Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the Hartford Schroders Tax-Aware Bond ETF Under NYSE Arca Rule 8.600-E, 50461-50468 [2017-23582]
Download as PDF
<![CDATA[
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Federal Register / Vol. 82, No. 209 / Tuesday, October 31, 2017 / Notices
securities registered under Section 12 of
the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) (‘‘Exchange Act’’); or
(2) filed a registration statement
pursuant to Section 12 of the Exchange
Act for a class of equity securities. The
Commission has adopted Form N–54A
(17 CFR 274.53) as the form for
notification of election to be regulated
as business development companies.
The purpose of Form N–54A is to
notify the Commission that the
investment company making the
notification elects to be subject to
Sections 55 through 65 of the
Investment Company Act, enabling the
Commission to administer those
provisions of the Investment Company
Act to such companies.
The Commission estimates that on
average approximately 12 business
development companies file these
notifications each year. Each of those
business development companies need
only make a single filing of Form N–
54A. The Commission further estimates
that this information collection imposes
a burden of 0.5 hours, resulting in a
total annual PRA burden of 6 hours.
Based on the estimated wage rate, the
total cost to the business development
company industry of the hour burden
for complying with Form N–54A would
be approximately $2,070.
The collection of information under
Form N–54A is mandatory. The
information provided by the form is not
kept confidential. An agency may not
conduct or sponsor, and a person is not
required to respond to, a collection of
information unless it displays a
currently valid control number.
The public may view the background
documentation for this information
collection at the following Web site,
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to: Shagufta_
Ahmed@omb.eop.gov; and (ii) Pamela
Dyson, Director/Chief Information
Officer, Securities and Exchange
Commission, c/o Remi Pavlik-Simon,
100 F Street NE., Washington, DC 20549
or send an email to: PRA_Mailbox@
sec.gov. Comments must be submitted to
OMB within 30 days of this notice.
Dated: October 26, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–23658 Filed 10–30–17; 8:45 am]
BILLING CODE P
VerDate Sep<11>2014
17:37 Oct 30, 2017
Jkt 244001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–81944; File No. SR–
NYSEArca–2017–99]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade Shares
of the Hartford Schroders Tax-Aware
Bond ETF Under NYSE Arca Rule
8.600–E
October 25, 2017.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on October
11, 2017, NYSE Arca, Inc. (‘‘Exchange’’
or ‘‘NYSE Arca’’) filed with the
Securities and Exchange Commission
(‘‘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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the Hartford Schroders
Tax-Aware Bond ETF under NYSE Arca
Rule 8.600–E (‘‘Managed Fund Shares’’).
The proposed rule 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 list and
trade shares (‘‘Shares’’) of the Hartford
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
PO 00000
Frm 00091
Fmt 4703
50461
Schroders Tax-Aware Bond ETF
(‘‘Fund’’) under NYSE Arca Rule 8.600–
E, which governs the listing and trading
of Managed Fund Shares.4 The Shares
will be offered by the Hartford Funds
Exchange-Traded Trust (the ‘‘Trust’’),
which is registered with the
Commission as an open-end
management investment company.5 The
Fund is a series of the Trust.
Hartford Funds Management
Company, LLC (‘‘HFMC’’ or ‘‘Manager’’)
will be the investment manager to the
Fund. ALPS Distributors, Inc. (‘‘ALPS’’
or the ‘‘Distributor’’) will be the
principal underwriter to the Fund.
HFMC is an indirect subsidiary of The
Hartford Financial Services Group, Inc.
Schroder Investment Management North
America Inc. (‘‘Sub-Adviser’’) will be
the sub-adviser to the Fund and
performs the daily investment of the
assets for the Fund.
Commentary .06 to Rule 8.600–E
provides that, if the investment adviser
to the investment company issuing
Managed Fund Shares is affiliated with
a broker-dealer, such investment adviser
shall erect a ‘‘fire wall’’ between the
investment adviser and the brokerdealer with respect to access to
information concerning the composition
and/or changes to such investment
company portfolio.6 In addition,
4 A Managed Fund Share is a security that
represents an interest in an investment company
registered under the Investment Company Act of
1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as
an open-end investment company or similar entity
that invests in a portfolio of securities selected by
its investment adviser consistent with its
investment objectives and policies. In contrast, an
open-end investment company that issues
Investment Company Units, listed and traded on
the Exchange under NYSE Arca Rule 5.2–E(j)(3),
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 The Trust is registered under the 1940 Act. On
June 26, 2017, the Trust filed with the Commission
its registration statement on Form N–1A under the
Securities Act of 1933 (15 U.S.C. 77a) (‘‘Securities
Act’’), and under the 1940 Act relating to the Funds
[sic] (File Nos. 333–215165 and 811–23222)
(‘‘Registration Statement’’). The description of the
operation of the Trust and the Funds [sic] herein
is based, in part, on the Registration Statement. In
addition, the Commission has issued an order
granting certain exemptive relief to the Trust under
the 1940 Act. See Investment Company Act Release
No. 32454 (January 27, 2017) (File No. 812–13828–
01) (‘‘Exemptive Order’’).
6 An investment adviser to an open-end fund is
required to be registered under the Investment
Advisers Act of 1940 (the ‘‘Advisers Act’’). As a
result, the Manager and Sub-Adviser and their
related personnel are subject to the provisions of
Rule 204A–1 under the Advisers Act relating to
codes of ethics. This Rule requires investment
advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as
well as compliance with other applicable securities
laws. Accordingly, procedures designed to prevent
the communication and misuse of non-public
Continued
Sfmt 4703
E:\FR\FM\31OCN1.SGM
31OCN1
50462
Federal Register / Vol. 82, No. 209 / Tuesday, October 31, 2017 / Notices
Commentary .06 further requires that
personnel who make decisions on the
open-end fund’s portfolio composition
must be subject to procedures designed
to prevent the use and dissemination of
material nonpublic information
regarding the open-end fund’s portfolio.
Neither the Manager nor Sub-Adviser is
registered as a broker-dealer but each is
affiliated with a broker-dealer. The
Manager and Sub-Adviser each has
implemented and will maintain a ‘‘fire
wall’’ with respect to such broker-dealer
affiliate regarding access to information
concerning the composition of and/or
changes to the Fund’s portfolio.7 In the
event (a) the Manager or Sub-Adviser
becomes registered as a broker-dealer or
newly affiliated with a broker-dealer, or
(b) any new adviser or sub-adviser to the
Fund is a registered broker-dealer or
becomes affiliated with a broker-dealer,
the applicable adviser or sub-adviser
will implement and maintain a ‘‘fire
wall’’ with respect to its relevant
personnel or broker-dealer affiliate
regarding access to information
concerning the composition and/or
changes to the Fund’s portfolio.
Hartford Schroders Tax-Aware Bond
ETF
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Principal Investments
According to the Registration
Statement, the Fund will seek total
return on an after-tax basis. The Fund
will seek to achieve its investment
objective by investing in a diversified
portfolio of fixed income debt
instruments of varying maturities.
Under normal market conditions,8 the
information by an investment adviser must be
consistent with Rule 204A–1 under the Advisers
Act. In addition, Rule 206(4)–7 under the Advisers
Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such
investment adviser has (i) adopted and
implemented written policies and procedures
reasonably designed to prevent violation, by the
investment adviser and its supervised persons, of
the Advisers Act and the Commission rules adopted
thereunder; (ii) implemented, at a minimum, an
annual review regarding the adequacy of the
policies and procedures established pursuant to
subparagraph (i) above and the effectiveness of their
implementation; and (iii) designated an individual
(who is a supervised person) responsible for
administering the policies and procedures adopted
under subparagraph (i) above.
7 While the Sub-Adviser is not registered as a
broker-dealer, it has a wholly-owned broker-dealer
subsidiary. This broker-dealer is limited purpose
and exists solely to serve as the distributor of
pooled investment vehicles for which the SubAdviser acts as an investment adviser. This brokerdealer does not execute securities transactions or
accept customer funds. For purposes of this filing,
the term ‘‘firewall’’ shall mean that personnel of
such broker-dealer are subject to procedures
designed to prevent the use and dissemination of
material non-public information, including
information regarding the Fund’s portfolio.
8 The term ‘‘normal market conditions’’ is defined
in NYSE Arca Rule 8.600–E(c)(5).
VerDate Sep<11>2014
17:37 Oct 30, 2017
Jkt 244001
Fund will invest principally (that is,
more than 50% of its assets) in the U.S.
dollar-denominated, fixed income debt
instruments described below.
The fixed income debt instruments in
which the Fund may invest as part of its
principal investment strategy are
securities issued or guaranteed by the
U.S. government and its agencies,
government-sponsored enterprise
securities, corporate bonds, agency
mortgage-backed securities (including
‘‘to be announced’’ or ‘‘TBA’’
transactions), agency asset-backed
securities (‘‘ABS’’), ‘‘Municipal
Securities’’ (as described below),
sovereign debt and debt securities
issued by supranational organizations.
They may pay fixed, variable, or floating
interest rates. The Fund may invest in
U.S. dollar denominated foreign
securities. The Fund may also invest in
cash and cash equivalents.9
According to the Registration
Statement, in seeking to achieve the
Fund’s investment objective, the SubAdviser will employ a tax-aware
investing strategy that attempts to
realize total return for shareholders,
primarily in the form of current income
and price appreciation, by balancing
investment considerations and tax
considerations.
According to the Registration
Statement, the Fund may invest in the
following Municipal Securities: General
obligation bonds; revenue (or limited
obligation) bonds; private activity (or
industrial development) bonds; bonds
that are collateralized with agency and/
or treasury securities, municipal notes;
municipal lease obligations; and
municipal inverse floaters.10 The Fund’s
investments in Municipal Securities
will be diversified among issuers in at
least 10 states and U.S. territories. The
Fund may invest up to 40% of the
Fund’s total assets in Municipal
Securities of issuers in each of
California, New York and Texas. The
Fund will limit its investments in
Municipal Securities of any one state
9 For purposes of this filing, cash equivalents are
money market funds and the following short-term
instruments with maturities of less than three
months: (i) Certificates of deposit issued against
funds deposited in a bank or savings and loan
association; (ii) bankers’ acceptances, which are
short-term credit instruments used to finance
commercial transactions; (iii) U.S. Government
obligations or corporate debt obligations (including
those subject to repurchase agreements); (iv) bank
time deposits; and (v) commercial paper.
10 Municipal inverse floaters are a type of inverse
floater in which a municipal bond is deposited with
a special purpose vehicle (SPV), which issues, in
return, the municipal inverse floater (which is
comprised of a residual interest in the cash flows
and assets of the SPV) plus proceeds from the
issuance by the SPV of floating rate certificates to
third parties.
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
(except California, New York and Texas)
or U.S. territory to 25% of the Fund’s
total assets.
The Fund may hold restricted
securities, which are securities that
cannot be offered for public resale
unless registered under the applicable
securities laws or that have a
contractual restriction that prohibits or
limits their resale. Restricted securities
include private placement securities
that have not been registered under the
applicable securities laws, such as Rule
144A securities, and securities of U.S.
and non-U.S. issuers that are issued
pursuant to Regulation S.
