Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, Regarding Changes to Investments of the First Trust TCW Unconstrained Plus Bond ETF, 45816-45819 [2019-18750]

Download as PDF 45816 Federal Register / Vol. 84, No. 169 / Friday, August 30, 2019 / Notices 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– CBOE–2019–047 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–CBOE–2019–047. 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–CBOE–2019–047 and should be submitted on or before September 20, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–18752 Filed 8–29–19; 8:45 am] BILLING CODE 8011–01–P 21 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:43 Aug 29, 2019 Jkt 247001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–86760; File No. SR– NYSEArca–2019–33] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, Regarding Changes to Investments of the First Trust TCW Unconstrained Plus Bond ETF August 26, 2019. On May 6, 2019, 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 modify investments of the First Trust TCW Unconstrained Plus Bond ETF, the shares of which are currently listed and traded on the Exchange pursuant to NYSE Arca Rule 8.600–E. On May 16, 2019, the Exchange filed Amendment No. 1 to the proposed rule change. The proposed rule change, as modified by Amendment No. 1, was published for comment in the Federal Register on May 28, 2019.3 On July 3, 2019, pursuant to Section 19(b)(2) of the Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change.5 The Commission has received no comment letters on the proposal. The Commission is publishing this order to institute proceedings under Section 19(b)(2)(B) of the Act 6 to determine whether to approve or disapprove the proposed rule change. I. Description of the Proposal 7 The Exchange proposes to make certain changes to the investments of 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 85903 (May 21, 2019), 84 FR 24576 (‘‘Notice’’). 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 86299, 84 FR 32804 (July 9, 2019). The Commission designated August 26, 2019, as the date by which it should approve, disapprove, or institute proceedings to determine whether to approve or disapprove the proposed rule change. 6 15 U.S.C. 78s(b)(2)(B). 7 The Commission notes that additional information regarding, among other things, the Shares, Fund, investment objective, permitted investments, investment strategies and methodology, investment restrictions, investment adviser and sub-adviser, creation and redemption procedures, availability of information, trading rules and halts, and surveillance procedures, can be 2 17 PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 the First Trust TCW Unconstrained Plus Bond ETF (‘‘Fund’’), the shares (‘‘Shares’’) of which are currently listed and traded on the Exchange under NYSE Arca Rule 8.600–E, which governs the listing and trading of Managed Fund Shares on the Exchange. According to the Exchange, the Shares of the Fund commenced trading on the Exchange on June 5, 2018 pursuant to the generic listing standards in Commentary .01 to NYSE Arca Rule 8.600–E. The Shares are offered by First Trust Exchange-Traded Fund VIII (‘‘Trust’’), which is registered with the Commission as an open-end management investment company.8 The Fund is a series of the Trust. First Trust Advisors L.P. is the investment adviser (‘‘Adviser’’) to the Fund. TCW Investment Management Company LLC (‘‘TCW’’ or ‘‘Sub-Adviser’’), serves as the Fund’s investment sub-adviser.9 First Trust Portfolios L.P. is the distributor for the Fund’s Shares. The Bank of New York Mellon acts as the administrator, custodian, and transfer agent for the Fund. A. Principal Investments of the Fund According to the Exchange, the investment objective of the Fund is to seek to maximize long-term total return. Under normal market conditions,10 the found in the Notice (see supra note 3) and the Registration Statement (see infra note 8), as applicable. 8 The Exchange represents that the Trust is registered under the Investment Company Act of 1940 (‘‘1940 Act’’). On May 29, 2018, the Trust filed with the Commission its registration statement (‘‘Registration Statement’’) on Form N–1A under the Securities Act of 1933 and under the 1940 Act relating to the Fund (File Nos. 333–210186 and 811–23147). In addition, the Exchange represents that the Trust has obtained an order from the Commission granting certain exemptive relief under the 1940 Act. See Investment Company Act Release No. 30029 (April 10, 2012) (File No. 812–13795). 9 According to the Exchange, the Adviser and Sub-Adviser are not registered as broker-dealers. The Adviser is affiliated with First Trust Portfolios L.P., 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 portfolio. The Sub-Adviser is affiliated with multiple brokerdealers and has implemented and will maintain a fire wall with respect to its broker-dealer affiliates regarding access to information concerning the composition of, and/or changes to, the portfolio. In the event (a) the Adviser or the 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 relevant personnel and any 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, nonpublic information regarding such portfolio. 10 The term ‘‘normal market conditions’’ is defined in NYSE Arca Rule 8.600–E(c)(5). On a E:\FR\FM\30AUN1.SGM 30AUN1 Federal Register / Vol. 84, No. 169 / Friday, August 30, 2019 / Notices jspears on DSK3GMQ082PROD with NOTICES Fund intends to invest at least 80% of its net assets (including investment borrowings) in a portfolio of ‘‘Fixed Income Securities’’. In managing the Fund’s portfolio, TCW intends to employ a flexible approach that allocates the Fund’s investments across a range of global investment opportunities and actively manage exposure to interest rates, credit sectors, and currencies. TCW seeks to utilize independent, bottom-up research to identify securities that are undervalued and that offer a superior risk/return profile. Pursuant to this investment strategy, the Fund may invest in the following Fixed Income Securities, which may be represented by derivatives relating to such securities, as discussed below: • Securities issued or guaranteed by the U.S. government or its agencies, instrumentalities, or U.S. governmentsponsored entities (‘‘U.S. government securities’’); • Treasury Inflation