conforming change to the filing, and stated that this proposed rule is based on current Exchange Rule 103B(VI)(H)—Equities and NYSE Rule 103B(VI)(H). Amendment No. 1 is available at: https:// www.sec.gov/comments/sr-nysemkt-2017-04/ nysemkt201704-1680445-149392.pdf. PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 also no longer provide for members to act as Supplemental Liquidity Providers. The Exchange represents that the proposal is based on the rules of NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’), which has already implemented Pillar, the same trading technology platform as the Exchange proposes to adopt.6 The proposal would set forth new definitions for Market Makers, Market Maker Authorized Traders, and Designated Market Makers. In addition, the proposal would set forth the process for registration and obligations of Market Makers, the obligations of Market Maker Authorized Traders, the registration of non-DMM Market Makers, the registration and obligations of DMMs, DMM security allocation and reallocation, and DMM combination review policy.7 The Exchange represents that it will announce the transition to Pillar, if approved by the Commission, by Trader Update. The Exchange anticipates that the transition would occur in the second quarter of 2017. After the transition to Pillar, current Exchange equities rules governing the floor-based platform would no longer be applicable. For each current equities rule that would not be applicable when trading on the Pillar platform begins, the Exchange proposes to add a preamble stating that ‘‘this rule is not applicable to trading on the Pillar trading platform.’’ The Exchange represents that, after it has transitioned to the Pillar trading platform, it will file a separate proposed rule change to delete the obsolete rules. Current Exchange rules governing equities trading that do not have the preamble described above will continue to govern 6 NYSE Arca filed four proposals to implement its transition to Pillar in stages: (1) Adopting rules for trading sessions, order ranking and display, and order execution; (2) adopting rules for orders and modifiers and the retail liquidity program; (3) adopting rules for trading halts, short sales, limit up-limit down, and odd lots and mixed lots; and (4) adopting rules for auctions. See Securities Exchange Act Release Nos. 74951 (May 13, 2015), 80 FR 28721 (May 19, 2015) and 75494 (July 20, 2015), 80 FR 44170 (July 24, 2015) (SR–NYSEArca– 2015–38) (first Pillar filing and approval); 75497 (July 21, 2015), 80 FR 45022 (July 28, 2015) and 76267 (Oct. 26, 2015), 80 FR 66951 (Oct. 30, 2015) (SR–NYSEArca–2015–56) (second Pillar filing and approval); 75467 (July 16, 2015), 80 FR 43515 (July 22, 2015) and 76198 (Oct. 20, 2015), 80 FR 65274 (Oct. 26, 2015) (third Pillar filing and approval); and 76085 (Oct. 6, 2015), 80 FR 61513 (Oct. 13, 2015) and 76869 (Jan. 11, 2016), 81 FR 2276 (Jan. 15, 2016) (fourth Pillar filing and approval). 7 The Exchange previously adopted these rules, generally with rule text reserved for future filings, in anticipation of the current proposal. See Securities Exchange Act Release No. 79242 (Nov. 4, 2016), 81 FR 79081 (Nov. 10, 2016) (SR– NYSEMKT–2016–97). The rule numbers correspond with the rule numbers of NYSE Arca Equities rules. E:\FR\FM\08MYN1.SGM 08MYN1

Agencies

[Federal Register Volume 82, Number 87 (Monday, May 8, 2017)]
[Notices]
[Pages 21443-21446]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-09196]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80579; File No. SR-NYSEArca-2016-120]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a 
Proposed Rule Change, as Modified by Amendment No. 3, 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

May 2, 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. On February 1, 
2017, the Commission instituted proceedings to determine whether to 
approve or disapprove the proposed rule change.\6\ On February 15, 
2017, the Exchange filed Amendment No. 2 to the proposed rule change, 
which replaced and superseded the proposed rule change as modified by 
Amendment No. 1. On April 20, 2017, the Exchange filed Amendment No. 3 
to the proposed rule change, which replaced and superseded the proposed 
rule change as modified by Amendment No. 2.\7\ The Commission received 
no comments on the proposed rule change. This order approves the 
proposed rule change, as modified by Amendment No. 3.
---------------------------------------------------------------------------