Other Investments
While the Fund, under normal market
conditions, will invest principally in the
securities and financial instruments
described above, the Fund may invest
its remaining assets in the securities and
financial instruments described below.
The Fund may invest in non-agency
ABS, which are securities backed by a
pool of some underlying asset,
including but not limited to home
equity loans, installment sale contracts,
credit card receivables or other assets.
The Fund may invest in collateralized
debt obligations (‘‘CDOs’’), which
include collateralized bond obligations
(‘‘CBOs’’), collateralized loan
obligations (‘‘CLOs’’) and other similarly
structured securities.
The Fund may invest in non-agency
mortgage-related securities.
The Fund may invest in the securities
of other registered investment
companies, including exchange-traded
funds (‘‘ETFs’’).11
The Fund may engage actively in
transactions in derivatives (futures,
options, swaps and forward rate
agreements), as described below. The
Fund will normally use derivatives to
supplement the effective management of
its duration profile, to gain exposure to
particular securities or markets, in
connection with hedging transactions,
or for purposes of efficient portfolio
management, including managing cash
flows or as part of the Fund’s risk
management process.
The Fund may invest in U.S and
foreign exchange-traded and over-the
counter (‘‘OTC’’) put and call options.
The Fund may engage in options
transactions on any security, index or
instrument in which it may invest.
11 For purposes of this filing, ETFs include
Investment Company Units (as described in NYSE
Arca Rule 5.2–E(j)(3)); Portfolio Depositary Receipts
(as described in NYSE Arca Rule 8.100–E); and
Managed Fund Shares (as described in NYSE Arca
Rule 8.600–E). The ETFs all will be listed and
traded in the U.S. on registered exchanges. The
Fund will not invest in inverse or leveraged (e.g.,
+2x, ¥2X) index ETFs.
E:\FR\FM\31OCN1.SGM
31OCN1
Federal Register / Vol. 82, No. 209 / Tuesday, October 31, 2017 / Notices
The Fund may invest in U.S and
foreign exchange-traded and OTC
currency options.
The Fund may invest in U.S. and
foreign exchange-traded futures
contracts and options on futures
contracts with respect to equity and
debt securities, foreign currencies,
aggregates of equity and debt securities
(aggregates are composites of equity or
debt securities that are not tied to a
commonly known index), interest rates,
indices, commodities and other
financial instruments.
The Fund may enter into commodity
swaps, total return swaps, currency
swaps, credit default swaps, asset
swaps, inflation swaps, event-linked
swaps, interest rate swaps, swaps on
specific securities or indices, swaps on
rates (such as mortgage prepayment
rates), municipal credit default swaps,
municipal market data derivatives rate
locks, caps, collars, and floors. The
Fund may also enter into options on
swap agreements (‘‘swaptions’’). The
Fund may also invest in the Dow Jones
CDX (‘‘CDX’’), which is a family of
indices that track credit derivative
indices in various countries around the
world. Swaps and swaptions can be
both exchange traded and OTC.
The Fund may enter into forward rate
agreements.
The Fund may invest in inflationprotected debt securities.
The Fund may invest in OTC and
exchange-traded convertible and
nonconvertible preferred stock.
The Fund may invest in when-issued
and delayed delivery securities and
forward commitments.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Disclosure of Portfolio Holdings
On each day the NYSE Arca is open
(a ‘‘Business Day’’), before
commencement of trading in Shares on
the Exchange, HFMC will disclose the
Fund’s iNAV Basket.12 Additionally, on
each Business Day, before
commencement of trading in Shares on
the Exchange, the Fund will disclose on
its Web site the identities and quantities
of the Fund’s portfolio holdings that
will form the basis for the Fund’s
calculation of NAV at the end of the
Business Day.
Creation and Redemption of Shares
According to the Registration
Statement, the Trust will issue and sell
Shares of the Fund only in Creation
Units at the NAV next determined after
12 An iNAV will be based on the current market
value of the Fund’s portfolio holdings that will form
the basis for the Fund’s calculation of NAV at the
end of the Business Day, as disclosed on the Fund’s
Web site prior to that Business Day’s
commencement of trading (the ‘‘iNAV Basket’’).
VerDate Sep<11>2014
17:37 Oct 30, 2017
Jkt 244001
receipt of an order in proper form on
any Business Day. The number of
Shares of the Fund that will constitute
a Creation Unit is 50,000. The size of a
Creation Unit is subject to change.
Creation of Shares
The consideration for purchase of
Creation Units will generally consist of
‘‘Deposit Securities’’ and the ‘‘Cash
Component’’, which will generally
correspond pro rata, to the extent
practicable, to the Fund’s securities, or,
as permitted or required by the Fund, of
cash. Together, the Deposit Securities
and Cash Component constitute the
‘‘Fund Deposit,’’ which represents the
minimum initial and subsequent
investment amount for a Creation Unit
of the Fund. Creation Units of Shares of
the Fund may be issued partially for
cash.
The Transfer Agent, through the
National Securities Clearing Corporation
(‘‘NSCC’’), will make available on each
Business Day, prior to the Core Trading
Session (subject to amendments) on the
Exchange (currently 9:30 a.m., Eastern
time), the identity and the required
number of each Deposit Security and
the amount of the Cash Component to
be included in the current Fund Deposit
(based on information at the end of the
previous Business Day).
To be eligible to place orders with the
Distributor and to create a Creation Unit
of the Fund, an entity must be: (i) A
‘‘Participating Party,’’ i.e. a brokerdealer or other participant in the
clearing process through the Continuous
Net Settlement System of the NSCC (the
‘‘Clearing Process’’); or (ii) a participant
of Depository Trust Company (‘‘DTC’’)
(‘‘DTC Participant’’) and must have
executed an agreement with the
Distributor (and accepted by the
Transfer Agent), with respect to
creations and redemptions of Creation
Units (‘‘Participant Agreement’’)
(discussed below). A Participating Party
or DTC Participant who has executed a
Participant Agreement is referred to as
an ‘‘Authorized Participant.’’
Except as described below, and in all
cases subject to the terms of the
applicable Participant Agreement, all
orders to create Creation Units of the
Fund must be received by the Transfer
Agent no later than 1:00 p.m., Eastern
time) in each case on the date such
order is placed for creation of Creation
Units to be effected based on the NAV
of shares of the Fund as next
determined after receipt of an order in
proper form. Orders requesting
substitution of a ‘‘cash-in-lieu’’ amount
or a cash creation, must be received by
the Transfer Agent no later than 1:00
p.m., Eastern time. The date on which
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
50463
an order to create Creation Units (or an
order to redeem Creation Units, as
discussed below) is placed is referred to
as the ‘‘Transmittal Date’’.
Fund Deposits created through the
Clearing Process, if available, must be
delivered through a Participating Party
that has executed a Participant
Agreement.
The Participant Agreement authorizes
the Transfer Agent to transmit to NSCC
on behalf of the Participating Party such
trade instructions as are necessary to
effect the Participating Party’s creation
order. Pursuant to such trade
instructions from the Transfer Agent to
NSCC, the Participating Party agrees to
transfer the requisite Deposit Securities
(or contracts to purchase such Deposit
Securities that are expected to be
delivered in a ‘‘regular way’’ manner by
the second Business Day) and the Cash
Component to the Trust, together with
such additional information as may be
required by the Transfer Agent and the
Distributor as set forth in the Participant
Agreement. An order to create Creation
Units of the Fund through the Clearing
Process is deemed received by the
Transfer Agent on the Transmittal Date
if (i) such order is received by the
Transfer Agent not later than the Order
Cutoff Time on such Transmittal Date
and (ii) all other procedures set forth in
the Participant Agreement are properly
followed.
Fund Deposits created outside the
Clearing Process must be delivered
through a DTC Participant that has
executed a Participant Agreement.
Redemption of Shares
Shares may be redeemed only in
Creation Units at their NAV next
determined after receipt of a redemption
request in proper form on a Business
Day and only through a Participating
Party or DTC Participant who has
executed a Participant Agreement.
With respect to the Fund, the Transfer
Agent, through the NSCC, makes
available immediately prior to the
opening of business on the Exchange
(currently 9:30 a.m., Eastern time) on
each Business Day, the identity of the
Fund’s securities and/or an amount of
cash that will be applicable (subject to
possible amendment or correction) to
redemption requests received in proper
form (as described below) on that day.
All orders are subject to acceptance by
the Distributor. The Fund’s securities
received on redemption will generally
correspond pro rata, to the extent
practicable, to the Fund’s securities. The
Fund’s securities received on
redemption (‘‘Fund Securities’’) may not
be identical to Deposit Securities that
E:\FR\FM\31OCN1.SGM
31OCN1
50464
Federal Register / Vol. 82, No. 209 / Tuesday, October 31, 2017 / Notices
asabaliauskas on DSKBBXCHB2PROD with NOTICES
are applicable to creations of Creation
Units.
Unless cash only redemptions are
available or specified for the Fund, the
redemption proceeds for a Creation Unit
will generally consist of Fund
Securities—as announced on the
Business Day of the request for a
redemption order received in proper
form—plus cash in an amount equal to
the difference between the NAV of the
Shares being redeemed, as next
determined after a receipt of a request
in proper form, and the value of the
Fund Securities, less the redemption
transaction fee and variable fees
described below. Notwithstanding the
foregoing, the Trust will substitute a
‘‘cash-in-lieu’’ amount to replace any
Fund Security that is a non-deliverable
instrument.
Orders to redeem Creation Units of
the Fund through the Clearing Process,
if available, must be delivered through
a Participating Party that has executed
the Participant Agreement. An order to
redeem Creation Units of the Fund
through the Clearing Process will be
deemed received by the Transfer Agent
on the Transmittal Date if such order is
received by the Transfer Agent not later
than 1:00 p.m. Eastern time on such
Transmittal Date and other applicable
procedures are properly followed.
Orders to redeem Creation Units of
the Fund outside the Clearing Process
must be delivered through a DTC
Participant that has executed the
Participant Agreement. An order to
redeem Creation Units of the Fund
outside the Clearing Process will be
deemed received by the Transfer Agent
on the Transmittal Date if such order is
received by the Transfer Agent not later
than 1:00 p.m. Eastern time on such
Transmittal Date and other applicable
procedures are properly followed.
Availability of Information
The Fund will disclose on the Fund’s
Web site (www.hartfordfunds.com) at
the start of each Business Day the
identities and quantities of the
securities and other assets held by the
Fund that will form the basis of the
Fund’s calculation of its NAV on that
Business Day. The portfolio holdings so
disclosed will be based on information
as of the close of business on the prior
Business Day and/or trades that have
been completed prior to the opening of
business on that Business Day and that
are expected to settle on the Business
Day.
The Web site for the Fund will
contain the following information, on a
per-Share basis, for the Fund: (1) The
prior Business Day’s NAV; (2) the
reported midpoint of the bid-ask spread
VerDate Sep<11>2014
17:37 Oct 30, 2017
Jkt 244001
at the time of NAV calculation (the
‘‘Bid-Ask Price’’); (3) a calculation of the
premium or discount of the Bid-Ask
Price against such NAV; and (4) data in
chart format displaying the frequency
distribution of discounts and premiums
of the Bid-Ask Price against the NAV,
within appropriate ranges, for each of
the four previous calendar quarters (or
for the life of the Fund if, shorter).
