Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change, as Modified by Amendment Nos. 4 and 6, To List and Trade Shares of the Amplify BlackSwan Growth & Treasury Core ETF Under Commentary .02 to NYSE Arca Rule 5.2-E(j)(3), 51027-51030 [2018-21901]
Download as PDF
Federal Register / Vol. 83, No. 196 / Wednesday, October 10, 2018 / Notices
FOR FURTHER INFORMATION CONTACT:
David Dimitrious, Senior Special
Counsel, at (202) 551–5131, or Benjamin
Bernstein, Special Counsel, at (202)
551–5354, Division of Trading and
Markets, Securities and Exchange
Commission, 100 F Street NE,
Washington DC 20549–7010.
SUPPLEMENTARY INFORMATION: In
accordance with Section 10(a) of the
Federal Advisory Committee Act, 5
U.S.C.-App. 1, and the regulations
thereunder, Brett Redfearn, Designated
Federal Officer of the Committee, has
ordered publication of this notice.
Dated: October 3, 2018.
Brent J. Fields,
Committee Management Officer.
[FR Doc. 2018–21953 Filed 10–9–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84348; File No. SR–
NYSEArca–2018–57]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Granting Approval of
Proposed Rule Change, as Modified by
Amendment Nos. 4 and 6, To List and
Trade Shares of the Amplify
BlackSwan Growth & Treasury Core
ETF Under Commentary .02 to NYSE
Arca Rule 5.2–E(j)(3)
amozie on DSK3GDR082PROD with NOTICES1
October 3, 2018.
I. Introduction
On July 31, 2018, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares
(‘‘Shares’’) of the Amplify BlackSwan
Growth & Treasury Core ETF (‘‘Fund’’)
under Commentary .02 to NYSE Arca
Rule 5.2–E(j)(3). On August 10, 2018,
the Exchange filed Amendment No. 1 to
the proposed rule change, which
replaced and superseded the original
filing in its entirety. The proposed rule
change, as modified by Amendment No.
1, was published for comment in the
Federal Register on August 20, 2018.3
On September 10, 2018, the Exchange
filed Amendment No. 2 to the proposed
rule change, which replaced and
superseded the proposed rule change, as
modified by Amendment No. 1, in its
entirety. On September 24, 2018, the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 83845
(August 14, 2018), 83 FR 42188 (‘‘Notice’’).
2 17
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Exchange filed Amendment No. 3 to the
proposed rule change. On September 28,
2018, the Exchange filed Amendment
No. 4 to the proposed rule change,
which replaced and superseded the
proposed rule change, as modified by
Amendment Nos. 1, 2, and 3, in its
entirety.4 On October 1, 2018, the
Exchange submitted and withdrew
Amendment No. 5 to the proposed rule
change. On October 1, 2018, the
Exchange also filed Amendment No. 6
to the proposed rule change.5 The
Commission received no comments on
the proposed rule change. This order
grants approval of the proposed rule
change, as modified by Amendment
Nos. 4 and 6.
II. Description of the Proposed Rule
Change, as Modified by Amendment
Nos. 4 and 6 6
The Exchange proposes to list and
trade the Shares under Commentary .02
to NYSE Arca Rule 5.2–E(j)(3), which
governs the listing and trading of
Investment Company Units on the
Exchange. The Fund will be an indexbased exchange traded fund (‘‘ETF’’).
The Shares will be offered by the
Amplify ETF Trust (‘‘Trust’’), which is
registered with the Commission as an
investment company and has filed a
4 In Amendment No. 4, the Exchange: (i)
Amended the description of the Fund’s subadvisers, the Index Provider (as defined below), and
the Index Committee (as defined below); (ii)
represented that the Index Provider has
implemented and will maintain procedures
designed to prevent the use and dissemination of
material non-public information regarding the
Index (as defined below); (iii) amended the name
of the Index; (iv) stated that the Exchange believes
that surveillances by other exchanges on which SPY
LEAPS trade should help to protect against market
manipulation of the Fund’s Shares and SPY LEAPS;
(v) clarified that statements and representations in
the filing regarding the description of, or limitations
on, the Index shall constitute continued listing
requirements for listing the Shares of the Fund on
the Exchange; (vi) stated that the value of the Index
will be widely disseminated by one or more major
market data vendors at least once per day; (vii)
clarified the availability of certain information on
the Fund’s website; and (viii) made certain
technical and conforming changes. Amendment No.
4 to the proposed rule change is available at:
https://www.sec.gov/comments/sr-nysearca-201857/nysearca201857.htm. Amendment No. 4 is not
subject to notice and comment because it does not
materially alter the substance of the proposed rule
change or raise unique or novel regulatory issues.
5 In Amendment No. 6, the Exchange: (i) Clarified
that the Index Provider is not registered as an
investment adviser and is not affiliated with an
investment adviser; and (ii) made certain technical
and conforming changes. Amendment No. 6 to the
proposed rule change is available at: https://
www.sec.gov/comments/sr-nysearca-2018-57/
nysearca201857.htm. Amendment No. 6 is not
subject to notice and comment because it does not
materially alter the substance of the proposed rule
change or raise unique or novel regulatory issues.
6 For more information regarding the Fund and
the Shares, see Amendment No. 4, supra note 4 and
Amendment No. 6, supra note 5.
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51027
registration statement on Form N–1A
(‘‘Registration Statement’’) with the
Commission on behalf of the Fund.7
Amplify Investments LLC will be the
Fund’s investment adviser (‘‘Adviser’’).
CSAT Investment Advisory, L.P., d/b/a
Exponential ETFs and ARGI Investment
Services LLC will be the Fund’s subadvisers (‘‘Sub-Advisers’’).8 U.S.
Bancorp Fund Services, LLC will be the
administrator, custodian, and fund
accounting and transfer agent for the
Fund. Quasar Distributors LLC will
serve as the distributor for the Fund.