Protected Securities (‘‘TIPS’’); • the following non-agency, nongovernment-sponsored entity (‘‘GSE’’), and privately-issued mortgage-related and other asset-backed securities: Residential mortgage-backed securities (‘‘RMBS’’), commercial mortgage-backed securities (‘‘CMBS’’), asset-backed securities (‘‘ABS’’), and collateralized loan obligations (‘‘CLOs’’ and, together with such RMBS, CMBS, and ABS, collectively, ‘‘Private ABS/MBS’’); 11 • Agency RMBS, agency CMBS, and agency ABS; • domestic corporate bonds; • Fixed Income Securities issued by non-U.S. corporations and non-U.S. governments; • bank loans, including first lien senior secured floating rate bank loans (‘‘Senior Loans’’), secured and unsecured loans, second lien or more junior loans, and bridge loans; temporary basis, including for defensive purposes, during the initial invest-up period (i.e., the six-week period following the commencement of trading of Shares on the Exchange) and during periods of high cash inflows or outflows (i.e., rolling periods of seven calendar days during which inflows or outflows of cash, in the aggregate, exceed 10% of the Fund’s net assets as of the opening of business on the first day of such periods), the Fund may depart from its principal investment strategies; for example, it may hold a higher than normal proportion of its assets in cash. During such periods, the Fund may not be able to achieve its investment objective. The Fund may adopt a defensive strategy when the Adviser and/or the Sub-Adviser believes securities in which the Fund normally invests have elevated risks due to market, political or economic factors and in other extraordinary circumstances. 11 In the Notice, the Exchange states that ‘‘Private ABS/MBS’’ are non-agency, non-GSE, and privately-issued mortgage-related and other assetbacked securities as stated in Commentary .01(b)(5) to NYSE Arca Rule 8.600–E. VerDate Sep<11>2014 16:43 Aug 29, 2019 Jkt 247001 • fixed income convertible securities; • fixed income preferred securities; and • municipal bonds. In addition, the Fund may invest in agency RMBS and CMBS by investing in to-be-announced transactions. The Fund may hold cash and cash equivalents,12 as well as the following short-term instruments with maturities of three months or more: Certificates of deposit; bankers’ acceptances; repurchase agreements and reverse repurchase agreements; bank time deposits; and commercial paper. The Fund also may enter into short sales of any securities in which the Fund may invest. The Fund may utilize exchange-listed and over-the-counter (‘‘OTC’’) traded derivatives instruments for duration/ yield curve management and/or hedging purposes, for risk management purposes, or as part of its investment strategies. The Fund will use derivative instruments primarily to hedge interest rate risk, actively manage interest rate exposure, hedge foreign currency risk, and actively manage foreign currency exposure. The Fund may also use derivative instruments to enhance returns, as a substitute for, or to gain exposure to, a position in an underlying asset, to reduce transaction costs, to maintain full market exposure, to manage cash flows, or to preserve capital. Derivatives may also be used to hedge risks associated with the Fund’s other portfolio investments. The Fund will not use derivative instruments to gain exposure to Private ABS/MBS, and derivative instruments linked to such securities will be used for hedging purposes only. Derivatives that the Fund may enter into are the following: Futures on interest rates, currencies, Fixed Income Securities, and fixed income indices; exchange-traded and OTC options on interest rates, currencies, Fixed Income Securities, and fixed income indices; swap agreements on interest rates, currencies, Fixed Income Securities, and fixed income indices; credit default swaps; and currency forward contracts. B. Other Investments of the Fund While the Fund, under normal market conditions, invests at least 80% of its net assets in the Principal Investments described above, the Fund may invest its remaining assets in the following ‘‘Non-Principal Investments.’’ The Fund may invest in exchangetraded common stock, exchange-traded 12 According to the Exchange, cash equivalents are the short-term instruments with maturities of less than 3 months enumerated in Commentary .01(c) to NYSE Arca Rule 8.600–E. PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 45817 preferred stock, exchange-traded real estate investment trusts (‘‘REITs’’), and securities of other investment companies registered under the 1940 Act, including money market funds, exchange-traded funds (‘‘ETFs’’), openend funds (other than money market funds and other ETFs), and U.S. exchange-traded closed-end funds.13 In addition, the Fund may hold exchangetraded notes (‘‘ETNs’’),14 exchangetraded or OTC ‘‘Work Out Securities,’’ 15 and exchange-traded or OTC equity securities issued upon conversion of fixed income convertible securities. C. Investment Restrictions of the Fund 16 As stated in the Notice, the Fund proposes to not invest more than 2% of its total assets in any one Fixed Income Security (excluding U.S. government securities and TIPS) on a per CUSIP basis. The Fund’s holdings in derivative instruments for hedging purposes would be excluded from the determination of compliance with this 2% limitation. The total gross notional value of the Fund’s holdings in derivative instruments used to gain exposure to a specific asset is limited to 2% of the Fund’s total assets. Additionally, the Fund proposes to invest up to 50% of its total assets in the aggregate in Private ABS/MBS, provided that the Fund (1) may not invest more than 30% of its total assets in nonagency RMBS; (2) may not invest more than 25% of its total assets in nonagency CMBS and CLOs; and (3) may not invest more than 25% of its total assets in non-agency ABS. With respect to the Fund’s investments in up to 30% of its total assets in Private ABS/MBS that exceed the 20% of the weight of the fixed income portion of the Fund’s portfolio that may be invested in Private ABS/ 13 According to the Exchange, the term ‘‘ETFs’’ are Investment Company Units (as described in NYSE Arca Rule 5.2–E(j)(3)); Portfolio Depositary Receipts (as described in NYSE Arca Rule 8.100– E); and Managed Fund Shares (as described in NYSE Arca Rule 8.600–E). All ETFs will be listed and traded in the U.S. on a national securities exchange. While the Fund may invest in inverse ETFs, the Fund will not invest in leveraged (e.g., 2X, -2X, 3X, or -3X) ETFs. 14 ETNs are Index-Linked Securities (as described in NYSE Arca Rule 5.2–E(j)(6)). While the Fund may invest in inverse ETNs, the Fund will not invest in leveraged or inverse leveraged ETNs (e.g., 2X or -3X). 