    \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 the proposed rule change, 
disapprove the proposed rule change, or institute proceedings to 
determine whether to disapprove the proposed rule change.
    \6\ See Securities Exchange Act Release No. 79914, 82 FR 9625 
(February 7, 2017).
    \7\ In Amendment No. 3, the Exchange: (1) Clarified the 
permissible investments of the Funds; (2) clarified the prices that 
will be used to calculate the net asset value (``NAV'') for each 
Fund; (3) stated that the indicative fund value (``IFV'') will be 
calculated and disseminated throughout the Exchange Core Trading 
Session; (4) amended and clarified the description of the creation 
and redemption process for the Shares; (5) added a discussion 
regarding the impact on the arbitrage mechanism as a result of the 
use of derivatives; (6) amended and supplemented the description of 
the information that will be provided to ETP Holders through the 
Information Bulletin; (7) provided information regarding the 
obligations of ETP Holders to follow FINRA guidance relating to 
increased sales practice and customer margin requirements applicable 
to inverse, leveraged, and inverse leveraged securities; and (8) 
made various technical changes. Amendment No. 3 is not subject to 
notice and comment because it does not materially alter the 
substance of the proposed rule change or raise unique or novel 
regulatory issues. All of the amendments to the proposed rule change 
are available at: https://www.sec.gov/comments/sr-nysearca-2016-120/nysearca2016120.shtml.

II. Description of the Proposed Rule Change, as Modified by Amendment 
No. 3 \8\
---------------------------------------------------------------------------

    \8\ The Commission notes that additional information regarding 
the Trust (defined below), the Funds, their investments, and the 
Shares, including investment strategies, risks, creation and 
redemption procedures, fees, portfolio holdings disclosure policies, 
and taxes, among other information, can be found in Amendment No. 3, 
supra note 7, and the Registration Statement, infra note 9.

    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 
(``Trust'').\9\ 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''). The Custodian will also be the registrar and transfer 
agent for the Shares.
---------------------------------------------------------------------------

    \9\ The Trust is registered under the Securities Act of 1933. On 
September 30, 2016, the Trust filed with the Commission a 
registration statement on Form S-1 under the Securities Act of 1933 
relating to the Funds (File No. 333-213911) (``Registration 
Statement'').
---------------------------------------------------------------------------

    The Long Fund's primary investment objective is to seek daily 
investment results, before fees and expenses, that correspond to 
approximately four times (400%) the daily performance of the

[[Page 21444]]

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 (``CME''). This closing settlement price is 
referred to as the ``Benchmark.''\10\ 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 Benchmark. Each Fund will not 
seek to achieve its primary investment objective over a period of time 
greater than a single day.\11\
---------------------------------------------------------------------------

    \10\ The design of the Funds' Benchmark is such that it will 
change four times per year in connection with the expiration of the 
lead month Big S&P Contracts, and each Fund's positions in S&P 
Interests (defined below) will be rolled on a regular basis in order 
to track the changing nature of the Benchmark.
    \11\ The Exchange states that the return of each Fund for 
periods longer than a single day will be the result of each day's 
returns compounded over the period, which will very likely differ 
from four times the total performance, in the case of the Long Fund, 
or four times the inverse of the total performance, in the case of 
the Short Fund, of the Benchmark over the same period.
---------------------------------------------------------------------------

    Under normal market conditions, each Fund will seek to achieve its 
primary investment objective primarily by investing in Big S&P 
Contracts. Each Fund will also invest in E-Mini 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 will be lead 
month or deferred month Primary S&P Interests. Subsequently, 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'' and, together with Primary S&P Interests, ``S&P 
Interests'').\12\ Each Fund may invest in Other S&P Interests in an 
amount up to 25% of its net assets.
---------------------------------------------------------------------------

    \12\ The Sponsor will assess or review, as appropriate, the 
creditworthiness of each potential or existing counterparty to an 
over-the-counter contract.
---------------------------------------------------------------------------

    Each Fund may acquire or dispose of Stop Options, which will be 
options on Primary S&P Interests, in pursuing its secondary investment 
objective of recouping a small amount of a Fund's losses from an 
extreme, short term movement in the Benchmark.\13\ Stop Options are 
expected to average less than approximately 5% of each Fund's 
portfolio.
---------------------------------------------------------------------------

    \13\ The Long Fund will hold put options, and the Short Fund 
will hold call options, with respect to all or substantially all of 
its S&P Interests with strike prices at approximately 75%, in the 
case of the Long Fund, or 125%, in the case of the Short Fund, of 
the value of the applicable underlying S&P Interest as of the end of 
the preceding business day. These Stop Options will serve primarily 
to (a) prevent the Fund's NAV from going to zero in the event of a 
25% adverse move in the Benchmark, and (b) recoup a small portion of 
substantial losses of a Fund that may result from large movements in 
the Benchmark.
---------------------------------------------------------------------------