A. The Fund’s Underlying Index
According to the Exchange, the Fund
will seek investment results that
generally correspond (before fees and
expenses) to the price and yield of the
S-Network BlackSwan Core Total
Return Index (‘‘Index’’). The Index was
created and is maintained by S-Network
Global Networks, Inc. (‘‘Index
Provider’’).9 The Index is also compiled
and calculated by the Index Provider.
According to the Exchange, the Index
is a rules-based, quantitative index that
seeks to provide capital protection
against the unpredictable, rare, and
highly disruptive events that have come
to be referred to as ‘‘Black Swans.’’ The
Index endeavors to provide investment
returns that correspond to those of the
7 The Exchange states that, on June 26, 2018, the
Trust filed a Registration Statement on Form N–1A
on behalf of the Fund (File Nos. 333–207937 and
811–23108). In addition, the Exchange states that
the Commission has issued an order granting
certain exemptive relief to the Trust under the
Investment Company Act of 1940 Act. See
Investment Company Act Release No. 31822
(September 14, 2015) (File No. 812–14424).
8 The Exchange represents that the Adviser is not
registered as a broker-dealer but is affiliated with
a broker-dealer and has implemented and will
maintain a fire wall with respect to its broker-dealer
affiliate regarding access to information concerning
the composition of and/or changes to the Fund’s
portfolio. The Exchange represents that the SubAdvisers are not registered as a broker-dealer or
affiliated with a broker-dealer. The Exchange
further represents that, in the event (a) the Adviser
or a Sub-Adviser becomes registered as a brokerdealer or newly affiliated with a broker-dealer, or
(b) any new adviser or sub-adviser is a registered
broker-dealer or becomes affiliated with a brokerdealer, it will implement and maintain a fire wall
with respect to its relevant personnel or its brokerdealer affiliate regarding access to information
concerning the composition of and/or changes to
the portfolio, and will be subject to procedures
designed to prevent the use and dissemination of
material non-public information regarding the
portfolio.
9 According to the Exchange, the Index Provider
is not registered as an investment adviser or brokerdealer and is not affiliated with an investment
adviser or broker-dealer. The Exchange states that
the Index Provider has implemented and will
maintain procedures designed to prevent the use
and dissemination of material non-public
information regarding the Index. In addition, the
Exchange states that the Index Provider is not
affiliated with the Fund, the Adviser, or the SubAdvisers.
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amozie on DSK3GDR082PROD with NOTICES1
S&P 500 Index, while mitigating against
significant losses.
The Index is composed of U.S.
Treasury securities and long-dated call
options (‘‘LEAPS’’) 10 on the SPDR S&P
500 ETF Trust (‘‘SPY’’) 11 (which
options are referred to herein as ‘‘SPY
LEAPS’’). Twice a year, in June and
December, on the Index reconstitution
and rebalance date, the Index places
90% of its index market capitalization
in the portfolio of U.S. Treasury
securities and 10% of its index market
capitalization in the portfolio of SPY
LEAPS. The U.S. Treasury portfolio of
the Index is composed of 2-, 3-, 5-, 7, 10-, and 30-year U.S. Treasury
securities that cumulatively provide a
portfolio duration that matches the
initial duration of the 10-year U.S.
Treasury security.12 The SPY LEAPS
portfolio of the Index is composed of inthe-money SPY LEAPS that, at the time
of purchase, have expirations of at least
one year and one day in the future and
expire in either June or December, as
applicable.13
The Index is governed by a committee
(‘‘Index Committee’’) that is responsible
for overseeing the activities of the Index
Provider and approving all changes to
the Index related to its semi-annual
reconstitutions and rebalances.
According to the Exchange, all members
of the Index Committee and their
advisors must comply with the Index
Provider’s code of conduct and ethics
with respect to the disclosure and use
of material non-public information.
10 LEAPS are long-term options traded on U.S.
options exchanges.
11 Shares of SPY are listed and traded on the
Exchange.
12 The Exchange states that the treasury position
holds 5% of its allocated portion of Index market
capitalization in a ‘‘barbell’’ portfolio of 2- and 30year treasuries, and 95% of its allocated portion of
Index market capitalization in a core portfolio that
invests in 3-, 5-, 7-, 10-, and 30-year treasuries.
13 The Exchange states that the SPY LEAPS will
generally have a delta of 70 at the time of purchase,
and should there not be a 70-delta option, the
closest option above 70 will be utilized. The
Exchange states that the options portion of the
Index holds 5% of the Index market capitalization
in June 70-delta SPY LEAPS and 5% in December
70-delta SPY LEAPS. At each June reconstitution,
the Index liquidates its existing June SPY LEAPS
and purchases SPY LEAPS that expire the following
June. The December SPY LEAPS positions will
remain unchanged at each June reconstitution. At
each December reconstitution, the Index liquidates
its existing December SPY LEAPS and purchases
SPY LEAPS that expire the following December.
The June SPY LEAPS positions will remain
unchanged at each December reconstitution. Net
gains or losses derived from the reconstitutions of
the SPY LEAPS positions will be added to or
subtracted from the U.S. Treasury portfolio at each
reconstitution.
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B. The Fund’s Principal Investments
Under normal market conditions,14
the Fund will invest at least 80% of its
total assets in the securities that
comprise the Index, which, as described
above, are U.S. Treasury securities and
SPY LEAPS.