The Fund’s portfolio holdings will be
disclosed on the Fund’s Web site daily
after the close of trading on the
Exchange and prior to the opening of
trading on the Exchange the following
day. On a daily basis, the Fund will
disclose the information required under
NYSE Arca Rule 8.600–E(c)(2) to the
extent applicable. The Fund’s
prospectus and Statement of Additional
Information (‘‘SAI’’) will be available on
the Fund’s Web site. The Web site
information will be publicly available at
no charge.
Investors can also obtain the Fund’s
SAI, shareholder reports, Form N–CSR
and Form N–SAR, filed twice a year.
The Fund’s SAI and shareholder reports
will be available free upon request from
the Trust, and those documents and the
Form N–CSR and Form N–SAR may be
viewed on-screen or downloaded from
the Commission’s Web site at
www.sec.gov. Information regarding
market price and trading volume of the
Shares will be continually available on
a real-time basis throughout the day on
brokers’ computer screens and other
electronic services. Information
regarding the previous day’s closing
price and trading volume information
for the Shares will be publicly available
and will be published daily in the
financial section of newspapers.
Quotation and last sale information
for the Shares and ETFs will be
available via the Consolidated Tape
Association (‘‘CTA’’) high-speed line,
and from the national securities
exchanges on which they are listed.
Quotation information from brokers
and dealers or pricing services will be
available for Municipal Securities. Price
information for money market funds
will be available from the applicable
investment company’s Web site and
from market data vendors. Pricing
information regarding each asset class in
which the Fund will invest will
generally be available through
nationally recognized data service
providers through subscription
agreements. In addition, the iNAV
(which is the Portfolio Indicative Value,
as defined in NYSE Arca Rule 8.600–
E(c)(3)), will be widely disseminated at
least every 15 seconds during the Core
Trading Session by one or more major
market data vendors or other
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
information providers.13 One source of
price information for municipal
securities is the Electronic Municipal
Market Access (‘‘EMMA’’), which is
administered by the Municipal
Securities Rulemaking Board.
Investment Restrictions
The Fund’s investments will be
consistent with its investment goal and
will not be used to provide multiple
returns of a benchmark or to produce
leveraged returns.
With respect to the Fund’s
investments in Municipal Securities,
under normal market conditions, except
for periods of high cash inflows or
outflows, the Fund will satisfy the
following criteria:
i. The Fund will have a minimum of
20 non-affiliated issuers;
ii. No single Municipal Securities
issuer will account for more than 10%
of the weight of the Fund’s portfolio; 14
iii. No individual bond will account
for more than 5% of the weight of the
Fund’s portfolio; 15
iv. The Fund will limit its
investments in Municipal Securities of
any one state to 25% of the Fund’s total
assets, provided that up to and
including 40% of the Fund’s total assets
may be invested in Municipal Securities
of issuers in each of California, New
York and Texas; 16
13 Currently, it is the Exchange’s understanding
that several major market data vendors display and/
or make widely available Portfolio Indicative
Values taken from CTA or other data feeds.
14 The Exchange notes that the Commission has
approved the listing and trading of another issue of
Managed Fund Shares that principally holds
municipal securities for which no single issuer
would account for more than 10% of the weight of
the fund’s portfolio. See Securities Exchange Act
Release No. 79293 (November 10, 2016), 81 FR
81189 (November 17, 2016) (SR–NYSEArca–2016–
107) (order approving listing and trading of shares
of Cumberland Municipal Bond ETF under Rule
8.600).
15 The Exchange notes that the Commission has
approved the listing and trading of another issue of
Managed Fund Shares that principally holds
municipal securities for which no single bond
would exceed 5% of the fund’s portfolio. See
Securities Exchange Act Release No. 80885 (June 8,
2017), 82 FR 27302 (June 14, 2017) (order approving
listing and trading of shares of the IQ Municipal
Insured ETF, IQ Municipal Short Duration ETF, and
IQ Municipal Intermediate ETF under NYSE Arca
Equities Rule 8.600).
16 The Exchange notes that the Commission has
approved the listing and trading of other issues of
Managed Fund Shares that principally hold
municipal securities for which the applicable
fund’s assets in municipal securities of any one
state would be limited to 25% of such fund’s assets.
See Securities Exchange Act Release Nos. 80885
(June 8, 2017), 82 FR 27302 (June 14, 2017) (order
approving listing and trading of shares of the IQ
Municipal Insured ETF, IQ Municipal Short
Duration ETF, and IQ Municipal Intermediate ETF
under NYSE Arca Equities Rule 8.600); 79293
(November 10, 2016), 81 FR 81189 (November 17,
2016) (SR–NYSEArca–2016–107) (order approving
E:\FR\FM\31OCN1.SGM
31OCN1
Federal Register / Vol. 82, No. 209 / Tuesday, October 31, 2017 / Notices
v. The Fund’s investments in
Municipal Securities will be diversified
among issuers in at least 10 states and
U.S. territories; 17
vi. The Fund will be diversified
among a minimum of five different
sectors of the Municipal Securities
market.18
Pre-refunded bonds will be excluded
from the above limits given that they
have a high level of credit quality and
liquidity.19
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Application of Generic Listing
Requirements
The Exchange is submitting this
proposed rule change because the
portfolio for the Fund will not meet all
of the ‘‘generic’’ listing requirements of
Commentary .01 to NYSE Arca Rule
8.600–E applicable to the listing of
Managed Fund Shares. The Fund’s
portfolio will meet all such
requirements except for those set forth
in Commentary .01(b)(1).20
listing and trading of shares of Cumberland
Municipal Bond ETF under Rule 8.600); 78913
(September 23, 2016) (SR–Nasdaq–2016–002) (order
approving listing and trading of the First Trust
Municipal High Income ETF of First Trust
Exchange-Traded Fund III).
17 The Exchange notes that the Commission has
approved the listing and trading of another issue of
Managed Fund Shares that principally holds
municipal securities and for which the fund’s assets
would be diversified among issuers in 10 states. See
Securities Exchange Act Release No. 80865 (June 6,
2017), 82 FR 26970 (June 12, 2017) (order approving
listing and trading of shares of the Franklin Liberty
Intermediate Municipal Opportunities ETF and
Franklin Liberty Municipal Bond ETF under NYSE
Arca Equities Rule 8.600).
18 The Fund’s investments in Municipal
Securities will include investments in state and
local (e.g., county, city, town) Municipal Securities
relating to such sectors as the following: Airports;
bridges and highways; hospitals; housing; jails;
mass transportation; nursing homes; parks; public
buildings; recreational facilities; school facilities;
streets; and water and sewer works.
19 The Exchange notes that the Commission has
approved the listing and trading of another issue of
Managed Fund Shares that principally holds
municipal securities for which pre-refunded bonds
were excluded from the specified limits in the
fund’s municipal bond investments. See Securities
Exchange Act Release No. 80865 (June 6, 2017), 82
FR 26970 (June 12, 2017) (order approving listing
and trading of shares of the Franklin Liberty
Intermediate Municipal Opportunities ETF and
Franklin Liberty Municipal Bond ETF under NYSE
Arca Equities Rule 8.600). Pre-refunded bonds (also
known as refunded or escrow-secured bonds) have
a high level of credit quality and liquidity because
the issuer ‘‘pre-refunds’’ the bond by setting aside
in advance all or a portion of the amount to be paid
to the bondholders when the bond is called.
Generally, an issuer uses the proceeds from a new
bond issue to buy high grade, interest bearing debt
securities, including direct obligations of the U.S.
government, which are then deposited in an
irrevocable escrow account held by a trustee bank
to secure all future payments of principal and
interest on the pre-refunded bonds.
20 Commentary .01(b)(1) to NYSE Arca Rule
8.600–E provides that components that in the
aggregate account for at least 75% of the fixed
income weight of the portfolio each shall have a
VerDate Sep<11>2014
17:37 Oct 30, 2017
Jkt 244001
The Exchange believes that it is
appropriate and in the public interest to
approve listing and trading of Shares of
the Fund on the Exchange
notwithstanding that the Fund would
not meet the requirements of
Commentary .01(b)(1) to Rule 8.600–E
in that the Fund’s investments in fixed
income securities, including Municipal
Securities, will be well-diversified.
The Exchange believes that permitting
Fund Shares to be listed and traded on
the Exchange, notwithstanding that, as a
result principally of the Fund’s
investments in Municipal Securities,
less than 75% of the weight of the
Fund’s portfolio may consist of
components with $100 million
minimum or more original principal
amount outstanding, would provide the
Fund with greater ability to select from
a broad range of fixed income securities,
including Municipal Securities, as
described above, that would support the
Fund’s investment goal.
The Exchange believes that,
notwithstanding that the Fund’s
portfolio may not satisfy Commentary
.01(b)(1) to Rule 8.600–E, the Fund will
not be susceptible to manipulation. As
noted above, with respect to the Fund’s
investments in Municipal Securities,
such securities will be diversified
among a minimum of 20 non-affiliated
issuers; no single Municipal Securities
issuer will account for more than 10%
of the weight of the Fund’s portfolio; no
individual bond will account for more
than 5% of the weight of the Fund’s
portfolio; the Fund will limit its
investments in Municipal Securities of
any one state to 25% of the Fund’s total
assets, provided that up to and
including 40% of the Fund’s total assets
may be invested in Municipal Securities
of issuers in each of California, New
York and Texas; and the Fund’s
investments in Municipal Securities
will be diversified among issuers in at
least 10 states and U.S. territories and
will be diversified among a minimum of
five different sectors of the Municipal
Securities market.
The Exchange notes that, other than
Commentary .01(b)(1) to Rule 8.600–E,
the Fund’s portfolio will meet all other
requirements of Rule 8.600–E.
Trading Halts
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares of
the Fund.21 Trading in Shares of the
Fund will be halted if the circuit breaker
minimum original principal amount outstanding of
$100 million or more.
21 See NYSE Arca Rule 7.12–E.
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
50465
parameters in NYSE Arca Rule 7.12–E
have been reached. Trading also may be
halted because of market conditions or
for reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable. Trading in the Fund’s
Shares also will be subject to Rule
8.600–E(d)(2)(D) (‘‘Trading Halts’’).
Trading Rules
The Exchange 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. Shares will trade on
the NYSE Arca Marketplace from 4 a.m.
to 8 p.m., Eastern Time in accordance
with NYSE Arca Rule 7.34–E (Early,
Core, and Late Trading Sessions). The
Exchange has appropriate rules to
facilitate transactions in the Shares
during all trading sessions. As provided
in NYSE Arca Rule 7.6–E, the minimum
price variation (‘‘MPV’’) for quoting and
entry of orders in equity securities
traded on the NYSE Arca Marketplace is
$0.01, with the exception of securities
that are priced less than $1.00 for which
the MPV for order entry is $0.0001.
