Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Generic Listing Standards for Fixed Income Securities Included in the Portfolio of a Series of Managed Fund Shares, 35446-35448 [2019-15560]
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Federal Register / Vol. 84, No. 141 / Tuesday, July 23, 2019 / Notices
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CBOE–2019–035 and
should be submitted on or before
August 13, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.57
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–15561 Filed 7–22–19; 8:45 am]
BILLING CODE 8011–01–P
presentation on the work of the Office
of Minority and Women Inclusion;
subcommittee reports; and a nonpublic
administrative work session during
lunch.
CONTACT PERSON FOR MORE INFORMATION:
For further information and to ascertain
what, if any, matters have been added,
deleted or postponed; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
Dated: July 18, 2019.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2019–15674 Filed 7–19–19; 11:15 am]
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COMMISSION
BILLING CODE 8011–01–P
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SECURITIES AND EXCHANGE
COMMISSION
Notice is hereby given,
pursuant to the provisions of the
Government in Sunshine Act, Public
Law 94–409, that the Securities and
Exchange Commission Investor
Advisory Committee will hold a
meeting on Thursday, July 25, 2019 at
9:00 a.m. (ET).
PLACE: The meeting will be held in
Multi-Purpose Room LL–006 at the
Commission’s headquarters, 100 F
Street NE, Washington, DC 20549.
STATUS: This meeting will begin at 9:00
a.m. (ET) and will be open to the public.
Seating will be on a first-come, firstserved basis. Doors will open at 8:30
a.m. Visitors will be subject to security
checks. The meeting will be webcast on
the Commission’s website at
www.sec.gov.
MATTERS TO BE CONSIDERED: On July 3,
2019, the Commission issued notice of
the Committee meeting (Release No. 33–
10658), indicating that the meeting is
open to the public (except during that
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administrative work session during
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jspears on DSK30JT082PROD with NOTICES
TIME AND DATE:
[Release No. 34–86399; File No. SR–
NASDAQ–2019–054]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Generic Listing Standards for Fixed
Income Securities Included in the
Portfolio of a Series of Managed Fund
Shares
July 17, 2019.
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 July 3,
2019, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) 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 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
Nasdaq Rule 5735(b)(1)(B)(v) relating to
generic listing standards applicable to
fixed income securities included in the
portfolio of a series of Managed Fund
Shares listed on the Exchange.
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaq.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
1 15
57 17
CFR 200.30–3(a)(12).
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16:43 Jul 22, 2019
2 17
Jkt 247001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00078
Fmt 4703
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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
The Exchange proposes to amend
Nasdaq Rule 5735(b)(1), which sets forth
generic listing standards for the listing
and trading of Managed Fund Shares.3
Nasdaq Rule 5735(b)(1)(B) sets forth
generic listing standards applicable to
fixed income securities included in the
portfolio of a series of Managed Fund
Shares listed on the Exchange.4 Nasdaq
Rule 5735(b)(1)(B)(v) provides that nonagency, non-GSE and privately-issued
mortgage related and other asset-backed
securities (‘‘ABS’’ and, collectively,
‘‘non-agency ABS’’) components of a
portfolio shall not account, in the
aggregate, for more than 20% of the
weight of the fixed income portion of
the portfolio. Nasdaq proposes to amend
Nasdaq Rule 5735(b)(1)(B)(v) by deleting
the words ‘‘fixed income portion’’ to
provide that such 20% limitation would
apply to the entire portfolio rather than
to only the fixed income portion of the
3 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) (the ‘‘1940 Act’’) organized
as an open-end management 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 management
investment company that issues Index Fund Shares
that may be listed and traded on the Exchange
under Nasdaq Rule 5705(b) seeks to provide
investment results that correspond generally to the
performance of a specific foreign or domestic stock
index, fixed income securities index or combination
thereof.
4 Nasdaq Rule 5735(b)(1)(B) provides 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 (‘‘Treasury Securities’’),
government-sponsored entity securities (‘‘GSE
Securities’’), municipal securities, trust preferred
securities, supranational debt and debt of a foreign
country or a subdivision thereof, investment grade
and high yield corporate debt, bank loans, mortgage
and asset backed securities, and commercial paper.