C. The Fund’s Non-Principal
Investments
While, under normal market
conditions, the Fund will invest at least
80% of its total assets in securities that
comprise the Index, the Fund may also
hold cash and cash equivalents.15
D. Application of Generic Listing
Requirements
The Exchange represents that it has
submitted the proposed rule change
because the Index does not meet all of
the generic listing requirements of
Commentary .02(a) to NYSE Arca Rule
5.2–E(j)(3). Specifically, because the
Index includes SPY LEAPS, the Index
does not satisfy the requirement set
forth in Commentary .02(a)(1) to NYSE
Arca Rule 5.2–E(j)(3), which states that
the index or portfolio underlying a
series of Investment Company Units
must consist of (i) only Fixed Income
Securities 16 or (ii) Fixed Income
Securities and cash. The Exchange
represents that, with the exception of
the requirement in Commentary
.02(a)(1) to NYSE Arca Rule 5.2–E(j)(3),
the Index and the Fund will meet each
of the initial and continued listing
criteria in NYSE Arca Rule 5.2–E(j)(3)
and NYSE Arca Rule 5.5–E(g)(2).
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change, as
modified by Amendment Nos. 4 and 6,
is consistent with the Act and the rules
and regulations thereunder applicable to
a national securities exchange.17 In
particular, the Commission finds that
the proposed rule change, as modified
by Amendment Nos. 4 and 6, is
consistent with Section 6(b)(5) of the
14 The term ‘‘normal market conditions’’ is as that
term is defined in NYSE Arca Rule 8.600–E(c)(5).
15 The term ‘‘cash equivalents’’ has the meaning
specified in Commentary .01(c) to NYSE Arca Rule
8.600–E.
16 Commentary .02 to NYSE Arca Rule 5.2–E(j)(3)
states that ‘‘Fixed Income Securities’’ are debt
securities that are notes, bonds, debentures or
evidence of indebtedness that include, but are not
limited to, U.S. Department of Treasury securities,
government-sponsored entity securities, municipal
securities, trust preferred securities, supranational
debt and debt of a foreign country or a subdivision
thereof.
17 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
PO 00000
Frm 00145
Fmt 4703
Sfmt 4703
Act,18 which requires, among other
things, that the Exchange’s rules be
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system and, in general, to protect
investors and the public interest.
As discussed above, the Shares do not
qualify for generic listing under
Commentary .02 to NYSE Arca Rule
5.2–E(j)(3) because the Index includes
SPY LEAPS. The Commission notes that
the Exchange represents that, other than
Commentary .02(a)(1) to NYSE Arca
Rule 5.2–E(j)(3), the Shares will meet
the initial and continued listing criteria
under NYSE Arca Rules 5.2–E(j)(3) and
5.5–E(g)(2). The Commission also notes
that SPY LEAPS are traded on U.S.
options exchanges, SPY is listed and
traded on the Exchange, and SPY is
based on the S&P 500 Index.19
The Commission also finds that the
proposal is consistent with Section
11A(a)(1)(C)(iii) of the Act,20 which sets
forth Congress’s finding that it is in the
public interest and appropriate for the
protection of investors and the
maintenance of fair and orderly markets
to assure the availability to brokers,
dealers, and investors of information
with respect to quotations for and
transactions in securities.
Quotation and last sale information
for the Shares will be available via the
Consolidated Tape Association highspeed line. Information regarding
market price and trading volume for 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 published daily in
the financial section of newspapers. In
addition, the Intraday Indicative Value
(‘‘IIV’’) (as defined in NYSE Arca Rule
5.2–E(j)(3), Commentary .02(c)) will be
widely disseminated at least every 15
seconds during the Core Trading
Session by one or more major market
data vendors.21 The value of the Index
will be widely disseminated by one or
more major market data vendors at least
once per day. Information about the
Index constituents, the weighting of the
18 15
U.S.C. 78f(b)(5).
Exchange also notes that the S&P 500
Index would meet the generic listing standards
applicable to an index composed of U.S.
Component Stocks in Commentary .01(a) to NYSE
Arca Rule 5.2–E(j)(3).
20 15 U.S.C. 78k–1(a)(1)(C)(iii).
21 The Exchange states that all Fund holdings will
be included in calculating the IIV.
19 The
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constituents, the Index’s methodology,
and the Index’s rules will be available
on the Index Provider’s website.
Quotation and last sale information for
SPY LEAPS will be available from the
exchange on which they are traded and
through the Options Price Reporting
Authority. The intraday, closing, and
settlement prices of exchange-traded
options also will be available from the
options exchanges, automated quotation
systems, published or other public
sources, or online information services.
Price information on U.S. Treasury
securities and cash equivalents will be
available from major broker-dealer firms
or market data vendors, automated
quotation systems, published or other
public sources, or online information
services.
The Fund’s website, which will be
publicly available prior to the public
offering of Shares, will include a form
of the prospectus for the Fund and
additional data relating to the net asset
value (‘‘NAV’’) and other applicable
quantitative information. On each
business day, before commencement of
trading in Shares in the Core Trading
Session on the Exchange, the Fund will
disclose on its website information
regarding each portfolio holding of the
Fund. In addition, a portfolio
composition file, which will include the
security names and quantities of
securities and other assets required to be
delivered in exchange for the Fund’s
Shares, together with estimates and
actual cash components, will be
publicly disseminated prior to the
opening of the Exchange via the
National Securities Clearing
Corporation.
The Commission also believes that the
proposal is reasonably designed to
promote fair disclosure of information
that may be necessary to price the
Shares appropriately and to prevent
trading when a reasonable degree of
transparency cannot be assured. 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 the Shares
inadvisable. In addition, trading in the
Shares will be subject to NYSE Arca
Rule 5.5–E(g)(2)(b), which sets forth
circumstances under which Shares of
the Fund may and/or will be halted. The
Exchange will obtain a representation
from the issuer of the Shares that the
NAV will be calculated daily every day
the New York Stock Exchange is open
and that the NAV will be made available
to all market participants at the same
time. Under NYSE Arca Rule 7.18–
E(d)(2), if the Exchange becomes aware
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21:20 Oct 09, 2018
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that the NAV is not being disseminated
to all market participants at the same
time, it will halt trading until such time
as the NAV is available to all market
participants.