15 According to the Exchange, For purposes of this filing, Work Out Securities are U.S. or foreign equity securities of any type acquired in connection with restructurings related to issuers of Fixed Income Securities held by the Fund. Work Out Securities are generally traded OTC, but may be traded on a U.S. or foreign exchange. 16 The Exchange represents that the Fund will not invest in securities or other financial instruments that have not been described in the Notice. E:\FR\FM\30AUN1.SGM 30AUN1 45818 Federal Register / Vol. 84, No. 169 / Friday, August 30, 2019 / Notices MBS under Commentary .01(b)(5) to NYSE Arca Rule 8.600–E,17 the following restrictions will apply: • Non-agency RMBS shall have an average loan maturity of 84 months or more; • Non-agency CMBS and CLOs shall have an average loan maturity of 60 months or more; and • Non-agency ABS shall have an average loan maturity of 12 months or more.18 The Exchange proposes that up to 25% of the Fund’s assets may be invested in OTC derivatives that are used to reduce currency, interest rate, or credit risk arising from the Fund’s investments. The Fund’s investments in OTC derivatives other than OTC derivatives used to hedge the Fund’s portfolio against currency, interest rate, or credit risk will be limited to 20% of the assets in the Fund’s portfolio. For purposes of these percentage limitations on OTC derivatives, the weight of such OTC derivatives will be calculated as the aggregate gross notional value of such OTC derivatives. The Fund’s holdings of bank loans will not exceed 15% of the Fund’s total assets, and the Fund’s holdings of bank loans other than Senior Loans will not exceed 5% of the Fund’s total assets. The Fund’s holdings in fixed income convertible securities and in equity securities issued upon conversion of such convertible securities will not exceed 10% of the Fund’s total assets. The Fund’s holdings in Work Out Securities will not exceed 5% of the Fund’s total assets. The Fund’s investments, including derivatives, will be consistent with the Fund’s investment objective and will not be used to enhance leverage (although certain derivatives and other investments may result in leverage). That is, the Fund’s investments will not be used to seek performance that is the multiple or inverse multiple (e.g., 2X or -3X) of the Fund’s primary broad-based securities benchmark index (as defined in Form N–1A). jspears on DSK3GMQ082PROD with NOTICES D. Impact on Arbitrage Mechanism According to the Exchange, the Adviser and the Sub-Adviser believe there will be minimal, if any, impact to the arbitrage mechanism as a result of 17 Commentary .01(b)(5) to NYSE Arca Rule 8.600–E provides that non-agency, non-GSE, and privately-issued mortgage-related and other assetbacked securities 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. 18 Information relating to average loan maturity for non-agency RMBS, non-agency CMBS, CLOs, and non-agency ABS is widely available from major market data vendors such as Bloomberg. VerDate Sep<11>2014 16:43 Aug 29, 2019 Jkt 247001 the Fund’s use of derivatives and Private ABS/MBS. The Adviser and the Sub-Adviser understand that market makers and participants should be able to value derivatives and Private ABS/ MBS as long as the positions are disclosed with relevant information. The Adviser and the Sub-Adviser believe that the price at which Shares of the Fund trade will continue to be disciplined by arbitrage opportunities created by the ability to purchase or redeem Shares of the Fund at their net asset value (‘‘NAV’’), which should ensure that Shares of the Fund will not trade at a material discount or premium in relation to their NAV. The Adviser and Sub-Adviser do not believe there will be any significant impacts to the settlement or operational aspects of the Fund’s arbitrage mechanism due to the use of derivatives and Private ABS/MBS. E. The Proposed Modifications to the Shares’ Listing Rule The Exchange represents, among other things, that the Fund will not comply with the requirement in Commentary .01(b)(1) to NYSE Arca Rule 8.600–E that components that in the aggregate account for at least 75% of the fixed income weight of the portfolio each shall have a minimum original principal amount outstanding of $100 million or more. Instead, the Exchange proposes that components that in the aggregate account for at least 50% of the fixed income weight of the portfolio each shall have a minimum original principal amount outstanding of $50 million or more. As noted above, the Fund may not invest more than 2% of its total assets in any one Fixed Income Security (excluding U.S. government securities and TIPS) on a per CUSIP basis. In addition, at least 50% of the weight of the Fund’s portfolio would continue to be subject to a substantial minimum (i.e., $50 million) original principal amount outstanding. The Exchange believes this limitation would provide significant additional diversification to the Fund’s investments in Fixed Income Securities, and reduce concerns that the Fund’s investments in such securities would be readily susceptible to market manipulation. The Exchange also represents that the Fund will not comply with the requirements in Commentary .01(b)(4) to NYSE Arca Rule 8.600–E that component securities that in the aggregate account for at least 90% of the fixed income weight of the portfolio meet one of the criteria specified in Commentary .01(b)(4), because certain Private ABS/MBS cannot satisfy the PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 criteria in Commentary .01(b)(4).19 Instead, the Exchange proposes that the Fund’s investments in Fixed Income Securities other than Private ABS/MBS will be required to comply with the requirements of Commentary .01(b)(4). As noted above, the Fund may not invest more than 2% of its total assets in any one Fixed Income Security (excluding U.S. government securities and TIPS) on a per CUSIP basis. The