E:\FR\FM\23JYN1.SGM
23JYN1
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Federal Register / Vol. 84, No. 141 / Tuesday, July 23, 2019 / Notices
portfolio. Thus, Nasdaq Rule
5735(b)(1)(B)(v) would provide that
non-agency, non-GSE and privatelyissued mortgage related and other ABS
components of a portfolio shall not
account, in the aggregate, for more than
20% of the weight of the portfolio.
Nasdaq believes this amendment is
appropriate because a fund’s investment
in non-agency, non-GSE and privatelyissued mortgage-related and other ABS
may provide a fund with benefits
associated with increased
diversification, as such investments may
be less correlated to interest rates than
many other fixed income securities. The
Exchange notes that application of the
20% limitation only to the fixed income
portion of a fund’s portfolio may impose
a much more restrictive percentage limit
on permitted holdings of non-agency
ABS for funds that have a more
diversified investment portfolio than for
funds that hold principally or
exclusively fixed income securities. For
example, a fund holding 100% of its
assets in fixed income securities can
hold 20% of its entire portfolio’s weight
in non-agency ABS. In contrast, a fund
holding 25% of its assets in fixed
income securities, 25% in U.S
Component Stocks, and 50% in cash
and cash equivalents is limited to a 5%
(25% * 20% = 5%) allocation to nonagency ABS. Nasdaq, therefore, believes
application of the 20% limitation to a
fund’s entire portfolio would be more
equitable for Managed Fund Shares
issuers with different investment
objectives and holdings.
The Commission has previously
approved a proposed rule change by
NYSE Arca, Inc. that is substantively
identical to the amendment to Nasdaq
Rule 5735(b)(1)(B)(v) proposed herein.5
Therefore, Nasdaq believes it is
appropriate to apply the 20% limitation
to a fund’s investment in non-agency,
non-GSE and privately-issued mortgagerelated and other ABS components of a
portfolio in Nasdaq Rule
5735(b)(1)(B)(v) to a fund’s total assets.
Non-agency ABS would otherwise
satisfy all generic listing requirements of
Nasdaq Rule 5735(b)(1)(B).
Nasdaq believes the proposed
amendments would provide issuers of
Managed Fund Shares with additional
investment choices for fund portfolios
for funds permitted to list and trade on
the Exchange pursuant to Rule 19b–4(e),
which would enhance competition
5 See Securities Exchange Act Release No. 86017
(June 3, 2019), 84 FR 26711 (June 7, 2019) (SR–
NYSEArca–2019–06) (Order Approving a Proposed
Rule Change, as Modified by Amendment No. 1, to
Amend Certain Generic Listing Standards for
Managed Fund Shares Applicable to Holdings of
Fixed Income Securities).
VerDate Sep<11>2014
16:43 Jul 22, 2019
Jkt 247001
among market participants, to the
benefit of investors and the marketplace.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,6 in general, and furthers the
objectives of Section 6(b)(5) of the Act,7
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest and
because it is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange has in place
surveillance procedures that are
adequate to properly monitor trading in
Managed Fund Shares in all trading
sessions and to deter and detect
violations of Exchange rules and
applicable federal securities laws. The
Exchange notes that Nasdaq or FINRA,
on behalf of Nasdaq, or both, would
communicate as needed regarding
trading in Managed Fund Shares with
other markets and other entities that are
members of the Intermarket
Surveillance Group (‘‘ISG’’), and Nasdaq
or FINRA, on behalf of Nasdaq, or both,
could obtain trading information
regarding trading in Managed Fund
Shares from such markets and other
entities. In addition, Nasdaq could
obtain information regarding trading in
Managed Fund Shares from markets and
other entities that are members of ISG or
with which Nasdaq has in place a
comprehensive surveillance sharing
agreement.
Nasdaq believes that the proposed
amendment to Nasdaq Rule
5735(b)(1)(B)(v) is appropriate because a
fund’s investment in non-agency, nonGSE and privately-issued mortgagerelated and other ABS may provide a
fund with benefits associated with
increased diversification, as such
investments may be less correlated to
interest rates than many other fixed
income securities. As noted above,
application of the 20% limitation to
only the fixed income portion of a
fund’s portfolio may impose a much
lower percentage limit on permitted
holdings of non-agency ABS for funds
that have a more diversified investment
PO 00000
6 15
7 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00079
Fmt 4703
portfolio than for funds that hold
principally or exclusively fixed income
securities. Nasdaq, therefore, believes
application of the 20% limitation to a
fund’s entire portfolio would be more
equitable for issuers of Managed Fund
Shares with different investment
objectives and holdings.