In support of this proposal, the
Exchange represents that:
(1) The Shares will conform to the
initial and continued listing criteria
under NYSE Arca Rules 5.2–E(j)(3) and
5.5(E)(g)(2), except that the Index will
not meet the requirements of NYSE Arca
Rule 5.2–E(j)(3), Commentary .02(a)(1)
in that the Index will include SPY
LEAPS.
(2) The Shares will comply with all
other requirements applicable to
Investment Company Units, including
the dissemination of key information
such as the Index value, the NAV, and
the IIV, rules governing the trading of
equity securities, trading hours, trading
halts, firewalls for the Index Provider,
Adviser and Sub-Advisers, surveillance,
and the Information Bulletin, as set
forth in Exchange rules applicable to
Investment Company Units and the
orders approving such rules.
(3) The Shares will be subject to the
existing trading surveillances
administered by the Exchange and
Financial Industry Regulatory Authority
(‘‘FINRA’’) on behalf of the Exchange,
which are designed to deter and detect
violations of Exchange rules and
applicable federal securities laws
relating to trading on the Exchange.22
(4) The Exchange, or FINRA on behalf
of the Exchange, or both, will
communicate as needed regarding
trading in the Shares and SPY LEAPS
with other markets and other entities
that are members of the Intermarket
Surveillance Group (‘‘ISG’’), and the
Exchange, or FINRA on behalf of the
Exchange, or both, may obtain trading
information regarding trading in the
Shares and SPY LEAPS from such
markets and other entities. In addition,
the Exchange may obtain information
regarding trading in the Shares and SPY
LEAPS from markets and other entities
that are members of ISG or with which
the Exchange has in place a
comprehensive surveillance sharing
agreement. Moreover, 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.
(5) Prior to the commencement of
trading, the Exchange will inform its
22 The Exchange states that FINRA conducts
cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services
agreement, and that the Exchange is responsible for
FINRA’s performance under this regulatory services
agreement.
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Fmt 4703
Sfmt 4703
51029
ETP Holders in an Information Bulletin
of the special characteristics and risks
associated with trading the Shares.
(6) The Fund’s investments will be
consistent with its investment objective
and will not be used to enhance
leverage. The Fund’s investments will
not be used to seek performance that is
the multiple or inverse multiple (e.g., 2×
or ¥2×) of the Index.
(7) For initial and continued listing,
the Fund will be in compliance with
Rule 10A–3 under the Act.23
(8) A minimum of 100,000 Shares for
the Fund will be outstanding at the
commencement of trading on the
Exchange.
(9) All statements and representations
made in the filing regarding (a) the
description of the Index, portfolio or
reference asset, (b) limitations on the
Index or portfolio holdings or reference
assets, or (c) the applicability of
Exchange listing rules specified in the
rule filing shall constitute continued
listing requirements for listing the
Shares of the Fund on the Exchange. In
addition, the issuer is required to notify
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 24 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).
This approval order is based on all of
the Exchange’s statements and
representations, including those set
forth above and in Amendment Nos. 4
and 6.
For the foregoing reasons, the
Commission finds that the proposed
rule change, as modified by Amendment
Nos. 4 and 6, is consistent with Section
6(b)(5) of the Act 25 and Section
11A(a)(1)(C)(iii) of the Act 26 and the
rules and regulations thereunder
applicable to a national securities
exchange.
23 17
CFR 240.10A–3.
Commission notes that certain proposals
for the listing and trading of exchange-traded
products include a representation that the exchange
will ‘‘surveil’’ for compliance with the continued
listing requirements. See, e.g., Securities Exchange
Act Release No. 77499 (April 1, 2016), 81 FR 20428,
20432 (April 7, 2016) (SR–BATS–2016–04). In the
context of this representation, it is the
Commission’s view that ‘‘monitor’’ and ‘‘surveil’’
both mean ongoing oversight of compliance with
the continued listing requirements. Therefore, the
Commission does not view ‘‘monitor’’ as a more or
less stringent obligation than ‘‘surveil’’ with respect
to the continued listing requirements.
25 15 U.S.C. 78f(b)(5).
26 15 U.S.C. 78k–1(a)(1)(C)(iii).
24 The
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IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,27 that the
proposed rule change (SR–NYSEArca–
2018–57), as modified by Amendment
Nos. 4 and 6 be, and hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–21901 Filed 10–9–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84350; File No. SR–
NYSENAT–2018–21]
Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Immediate Effectiveness of
Amendments to Rules Regarding
Qualification, Registration and
Continuing Education Applicable to
Equity Trading Permit Holders
amozie on DSK3GDR082PROD with NOTICES1
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on
September 27, 2018, NYSE National,
Inc. (the ‘‘Exchange’’ or ‘‘NYSE
National’’) filed with the Securities and
Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes amendments
to the Exchange’s rules regarding
qualification, registration and
continuing education requirements
applicable to Equity Trading Permit
(‘‘ETP’’) Holders. To the extent the
Exchange’s rule proposal is intended to
harmonize with Financial Regulatory
Authority, Inc. (‘‘FINRA’’) rules and
thus promote consistency within the
securities industry, the Exchange is only
adopting rules that are relevant to the
Exchange’s ETP Holders. The Exchange
is not adopting registration categories
that are not applicable to ETP Holders
27 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
28 17
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21:20 Oct 09, 2018
Jkt 247001
because ETP Holders do not engage in
the type of business that would require
such registration. As such, the Exchange
is amending current Rule 2.2 regarding
continuing education requirements to
reflect the FINRA rule; adopting
Commentary .08 to current Rule 2.2
regarding fingerprint information;
adopting new Rule 2.1210 regarding
registration requirements and related
Commentary to new Rule 2.1210;
adopting new Rule 2.1220 regarding
registration categories 4 and related
Commentary to new Rule 2.1220; and
adopting new Rule 2.1230 regarding
associated persons exempt from
registration and related Commentary to
new Rule 2.1230. Each of these rule
changes, which are [sic] described in
more detail below, would become
operative on October 1, 2018. The
proposed rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
qualification, registration, and
continuing education requirements
applicable to ETP Holders. The
proposed amendments are intended to:
(i) Provide transparency and clarity with
respect to the Exchange’s registration,
qualification and examination
requirements; (ii) amend its rules
relating to categories of registration and
4 The relevant principal registration categories the
Exchange proposes to adopt are (1) Principal; (2)
General Securities Principal; (3) Compliance
Officer; (4) Financial and Operations Principal and
Introducing Broker-Dealer Financial and Operations
Principal; (5) Securities Trader Principal; and (6)
General Securities Sales Supervisor. The relevant
representative registration categories the Exchange
proposes to adopt are (1) Representative; (2) General
Securities Representative; and (3) Securities Trader.
