Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Supplementary Material .01(b)(5) to NYSE American Rule 8.600E Relating to Generic Listing Standards for Managed Fund Shares, 43640-43642 [2019-17985]
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Federal Register / Vol. 84, No. 162 / Wednesday, August 21, 2019 / Notices
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 rule-comments@
sec.gov. Please include File Number SR–
NYSE–2019–35 on the subject line.
Paper Comments
jspears on DSK3GMQ082PROD with NOTICES
• 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–NYSE–2019–35. 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–NYSE–2019–35 and should
VerDate Sep<11>2014
18:13 Aug 20, 2019
Jkt 247001
be submitted on or before September 11,
2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–17986 Filed 8–20–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86688; File No. SR–
NYSEAMER–2019–24]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend
Supplementary Material .01(b)(5) to
NYSE American Rule 8.600E Relating
to Generic Listing Standards for
Managed Fund Shares
August 15, 2019.
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 August 1,
2019, NYSE American LLC (‘‘NYSE
American’’ or the ‘‘Exchange’’) 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 to amend
Supplementary Material .01(b)(5) to
NYSE American Rule 8.600E relating to
generic listing standards for Managed
Fund Shares applicable to holdings in
fixed income securities. 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,
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00062
Fmt 4703
Sfmt 4703
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
Supplementary Material .01 to NYSE
American Rule 8.600E sets forth generic
listing standards for Managed Fund
Shares on the Exchange.4 The Exchange
proposes to amend Supplementary
Material .01(b)(5) to Rule 8.600E, as
described below. 5
Proposed Amendment to
Supplementary Material .01(b)(5) to
Rule 8.600E
Supplementary Material .01(b) to
NYSE American Rule 8.600E sets forth
generic listing standards applicable to
fixed income securities included in the
portfolio of a series of Managed Fund
Shares.6 Supplementary Material
.01(b)(5) provides that non-agency, non4 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 Investment
Company Units that may be traded on the Exchange
under NYSE American Rule 5.2E (j)(3) seeks to
provide investment results that correspond
generally to the price and yield performance of a
specific foreign or domestic stock index, fixed
income securities index or combination thereof.
5 Managed Fund Shares are currently traded on
the Exchange pursuant to UTP and are not listed on
the Exchange. NYSE American Rule 8E provides
that the rule shall apply to the trading pursuant to
UTP of Exchange Traded Products (which include
Managed Fund Shares) on the Exchange and shall
not apply to the Exchange listing of Exchange
Traded Products. Therefore, this proposed rule
change would only apply to Exchange-listed
Managed Fund Shares in the event the Exchange
determines to list such securities in the future. The
Exchange will not list Managed Fund Shares prior
to approval or effectiveness of an Exchange
proposed rule change to amend Rule 8E to permit
such listings.
6 Supplementary Material .01(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\21AUN1.SGM
21AUN1
jspears on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 84, No. 162 / Wednesday, August 21, 2019 / Notices
GSE and privately-issued mortgagerelated 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. The
Exchange proposes to amend
Supplementary Material .01(b)(5) 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 portfolio. Thus,
Supplementary Material .01(b)(5) 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.
The Exchange believes this
amendment 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. 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. The
Exchange, 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 NYSE
American Rule 8.600E, Supplementary
Material .01(b)(5) proposed herein.7
Therefore, the Exchange believes it is
7 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
18:13 Aug 20, 2019
Jkt 247001
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 Supplementary Material
.01(b)(5) to a fund’s total assets. Nonagency ABS would otherwise satisfy all
generic listing requirements of Rule
8.600E, Supplementary Material .01(b).
The Exchange believes the proposed
amendments would provide issuers of
Managed Fund Shares with additional
investment choices for fund portfolios
for issues 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.8
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,9 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,10 in particular, because it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to, and perfect the
mechanisms of, a free and open market
and a national market system and, in
general, to protect investors and the
public interest and because it is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange has in place
surveillance procedures that are
adequate to properly monitor trading in
series of 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 the Exchange or
Financial Industry Regulatory Authority
(‘‘FINRA’’), on behalf of the Exchange,
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, and the
Exchange or FINRA, on behalf of the
Exchange, or both, could obtain trading
information regarding trading in
Managed Fund Shares from such
markets and other entities. In addition,
the Exchange could obtain information
regarding trading in Managed Fund
Shares from markets and other entities
note 5, supra.
U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
that are members of ISG or with which
the Exchange has in place a
comprehensive surveillance sharing
agreement.