With the exception of the
requirements of Commentary .01(b)(1) to
Rule 8.600–E as described above in
‘‘Application of Generic Listing
Requirements’’, the Shares of the Fund
will conform to the initial and
continued listing criteria under NYSE
Arca Rule 8.600–E. Consistent with
NYSE Arca Rule 8.600–E(d)(2)(B)(ii), the
Manager will implement and maintain,
or be subject to, procedures designed to
prevent the use and dissemination of
material non-public information
regarding the actual components of the
Fund’s portfolio. The Exchange
represents that, for initial and continued
listing, the Fund will be in compliance
with Rule 10A–3 22 under the Act, as
provided by NYSE Arca Rule 5.3–E. A
minimum of 100,000 Shares will be
outstanding at the commencement of
trading on the Exchange. The Exchange
will obtain a representation from the
issuer of the Shares that the NAV per
Share will be calculated daily and that
the NAV and the Disclosed Portfolio
will be made available to all market
participants at the same time. The
Fund’s investments will be consistent
with its investment goal and will not be
used to provide multiple returns of a
benchmark or to produce leveraged
returns.
Surveillance
The Exchange represents that trading
in the Shares will be subject to the
existing trading surveillances,
22 17
E:\FR\FM\31OCN1.SGM
CFR 240.10A–3.
31OCN1
50466
Federal Register / Vol. 82, No. 209 / Tuesday, October 31, 2017 / Notices
asabaliauskas on DSKBBXCHB2PROD with NOTICES
administered by the Financial Industry
Regulatory Authority (‘‘FINRA’’) on
behalf of the Exchange, or by regulatory
staff of the Exchange, which are
designed to detect violations of
Exchange rules and applicable federal
securities laws. The Exchange
represents that 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 federal
securities laws applicable to trading on
the Exchange.23
The surveillances referred to above
generally focus on detecting securities
trading outside their normal patterns,
which could be indicative of
manipulative or other violative activity.
When such situations are detected,
surveillance analysis follows and
investigations are opened, where
appropriate, to review the behavior of
all relevant parties for all relevant
trading violations.24
The Exchange or FINRA, on behalf of
the Exchange, or both, will
communicate as needed regarding
trading in the Shares, ETFs, certain
exchange-traded options and certain
exchange-traded futures with other
markets and other entities that are
members of the ISG, and the Exchange
or FINRA, on behalf of the Exchange, or
both, may obtain trading information
regarding trading in the Shares, ETFs,
certain exchange-traded options and
certain exchange-traded futures from
such markets and other entities. In
addition, the Exchange may obtain
information regarding trading in the
Shares, ETFs, certain exchange-traded
options and certain exchange-traded
futures from markets and other entities
that are members of ISG or with which
the Exchange has in place a
comprehensive surveillance sharing
agreement. In addition, FINRA, on
behalf of the Exchange, is able to access,
as needed, trade information for certain
fixed income securities held by the
Fund reported to FINRA’s Trade
Reporting and Compliance Engine
(‘‘TRACE’’). FINRA also can access data
obtained from the Municipal Securities
Rulemaking Board (‘‘MSRB’’) relating to
municipal bond trading activity for
surveillance purposes in connection
with trading in the Shares.
23 FINRA conducts cross-market surveillances on
behalf of the Exchange pursuant to a regulatory
services agreement. The Exchange is responsible for
FINRA’s performance under this regulatory services
agreement.
24 For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all
components of the Disclosed Portfolio may trade on
markets that are members of ISG or with which the
Exchange has in place a comprehensive
surveillance sharing agreement.
VerDate Sep<11>2014
17:37 Oct 30, 2017
Jkt 244001
In addition, the Exchange also has a
general policy prohibiting the
distribution of material, non-public
information by its employees.
All statements and representations
made in this filing regarding (a) the
description of the portfolio, (b)
limitations on portfolio holdings or
reference assets, or (c) the applicability
of Exchange listing rules specified in
this rule filing shall constitute
continued listing requirements for
listing the Shares of the Fund on the
Exchange.
The issuer has represented to the
Exchange that it will advise the
Exchange of any failure by the Fund to
comply with the continued listing
requirements, and, pursuant to its
obligations under Section 19(g)(1) of the
Act, the Exchange will monitor for
compliance with the continued listing
requirements. If the Fund is not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
NYSE Arca Rule 5.5–E(m).
Information Bulletin
Prior to the commencement of
trading, the Exchange will inform its
Equity Trading Permit Holders in an
Information Bulletin (‘‘Bulletin’’) of the
special characteristics and risks
associated with trading the Shares.
Specifically, the Bulletin will discuss
the following: (1) The procedures for
purchases and redemptions of Shares in
Creation Unit aggregations (and that
Shares are not individually redeemable);
(2) NYSE Arca Rule 9.2–E(a), which
imposes a duty of due diligence on its
Equity Trading Permit Holders to learn
the essential facts relating to every
customer prior to trading the Shares; (3)
the risks involved in trading the Shares
during the Early and Late Trading
Sessions when an updated iNAV will
not be calculated or publicly
disseminated; (4) how information
regarding the iNAV and the Disclosed
Portfolio is disseminated; (5) the
requirement that Equity Trading Permit
Holders deliver a prospectus to
investors purchasing newly issued
Shares prior to or concurrently with the
confirmation of a transaction; and (6)
trading information.
In addition, the Bulletin will
reference that the Fund is subject to
various fees and expenses described in
the Registration Statement. The Bulletin
will discuss any exemptive, no-action,
and interpretive relief granted by the
Commission from any rules under the
Act. The Bulletin will also disclose that
the NAV for the Shares will be
calculated after 4:00 p.m., Eastern Time
each trading day.
PO 00000
Frm 00096
Fmt 4703
Sfmt 4703
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 25 that an
exchange have rules that are 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, in general, to protect investors and
the public interest.
The Exchange believes that the
proposed rule change is designed to
prevent fraudulent and manipulative
acts and practices in that the Shares will
be listed and traded on the Exchange
pursuant to the initial and continued
listing criteria in NYSE Arca Rule
8.600–E. The Exchange has in place
surveillance procedures that are
adequate to properly monitor trading in
the Shares in all trading sessions and to
deter and detect violations of Exchange
rules and applicable federal securities
laws. The Exchange or FINRA, on behalf
of the Exchange, or both, will
communicate as needed regarding
trading in the Shares, ETFs, certain
exchange-traded options and certain
exchange-traded futures with other
markets and other entities that are
members of the ISG, and the Exchange
or FINRA, on behalf of the Exchange, or
both, may obtain trading information
regarding trading in the Shares, ETFs,
certain exchange-traded options and
certain exchange-traded futures from
such markets and other entities. In
addition, the Exchange may obtain
information regarding trading in the
Shares, ETFs, certain exchange-traded
options and certain exchange-traded
futures from markets and other entities
that are members of ISG or with which
the Exchange has in place a
comprehensive surveillance sharing
agreement. In addition, FINRA, on
behalf of the Exchange, is able to access,
as needed, trade information for certain
fixed income securities held by the
Fund reported to TRACE. FINRA also
can access data obtained from the MSRB
relating to municipal bond trading
activity for surveillance purposes in
connection with trading in the Shares.
Neither the Manager nor Sub-Adviser is
registered as a broker-dealer but each is
affiliated with a broker-dealer. The
Manager and Sub-Adviser each has
implemented a ‘‘fire wall’’ with respect
to such broker-dealer affiliate regarding
access to information concerning the
composition of and/or changes to the
Fund’s portfolio.26
25 15
U.S.C. 78f(b)(5).
note 7, supra.
26 See
E:\FR\FM\31OCN1.SGM
31OCN1
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Federal Register / Vol. 82, No. 209 / Tuesday, October 31, 2017 / Notices
The Exchange believes that it is
appropriate and in the public interest to
approve listing and trading of Shares of
the Fund on the Exchange
notwithstanding that the Fund would
not meet the requirements of
Commentary .01(b)(1) to Rule 8.600–E
in that the Fund’s investments in
Municipal Securities will be welldiversified.
The Exchange believes that permitting
Fund Shares to be listed and traded on
the Exchange notwithstanding that, as a
result principally of the Fund’s
investments in Municipal Securities,
less than 75% of the weight of the
Fund’s portfolio may consist of
components with $100 million
minimum or more original principal
amount outstanding would provide the
Fund with greater ability to select from
a broad range of Municipal Securities,
as described above, that would support
the Fund’s investment goal.
The Exchange believes that,
notwithstanding that the Fund’s
portfolio may not satisfy Commentary
.01(b)(1) to Rule 8.600–E, the Fund’s
portfolio will not be susceptible to
manipulation. As noted above, with
respect to the Fund’s investments in
Municipal Securities, such securities
will be diversified among a minimum of
20 non-affiliated issuers; no single
Municipal Securities issuer will account
for more than 10% of the weight of the
Fund’s portfolio; no individual bond
will account for more than 5% of the
weight of the Fund’s portfolio; the Fund
will limit its investments in Municipal
Securities of any one state to 25% of the
Fund’s total assets, provided that up to
and including 40% of the Fund’s total
assets may be invested in Municipal
Securities of issuers in each of
California, New York and Texas; and the
Fund’s investments in Municipal
Securities will be diversified among
issuers in at least 10 states and will be
diversified among a minimum of five
different sectors of the Municipal
Securities market. The Exchange notes
that, other than Commentary .01(b)(1) to
Rule 8.600–E, the Fund’s portfolio will
meet all other requirements of Rule
8.600–E.
The proposed rule change is designed
to promote just and equitable principles
of trade and to protect investors and the
public interest in that the Exchange will
obtain a representation from the issuer
of the Shares that the NAV per Share
will be calculated daily and that the
NAV and the Disclosed Portfolio will be
made available to all market
participants at the same time. In
addition, a large amount of information
is publicly available regarding the Fund
and the Shares, thereby promoting
VerDate Sep<11>2014
17:37 Oct 30, 2017
Jkt 244001
market transparency. Quotation and last
sale information for the Shares and
ETFs will be available via the CTA highspeed line, and from the national
securities exchanges on which they are
listed. Prior to the commencement of
trading, the Exchange will inform its
Equity Trading Permit Holders in an
Information Bulletin of the special
characteristics and risks associated with
trading the Shares. Trading in Shares of
the Fund will be halted if the circuit
breaker parameters in NYSE Arca Rule
7.12–E have been reached or because of
market conditions or for reasons that, in
the view of the Exchange, make trading
in the Shares inadvisable. Trading in the
Shares will be subject to NYSE Arca
Rule 8.600–E(d)(2)(D), which sets forth
circumstances under which Shares of
the Funds [sic] may be halted. In
addition, as noted above, investors will
have ready access to information
regarding the Fund’s holdings, the
iNAV, the Disclosed Portfolio, and
quotation and last sale information for
the Shares.
The proposed rule change is designed
to perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest in that
it will facilitate the listing and trading
of an additional type of activelymanaged exchange-traded product that
principally will hold fixed income
securities and that will enhance
competition among market participants,
to the benefit of investors and the
marketplace. As noted above, the
Exchange has in place surveillance
procedures relating to trading in the
Shares and may obtain information via
ISG from other exchanges that are
members of ISG or with which the
Exchange has entered into a
comprehensive surveillance sharing
agreement. In addition, as noted above,
investors will have ready access to
information regarding the Fund’s
holdings, iNAV, Disclosed Portfolio,
and quotation and last sale information
for the Shares.