Exchange believes this limitation would provide additional diversification to the Fund’s investments in Private ABS/ MBS, and reduce concerns that the Fund’s investment in such securities would be readily susceptible to market manipulation. Finally, the Exchange represents that the Fund will not comply with the requirement in Commentary .01(b)(5) to NYSE Arca Rule 8.600–E that Private ABS/MBS in the Fund’s portfolio account, in the aggregate, for no more than 20% of the weight of the fixed income portion of the Fund’s portfolio.20 The Exchange proposes that, in order to enable the portfolio to be more diversified and provide the Fund with an opportunity to earn higher returns, the Fund may invest up to 50% of its total assets in the aggregate in Private ABS/MBS, consistent with the investment restrictions proposed above. The Exchange believes these limitations would provide additional diversification to the Fund’s Private ABS/MBS investments and reduce concerns that the Fund’s investment in such securities would be readily susceptible to market manipulation. The Exchange notes that, other than the exceptions proposed in the Notice, the Fund’s portfolio will meet all other requirements of NYSE Arca Rule 8.600–E. II. Proceedings To Determine Whether To Approve or Disapprove SR– NYSEArca–2019–33, as Modified by Amendment No. 1, and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act 21 to determine whether the proposed rule change should be approved or disapproved. Institution of such proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change. Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the 19 See Commentary .01(b)(4) to NYSE Arca Rule 8.600–E. 20 See note 17, supra. 21 15 U.S.C. 78s(b)(2)(B). E:\FR\FM\30AUN1.SGM 30AUN1 jspears on DSK3GMQ082PROD with NOTICES Federal Register / Vol. 84, No. 169 / Friday, August 30, 2019 / Notices issues involved. Rather, as described below, the Commission seeks and encourages interested persons to provide comments on the proposed rule change. Pursuant to Section 19(b)(2)(B) of the Act,22 the Commission is providing notice of the grounds for disapproval under consideration. The Commission is instituting proceedings to allow for additional analysis of the proposed rule change’s consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be ‘‘designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and ‘‘to protect investors and the public interest.’’ 23 The Commission asks that commenters address the sufficiency of the Exchange’s statements in support of the proposal, which are set forth in the Notice,24 in addition to any other comments they may wish to submit about the proposed rule change. In particular, the Commission seeks comment on the following questions and asks commenters to submit data where appropriate to support their views. If the listing rules for the Shares were amended as proposed, including the average loan maturity thresholds for Private ABS/MBS, would the listing rule continue to ensure that a substantial portion of the Fund’s portfolio consists of Fixed Income Securities for which information is publicly available? If not, are there reasons why it may not be necessary that information be publicly available for Private ABS/MBS (as distinguished from other types of Fixed Income Securities)? Has the Exchange adequately supported the use of the proposed average loan maturity thresholds for Private ABS/MBS? Why or why not? What further information regarding these thresholds would be useful to market participants? Does the Fund’s proposal to not invest more than 2% of its total assets in any one Fixed Income Security on a per CUSIP basis mitigate concerns that the Fund’s investment in such securities would be readily susceptible to market manipulation. Why or why not? Would the proposed increased investments in Private ABS/MBS by the Fund increase the susceptibility of the Shares to manipulation? If so, why; if not, why not? If the Fund’s permitted investments were expanded to the 22 Id. 23 15 U.S.C. 78f(b)(5). Notice, supra note 3. 24 See VerDate Sep<11>2014 16:43 Aug 29, 2019 Jkt 247001 extent proposed, would any other restrictions on the Fund’s permitted investments be appropriate in order for the proposed rule change to be consistent with Section 6(b)(5) of the Act? III. Procedure: Request for Written Comments The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal. In particular, the Commission invites the written views of interested persons concerning whether the proposal is consistent with Section 6(b)(5) or any other provision of the Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4, any request for an opportunity to make an oral presentation.25 Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by September 20, 2019. Any person who wishes to file a rebuttal to any other person’s submission must file that rebuttal by October 4, 2019. The Commission asks that commenters address the sufficiency of the Exchange’s statements in support of the proposal, in addition to any other comments they may wish to submit about the proposed rule change. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2019–33 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. 25 Section 19(b)(2) of the Act, as amended by the Securities Acts Amendments of 1975, Public Law 94–29 (June 4, 1975), grants the Commission flexibility to determine what type of proceeding— either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Acts Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 45819 All submissions should refer to File Number SR–NYSEArca–2019–33. 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–NYSEArca–2019–33 and should be submitted by September 20, 2019. Rebuttal comments should be submitted by October 4, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–18750 Filed 8–29–19; 8:45 am] BILLING CODE 8011–01–P STATE JUSTICE INSTITUTE SJI Board of Directors Meeting, Notice State Justice Institute. Notice of meeting. AGENCY: ACTION: The SJI Board of Directors will be meeting on Monday, September 9, 2019 at 1:00 p.m. The meeting will be held at the Athenee Hotel in New York, New York. The purpose of this meeting is to consider grant applications for the 4th quarter of FY 2019, and other business. All portions of this meeting are open to the public. SUMMARY: 26 17 E:\FR\FM\30AUN1.SGM CFR 200.30–3(a)(57). 30AUN1