With respect to the proposed
amendment to Supplementary Material
.01(b)(5), the Exchange believes this
amendment 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
portfolio than for funds that hold
principally or exclusively fixed income
securities. The Exchange, 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 Exchange notes that the
Commission has previously approved a
proposed rule change by NYSE Arca,
Inc. that is substantively identical to the
amendment to NYSE American Rule
8.600E, Supplementary Material
.01(b)(5) proposed herein.11 Therefore,
the Exchange 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
Supplementary Material .01(b)(5) to a
fund’s total assets. Non-agency ABS
would otherwise satisfy all generic
listing requirements of Rule 8.600E,
Supplementary Material .01(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.12
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,13 the Exchange believes that the
proposed rule change would not impose
any burden on competition that is not
necessary or appropriate in furtherance
8 See
11 See
9 15
12 See
PO 00000
Frm 00063
Fmt 4703
note 7, supra.
note 5, supra.
13 15 U.S.C. 78f(b)(8).
Sfmt 4703
43641
E:\FR\FM\21AUN1.SGM
21AUN1
43642
Federal Register / Vol. 84, No. 162 / Wednesday, August 21, 2019 / Notices
of the purposes of the Act. The
proposed rule change 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.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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 prior to 30 days from the date
on which it was filed, or such shorter
time as the Commission may designate,
it has become effective pursuant to
Section 19(b)(3)(A) of the Act 14 and
Rule 19b–4(f)(6) thereunder.15
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 rule-comments@
sec.gov. Please include File Number SR–
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–NYSEAMER–2019–24. 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–NYSEAMER–2019–24 and
should be submitted on or before
September 11, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–17985 Filed 8–20–19; 8:45 am]
BILLING CODE 8011–01–P
14 15
jspears on DSK3GMQ082PROD with NOTICES
U.S.C. 78s(b)(3)(A).
15 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.
NYSEAMER–2019–24 on the subject
line.
VerDate Sep<11>2014
18:13 Aug 20, 2019
Jkt 247001
16 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00064
Fmt 4703
Sfmt 4703
DEPARTMENT OF STATE
[Public Notice: 10859]
Notice of Receipt of Request From the
Government of the Kingdom of
Morocco Under Article 9 of the 1970
UNESCO Convention on the Means of
Prohibiting and Preventing the Illicit
Import, Export and Transfer of
Ownership of Cultural Property
Notice of receipt of request
from Morocco for cultural property
protection.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
Catherine Foster, Cultural Heritage
Center, Bureau of Educational and
Cultural Affairs: 202–632–6301;
culprop@state.gov.
SUPPLEMENTARY INFORMATION: The
Government of the Kingdom of Morocco
has made a request to the Government
of the United States under Article 9 of
the 1970 UNESCO Convention on the
Means of Prohibiting and Preventing the
Illicit Import, Export and Transfer of
Ownership of Cultural Property. The
United States Department of State
received this request on June 12, 2019.
Morocco’s request seeks U.S. import
restrictions on archaeological and
ethnological material representing
Morocco’s cultural patrimony. Pursuant
to the authority vested in the Assistant
Secretary of State for Educational and
Cultural Affairs, and pursuant to 19
U.S.C. 2602(f)(1), notification of the
request is hereby published. A public
summary of Morocco’s request and
information about U.S. implementation
of the 1970 UNESCO Convention will be
available at the Cultural Heritage Center
website: https://
culturalheritage.state.gov.
Marie Therese Porter Royce,
Assistant Secretary, Bureau of Educational
and Cultural Affairs, U.S. Department of
State.
[FR Doc. 2019–18049 Filed 8–20–19; 8:45 am]
BILLING CODE 4710–05–P
SURFACE TRANSPORTATION BOARD
[Docket No. FD 36300]
Leavenworth, Lawrence and Galveston
Railroad d/b/a Baldwin City & Southern
Railroad Company—Operation
Exemption—Midland Railway
Company
Leavenworth, Lawrence and
Galveston Railroad d/b/a Baldwin City
& Southern Railroad Company
(Leavenworth), a noncarrier, has filed a
verified notice of exemption under 49
CFR 1150.31 to operate approximately
E:\FR\FM\21AUN1.SGM
21AUN1
]]>Agencies
[Federal Register Volume 84, Number 162 (Wednesday, August 21, 2019)]
[Notices]
[Pages 43640-43642]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-17985]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86688; File No. SR-NYSEAMER-2019-24]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Supplementary Material .01(b)(5) to NYSE American Rule 8.600E Relating
to Generic Listing Standards for Managed Fund Shares
August 15, 2019.