The Exchange notes that the
Commission has previously approved a
rule change by NYSE Arca, Inc. that is
substantively identical to the
amendment to Nasdaq Rule
5735(b)(1)(B)(v) proposed herein.8
Therefore, Nasdaq believes it is
appropriate to apply the 20% limitation
to a fund’s investment in non-agency,
non-GSE and privately-issued mortgagerelated and other ABS components of a
portfolio in Nasdaq Rule
5735(b)(1)(B)(v) to a fund’s total assets.
Non-agency ABS would otherwise
satisfy all generic listing requirements of
Nasdaq Rule 5735(b)(1)(B).
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 additional types of Managed Fund
Shares that will enhance competition
among market participants, to the
benefit of investors and the marketplace.
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 not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change would permit
Exchange listing and trading under 19b–
4(e) of additional types of Managed
Fund Shares, which would 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 either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
8 See
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35447
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supra note 5.
23JYN1
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Federal Register / Vol. 84, No. 141 / Tuesday, July 23, 2019 / Notices
become effective pursuant to Section
19(b)(3)(A) of the Act 9 and Rule 19b–
4(f)(6) thereunder.10
A proposed rule change filed under
Rule 19b–4(f)(6) 11 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),12 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative delay. The Exchange states its
belief that the proposed rule change
does not raise any novel regulatory
issues, noting that the Commission
approved a substantively identical
proposed rule change by NYSE Arca,
Inc.13 For this reason, the Commission
believes that waiving the 30-day
operative delay is consistent with the
protection of investors and the public
interest. Accordingly, the Commission
waives the 30-day operative delay and
designates the proposed rule change
operative upon filing.14
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
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:
9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
11 17 CFR 240.19b–4(f)(6).
12 17 CFR 240.19b–4(f)(6)(iii).
13 See supra note 5.
14 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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10 17
VerDate Sep<11>2014
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Jkt 247001
Electronic Comments
SMALL BUSINESS ADMINISTRATION
• 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–
NASDAQ–2019–054 on the subject line.
[Disaster Declaration #16041 and #16042;
OKLAHOMA Disaster Number OK–00132]
Presidential Declaration of a Major
Disaster for Public Assistance Only for
the State of Oklahoma
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
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–NASDAQ–2019–054. 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 website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website 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–NASDAQ–2019–054 and
should be submitted on or before
August 13, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Jill M. Peterson,
Assistant Secretary.
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Oklahoma (FEMA–4438–
DR), dated 07/16/2019.
Incident: Severe Storms, Straight-line
Winds, Tornadoes, and Flooding.
Incident Period: 05/07/2019 through
06/09/2019.
DATES: Issued on 07/16/2019.
Physical Loan Application Deadline
Date: 09/16/2019.
Economic Injury (EIDL) Loan
Application Deadline Date: 04/16/2020.
ADDRESSES: Submit completed loan
applications to: U.S Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW, Suite 6050,
Washington, DC 20416, (202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
President’s major disaster declaration on
07/16/2019, Private Non-Profit
organizations that provide essential
services of a governmental nature may
file disaster loan applications at the
address listed above or other locally
announced locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties: Adair, Alfalfa,
Beaver, Beckham, Blaine, Canadian,
Cherokee, Craig, Creek, Custer,
Delaware, Dewey, Ellis, Garfield,
Grady, Grant, Greer, Harper,
Jackson, Kingfisher, Le Flore,
Lincoln, Logan, Mayes, Muskogee,
Nowata, Okfuskee, Osage, Pawnee,
Payne, Pittsburg, Pottawatomie,
Pushmataha, Roger Mills, Rogers,
Sequoyah, Tulsa, Wagoner,
Washington, Washita, Woods.