PO 00000
Frm 00147
Fmt 4703
Sfmt 4703
respective qualification examinations
required for ETP Holders that engage in
trading activities on the Exchange; (iii)
harmonize the Exchange’s qualification,
registration and examination rules with
those of FINRA 5 so as to promote
uniform standards across the securities
industry; and (iv) add new definitions of
terms and make other conforming
changes to enhance the
comprehensiveness and clarity of the
Exchange’s rules.6 The proposed
changes are discussed below.
A. Amendments to Rule 2.2(c)
Rule 2.2(c)(1) currently provides,
among other things, that an ETP Holder
shall register with the Exchange as a
Principal any Person who meets the
definition of a Principal as described in
Rule 1.1 and that each such Principal
must be registered as such through the
FINRA Central Registration Depository
System (‘‘CRD’’), and must pass the
general Securities Principal (Series 24)
examination. The current rule further
provides that a Principal must pass the
Series 7 examination or an equivalent
foreign examination module as a
prerequisite to taking the Series 24
examination. The Exchange proposes to
amend the current rule to reflect the
change of the prerequisite examination
requirements for Principals registered
with the Exchange. The amended rule
provides that the Exchange would
require the Series 7 examination and the
Securities Industry Essentials
examination as a prerequisite to taking
the Series 24 examination and would no
longer accept a foreign examination
module as a prerequisite given the
elimination of the foreign examination
module in the FINRA Filing.
Rule 2.2(c)(2) currently provides,
among other things, that each ETP
Holder, other than a sole proprietorship
or a proprietary trading firm that has 25
or fewer Authorized Traders, is required
to register at least two Principals with
the Exchange. Per the rule, a sole
proprietorship or a proprietary trading
firm with 25 or fewer Authorized
Traders is required to register one
Principal with the Exchange. The
5 See Securities Exchange Act Release No. 81098
(July 7, 2017), 82 FR 32419 (July 13, 2017) (SR–
FINRA–2017–007) (Approval Order) (the ‘‘FINRA
Filing’’). The Exchange notes that in order to
maintain consistency with the FINRA Filing, the
Exchange proposes to incorporate certain terms
from the relevant FINRA rule into the Exchange’s
rule that may not be applicable to all ETP Holders.
For example, while ETP Holders may not be
engaged in ‘‘investment banking’’ activity, the
Exchange proposes to adopt that term within these
registration rules to conform them to the FINRA
rules.
6 The conforming changes the Exchange proposes
would substitute the term ‘‘ETP Holder’’ for
‘‘member’’ and the term ‘‘Exchange’’ for ‘‘FINRA.’’
E:\FR\FM\10OCN1.SGM
10OCN1
Agencies
[Federal Register Volume 83, Number 196 (Wednesday, October 10, 2018)]
[Notices]
[Pages 51027-51030]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21901]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84348; File No. SR-NYSEArca-2018-57]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Approval of Proposed Rule Change, as Modified by Amendment Nos. 4 and
6, To List and Trade Shares of the Amplify BlackSwan Growth & Treasury
Core ETF Under Commentary .02 to NYSE Arca Rule 5.2-E(j)(3)
October 3, 2018.
I. Introduction
On July 31, 2018, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
list and trade shares (``Shares'') of the Amplify BlackSwan Growth &
Treasury Core ETF (``Fund'') under Commentary .02 to NYSE Arca Rule
5.2-E(j)(3). On August 10, 2018, the Exchange filed Amendment No. 1 to
the proposed rule change, which replaced and superseded the original
filing in its entirety. The proposed rule change, as modified by
Amendment No. 1, was published for comment in the Federal Register on
August 20, 2018.\3\ On September 10, 2018, the Exchange filed Amendment
No. 2 to the proposed rule change, which replaced and superseded the
proposed rule change, as modified by Amendment No. 1, in its entirety.
On September 24, 2018, the Exchange filed Amendment No. 3 to the
proposed rule change. On September 28, 2018, the Exchange filed
Amendment No. 4 to the proposed rule change, which replaced and
superseded the proposed rule change, as modified by Amendment Nos. 1,
2, and 3, in its entirety.\4\ On October 1, 2018, the Exchange
submitted and withdrew Amendment No. 5 to the proposed rule change. On
October 1, 2018, the Exchange also filed Amendment No. 6 to the
proposed rule change.\5\ The Commission received no comments on the
proposed rule change. This order grants approval of the proposed rule
change, as modified by Amendment Nos. 4 and 6.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 83845 (August 14,
2018), 83 FR 42188 (``Notice'').