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 purpose of the Act. The Exchange
notes that the proposed rule change will
facilitate the listing and trading of an
additional type of actively-managed
exchange-traded product that
principally will hold fixed income
securities and that will enhance
competition among market participants,
to the benefit of investors and the
marketplace.
PO 00000
Frm 00097
Fmt 4703
Sfmt 4703
50467
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
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 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–2017–99 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–2017–99. 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\31OCN1.SGM
31OCN1
50468
Federal Register / Vol. 82, No. 209 / Tuesday, October 31, 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 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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSEArca–2017–99 and
should be submitted on or before
November 21, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–23582 Filed 10–30–17; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–81948; File No. SR–BX–
2017–046]
Self-Regulatory Organizations;
NASDAQ BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to the
Exchange’s Name Change
October 25, 2017.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
18, 2017, NASDAQ BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
rules as well as certain corporate
documents of the Exchange to reflect
legal name changes.
27 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
17:37 Oct 30, 2017
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
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
VerDate Sep<11>2014
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaqbx.cchwallstreet.com/,
at the principal office of the Exchange,
and at the Commission’s Public
Reference Room.
Jkt 244001
The purpose of this filing is to reflect
in the Exchange’s governing documents
(and the governing documents of its
parent company) 3 and the Exchange’s
Rulebook a non-substantive corporate
branding change to the Exchange’s
name.4 Specifically, current references
will be changed as follows:
• References to ‘‘NASDAQ’’ will be
changed to ‘‘Nasdaq’’.
• References to ‘‘NASDAQ BX, Inc.’’
or ‘‘NASDAQ BX’’ will be changed to
‘‘Nasdaq BX, Inc.’’ or ‘‘Nasdaq BX’’.
• References to ‘‘The NASDAQ Stock
Market LLC’’ or ‘‘NASDAQ Stock
Market LLC’’ will be changed to ‘‘The
Nasdaq Stock Market LLC’’.
• References to ‘‘NASDAQ PHLX
LLC’’ or ‘‘NASDAQ PHLX’’ will be
changed to ‘‘Nasdaq PHLX LLC’’ or
‘‘Nasdaq PHLX’’.
• References to ‘‘The NASDAQ OMX
Group, Inc.’’ or ‘‘NASDAQ OMX Group,
Inc.’’ will be changed to ‘‘Nasdaq, Inc.’’ 5
• In addition to the preceding
changes, all references to ‘‘OMX’’ will
be removed from the Rulebook.6
3 The Exchange proposes to amend: (i) The
Certificate of Incorporation; (ii) Second Amended
Limited Liability Company Agreement; (iii) ByLaws; and (iv) Rule Book.
4 NASDAQ PHLX LLC and The NASDAQ Stock
Market LLC will also be filing similar rule changes.
5 See Securities Exchange Act Release No. 75421
(July 10, 2015), 80 FR 42136 (July 16, 2015) (SR–
BSECC–2015–001, SR–BX–2015–030, SR–
NASDAQ–2015–058, SR–Phlx–2015–46, SR–SCCP–
2015–01).
6 Id.
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
• References to ‘‘NASDAQ Execution
Services, LLC’’ will be changed to as
‘‘Nasdaq Execution Services, LLC’’.
• In all instances where the word
‘‘the’’ should have been capitalized,
(e.g., By-Law, Section 4.13(c)), the
Exchange will make the appropriate
correction.
No other changes are being proposed
in this filing. The Exchange represents
that these changes are concerned solely
with the administration of the Exchange
and do not affect the meaning,
administration, or enforcement of any
rules of the Exchange or the rights,
obligations, or privileges of Exchange
members or their associated persons in
any way. Accordingly, this filing is
being submitted under Rule 19b-4(f)(3).
In lieu of providing a copy of the
marked changes, the Exchange
represents that it will make the
necessary non-substantive revisions to
the Certificate of Incorporation, Second
Amended Limited Liability Company
Agreement, By-Laws and Rulebook and
post updated versions of each on the
Exchange’s Web site pursuant to Rule
19b–4(m)(2).
The Exchange notes that the following
references are not being amended in the
Exchange’s governing documents and
the Exchange’s Rulebook:
• Any name with a trademark (TM) or
service mark (SM) attached to the name.
• Any references in the Certificate of
Incorporation which references a prior
name of the Exchange and reflects a
historical date wherein that name was
in effect.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,7 in general, and furthers the
objectives of Section 6(b)(5) of the Act,8
in particular, in that it is designed 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 by
avoiding confusion with the name. The
Exchange proposes to conform its name
to that of its parent, Nasdaq Inc., by
changing the capitalization in the word
‘‘NASDAQ’’ to ‘‘Nasdaq.’’ The Exchange
also proposes to amend the names of
affiliated markets in a similar manner,
by changing the name ‘‘NASDAQ’’ to
‘‘Nasdaq.’’ The name change of the
Exchange as well as other name changes
to related entities are non-substantive
changes. No changes to the ownership
7 15
8 15
E:\FR\FM\31OCN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
31OCN1
]]>Agencies
[Federal Register Volume 82, Number 209 (Tuesday, October 31, 2017)]
[Notices]
[Pages 50461-50468]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-23582]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-81944; File No. SR-NYSEArca-2017-99]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of the Hartford
Schroders Tax-Aware Bond ETF Under NYSE Arca Rule 8.600-E
October 25, 2017.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on October 11, 2017, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade shares of the Hartford
Schroders Tax-Aware Bond ETF under NYSE Arca Rule 8.600-E (``Managed
Fund Shares''). The proposed rule 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 list and trade shares (``Shares'') of the
Hartford Schroders Tax-Aware Bond ETF (``Fund'') under NYSE Arca Rule
8.600-E, which governs the listing and trading of Managed Fund
Shares.\4\ The Shares will be offered by the Hartford Funds Exchange-
Traded Trust (the ``Trust''), which is registered with the Commission
as an open-end management investment company.\5\ The Fund is a series
of the Trust.
---------------------------------------------------------------------------
\4\ A Managed Fund Share is a security that represents an
interest in an investment company registered under the Investment
Company Act of 1940 (15 U.S.C. 80a-1) (``1940 Act'') organized as an
open-end investment company or similar entity that invests in a
portfolio of securities selected by its investment adviser
consistent with its investment objectives and policies. In contrast,
an open-end investment company that issues Investment Company Units,
listed and traded on the Exchange under NYSE Arca Rule 5.2-E(j)(3),
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\ The Trust is registered under the 1940 Act. On June 26,
2017, the Trust filed with the Commission its registration statement
on Form N-1A under the Securities Act of 1933 (15 U.S.C. 77a)
(``Securities Act''), and under the 1940 Act relating to the Funds
[sic] (File Nos. 333-215165 and 811-23222) (``Registration
Statement''). The description of the operation of the Trust and the
Funds [sic] herein is based, in part, on the Registration Statement.
In addition, the Commission has issued an order granting certain
exemptive relief to the Trust under the 1940 Act. See Investment
Company Act Release No. 32454 (January 27, 2017) (File No. 812-
13828-01) (``Exemptive Order'').
---------------------------------------------------------------------------
Hartford Funds Management Company, LLC (``HFMC'' or ``Manager'')
will be the investment manager to the Fund. ALPS Distributors, Inc.
(``ALPS'' or the ``Distributor'') will be the principal underwriter to
the Fund. HFMC is an indirect subsidiary of The Hartford Financial
Services Group, Inc. Schroder Investment Management North America Inc.
(``Sub-Adviser'') will be the sub-adviser to the Fund and performs the
daily investment of the assets for the Fund.
Commentary .06 to Rule 8.600-E provides that, if the investment
adviser to the investment company issuing Managed Fund Shares is
affiliated with a broker-dealer, such investment adviser shall erect a
``fire wall'' between the investment adviser and the broker-dealer with
respect to access to information concerning the composition and/or
changes to such investment company portfolio.\6\ In addition,
[[Page 50462]]
Commentary .06 further requires that personnel who make decisions on
the open-end fund's portfolio composition must be subject to procedures
designed to prevent the use and dissemination of material nonpublic
information regarding the open-end fund's portfolio. Neither the
Manager nor Sub-Adviser is registered as a broker-dealer but each is
affiliated with a broker-dealer. The Manager and Sub-Adviser each has
implemented and will maintain a ``fire wall'' with respect to such
broker-dealer affiliate regarding access to information concerning the
composition of and/or changes to the Fund's portfolio.\7\ In the event
(a) the Manager or Sub-Adviser becomes registered as a broker-dealer or
newly affiliated with a broker-dealer, or (b) any new adviser or sub-
adviser to the Fund is a registered broker-dealer or becomes affiliated
with a broker-dealer, the applicable adviser or sub-adviser will
implement and maintain a ``fire wall'' with respect to its relevant
personnel or broker-dealer affiliate regarding access to information
concerning the composition and/or changes to the Fund's portfolio.
---------------------------------------------------------------------------
\6\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Manager and Sub-Adviser and their related
personnel are subject to the provisions of Rule 204A-1 under the
Advisers Act relating to codes of ethics. This Rule requires
investment advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as well as
compliance with other applicable securities laws. Accordingly,
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under
the Advisers Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such investment adviser
has (i) adopted and implemented written policies and procedures
reasonably designed to prevent violation, by the investment adviser
and its supervised persons, of the Advisers Act and the Commission
rules adopted thereunder; (ii) implemented, at a minimum, an annual
review regarding the adequacy of the policies and procedures
established pursuant to subparagraph (i) above and the effectiveness
of their implementation; and (iii) designated an individual (who is
a supervised person) responsible for administering the policies and
procedures adopted under subparagraph (i) above.
\7\ While the Sub-Adviser is not registered as a broker-dealer,
it has a wholly-owned broker-dealer subsidiary. This broker-dealer
is limited purpose and exists solely to serve as the distributor of
pooled investment vehicles for which the Sub-Adviser acts as an
investment adviser. This broker-dealer does not execute securities
transactions or accept customer funds. For purposes of this filing,
the term ``firewall'' shall mean that personnel of such broker-
dealer are subject to procedures designed to prevent the use and
dissemination of material non-public information, including
information regarding the Fund's portfolio.
---------------------------------------------------------------------------
Hartford Schroders Tax-Aware Bond ETF
Principal Investments
According to the Registration Statement, the Fund will seek total
return on an after-tax basis. The Fund will seek to achieve its
investment objective by investing in a diversified portfolio of fixed
income debt instruments of varying maturities. Under normal market
conditions,\8\ the Fund will invest principally (that is, more than 50%
of its assets) in the U.S. dollar-denominated, fixed income debt
instruments described below.
---------------------------------------------------------------------------
\8\ The term ``normal market conditions'' is defined in NYSE
Arca Rule 8.600-E(c)(5).