    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.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as modified by Amendment No. 3, is consistent with the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\14\ In particular, the Commission finds that the 
proposed rule change, as modified by Amendment No. 3, is consistent 
with Section 6(b)(5) of the Act,\15\ which requires, among other 
things, that the Exchange's rules be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
of a free and open market and a national market system, and, in 
general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \14\ 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).
    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission also finds that the proposal to list and trade the 
Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of 
the Act,\16\ which sets forth Congress's finding that it is in the 
public interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers, and investors of information with respect to 
quotations for, and transactions in, securities.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    Quotation and last-sale information for the Shares will be 
disseminated through the facilities of the Consolidated Tape 
Association (``CTA''). The indicative fund value (``IFV'') will be 
disseminated every 15 seconds during the Exchange's Core Trading 
Session.\17\ The Exchange will make available on its Web site daily 
trading volume, closing prices, and the NAV of the Shares.\18\ The 
Exchange will also disseminate on a daily basis via the CTA information 
with respect to the NAV and Shares outstanding. Intraday and closing 
price information from brokers and dealers or independent pricing 
services, among other sources, will be available for S&P Interests, 
Stop Options, and Cash Equivalents. The Benchmark will be disseminated 
by one or more major market data vendors every 15 seconds during the 
NYSE Arca Core Trading Session.
---------------------------------------------------------------------------

    \17\ The Exchange will disseminate the IFV through the 
facilities of the CTA high speed line. In addition, the IFV will be 
published on the Exchange's Web site and will be available through 
on-line information services.
    \18\ Each Fund's NAV will be calculated as of the earlier of 
4:00 p.m. E.T. or the close of the Exchange each day. The NAV for a 
particular trading day will be released after 4:15 p.m. E.T. The NAV 
for the Funds will be disseminated daily to all market participants 
at the same time.
---------------------------------------------------------------------------

    On a daily basis, the Sponsor will disclose on the Funds' Web site 
the following information regarding each portfolio holding, as 
applicable to the type of holding: Ticker symbol, CUSIP number or other 
identifier, if any; a description of the holding (including the type of 
holding, such as the type of swap); the identity of the security, index 
or other asset or instrument underlying the holding, if any; for 
options, the option strike price; quantity held (as measured by, for 
example, par value, notional value or number of shares, contracts or 
units); maturity date, if any; market value of the holding; and the 
percentage weighting of the holding in a Fund's portfolio.\19\ The 
Funds' Web site will also include the prospectus, data relating to the 
NAV, and other applicable quantitative information for each Fund.
---------------------------------------------------------------------------

    \19\ The disclosure of the Funds' portfolio composition on the 
Funds' Web site will occur at the same time as the disclosure by the 
Sponsor of the portfolio composition to Authorized Purchasers so 
that all market participants are provided portfolio composition 
information at the same time.
---------------------------------------------------------------------------

    The Commission also believes that the proposal to list and trade 
the Shares is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Shares appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. If the Exchange becomes aware that the NAV with respect to the 
Shares is not disseminated to all market participants at the same time, 
it will halt trading in

[[Page 21445]]

the Shares until such time as the NAV is available to all market 
participants. Trading in the Shares will also be subject to NYSE Arca 
Equities Rule 7.12, which sets forth circumstances under which trading 
in the Shares may be halted. In addition, trading may be halted because 
of market conditions or for reasons that, in the view of the Exchange, 
make trading in the Shares inadvisable.\20\ Moreover, the Exchange may 
halt trading during the day in which an interruption to the 
dissemination of the IFV or the value of the underlying futures 
contracts occurs. If the interruption to the dissemination of the IFV 
or the value of the underlying futures contracts persists past the 
trading day in which it occurred, the Exchange will halt trading no 
later than the beginning of the trading day following the interruption. 
The Exchange represents that it has a general policy prohibiting the 
distribution of material, non-public information by its employees.
---------------------------------------------------------------------------

    \20\ These may include: (1) The extent to which trading is not 
occurring in the underlying futures contracts; or (2) whether other 
unusual conditions or circumstances detrimental to the maintenance 
of a fair and orderly market are present.
---------------------------------------------------------------------------

    The Exchange represents that it deems the Shares to be equity 
securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules governing the trading of equity securities. 
In support of this proposal, the Exchange has made the following 
representations:
    (1) The Funds will meet the initial and continued listing 
requirements applicable to Trust Issued Receipts in NYSE Arca Equities 
Rule 8.200 and Commentary .02 thereto.
    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.
    (3) Trading in the Shares will be subject to the existing trading 
surveillances administered by the Exchange, as well as cross-market 
surveillances administered by the Financial Industry Regulatory 
Authority (``FINRA'') on behalf of the Exchange, and these procedures 
are adequate to properly monitor Exchange trading of the Shares in all 
trading sessions and to deter and detect violations of Exchange rules 
and applicable federal securities laws.\21\
---------------------------------------------------------------------------

    \21\ The Exchange states that FINRA conducts cross-market 
surveillances on behalf of the Exchange pursuant to a regulatory 
services agreement, and that the Exchange is responsible for FINRA's 
performance under this regulatory services agreement.
---------------------------------------------------------------------------