\4\ In Amendment No. 4, the Exchange: (i) Amended the
description of the Fund's sub-advisers, the Index Provider (as
defined below), and the Index Committee (as defined below); (ii)
represented that the Index Provider has implemented and will
maintain procedures designed to prevent the use and dissemination of
material non-public information regarding the Index (as defined
below); (iii) amended the name of the Index; (iv) stated that the
Exchange believes that surveillances by other exchanges on which SPY
LEAPS trade should help to protect against market manipulation of
the Fund's Shares and SPY LEAPS; (v) clarified that statements and
representations in the filing regarding the description of, or
limitations on, the Index shall constitute continued listing
requirements for listing the Shares of the Fund on the Exchange;
(vi) stated that the value of the Index will be widely disseminated
by one or more major market data vendors at least once per day;
(vii) clarified the availability of certain information on the
Fund's website; and (viii) made certain technical and conforming
changes. Amendment No. 4 to the proposed rule change is available
at: https://www.sec.gov/comments/sr-nysearca-2018-57/nysearca201857.htm. Amendment No. 4 is not subject to notice and
comment because it does not materially alter the substance of the
proposed rule change or raise unique or novel regulatory issues.
\5\ In Amendment No. 6, the Exchange: (i) Clarified that the
Index Provider is not registered as an investment adviser and is not
affiliated with an investment adviser; and (ii) made certain
technical and conforming changes. Amendment No. 6 to the proposed
rule change is available at: https://www.sec.gov/comments/sr-nysearca-2018-57/nysearca201857.htm. Amendment No. 6 is not subject
to notice and comment because it does not materially alter the
substance of the proposed rule change or raise unique or novel
regulatory issues.
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change, as Modified by Amendment
Nos. 4 and 6 6
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\6\ For more information regarding the Fund and the Shares, see
Amendment No. 4, supra note 4 and Amendment No. 6, supra note 5.
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The Exchange proposes to list and trade the Shares under Commentary
.02 to NYSE Arca Rule 5.2-E(j)(3), which governs the listing and
trading of Investment Company Units on the Exchange. The Fund will be
an index-based exchange traded fund (``ETF''). The Shares will be
offered by the Amplify ETF Trust (``Trust''), which is registered with
the Commission as an investment company and has filed a registration
statement on Form N-1A (``Registration Statement'') with the Commission
on behalf of the Fund.\7\
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\7\ The Exchange states that, on June 26, 2018, the Trust filed
a Registration Statement on Form N-1A on behalf of the Fund (File
Nos. 333-207937 and 811-23108). In addition, the Exchange states
that the Commission has issued an order granting certain exemptive
relief to the Trust under the Investment Company Act of 1940 Act.
See Investment Company Act Release No. 31822 (September 14, 2015)
(File No. 812-14424).
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Amplify Investments LLC will be the Fund's investment adviser
(``Adviser''). CSAT Investment Advisory, L.P., d/b/a Exponential ETFs
and ARGI Investment Services LLC will be the Fund's sub-advisers
(``Sub-Advisers'').\8\ U.S. Bancorp Fund Services, LLC will be the
administrator, custodian, and fund accounting and transfer agent for
the Fund. Quasar Distributors LLC will serve as the distributor for the
Fund.
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\8\ The Exchange represents that the Adviser is not registered
as a broker-dealer but is affiliated with a broker-dealer and has
implemented and will maintain a fire wall with respect to its
broker-dealer affiliate regarding access to information concerning
the composition of and/or changes to the Fund's portfolio. The
Exchange represents that the Sub-Advisers are not registered as a
broker-dealer or affiliated with a broker-dealer. The Exchange
further represents that, in the event (a) the Adviser or a Sub-
Adviser becomes registered as a broker-dealer or newly affiliated
with a broker-dealer, or (b) any new adviser or sub-adviser is a
registered broker-dealer or becomes affiliated with a broker-dealer,
it will implement and maintain a fire wall with respect to its
relevant personnel or its broker-dealer affiliate regarding access
to information concerning the composition of and/or changes to the
portfolio, and will be subject to procedures designed to prevent the
use and dissemination of material non-public information regarding
the portfolio.
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A. The Fund's Underlying Index
According to the Exchange, the Fund will seek investment results
that generally correspond (before fees and expenses) to the price and
yield of the S-Network BlackSwan Core Total Return Index (``Index'').
The Index was created and is maintained by S-Network Global Networks,
Inc. (``Index Provider'').\9\ The Index is also compiled and calculated
by the Index Provider.
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\9\ According to the Exchange, the Index Provider is not
registered as an investment adviser or broker-dealer and is not
affiliated with an investment adviser or broker-dealer. The Exchange
states that the Index Provider has implemented and will maintain
procedures designed to prevent the use and dissemination of material
non-public information regarding the Index. In addition, the
Exchange states that the Index Provider is not affiliated with the
Fund, the Adviser, or the Sub-Advisers.
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According to the Exchange, the Index is a rules-based, quantitative
index that seeks to provide capital protection against the
unpredictable, rare, and highly disruptive events that have come to be
referred to as ``Black Swans.'' The Index endeavors to provide
investment returns that correspond to those of the
[[Page 51028]]
S&P 500 Index, while mitigating against significant losses.
The Index is composed of U.S. Treasury securities and long-dated
call options (``LEAPS'') \10\ on the SPDR S&P 500 ETF Trust (``SPY'')
\11\ (which options are referred to herein as ``SPY LEAPS''). Twice a
year, in June and December, on the Index reconstitution and rebalance
date, the Index places 90% of its index market capitalization in the
portfolio of U.S. Treasury securities and 10% of its index market
capitalization in the portfolio of SPY LEAPS. The U.S. Treasury
portfolio of the Index is composed of 2-, 3-, 5-, 7-, 10-, and 30-year
U.S. Treasury securities that cumulatively provide a portfolio duration
that matches the initial duration of the 10-year U.S. Treasury
security.\12\ The SPY LEAPS portfolio of the Index is composed of in-
the-money SPY LEAPS that, at the time of purchase, have expirations of
at least one year and one day in the future and expire in either June
or December, as applicable.\13\
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\10\ LEAPS are long-term options traded on U.S. options
exchanges.
\11\ Shares of SPY are listed and traded on the Exchange.