Agencies

[Federal Register Volume 84, Number 169 (Friday, August 30, 2019)]
[Notices]
[Pages 45816-45819]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-18750]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86760; File No. SR-NYSEArca-2019-33]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting 
Proceedings To Determine Whether To Approve or Disapprove a Proposed 
Rule Change, as Modified by Amendment No. 1, Regarding Changes to 
Investments of the First Trust TCW Unconstrained Plus Bond ETF

August 26, 2019.
    On May 6, 2019, 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 
modify investments of the First Trust TCW Unconstrained Plus Bond ETF, 
the shares of which are currently listed and traded on the Exchange 
pursuant to NYSE Arca Rule 8.600-E. On May 16, 2019, the Exchange filed 
Amendment No. 1 to the proposed rule change. The proposed rule change, 
as modified by Amendment No. 1, was published for comment in the 
Federal Register on May 28, 2019.\3\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 85903 (May 21, 
2019), 84 FR 24576 (``Notice'').
---------------------------------------------------------------------------

    On July 3, 2019, pursuant to Section 19(b)(2) of the Act,\4\ the 
Commission designated a longer period within which to approve the 
proposed rule change, disapprove the proposed rule change, or institute 
proceedings to determine whether to approve or disapprove the proposed 
rule change.\5\ The Commission has received no comment letters on the 
proposal. The Commission is publishing this order to institute 
proceedings under Section 19(b)(2)(B) of the Act \6\ to determine 
whether to approve or disapprove the proposed rule change.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 86299, 84 FR 32804 
(July 9, 2019). The Commission designated August 26, 2019, as the 
date by which it should approve, disapprove, or institute 
proceedings to determine whether to approve or disapprove the 
proposed rule change.
    \6\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

I. Description of the Proposal 7
---------------------------------------------------------------------------

    \7\ The Commission notes that additional information regarding, 
among other things, the Shares, Fund, investment objective, 
permitted investments, investment strategies and methodology, 
investment restrictions, investment adviser and sub-adviser, 
creation and redemption procedures, availability of information, 
trading rules and halts, and surveillance procedures, can be found 
in the Notice (see supra note 3) and the Registration Statement (see 
infra note 8), as applicable.
---------------------------------------------------------------------------

    The Exchange proposes to make certain changes to the investments of 
the First Trust TCW Unconstrained Plus Bond ETF (``Fund''), the shares 
(``Shares'') of which are currently listed and traded on the Exchange 
under NYSE Arca Rule 8.600-E, which governs the listing and trading of 
Managed Fund Shares on the Exchange. According to the Exchange, the 
Shares of the Fund commenced trading on the Exchange on June 5, 2018 
pursuant to the generic listing standards in Commentary .01 to NYSE 
Arca Rule 8.600-E.
    The Shares are offered by First Trust Exchange-Traded Fund VIII 
(``Trust''), which is registered with the Commission as an open-end 
management investment company.\8\ The Fund is a series of the Trust. 
First Trust Advisors L.P. is the investment adviser (``Adviser'') to 
the Fund. TCW Investment Management Company LLC (``TCW'' or ``Sub-
Adviser''), serves as the Fund's investment sub-adviser.\9\ First Trust 
Portfolios L.P. is the distributor for the Fund's Shares. The Bank of 
New York Mellon acts as the administrator, custodian, and transfer 
agent for the Fund.
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    \8\ The Exchange represents that the Trust is registered under 
the Investment Company Act of 1940 (``1940 Act''). On May 29, 2018, 
the Trust filed with the Commission its registration statement 
(``Registration Statement'') on Form N-1A under the Securities Act 
of 1933 and under the 1940 Act relating to the Fund (File Nos. 333-
210186 and 811-23147). In addition, the Exchange represents that the 
Trust has obtained an order from the Commission granting certain 
exemptive relief under the 1940 Act. See Investment Company Act 
Release No. 30029 (April 10, 2012) (File No. 812-13795).
    \9\ According to the Exchange, the Adviser and Sub-Adviser are 
not registered as broker-dealers. The Adviser is affiliated with 
First Trust Portfolios L.P., 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 portfolio. The Sub-Adviser is affiliated 
with multiple broker-dealers and has implemented and will maintain a 
fire wall with respect to its broker-dealer affiliates regarding 
access to information concerning the composition of, and/or changes 
to, the portfolio. In the event (a) the Adviser or the 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 relevant 
personnel and any 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 
such portfolio.
---------------------------------------------------------------------------