The Interest Rates are:
SUMMARY:
[FR Doc. 2019–15560 Filed 7–22–19; 8:45 am]
BILLING CODE 8011–01–P
PO 00000
15 17
CFR 200.30–3(a)(12).
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Percent
For Physical Damage:
Non-Profit Organizations with
Credit Available Elsewhere ...
E:\FR\FM\23JYN1.SGM
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2.750
]]>Agencies
[Federal Register Volume 84, Number 141 (Tuesday, July 23, 2019)]
[Notices]
[Pages 35446-35448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15560]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86399; File No. SR-NASDAQ-2019-054]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Generic Listing Standards for Fixed Income Securities
Included in the Portfolio of a Series of Managed Fund Shares
July 17, 2019.
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 July 3, 2019, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') 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 Exchange. 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\ 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 amend Nasdaq Rule 5735(b)(1)(B)(v)
relating to generic listing standards applicable to fixed income
securities included in the portfolio of a series of Managed Fund Shares
listed on the Exchange.
The text of the proposed rule change is available on the Exchange's
website at https://nasdaq.cchwallstreet.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 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
The Exchange proposes to amend Nasdaq Rule 5735(b)(1), which sets
forth generic listing standards for the listing and trading of Managed
Fund Shares.\3\ Nasdaq Rule 5735(b)(1)(B) sets forth generic listing
standards applicable to fixed income securities included in the
portfolio of a series of Managed Fund Shares listed on the Exchange.\4\
Nasdaq Rule 5735(b)(1)(B)(v) provides that non-agency, non-GSE and
privately-issued mortgage related and other asset-backed securities
(``ABS'' and, collectively, ``non-agency ABS'') components of a
portfolio shall not account, in the aggregate, for more than 20% of the
weight of the fixed income portion of the portfolio. Nasdaq proposes to
amend Nasdaq Rule 5735(b)(1)(B)(v) by deleting the words ``fixed income
portion'' to provide that such 20% limitation would apply to the entire
portfolio rather than to only the fixed income portion of the
[[Page 35447]]
portfolio. Thus, Nasdaq Rule 5735(b)(1)(B)(v) would provide that non-
agency, non-GSE and privately-issued mortgage related and other ABS
components of a portfolio shall not account, in the aggregate, for more
than 20% of the weight of the portfolio.
---------------------------------------------------------------------------
\3\ 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) (the ``1940 Act'') organized
as an open-end management 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 management investment company that issues
Index Fund Shares that may be listed and traded on the Exchange
under Nasdaq Rule 5705(b) seeks to provide investment results that
correspond generally to the performance of a specific foreign or
domestic stock index, fixed income securities index or combination
thereof.
\4\ Nasdaq Rule 5735(b)(1)(B) provides 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 (``Treasury Securities''),
government-sponsored entity securities (``GSE Securities''),
municipal securities, trust preferred securities, supranational debt
and debt of a foreign country or a subdivision thereof, investment
grade and high yield corporate debt, bank loans, mortgage and asset
backed securities, and commercial paper.
---------------------------------------------------------------------------
Nasdaq believes this amendment is appropriate because a fund's
investment in non-agency, non-GSE and privately-issued mortgage-related
and other ABS may provide a fund with benefits associated with
increased diversification, as such investments may be less correlated
to interest rates than many other fixed income securities. The Exchange
notes that application of the 20% limitation only to the fixed income
portion of a fund's portfolio may impose a much more restrictive
percentage limit on permitted holdings of non-agency ABS for funds that
have a more diversified investment portfolio than for funds that hold
principally or exclusively fixed income securities. For example, a fund
holding 100% of its assets in fixed income securities can hold 20% of
its entire portfolio's weight in non-agency ABS. In contrast, a fund
holding 25% of its assets in fixed income securities, 25% in U.S
Component Stocks, and 50% in cash and cash equivalents is limited to a
5% (25% * 20% = 5%) allocation to non-agency ABS. Nasdaq, therefore,
believes application of the 20% limitation to a fund's entire portfolio
would be more equitable for Managed Fund Shares issuers with different
investment objectives and holdings.