\12\ The Exchange states that the treasury position holds 5% of
its allocated portion of Index market capitalization in a
``barbell'' portfolio of 2- and 30-year treasuries, and 95% of its
allocated portion of Index market capitalization in a core portfolio
that invests in 3-, 5-, 7-, 10-, and 30-year treasuries.
\13\ The Exchange states that the SPY LEAPS will generally have
a delta of 70 at the time of purchase, and should there not be a 70-
delta option, the closest option above 70 will be utilized. The
Exchange states that the options portion of the Index holds 5% of
the Index market capitalization in June 70-delta SPY LEAPS and 5% in
December 70-delta SPY LEAPS. At each June reconstitution, the Index
liquidates its existing June SPY LEAPS and purchases SPY LEAPS that
expire the following June. The December SPY LEAPS positions will
remain unchanged at each June reconstitution. At each December
reconstitution, the Index liquidates its existing December SPY LEAPS
and purchases SPY LEAPS that expire the following December. The June
SPY LEAPS positions will remain unchanged at each December
reconstitution. Net gains or losses derived from the reconstitutions
of the SPY LEAPS positions will be added to or subtracted from the
U.S. Treasury portfolio at each reconstitution.
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The Index is governed by a committee (``Index Committee'') that is
responsible for overseeing the activities of the Index Provider and
approving all changes to the Index related to its semi-annual
reconstitutions and rebalances. According to the Exchange, all members
of the Index Committee and their advisors must comply with the Index
Provider's code of conduct and ethics with respect to the disclosure
and use of material non-public information.
B. The Fund's Principal Investments
Under normal market conditions,\14\ the Fund will invest at least
80% of its total assets in the securities that comprise the Index,
which, as described above, are U.S. Treasury securities and SPY LEAPS.
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\14\ The term ``normal market conditions'' is as that term is
defined in NYSE Arca Rule 8.600-E(c)(5).
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C. The Fund's Non-Principal Investments
While, under normal market conditions, the Fund will invest at
least 80% of its total assets in securities that comprise the Index,
the Fund may also hold cash and cash equivalents.\15\
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\15\ The term ``cash equivalents'' has the meaning specified in
Commentary .01(c) to NYSE Arca Rule 8.600-E.
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D. Application of Generic Listing Requirements
The Exchange represents that it has submitted the proposed rule
change because the Index does not meet all of the generic listing
requirements of Commentary .02(a) to NYSE Arca Rule 5.2-E(j)(3).
Specifically, because the Index includes SPY LEAPS, the Index does not
satisfy the requirement set forth in Commentary .02(a)(1) to NYSE Arca
Rule 5.2-E(j)(3), which states that the index or portfolio underlying a
series of Investment Company Units must consist of (i) only Fixed
Income Securities \16\ or (ii) Fixed Income Securities and cash. The
Exchange represents that, with the exception of the requirement in
Commentary .02(a)(1) to NYSE Arca Rule 5.2-E(j)(3), the Index and the
Fund will meet each of the initial and continued listing criteria in
NYSE Arca Rule 5.2-E(j)(3) and NYSE Arca Rule 5.5-E(g)(2).
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\16\ Commentary .02 to NYSE Arca Rule 5.2-E(j)(3) states that
``Fixed Income Securities'' are debt securities that are notes,
bonds, debentures or evidence of indebtedness that include, but are
not limited to, U.S. Department of Treasury securities, government-
sponsored entity securities, municipal securities, trust preferred
securities, supranational debt and debt of a foreign country or a
subdivision thereof.
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III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change, as modified by Amendment Nos. 4 and 6, is consistent with the
Act and the rules and regulations thereunder applicable to a national
securities exchange.\17\ In particular, the Commission finds that the
proposed rule change, as modified by Amendment Nos. 4 and 6, is
consistent with Section 6(b)(5) of the Act,\18\ which requires, among
other things, that the Exchange's rules be designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system and,
in general, to protect investors and the public interest.
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\17\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\18\ 15 U.S.C. 78f(b)(5).
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As discussed above, the Shares do not qualify for generic listing
under Commentary .02 to NYSE Arca Rule 5.2-E(j)(3) because the Index
includes SPY LEAPS. The Commission notes that the Exchange represents
that, other than Commentary .02(a)(1) to NYSE Arca Rule 5.2-E(j)(3),
the Shares will meet the initial and continued listing criteria under
NYSE Arca Rules 5.2-E(j)(3) and 5.5-E(g)(2). The Commission also notes
that SPY LEAPS are traded on U.S. options exchanges, SPY is listed and
traded on the Exchange, and SPY is based on the S&P 500 Index.\19\
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\19\ The Exchange also notes that the S&P 500 Index would meet
the generic listing standards applicable to an index composed of
U.S. Component Stocks in Commentary .01(a) to NYSE Arca Rule 5.2-
E(j)(3).
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The Commission also finds that the proposal is consistent with
Section 11A(a)(1)(C)(iii) of the Act,\20\ which sets forth Congress's
finding that it is in the public interest and appropriate for the
protection of investors and the maintenance of fair and orderly markets
to assure the availability to brokers, dealers, and investors of
information with respect to quotations for and transactions in
securities.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------
Quotation and last sale information for the Shares will be
available via the Consolidated Tape Association high-speed line.
Information regarding market price and trading volume for 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 published daily in the financial
section of newspapers. In addition, the Intraday Indicative Value
(``IIV'') (as defined in NYSE Arca Rule 5.2-E(j)(3), Commentary .02(c))
will be widely disseminated at least every 15 seconds during the Core
Trading Session by one or more major market data vendors.\21\ The value
of the Index will be widely disseminated by one or more major market
data vendors at least once per day. Information about the Index
constituents, the weighting of the
[[Page 51029]]
constituents, the Index's methodology, and the Index's rules will be
available on the Index Provider's website. Quotation and last sale
information for SPY LEAPS will be available from the exchange on which
they are traded and through the Options Price Reporting Authority. The
intraday, closing, and settlement prices of exchange-traded options
also will be available from the options exchanges, automated quotation
systems, published or other public sources, or online information
services. Price information on U.S. Treasury securities and cash
equivalents will be available from major broker-dealer firms or market
data vendors, automated quotation systems, published or other public
sources, or online information services.