A. Principal Investments of the Fund

    According to the Exchange, the investment objective of the Fund is 
to seek to maximize long-term total return. Under normal market 
conditions,\10\ the

[[Page 45817]]

Fund intends to invest at least 80% of its net assets (including 
investment borrowings) in a portfolio of ``Fixed Income Securities''.
---------------------------------------------------------------------------

    \10\ The term ``normal market conditions'' is defined in NYSE 
Arca Rule 8.600-E(c)(5). On a temporary basis, including for 
defensive purposes, during the initial invest-up period (i.e., the 
six-week period following the commencement of trading of Shares on 
the Exchange) and during periods of high cash inflows or outflows 
(i.e., rolling periods of seven calendar days during which inflows 
or outflows of cash, in the aggregate, exceed 10% of the Fund's net 
assets as of the opening of business on the first day of such 
periods), the Fund may depart from its principal investment 
strategies; for example, it may hold a higher than normal proportion 
of its assets in cash. During such periods, the Fund may not be able 
to achieve its investment objective. The Fund may adopt a defensive 
strategy when the Adviser and/or the Sub-Adviser believes securities 
in which the Fund normally invests have elevated risks due to 
market, political or economic factors and in other extraordinary 
circumstances.
---------------------------------------------------------------------------

    In managing the Fund's portfolio, TCW intends to employ a flexible 
approach that allocates the Fund's investments across a range of global 
investment opportunities and actively manage exposure to interest 
rates, credit sectors, and currencies. TCW seeks to utilize 
independent, bottom-up research to identify securities that are 
undervalued and that offer a superior risk/return profile. Pursuant to 
this investment strategy, the Fund may invest in the following Fixed 
Income Securities, which may be represented by derivatives relating to 
such securities, as discussed below:
     Securities issued or guaranteed by the U.S. government or 
its agencies, instrumentalities, or U.S. government-sponsored entities 
(``U.S. government securities'');
     Treasury Inflation Protected Securities (``TIPS'');
     the following non-agency, non-government-sponsored entity 
(``GSE''), and privately-issued mortgage-related and other asset-backed 
securities: Residential mortgage-backed securities (``RMBS''), 
commercial mortgage-backed securities (``CMBS''), asset-backed 
securities (``ABS''), and collateralized loan obligations (``CLOs'' 
and, together with such RMBS, CMBS, and ABS, collectively, ``Private 
ABS/MBS''); \11\
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    \11\ In the Notice, the Exchange states that ``Private ABS/MBS'' 
are non-agency, non-GSE, and privately-issued mortgage-related and 
other asset-backed securities as stated in Commentary .01(b)(5) to 
NYSE Arca Rule 8.600-E.
---------------------------------------------------------------------------

     Agency RMBS, agency CMBS, and agency ABS;
     domestic corporate bonds;
     Fixed Income Securities issued by non-U.S. corporations 
and non-U.S. governments;
     bank loans, including first lien senior secured floating 
rate bank loans (``Senior Loans''), secured and unsecured loans, second 
lien or more junior loans, and bridge loans;
     fixed income convertible securities;
     fixed income preferred securities; and
     municipal bonds.
    In addition, the Fund may invest in agency RMBS and CMBS by 
investing in to-be-announced transactions. The Fund may hold cash and 
cash equivalents,\12\ as well as the following short-term instruments 
with maturities of three months or more: Certificates of deposit; 
bankers' acceptances; repurchase agreements and reverse repurchase 
agreements; bank time deposits; and commercial paper. The Fund also may 
enter into short sales of any securities in which the Fund may invest.
---------------------------------------------------------------------------

    \12\ According to the Exchange, cash equivalents are the short-
term instruments with maturities of less than 3 months enumerated in 
Commentary .01(c) to NYSE Arca Rule 8.600-E.
---------------------------------------------------------------------------

    The Fund may utilize exchange-listed and over-the-counter (``OTC'') 
traded derivatives instruments for duration/yield curve management and/
or hedging purposes, for risk management purposes, or as part of its 
investment strategies. The Fund will use derivative instruments 
primarily to hedge interest rate risk, actively manage interest rate 
exposure, hedge foreign currency risk, and actively manage foreign 
currency exposure. The Fund may also use derivative instruments to 
enhance returns, as a substitute for, or to gain exposure to, a 
position in an underlying asset, to reduce transaction costs, to 
maintain full market exposure, to manage cash flows, or to preserve 
capital. Derivatives may also be used to hedge risks associated with 
the Fund's other portfolio investments. The Fund will not use 
derivative instruments to gain exposure to Private ABS/MBS, and 
derivative instruments linked to such securities will be used for 
hedging purposes only. Derivatives that the Fund may enter into are the 
following: Futures on interest rates, currencies, Fixed Income 
Securities, and fixed income indices; exchange-traded and OTC options 
on interest rates, currencies, Fixed Income Securities, and fixed 
income indices; swap agreements on interest rates, currencies, Fixed 
Income Securities, and fixed income indices; credit default swaps; and 
currency forward contracts.