---------------------------------------------------------------------------
The fixed income debt instruments in which the Fund may invest as
part of its principal investment strategy are securities issued or
guaranteed by the U.S. government and its agencies, government-
sponsored enterprise securities, corporate bonds, agency mortgage-
backed securities (including ``to be announced'' or ``TBA''
transactions), agency asset-backed securities (``ABS''), ``Municipal
Securities'' (as described below), sovereign debt and debt securities
issued by supranational organizations. They may pay fixed, variable, or
floating interest rates. The Fund may invest in U.S. dollar denominated
foreign securities. The Fund may also invest in cash and cash
equivalents.\9\
---------------------------------------------------------------------------
\9\ For purposes of this filing, cash equivalents are money
market funds and the following short-term instruments with
maturities of less than three months: (i) Certificates of deposit
issued against funds deposited in a bank or savings and loan
association; (ii) bankers' acceptances, which are short-term credit
instruments used to finance commercial transactions; (iii) U.S.
Government obligations or corporate debt obligations (including
those subject to repurchase agreements); (iv) bank time deposits;
and (v) commercial paper.
---------------------------------------------------------------------------
According to the Registration Statement, in seeking to achieve the
Fund's investment objective, the Sub-Adviser will employ a tax-aware
investing strategy that attempts to realize total return for
shareholders, primarily in the form of current income and price
appreciation, by balancing investment considerations and tax
considerations.
According to the Registration Statement, the Fund may invest in the
following Municipal Securities: General obligation bonds; revenue (or
limited obligation) bonds; private activity (or industrial development)
bonds; bonds that are collateralized with agency and/or treasury
securities, municipal notes; municipal lease obligations; and municipal
inverse floaters.\10\ The Fund's investments in Municipal Securities
will be diversified among issuers in at least 10 states and U.S.
territories. The Fund may invest up to 40% of the Fund's total assets
in Municipal Securities of issuers in each of California, New York and
Texas. The Fund will limit its investments in Municipal Securities of
any one state (except California, New York and Texas) or U.S. territory
to 25% of the Fund's total assets.
---------------------------------------------------------------------------
\10\ Municipal inverse floaters are a type of inverse floater in
which a municipal bond is deposited with a special purpose vehicle
(SPV), which issues, in return, the municipal inverse floater (which
is comprised of a residual interest in the cash flows and assets of
the SPV) plus proceeds from the issuance by the SPV of floating rate
certificates to third parties.
---------------------------------------------------------------------------
The Fund may hold restricted securities, which are securities that
cannot be offered for public resale unless registered under the
applicable securities laws or that have a contractual restriction that
prohibits or limits their resale. Restricted securities include private
placement securities that have not been registered under the applicable
securities laws, such as Rule 144A securities, and securities of U.S.
and non-U.S. issuers that are issued pursuant to Regulation S.
Other Investments
While the Fund, under normal market conditions, will invest
principally in the securities and financial instruments described
above, the Fund may invest its remaining assets in the securities and
financial instruments described below.
The Fund may invest in non-agency ABS, which are securities backed
by a pool of some underlying asset, including but not limited to home
equity loans, installment sale contracts, credit card receivables or
other assets.
The Fund may invest in collateralized debt obligations (``CDOs''),
which include collateralized bond obligations (``CBOs''),
collateralized loan obligations (``CLOs'') and other similarly
structured securities.
The Fund may invest in non-agency mortgage-related securities.
The Fund may invest in the securities of other registered
investment companies, including exchange-traded funds (``ETFs'').\11\
---------------------------------------------------------------------------
\11\ For purposes of this filing, ETFs include Investment
Company Units (as described in NYSE Arca Rule 5.2-E(j)(3));
Portfolio Depositary Receipts (as described in NYSE Arca Rule 8.100-
E); and Managed Fund Shares (as described in NYSE Arca Rule 8.600-
E). The ETFs all will be listed and traded in the U.S. on registered
exchanges. The Fund will not invest in inverse or leveraged (e.g.,
+2x, -2X) index ETFs.
---------------------------------------------------------------------------
The Fund may engage actively in transactions in derivatives
(futures, options, swaps and forward rate agreements), as described
below. The Fund will normally use derivatives to supplement the
effective management of its duration profile, to gain exposure to
particular securities or markets, in connection with hedging
transactions, or for purposes of efficient portfolio management,
including managing cash flows or as part of the Fund's risk management
process.
The Fund may invest in U.S and foreign exchange-traded and over-the
counter (``OTC'') put and call options. The Fund may engage in options
transactions on any security, index or instrument in which it may
invest.
[[Page 50463]]
The Fund may invest in U.S and foreign exchange-traded and OTC
currency options.
The Fund may invest in U.S. and foreign exchange-traded futures
contracts and options on futures contracts with respect to equity and
debt securities, foreign currencies, aggregates of equity and debt
securities (aggregates are composites of equity or debt securities that
are not tied to a commonly known index), interest rates, indices,
commodities and other financial instruments.
The Fund may enter into commodity swaps, total return swaps,
currency swaps, credit default swaps, asset swaps, inflation swaps,
event-linked swaps, interest rate swaps, swaps on specific securities
or indices, swaps on rates (such as mortgage prepayment rates),
municipal credit default swaps, municipal market data derivatives rate
locks, caps, collars, and floors. The Fund may also enter into options
on swap agreements (``swaptions''). The Fund may also invest in the Dow
Jones CDX (``CDX''), which is a family of indices that track credit
derivative indices in various countries around the world. Swaps and
swaptions can be both exchange traded and OTC.
The Fund may enter into forward rate agreements.
The Fund may invest in inflation-protected debt securities.
The Fund may invest in OTC and exchange-traded convertible and
nonconvertible preferred stock.
The Fund may invest in when-issued and delayed delivery securities
and forward commitments.
Disclosure of Portfolio Holdings
On each day the NYSE Arca is open (a ``Business Day''), before
commencement of trading in Shares on the Exchange, HFMC will disclose
the Fund's iNAV Basket.\12\ Additionally, on each Business Day, before
commencement of trading in Shares on the Exchange, the Fund will
disclose on its Web site the identities and quantities of the Fund's
portfolio holdings that will form the basis for the Fund's calculation
of NAV at the end of the Business Day.
---------------------------------------------------------------------------
\12\ An iNAV will be based on the current market value of the
Fund's portfolio holdings that will form the basis for the Fund's
calculation of NAV at the end of the Business Day, as disclosed on
the Fund's Web site prior to that Business Day's commencement of
trading (the ``iNAV Basket'').
---------------------------------------------------------------------------
Creation and Redemption of Shares
According to the Registration Statement, the Trust will issue and
sell Shares of the Fund only in Creation Units at the NAV next
determined after receipt of an order in proper form on any Business
Day. The number of Shares of the Fund that will constitute a Creation
Unit is 50,000. The size of a Creation Unit is subject to change.
Creation of Shares
The consideration for purchase of Creation Units will generally
consist of ``Deposit Securities'' and the ``Cash Component'', which
will generally correspond pro rata, to the extent practicable, to the
Fund's securities, or, as permitted or required by the Fund, of cash.
Together, the Deposit Securities and Cash Component constitute the
``Fund Deposit,'' which represents the minimum initial and subsequent
investment amount for a Creation Unit of the Fund. Creation Units of
Shares of the Fund may be issued partially for cash.
The Transfer Agent, through the National Securities Clearing
Corporation (``NSCC''), will make available on each Business Day, prior
to the Core Trading Session (subject to amendments) on the Exchange
(currently 9:30 a.m., Eastern time), the identity and the required
number of each Deposit Security and the amount of the Cash Component to
be included in the current Fund Deposit (based on information at the
end of the previous Business Day).
To be eligible to place orders with the Distributor and to create a
Creation Unit of the Fund, an entity must be: (i) A ``Participating
Party,'' i.e. a broker-dealer or other participant in the clearing
process through the Continuous Net Settlement System of the NSCC (the
``Clearing Process''); or (ii) a participant of Depository Trust
Company (``DTC'') (``DTC Participant'') and must have executed an
agreement with the Distributor (and accepted by the Transfer Agent),
with respect to creations and redemptions of Creation Units
(``Participant Agreement'') (discussed below). A Participating Party or
DTC Participant who has executed a Participant Agreement is referred to
as an ``Authorized Participant.''
Except as described below, and in all cases subject to the terms of
the applicable Participant Agreement, all orders to create Creation
Units of the Fund must be received by the Transfer Agent no later than
1:00 p.m., Eastern time) in each case on the date such order is placed
for creation of Creation Units to be effected based on the NAV of
shares of the Fund as next determined after receipt of an order in
proper form. Orders requesting substitution of a ``cash-in-lieu''
amount or a cash creation, must be received by the Transfer Agent no
later than 1:00 p.m., Eastern time. The date on which an order to
create Creation Units (or an order to redeem Creation Units, as
discussed below) is placed is referred to as the ``Transmittal Date''.
Fund Deposits created through the Clearing Process, if available,
must be delivered through a Participating Party that has executed a
Participant Agreement.
The Participant Agreement authorizes the Transfer Agent to transmit
to NSCC on behalf of the Participating Party such trade instructions as
are necessary to effect the Participating Party's creation order.
Pursuant to such trade instructions from the Transfer Agent to NSCC,
the Participating Party agrees to transfer the requisite Deposit
Securities (or contracts to purchase such Deposit Securities that are
expected to be delivered in a ``regular way'' manner by the second
Business Day) and the Cash Component to the Trust, together with such
additional information as may be required by the Transfer Agent and the
Distributor as set forth in the Participant Agreement. An order to
create Creation Units of the Fund through the Clearing Process is
deemed received by the Transfer Agent on the Transmittal Date if (i)
such order is received by the Transfer Agent not later than the Order
Cutoff Time on such Transmittal Date and (ii) all other procedures set
forth in the Participant Agreement are properly followed.
Fund Deposits created outside the Clearing Process must be
delivered through a DTC Participant that has executed a Participant
Agreement.
Redemption of Shares
Shares may be redeemed only in Creation Units at their NAV next
determined after receipt of a redemption request in proper form on a
Business Day and only through a Participating Party or DTC Participant
who has executed a Participant Agreement.
With respect to the Fund, the Transfer Agent, through the NSCC,
makes available immediately prior to the opening of business on the
Exchange (currently 9:30 a.m., Eastern time) on each Business Day, the
identity of the Fund's securities and/or an amount of cash that will be
applicable (subject to possible amendment or correction) to redemption
requests received in proper form (as described below) on that day. All
orders are subject to acceptance by the Distributor. The Fund's
securities received on redemption will generally correspond pro rata,
to the extent practicable, to the Fund's securities. The Fund's
securities received on redemption (``Fund Securities'') may not be
identical to Deposit Securities that
[[Page 50464]]
are applicable to creations of Creation Units.
Unless cash only redemptions are available or specified for the
Fund, the redemption proceeds for a Creation Unit will generally
consist of Fund Securities--as announced on the Business Day of the
request for a redemption order received in proper form--plus cash in an
amount equal to the difference between the NAV of the Shares being
redeemed, as next determined after a receipt of a request in proper
form, and the value of the Fund Securities, less the redemption
transaction fee and variable fees described below. Notwithstanding the
foregoing, the Trust will substitute a ``cash-in-lieu'' amount to
replace any Fund Security that is a non-deliverable instrument.