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\21\ The Exchange states that all Fund holdings will be included
in calculating the IIV.
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The Fund's website, which will be publicly available prior to the
public offering of Shares, will include a form of the prospectus for
the Fund and additional data relating to the net asset value (``NAV'')
and other applicable quantitative information. On each business day,
before commencement of trading in Shares in the Core Trading Session on
the Exchange, the Fund will disclose on its website information
regarding each portfolio holding of the Fund. In addition, a portfolio
composition file, which will include the security names and quantities
of securities and other assets required to be delivered in exchange for
the Fund's Shares, together with estimates and actual cash components,
will be publicly disseminated prior to the opening of the Exchange via
the National Securities Clearing Corporation.
The Commission also believes that the proposal is reasonably
designed to promote fair disclosure of information that may be
necessary to price the Shares appropriately and to prevent trading when
a reasonable degree of transparency cannot be assured. 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 the
Shares inadvisable. In addition, trading in the Shares will be subject
to NYSE Arca Rule 5.5-E(g)(2)(b), which sets forth circumstances under
which Shares of the Fund may and/or will be halted. The Exchange will
obtain a representation from the issuer of the Shares that the NAV will
be calculated daily every day the New York Stock Exchange is open and
that the NAV will be made available to all market participants at the
same time. Under NYSE Arca Rule 7.18-E(d)(2), if the Exchange becomes
aware that the NAV is not being disseminated to all market participants
at the same time, it will halt trading until such time as the NAV is
available to all market participants.
In support of this proposal, the Exchange represents that:
(1) The Shares will conform to the initial and continued listing
criteria under NYSE Arca Rules 5.2-E(j)(3) and 5.5(E)(g)(2), except
that the Index will not meet the requirements of NYSE Arca Rule 5.2-
E(j)(3), Commentary .02(a)(1) in that the Index will include SPY LEAPS.
(2) The Shares will comply with all other requirements applicable
to Investment Company Units, including the dissemination of key
information such as the Index value, the NAV, and the IIV, rules
governing the trading of equity securities, trading hours, trading
halts, firewalls for the Index Provider, Adviser and Sub-Advisers,
surveillance, and the Information Bulletin, as set forth in Exchange
rules applicable to Investment Company Units and the orders approving
such rules.
(3) The Shares will be subject to the existing trading
surveillances administered by the Exchange and Financial Industry
Regulatory Authority (``FINRA'') on behalf of the Exchange, which are
designed to deter and detect violations of Exchange rules and
applicable federal securities laws relating to trading on the
Exchange.\22\
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\22\ The Exchange states that FINRA conducts cross-market
surveillances on behalf of the Exchange pursuant to a regulatory
services agreement, and that the Exchange is responsible for FINRA's
performance under this regulatory services agreement.
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(4) The Exchange, or FINRA on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and SPY LEAPS
with other markets and other entities that are members of the
Intermarket Surveillance Group (``ISG''), and the Exchange, or FINRA on
behalf of the Exchange, or both, may obtain trading information
regarding trading in the Shares and SPY LEAPS from such markets and
other entities. In addition, the Exchange may obtain information
regarding trading in the Shares and SPY LEAPS from markets and other
entities that are members of ISG or with which the Exchange has in
place a comprehensive surveillance sharing agreement. Moreover, 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.
(5) Prior to the commencement of trading, the Exchange will inform
its ETP Holders in an Information Bulletin of the special
characteristics and risks associated with trading the Shares.
(6) The Fund's investments will be consistent with its investment
objective and will not be used to enhance leverage. The Fund's
investments will not be used to seek performance that is the multiple
or inverse multiple (e.g., 2x or -2x) of the Index.
(7) For initial and continued listing, the Fund will be in
compliance with Rule 10A-3 under the Act.\23\
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\23\ 17 CFR 240.10A-3.
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(8) A minimum of 100,000 Shares for the Fund will be outstanding at
the commencement of trading on the Exchange.
(9) All statements and representations made in the filing regarding
(a) the description of the Index, portfolio or reference asset, (b)
limitations on the Index or portfolio holdings or reference assets, or
(c) the applicability of Exchange listing rules specified in the rule
filing shall constitute continued listing requirements for listing the
Shares of the Fund on the Exchange. In addition, the issuer is required
to notify 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 \24\ 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).
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\24\ The Commission notes that certain proposals for the listing
and trading of exchange-traded products include a representation
that the exchange will ``surveil'' for compliance with the continued
listing requirements. See, e.g., Securities Exchange Act Release No.
77499 (April 1, 2016), 81 FR 20428, 20432 (April 7, 2016) (SR-BATS-
2016-04). In the context of this representation, it is the
Commission's view that ``monitor'' and ``surveil'' both mean ongoing
oversight of compliance with the continued listing requirements.
Therefore, the Commission does not view ``monitor'' as a more or
less stringent obligation than ``surveil'' with respect to the
continued listing requirements.
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This approval order is based on all of the Exchange's statements
and representations, including those set forth above and in Amendment
Nos. 4 and 6.
For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendment Nos. 4 and 6, is consistent with
Section 6(b)(5) of the Act \25\ and Section 11A(a)(1)(C)(iii) of the
Act \26\ and the rules and regulations thereunder applicable to a
national securities exchange.
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\25\ 15 U.S.C. 78f(b)(5).
\26\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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[[Page 51030]]
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\27\ that the proposed rule change (SR-NYSEArca-2018-57), as
modified by Amendment Nos. 4 and 6 be, and hereby is, approved.
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\27\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-21901 Filed 10-9-18; 8:45 am]
BILLING CODE 8011-01-P