B. Other Investments of the Fund

    While the Fund, under normal market conditions, invests at least 
80% of its net assets in the Principal Investments described above, the 
Fund may invest its remaining assets in the following ``Non-Principal 
Investments.''
    The Fund may invest in exchange-traded common stock, exchange-
traded preferred stock, exchange-traded real estate investment trusts 
(``REITs''), and securities of other investment companies registered 
under the 1940 Act, including money market funds, exchange-traded funds 
(``ETFs''), open-end funds (other than money market funds and other 
ETFs), and U.S. exchange-traded closed-end funds.\13\ In addition, the 
Fund may hold exchange-traded notes (``ETNs''),\14\ exchange-traded or 
OTC ``Work Out Securities,'' \15\ and exchange-traded or OTC equity 
securities issued upon conversion of fixed income convertible 
securities.
---------------------------------------------------------------------------

    \13\ According to the Exchange, the term ``ETFs'' are Investment 
Company Units (as described in NYSE Arca Rule 5.2-E(j)(3)); 
Portfolio Depositary Receipts (as described in NYSE Arca Rule 8.100-
E); and Managed Fund Shares (as described in NYSE Arca Rule 8.600-
E). All ETFs will be listed and traded in the U.S. on a national 
securities exchange. While the Fund may invest in inverse ETFs, the 
Fund will not invest in leveraged (e.g., 2X, -2X, 3X, or -3X) ETFs.
    \14\ ETNs are Index-Linked Securities (as described in NYSE Arca 
Rule 5.2-E(j)(6)). While the Fund may invest in inverse ETNs, the 
Fund will not invest in leveraged or inverse leveraged ETNs (e.g., 
2X or -3X).
    \15\ According to the Exchange, For purposes of this filing, 
Work Out Securities are U.S. or foreign equity securities of any 
type acquired in connection with restructurings related to issuers 
of Fixed Income Securities held by the Fund. Work Out Securities are 
generally traded OTC, but may be traded on a U.S. or foreign 
exchange.
---------------------------------------------------------------------------

C. Investment Restrictions of the Fund 16
---------------------------------------------------------------------------

    \16\ The Exchange represents that the Fund will not invest in 
securities or other financial instruments that have not been 
described in the Notice.
---------------------------------------------------------------------------

    As stated in the Notice, the Fund proposes to not invest more than 
2% of its total assets in any one Fixed Income Security (excluding U.S. 
government securities and TIPS) on a per CUSIP basis. The Fund's 
holdings in derivative instruments for hedging purposes would be 
excluded from the determination of compliance with this 2% limitation. 
The total gross notional value of the Fund's holdings in derivative 
instruments used to gain exposure to a specific asset is limited to 2% 
of the Fund's total assets.
    Additionally, the Fund proposes to invest up to 50% of its total 
assets in the aggregate in Private ABS/MBS, provided that the Fund (1) 
may not invest more than 30% of its total assets in non-agency RMBS; 
(2) may not invest more than 25% of its total assets in non-agency CMBS 
and CLOs; and (3) may not invest more than 25% of its total assets in 
non-agency ABS.
    With respect to the Fund's investments in up to 30% of its total 
assets in Private ABS/MBS that exceed the 20% of the weight of the 
fixed income portion of the Fund's portfolio that may be invested in 
Private ABS/

[[Page 45818]]

MBS under Commentary .01(b)(5) to NYSE Arca Rule 8.600-E,\17\ the 
following restrictions will apply:
---------------------------------------------------------------------------

    \17\ Commentary .01(b)(5) to NYSE Arca Rule 8.600-E provides 
that non-agency, non-GSE, and privately-issued mortgage-related and 
other asset-backed securities 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.
---------------------------------------------------------------------------

     Non-agency RMBS shall have an average loan maturity of 84 
months or more;
     Non-agency CMBS and CLOs shall have an average loan 
maturity of 60 months or more; and
     Non-agency ABS shall have an average loan maturity of 12 
months or more.\18\
---------------------------------------------------------------------------

    \18\ Information relating to average loan maturity for non-
agency RMBS, non-agency CMBS, CLOs, and non-agency ABS is widely 
available from major market data vendors such as Bloomberg.
---------------------------------------------------------------------------

    The Exchange proposes that up to 25% of the Fund's assets may be 
invested in OTC derivatives that are used to reduce currency, interest 
rate, or credit risk arising from the Fund's investments. The Fund's 
investments in OTC derivatives other than OTC derivatives used to hedge 
the Fund's portfolio against currency, interest rate, or credit risk 
will be limited to 20% of the assets in the Fund's portfolio. For 
purposes of these percentage limitations on OTC derivatives, the weight 
of such OTC derivatives will be calculated as the aggregate gross 
notional value of such OTC derivatives.
    The Fund's holdings of bank loans will not exceed 15% of the Fund's 
total assets, and the Fund's holdings of bank loans other than Senior 
Loans will not exceed 5% of the Fund's total assets.
    The Fund's holdings in fixed income convertible securities and in 
equity securities issued upon conversion of such convertible securities 
will not exceed 10% of the Fund's total assets.
    The Fund's holdings in Work Out Securities will not exceed 5% of 
the Fund's total assets.
    The Fund's investments, including derivatives, will be consistent 
with the Fund's investment objective and will not be used to enhance 
leverage (although certain derivatives and other investments may result 
in leverage). That is, the Fund's investments will not be used to seek 
performance that is the multiple or inverse multiple (e.g., 2X or -3X) 
of the Fund's primary broad-based securities benchmark index (as 
defined in Form N-1A).