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 August 1, 2019, NYSE American LLC (``NYSE American'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Supplementary Material .01(b)(5) to
NYSE American Rule 8.600E relating to generic listing standards for
Managed Fund Shares applicable to holdings in fixed income securities.
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
Supplementary Material .01 to NYSE American Rule 8.600E sets forth
generic listing standards for Managed Fund Shares on the Exchange.\4\
The Exchange proposes to amend Supplementary Material .01(b)(5) to Rule
8.600E, as described below. \5\
---------------------------------------------------------------------------
\4\ A Managed Fund Share is a security that represents an
interest in an investment company registered under the Investment
Company Act of 1940 (15 U.S.C. 80a-1) (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
Investment Company Units that may be traded on the Exchange under
NYSE American Rule 5.2E (j)(3) seeks to provide investment results
that correspond generally to the price and yield performance of a
specific foreign or domestic stock index, fixed income securities
index or combination thereof.
\5\ Managed Fund Shares are currently traded on the Exchange
pursuant to UTP and are not listed on the Exchange. NYSE American
Rule 8E provides that the rule shall apply to the trading pursuant
to UTP of Exchange Traded Products (which include Managed Fund
Shares) on the Exchange and shall not apply to the Exchange listing
of Exchange Traded Products. Therefore, this proposed rule change
would only apply to Exchange-listed Managed Fund Shares in the event
the Exchange determines to list such securities in the future. The
Exchange will not list Managed Fund Shares prior to approval or
effectiveness of an Exchange proposed rule change to amend Rule 8E
to permit such listings.
---------------------------------------------------------------------------
Proposed Amendment to Supplementary Material .01(b)(5) to Rule 8.600E
Supplementary Material .01(b) to NYSE American Rule 8.600E sets
forth generic listing standards applicable to fixed income securities
included in the portfolio of a series of Managed Fund Shares.\6\
Supplementary Material .01(b)(5) provides that non-agency, non-
[[Page 43641]]
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. The
Exchange proposes to amend Supplementary Material .01(b)(5) 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 portfolio. Thus, Supplementary Material .01(b)(5)
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.
---------------------------------------------------------------------------
\6\ Supplementary Material .01(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.
---------------------------------------------------------------------------
The Exchange 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. The Exchange,
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
NYSE American Rule 8.600E, Supplementary Material .01(b)(5) proposed
herein.\7\ Therefore, the Exchange 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 Supplementary Material .01(b)(5) to a fund's total assets.
Non-agency ABS would otherwise satisfy all generic listing requirements
of Rule 8.600E, Supplementary Material .01(b).
---------------------------------------------------------------------------
\7\ 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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The Exchange believes the proposed amendments would provide issuers
of Managed Fund Shares with additional investment choices for fund
portfolios for issues 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.\8\
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\8\ See note 5, supra.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\10\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to, and
perfect the mechanisms of, a free and open market and a national market
system and, in general, to protect investors and the public interest
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 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 series of 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 the
Exchange or Financial Industry Regulatory Authority (``FINRA''), on
behalf of the Exchange, 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, and the
Exchange or FINRA, on behalf of the Exchange, or both, could obtain
trading information regarding trading in Managed Fund Shares from such
markets and other entities. In addition, the Exchange could obtain
information regarding trading in Managed Fund Shares from markets and
other entities that are members of ISG or with which the Exchange has
in place a comprehensive surveillance sharing agreement.
With respect to the proposed amendment to Supplementary Material
.01(b)(5), the Exchange 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. 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. The Exchange,
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 Exchange notes that the Commission has previously approved a
proposed rule change by NYSE Arca, Inc. that is substantively identical
to the amendment to NYSE American Rule 8.600E, Supplementary Material
.01(b)(5) proposed herein.\11\ Therefore, the Exchange 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 Supplementary Material .01(b)(5) to a
fund's total assets. Non-agency ABS would otherwise satisfy all generic
listing requirements of Rule 8.600E, Supplementary Material .01(b).
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\11\ See note 7, supra.
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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.\12\
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\12\ See note 5, supra.
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B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\13\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance
[[Page 43642]]
of the purposes of the Act. The proposed rule change 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.
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\13\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 prior to 30 days from the date on which it was filed,
or such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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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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-NYSEAMER-2019-24 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-NYSEAMER-2019-24. 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-NYSEAMER-2019-24 and should be submitted
on or before September 11, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-17985 Filed 8-20-19; 8:45 am]
BILLING CODE 8011-01-P