Orders to redeem Creation Units of the Fund through the Clearing
Process, if available, must be delivered through a Participating Party
that has executed the Participant Agreement. An order to redeem
Creation Units of the Fund through the Clearing Process will be deemed
received by the Transfer Agent on the Transmittal Date if such order is
received by the Transfer Agent not later than 1:00 p.m. Eastern time on
such Transmittal Date and other applicable procedures are properly
followed.
Orders to redeem Creation Units of the Fund outside the Clearing
Process must be delivered through a DTC Participant that has executed
the Participant Agreement. An order to redeem Creation Units of the
Fund outside the Clearing Process will be deemed received by the
Transfer Agent on the Transmittal Date if such order is received by the
Transfer Agent not later than 1:00 p.m. Eastern time on such
Transmittal Date and other applicable procedures are properly followed.
Availability of Information
The Fund will disclose on the Fund's Web site
(www.hartfordfunds.com) at the start of each Business Day the
identities and quantities of the securities and other assets held by
the Fund that will form the basis of the Fund's calculation of its NAV
on that Business Day. The portfolio holdings so disclosed will be based
on information as of the close of business on the prior Business Day
and/or trades that have been completed prior to the opening of business
on that Business Day and that are expected to settle on the Business
Day.
The Web site for the Fund will contain the following information,
on a per-Share basis, for the Fund: (1) The prior Business Day's NAV;
(2) the reported midpoint of the bid-ask spread at the time of NAV
calculation (the ``Bid-Ask Price''); (3) a calculation of the premium
or discount of the Bid-Ask Price against such NAV; and (4) data in
chart format displaying the frequency distribution of discounts and
premiums of the Bid-Ask Price against the NAV, within appropriate
ranges, for each of the four previous calendar quarters (or for the
life of the Fund if, shorter).
The Fund's portfolio holdings will be disclosed on the Fund's Web
site daily after the close of trading on the Exchange and prior to the
opening of trading on the Exchange the following day. On a daily basis,
the Fund will disclose the information required under NYSE Arca Rule
8.600-E(c)(2) to the extent applicable. The Fund's prospectus and
Statement of Additional Information (``SAI'') will be available on the
Fund's Web site. The Web site information will be publicly available at
no charge.
Investors can also obtain the Fund's SAI, shareholder reports, Form
N-CSR and Form N-SAR, filed twice a year. The Fund's SAI and
shareholder reports will be available free upon request from the Trust,
and those documents and the Form N-CSR and Form N-SAR may be viewed on-
screen or downloaded from the Commission's Web site at www.sec.gov.
Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be publicly available and will be
published daily in the financial section of newspapers.
Quotation and last sale information for the Shares and ETFs will be
available via the Consolidated Tape Association (``CTA'') high-speed
line, and from the national securities exchanges on which they are
listed.
Quotation information from brokers and dealers or pricing services
will be available for Municipal Securities. Price information for money
market funds will be available from the applicable investment company's
Web site and from market data vendors. Pricing information regarding
each asset class in which the Fund will invest will generally be
available through nationally recognized data service providers through
subscription agreements. In addition, the iNAV (which is the Portfolio
Indicative Value, as defined in NYSE Arca Rule 8.600-E(c)(3)), will be
widely disseminated at least every 15 seconds during the Core Trading
Session by one or more major market data vendors or other information
providers.\13\ One source of price information for municipal securities
is the Electronic Municipal Market Access (``EMMA''), which is
administered by the Municipal Securities Rulemaking Board.
---------------------------------------------------------------------------
\13\ Currently, it is the Exchange's understanding that several
major market data vendors display and/or make widely available
Portfolio Indicative Values taken from CTA or other data feeds.
---------------------------------------------------------------------------
Investment Restrictions
The Fund's investments will be consistent with its investment goal
and will not be used to provide multiple returns of a benchmark or to
produce leveraged returns.
With respect to the Fund's investments in Municipal Securities,
under normal market conditions, except for periods of high cash inflows
or outflows, the Fund will satisfy the following criteria:
i. The Fund will have a minimum of 20 non-affiliated issuers;
ii. No single Municipal Securities issuer will account for more
than 10% of the weight of the Fund's portfolio; \14\
---------------------------------------------------------------------------
\14\ The Exchange notes that the Commission has approved the
listing and trading of another issue of Managed Fund Shares that
principally holds municipal securities for which no single issuer
would account for more than 10% of the weight of the fund's
portfolio. See Securities Exchange Act Release No. 79293 (November
10, 2016), 81 FR 81189 (November 17, 2016) (SR-NYSEArca-2016-107)
(order approving listing and trading of shares of Cumberland
Municipal Bond ETF under Rule 8.600).
---------------------------------------------------------------------------
iii. No individual bond will account for more than 5% of the weight
of the Fund's portfolio; \15\
---------------------------------------------------------------------------
\15\ The Exchange notes that the Commission has approved the
listing and trading of another issue of Managed Fund Shares that
principally holds municipal securities for which no single bond
would exceed 5% of the fund's portfolio. See Securities Exchange Act
Release No. 80885 (June 8, 2017), 82 FR 27302 (June 14, 2017) (order
approving listing and trading of shares of the IQ Municipal Insured
ETF, IQ Municipal Short Duration ETF, and IQ Municipal Intermediate
ETF under NYSE Arca Equities Rule 8.600).
---------------------------------------------------------------------------
iv. The Fund will limit its investments in Municipal Securities of
any one state to 25% of the Fund's total assets, provided that up to
and including 40% of the Fund's total assets may be invested in
Municipal Securities of issuers in each of California, New York and
Texas; \16\
---------------------------------------------------------------------------
\16\ The Exchange notes that the Commission has approved the
listing and trading of other issues of Managed Fund Shares that
principally hold municipal securities for which the applicable
fund's assets in municipal securities of any one state would be
limited to 25% of such fund's assets. See Securities Exchange Act
Release Nos. 80885 (June 8, 2017), 82 FR 27302 (June 14, 2017)
(order approving listing and trading of shares of the IQ Municipal
Insured ETF, IQ Municipal Short Duration ETF, and IQ Municipal
Intermediate ETF under NYSE Arca Equities Rule 8.600); 79293
(November 10, 2016), 81 FR 81189 (November 17, 2016) (SR-NYSEArca-
2016-107) (order approving listing and trading of shares of
Cumberland Municipal Bond ETF under Rule 8.600); 78913 (September
23, 2016) (SR-Nasdaq-2016-002) (order approving listing and trading
of the First Trust Municipal High Income ETF of First Trust
Exchange-Traded Fund III).
---------------------------------------------------------------------------
[[Page 50465]]
v. The Fund's investments in Municipal Securities will be
diversified among issuers in at least 10 states and U.S. territories;
\17\
---------------------------------------------------------------------------
\17\ The Exchange notes that the Commission has approved the
listing and trading of another issue of Managed Fund Shares that
principally holds municipal securities and for which the fund's
assets would be diversified among issuers in 10 states. See
Securities Exchange Act Release No. 80865 (June 6, 2017), 82 FR
26970 (June 12, 2017) (order approving listing and trading of shares
of the Franklin Liberty Intermediate Municipal Opportunities ETF and
Franklin Liberty Municipal Bond ETF under NYSE Arca Equities Rule
8.600).
---------------------------------------------------------------------------
vi. The Fund will be diversified among a minimum of five different
sectors of the Municipal Securities market.\18\
---------------------------------------------------------------------------
\18\ The Fund's investments in Municipal Securities will include
investments in state and local (e.g., county, city, town) Municipal
Securities relating to such sectors as the following: Airports;
bridges and highways; hospitals; housing; jails; mass
transportation; nursing homes; parks; public buildings; recreational
facilities; school facilities; streets; and water and sewer works.
---------------------------------------------------------------------------
Pre-refunded bonds will be excluded from the above limits given
that they have a high level of credit quality and liquidity.\19\
---------------------------------------------------------------------------
\19\ The Exchange notes that the Commission has approved the
listing and trading of another issue of Managed Fund Shares that
principally holds municipal securities for which pre-refunded bonds
were excluded from the specified limits in the fund's municipal bond
investments. See Securities Exchange Act Release No. 80865 (June 6,
2017), 82 FR 26970 (June 12, 2017) (order approving listing and
trading of shares of the Franklin Liberty Intermediate Municipal
Opportunities ETF and Franklin Liberty Municipal Bond ETF under NYSE
Arca Equities Rule 8.600). Pre-refunded bonds (also known as
refunded or escrow-secured bonds) have a high level of credit
quality and liquidity because the issuer ``pre-refunds'' the bond by
setting aside in advance all or a portion of the amount to be paid
to the bondholders when the bond is called. Generally, an issuer
uses the proceeds from a new bond issue to buy high grade, interest
bearing debt securities, including direct obligations of the U.S.
government, which are then deposited in an irrevocable escrow
account held by a trustee bank to secure all future payments of
principal and interest on the pre-refunded bonds.
---------------------------------------------------------------------------
Application of Generic Listing Requirements
The Exchange is submitting this proposed rule change because the
portfolio for the Fund will not meet all of the ``generic'' listing
requirements of Commentary .01 to NYSE Arca Rule 8.600-E applicable to
the listing of Managed Fund Shares. The Fund's portfolio will meet all
such requirements except for those set forth in Commentary
.01(b)(1).\20\
---------------------------------------------------------------------------
\20\ Commentary .01(b)(1) to NYSE Arca Rule 8.600-E provides
that components that in the aggregate account for at least 75% of
the fixed income weight of the portfolio each shall have a minimum
original principal amount outstanding of $100 million or more.
---------------------------------------------------------------------------
The Exchange believes that it is appropriate and in the public
interest to approve listing and trading of Shares of the Fund on the
Exchange notwithstanding that the Fund would not meet the requirements
of Commentary .01(b)(1) to Rule 8.600-E in that the Fund's investments
in fixed income securities, including Municipal Securities, will be
well-diversified.
The Exchange believes that permitting Fund Shares to be listed and
traded on the Exchange, notwithstanding that, as a result principally
of the Fund's investments in Municipal Securities, less than 75% of the
weight of the Fund's portfolio may consist of components with $100
million minimum or more original principal amount outstanding, would
provide the Fund with greater ability to select from a broad range of
fixed income securities, including Municipal Securities, as described
above, that would support the Fund's investment goal.
The Exchange believes that, notwithstanding that the Fund's
portfolio may not satisfy Commentary .01(b)(1) to Rule 8.600-E, the
Fund will not be susceptible to manipulation. As noted above, with
respect to the Fund's investments in Municipal Securities, such
securities will be diversified among a minimum of 20 non-affiliated
issuers; no single Municipal Securities issuer will account for more
than 10% of the weight of the Fund's portfolio; no individual bond will
account for more than 5% of the weight of the Fund's portfolio; the
Fund will limit its investments in Municipal Securities of any one
state to 25% of the Fund's total assets, provided that up to and
including 40% of the Fund's total assets may be invested in Municipal
Securities of issuers in each of California, New York and Texas; and
the Fund's investments in Municipal Securities will be diversified
among issuers in at least 10 states and U.S. territories and will be
diversified among a minimum of five different sectors of the Municipal
Securities market.