The Commission has previously approved a proposed rule change by
NYSE Arca, Inc. that is substantively identical to the amendment to
Nasdaq Rule 5735(b)(1)(B)(v) proposed herein.\5\ Therefore, Nasdaq
believes it is appropriate to apply the 20% limitation to a fund's
investment in non-agency, non-GSE and privately-issued mortgage-related
and other ABS components of a portfolio in Nasdaq Rule 5735(b)(1)(B)(v)
to a fund's total assets. Non-agency ABS would otherwise satisfy all
generic listing requirements of Nasdaq Rule 5735(b)(1)(B).
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 86017 (June 3,
2019), 84 FR 26711 (June 7, 2019) (SR-NYSEArca-2019-06) (Order
Approving a Proposed Rule Change, as Modified by Amendment No. 1, to
Amend Certain Generic Listing Standards for Managed Fund Shares
Applicable to Holdings of Fixed Income Securities).
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Nasdaq believes the proposed amendments would provide issuers of
Managed Fund Shares with additional investment choices for fund
portfolios for funds permitted to list and trade on the Exchange
pursuant to Rule 19b-4(e), which would enhance competition among market
participants, to the benefit of investors and the marketplace.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\7\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general to
protect investors and the public interest and because it is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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The Exchange has in place surveillance procedures that are adequate
to properly monitor trading in Managed Fund Shares in all trading
sessions and to deter and detect violations of Exchange rules and
applicable federal securities laws. The Exchange notes that Nasdaq or
FINRA, on behalf of Nasdaq, or both, would communicate as needed
regarding trading in Managed Fund Shares with other markets and other
entities that are members of the Intermarket Surveillance Group
(``ISG''), and Nasdaq or FINRA, on behalf of Nasdaq, or both, could
obtain trading information regarding trading in Managed Fund Shares
from such markets and other entities. In addition, Nasdaq could obtain
information regarding trading in Managed Fund Shares from markets and
other entities that are members of ISG or with which Nasdaq has in
place a comprehensive surveillance sharing agreement.
Nasdaq believes that the proposed amendment to Nasdaq Rule
5735(b)(1)(B)(v) is appropriate because a fund's investment in non-
agency, non-GSE and privately-issued mortgage-related and other ABS may
provide a fund with benefits associated with increased diversification,
as such investments may be less correlated to interest rates than many
other fixed income securities. As noted above, application of the 20%
limitation to only the fixed income portion of a fund's portfolio may
impose a much lower percentage limit on permitted holdings of non-
agency ABS for funds that have a more diversified investment portfolio
than for funds that hold principally or exclusively fixed income
securities. Nasdaq, therefore, believes application of the 20%
limitation to a fund's entire portfolio would be more equitable for
issuers of Managed Fund Shares with different investment objectives and
holdings.
The Exchange notes that the Commission has previously approved a
rule change by NYSE Arca, Inc. that is substantively identical to the
amendment to Nasdaq Rule 5735(b)(1)(B)(v) proposed herein.\8\
Therefore, Nasdaq believes it is appropriate to apply the 20%
limitation to a fund's investment in non-agency, non-GSE and privately-
issued mortgage-related and other ABS components of a portfolio in
Nasdaq Rule 5735(b)(1)(B)(v) to a fund's total assets. Non-agency ABS
would otherwise satisfy all generic listing requirements of Nasdaq Rule
5735(b)(1)(B).
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\8\ See supra note 5.
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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
additional types of Managed Fund Shares that will enhance competition
among market participants, to the benefit of investors and the
marketplace.
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 not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change would
permit Exchange listing and trading under 19b-4(e) of additional types
of Managed Fund Shares, which would 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 either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has
[[Page 35448]]
become effective pursuant to Section 19(b)(3)(A) of the Act \9\ and
Rule 19b-4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay. The
Exchange states its belief that the proposed rule change does not raise
any novel regulatory issues, noting that the Commission approved a
substantively identical proposed rule change by NYSE Arca, Inc.\13\ For
this reason, the Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest. Accordingly, the Commission waives the 30-day operative delay
and designates the proposed rule change operative upon filing.\14\
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ See supra note 5.
\14\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
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-NASDAQ-2019-054 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-NASDAQ-2019-054. 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 website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website 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-NASDAQ-2019-054 and should be submitted
on or before August 13, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-15560 Filed 7-22-19; 8:45 am]
BILLING CODE 8011-01-P