    (4) The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares, Primary S&P 
Interests, and options on futures with other markets or other entities 
that are members of the Intermarket Surveillance Group (``ISG''), and 
the Exchange or FINRA, on behalf of the Exchange, or both, may obtain 
trading information regarding trading in such securities and financial 
instruments from such markets or entities. In addition, the Exchange 
may obtain information regarding trading in such securities and 
financial instruments from markets or other entities that are members 
of ISG or with which the Exchange has in place a comprehensive 
surveillance sharing agreement (``CSSA'').
    (5) Not more than 10% of the net assets of a Fund in the aggregate 
invested in futures contracts or exchange-traded options contracts 
shall consist of futures contracts or exchange-traded options contracts 
whose principal market is not a member of ISG or is a market with which 
the Exchange does not have a CSSA.
    (6) Prior to the commencement of trading, the Exchange will inform 
its ETP Holders in an Information Bulletin of the special 
characteristics and risks associated with trading the Shares. 
Specifically, the Information Bulletin will discuss the following: (a) 
The risks involved in trading the Shares during the Opening and Late 
Trading Sessions when an updated IFV will not be calculated or publicly 
disseminated; (b) the procedures for purchases and redemptions of 
Shares in Creation Baskets and Redemption Baskets (and that Shares are 
not individually redeemable); (c) NYSE Arca Equities Rule 9.2(a), which 
imposes a duty of due diligence on its ETP Holders to learn the 
essential facts relating to every customer prior to trading the Shares; 
(d) how information regarding the IFV and the portfolio is 
disseminated; (e) applicable prospectus delivery requirements; and (f) 
trading information.
    (7) Prior to the commencement of trading, the Exchange will inform 
its ETP Holders of the suitability requirements of NYSE Arca Equities 
Rule 9.2(a) in an Information Bulletin. Specifically, ETP Holders will 
be reminded in the Information Bulletin that, in recommending 
transactions in the Shares, they must have a reasonable basis to 
believe that (a) the recommendation is suitable for a customer given 
reasonable inquiry concerning the customer's investment objectives, 
financial situation, needs, and any other information known by such ETP 
Holder, and (b) the customer can evaluate the special characteristics, 
and is able to bear the financial risks, of an investment in the 
Shares. In connection with the suitability obligation, the Information 
Bulletin will also provide that ETP Holders must make reasonable 
efforts to obtain the following information: (a) The customer's 
financial status; (b) the customer's tax status; (c) the customer's 
investment objectives; and (d) such other information used or 
considered to be reasonable by such ETP Holder or registered 
representative in making recommendations to the customer.
    (8) A minimum of 100,000 Shares for each Fund will be outstanding 
at the start of trading on the Exchange.
    The Exchange represents that all statements and representations 
made in the filing regarding (a) the description of the portfolios; (b) 
limitations on portfolio holdings or reference assets; or (c) the 
applicability of Exchange listing rules specified in the rule filing 
constitute continued listing requirements for listing the Shares on the 
Exchange. In addition, the issuer has represented to the Exchange that 
it will advise the Exchange of any failure by a Fund to comply with the 
continued listing requirements and, pursuant to its obligations under 
Section 19(g)(1) of the Act, the Exchange will monitor \22\ for 
compliance with the continued listing requirements. If a Fund is not in 
compliance with the applicable listing requirements, the Exchange will 
commence delisting procedures under NYSE Arca Equities Rule 5.5(m).
---------------------------------------------------------------------------

    \22\ The Commission notes that certain proposals for the listing 
and trading of exchange-traded products include a representation 
that the exchange will ``surveil'' for compliance with the continued 
listing requirements. See, e.g., Securities Exchange Act Release No. 
77499 (April 1, 2016), 81 FR 20428, 20432 (April 7, 2016) (SR-BATS-
2016-04). In the context of this representation, it is the 
Commission's view that ``monitor'' and ``surveil'' both mean ongoing 
oversight of compliance with the continued listing requirements. 
Therefore, the Commission does not view ``monitor'' as a more or 
less stringent obligation than ``surveil'' with respect to the 
continued listing requirements.
---------------------------------------------------------------------------

    This approval order is based on all of the Exchange's statements 
and representations, including those set forth above and in Amendment 
No. 3.
    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendment No. 3, is consistent with Section 
6(b)(5) of the Act \23\ and Section 11A(a)(1)(C)(iii) of the Act \24\ 
and the rules and regulations thereunder applicable to a national 
securities exchange.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78f(b)(5).
    \24\ 15 U.S.C. 78k-1(a)(1)(C)(iii).

---------------------------------------------------------------------------

[[Page 21446]]

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\25\ that the proposed rule change (SR-NYSEArca-2016-120), as 
modified by Amendment No. 3, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-09196 Filed 5-5-17; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.