The Exchange notes that, other than Commentary .01(b)(1) to Rule
8.600-E, the Fund's portfolio will meet all other requirements of Rule
8.600-E.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund.\21\ Trading in Shares of the Fund
will be halted if the circuit breaker parameters in NYSE Arca Rule
7.12-E have been reached. Trading also may be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. Trading in the Fund's Shares also
will be subject to Rule 8.600-E(d)(2)(D) (``Trading Halts'').
---------------------------------------------------------------------------
\21\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------
Trading Rules
The Exchange 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. Shares will trade on
the NYSE Arca Marketplace from 4 a.m. to 8 p.m., Eastern Time in
accordance with NYSE Arca Rule 7.34-E (Early, Core, and Late Trading
Sessions). The Exchange has appropriate rules to facilitate
transactions in the Shares during all trading sessions. As provided in
NYSE Arca Rule 7.6-E, the minimum price variation (``MPV'') for quoting
and entry of orders in equity securities traded on the NYSE Arca
Marketplace is $0.01, with the exception of securities that are priced
less than $1.00 for which the MPV for order entry is $0.0001.
With the exception of the requirements of Commentary .01(b)(1) to
Rule 8.600-E as described above in ``Application of Generic Listing
Requirements'', the Shares of the Fund will conform to the initial and
continued listing criteria under NYSE Arca Rule 8.600-E. Consistent
with NYSE Arca Rule 8.600-E(d)(2)(B)(ii), the Manager will implement
and maintain, or be subject to, procedures designed to prevent the use
and dissemination of material non-public information regarding the
actual components of the Fund's portfolio. The Exchange represents
that, for initial and continued listing, the Fund will be in compliance
with Rule 10A-3 \22\ under the Act, as provided by NYSE Arca Rule 5.3-
E. A minimum of 100,000 Shares will be outstanding at the commencement
of trading on the Exchange. The Exchange will obtain a representation
from the issuer of the Shares that the NAV per Share will be calculated
daily and that the NAV and the Disclosed Portfolio will be made
available to all market participants at the same time. The Fund's
investments will be consistent with its investment goal and will not be
used to provide multiple returns of a benchmark or to produce leveraged
returns.
---------------------------------------------------------------------------
\22\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------
Surveillance
The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances,
[[Page 50466]]
administered by the Financial Industry Regulatory Authority (``FINRA'')
on behalf of the Exchange, or by regulatory staff of the Exchange,
which are designed to detect violations of Exchange rules and
applicable federal securities laws. The Exchange represents that 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 federal securities laws applicable to trading on the
Exchange.\23\
---------------------------------------------------------------------------
\23\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
---------------------------------------------------------------------------
The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.\24\
---------------------------------------------------------------------------
\24\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Disclosed Portfolio may trade on markets that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.
---------------------------------------------------------------------------
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares, ETFs, certain
exchange-traded options and certain exchange-traded futures with other
markets and other entities that are members of the ISG, and the
Exchange or FINRA, on behalf of the Exchange, or both, may obtain
trading information regarding trading in the Shares, ETFs, certain
exchange-traded options and certain exchange-traded futures from such
markets and other entities. In addition, the Exchange may obtain
information regarding trading in the Shares, ETFs, certain exchange-
traded options and certain exchange-traded futures from markets and
other entities that are members of ISG or with which the Exchange has
in place a comprehensive surveillance sharing agreement. In addition,
FINRA, on behalf of the Exchange, is able to access, as needed, trade
information for certain fixed income securities held by the Fund
reported to FINRA's Trade Reporting and Compliance Engine (``TRACE'').
FINRA also can access data obtained from the Municipal Securities
Rulemaking Board (``MSRB'') relating to municipal bond trading activity
for surveillance purposes in connection with trading in the Shares.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
All statements and representations made in this filing regarding
(a) the description of the portfolio, (b) limitations on portfolio
holdings or reference assets, or (c) the applicability of Exchange
listing rules specified in this rule filing shall constitute continued
listing requirements for listing the Shares of the Fund on the
Exchange.
The issuer has represented to the Exchange that it will advise the
Exchange of any failure by the Fund to comply with the continued
listing requirements, and, pursuant to its obligations under Section
19(g)(1) of the Act, the Exchange will monitor for compliance with the
continued listing requirements. If the Fund is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under NYSE Arca Rule 5.5-E(m).
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
Equity Trading Permit Holders in an Information Bulletin (``Bulletin'')
of the special characteristics and risks associated with trading the
Shares. Specifically, the Bulletin will discuss the following: (1) The
procedures for purchases and redemptions of Shares in Creation Unit
aggregations (and that Shares are not individually redeemable); (2)
NYSE Arca Rule 9.2-E(a), which imposes a duty of due diligence on its
Equity Trading Permit Holders to learn the essential facts relating to
every customer prior to trading the Shares; (3) the risks involved in
trading the Shares during the Early and Late Trading Sessions when an
updated iNAV will not be calculated or publicly disseminated; (4) how
information regarding the iNAV and the Disclosed Portfolio is
disseminated; (5) the requirement that Equity Trading Permit Holders
deliver a prospectus to investors purchasing newly issued Shares prior
to or concurrently with the confirmation of a transaction; and (6)
trading information.
In addition, the Bulletin will reference that the Fund is subject
to various fees and expenses described in the Registration Statement.
The Bulletin will discuss any exemptive, no-action, and interpretive
relief granted by the Commission from any rules under the Act. The
Bulletin will also disclose that the NAV for the Shares will be
calculated after 4:00 p.m., Eastern Time each trading day.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \25\ that an exchange have rules that
are 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, in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\25\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Rule 8.600-E. The
Exchange has in place surveillance procedures that are adequate to
properly monitor trading in the Shares in all trading sessions and to
deter and detect violations of Exchange rules and applicable federal
securities laws. The Exchange or FINRA, on behalf of the Exchange, or
both, will communicate as needed regarding trading in the Shares, ETFs,
certain exchange-traded options and certain exchange-traded futures
with other markets and other entities that are members of the ISG, and
the Exchange or FINRA, on behalf of the Exchange, or both, may obtain
trading information regarding trading in the Shares, ETFs, certain
exchange-traded options and certain exchange-traded futures from such
markets and other entities. In addition, the Exchange may obtain
information regarding trading in the Shares, ETFs, certain exchange-
traded options and certain exchange-traded futures from markets and
other entities that are members of ISG or with which the Exchange has
in place a comprehensive surveillance sharing agreement. In addition,
FINRA, on behalf of the Exchange, is able to access, as needed, trade
information for certain fixed income securities held by the Fund
reported to TRACE. FINRA also can access data obtained from the MSRB
relating to municipal bond trading activity for surveillance purposes
in connection with trading in the Shares. Neither the Manager nor Sub-
Adviser is registered as a broker-dealer but each is affiliated with a
broker-dealer. The Manager and Sub-Adviser each has implemented a
``fire wall'' with respect to such broker-dealer affiliate regarding
access to information concerning the composition of and/or changes to
the Fund's portfolio.\26\
---------------------------------------------------------------------------
\26\ See note 7, supra.
---------------------------------------------------------------------------
[[Page 50467]]
The Exchange believes that it is appropriate and in the public
interest to approve listing and trading of Shares of the Fund on the
Exchange notwithstanding that the Fund would not meet the requirements
of Commentary .01(b)(1) to Rule 8.600-E in that the Fund's investments
in Municipal Securities will be well-diversified.
The Exchange believes that permitting Fund Shares to be listed and
traded on the Exchange notwithstanding that, as a result principally of
the Fund's investments in Municipal Securities, less than 75% of the
weight of the Fund's portfolio may consist of components with $100
million minimum or more original principal amount outstanding would
provide the Fund with greater ability to select from a broad range of
Municipal Securities, as described above, that would support the Fund's
investment goal.
The Exchange believes that, notwithstanding that the Fund's
portfolio may not satisfy Commentary .01(b)(1) to Rule 8.600-E, the
Fund's portfolio will not be susceptible to manipulation. As noted
above, with respect to the Fund's investments in Municipal Securities,
such securities will be diversified among a minimum of 20 non-
affiliated issuers; no single Municipal Securities issuer will account
for more than 10% of the weight of the Fund's portfolio; no individual
bond will account for more than 5% of the weight of the Fund's
portfolio; the Fund will limit its investments in Municipal Securities
of any one state to 25% of the Fund's total assets, provided that up to
and including 40% of the Fund's total assets may be invested in
Municipal Securities of issuers in each of California, New York and
Texas; and the Fund's investments in Municipal Securities will be
diversified among issuers in at least 10 states and will be diversified
among a minimum of five different sectors of the Municipal Securities
market. The Exchange notes that, other than Commentary .01(b)(1) to
Rule 8.600-E, the Fund's portfolio will meet all other requirements of
Rule 8.600-E.
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation from the issuer of the
Shares that the NAV per Share will be calculated daily and that the NAV
and the Disclosed Portfolio will be made available to all market
participants at the same time. In addition, a large amount of
information is publicly available regarding the Fund and the Shares,
thereby promoting market transparency. Quotation and last sale
information for the Shares and ETFs will be available via the CTA high-
speed line, and from the national securities exchanges on which they
are listed. Prior to the commencement of trading, the Exchange will
inform its Equity Trading Permit Holders in an Information Bulletin of
the special characteristics and risks associated with trading the
Shares. Trading in Shares of the Fund will be halted if the circuit
breaker parameters in NYSE Arca Rule 7.12-E have been reached or
because of market conditions or for reasons that, in the view of the
Exchange, make trading in the Shares inadvisable. Trading in the Shares
will be subject to NYSE Arca Rule 8.600-E(d)(2)(D), which sets forth
circumstances under which Shares of the Funds [sic] may be halted. In
addition, as noted above, investors will have ready access to
information regarding the Fund's holdings, the iNAV, the Disclosed
Portfolio, and quotation and last sale information for the Shares.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of actively-managed exchange-traded product that
principally will hold fixed income securities and that will enhance
competition among market participants, to the benefit of investors and
the marketplace. As noted above, the Exchange has in place surveillance
procedures relating to trading in the Shares and may obtain information
via ISG from other exchanges that are members of ISG or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement. In addition, as noted above, investors will have ready
access to information regarding the Fund's holdings, iNAV, Disclosed
Portfolio, and quotation and last sale information for the Shares.
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 purpose of the Act. The Exchange notes that the
proposed rule change will facilitate the listing and trading of an
additional type of actively-managed exchange-traded product that
principally will hold fixed income securities and that will enhance
competition among market participants, to the benefit of investors and
the marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove 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 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 [email protected]. Please include
File Number SR-NYSEArca-2017-99 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-2017-99. 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 50468]]
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. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2017-99 and should
be submitted on or before November 21, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
\27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-23582 Filed 10-30-17; 8:45 am]
BILLING CODE 8011-01-P