D. Impact on Arbitrage Mechanism

    According to the Exchange, the Adviser and the Sub-Adviser believe 
there will be minimal, if any, impact to the arbitrage mechanism as a 
result of the Fund's use of derivatives and Private ABS/MBS. The 
Adviser and the Sub-Adviser understand that market makers and 
participants should be able to value derivatives and Private ABS/MBS as 
long as the positions are disclosed with relevant information. The 
Adviser and the Sub-Adviser believe that the price at which Shares of 
the Fund trade will continue to be disciplined by arbitrage 
opportunities created by the ability to purchase or redeem Shares of 
the Fund at their net asset value (``NAV''), which should ensure that 
Shares of the Fund will not trade at a material discount or premium in 
relation to their NAV.
    The Adviser and Sub-Adviser do not believe there will be any 
significant impacts to the settlement or operational aspects of the 
Fund's arbitrage mechanism due to the use of derivatives and Private 
ABS/MBS.

E. The Proposed Modifications to the Shares' Listing Rule

    The Exchange represents, among other things, that the Fund will not 
comply with the requirement in Commentary .01(b)(1) to NYSE Arca Rule 
8.600-E that components that in the aggregate account for at least 75% 
of the fixed income weight of the portfolio each shall have a minimum 
original principal amount outstanding of $100 million or more. Instead, 
the Exchange proposes that components that in the aggregate account for 
at least 50% of the fixed income weight of the portfolio each shall 
have a minimum original principal amount outstanding of $50 million or 
more. As noted above, the Fund may not invest more than 2% of its total 
assets in any one Fixed Income Security (excluding U.S. government 
securities and TIPS) on a per CUSIP basis. In addition, at least 50% of 
the weight of the Fund's portfolio would continue to be subject to a 
substantial minimum (i.e., $50 million) original principal amount 
outstanding. The Exchange believes this limitation would provide 
significant additional diversification to the Fund's investments in 
Fixed Income Securities, and reduce concerns that the Fund's 
investments in such securities would be readily susceptible to market 
manipulation.
    The Exchange also represents that the Fund will not comply with the 
requirements in Commentary .01(b)(4) to NYSE Arca Rule 8.600-E that 
component securities that in the aggregate account for at least 90% of 
the fixed income weight of the portfolio meet one of the criteria 
specified in Commentary .01(b)(4), because certain Private ABS/MBS 
cannot satisfy the criteria in Commentary .01(b)(4).\19\ Instead, the 
Exchange proposes that the Fund's investments in Fixed Income 
Securities other than Private ABS/MBS will be required to comply with 
the requirements of Commentary .01(b)(4). As noted above, the Fund may 
not invest more than 2% of its total assets in any one Fixed Income 
Security (excluding U.S. government securities and TIPS) on a per CUSIP 
basis. The Exchange believes this limitation would provide additional 
diversification to the Fund's investments in Private ABS/MBS, and 
reduce concerns that the Fund's investment in such securities would be 
readily susceptible to market manipulation.
---------------------------------------------------------------------------

    \19\ See Commentary .01(b)(4) to NYSE Arca Rule 8.600-E.
---------------------------------------------------------------------------

    Finally, the Exchange represents that the Fund will not comply with 
the requirement in Commentary .01(b)(5) to NYSE Arca Rule 8.600-E that 
Private ABS/MBS in the Fund's portfolio account, in the aggregate, for 
no more than 20% of the weight of the fixed income portion of the 
Fund's portfolio.\20\ The Exchange proposes that, in order to enable 
the portfolio to be more diversified and provide the Fund with an 
opportunity to earn higher returns, the Fund may invest up to 50% of 
its total assets in the aggregate in Private ABS/MBS, consistent with 
the investment restrictions proposed above. The Exchange believes these 
limitations would provide additional diversification to the Fund's 
Private ABS/MBS investments and reduce concerns that the Fund's 
investment in such securities would be readily susceptible to market 
manipulation.
---------------------------------------------------------------------------

    \20\ See note 17, supra.
---------------------------------------------------------------------------

    The Exchange notes that, other than the exceptions proposed in the 
Notice, the Fund's portfolio will meet all other requirements of NYSE 
Arca Rule 8.600-E.

II. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEArca-2019-33, as Modified by Amendment No. 1, and Grounds for 
Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \21\ to determine whether the proposed rule 
change should be approved or disapproved. Institution of such 
proceedings is appropriate at this time in view of the legal and policy 
issues raised by the proposed rule change. Institution of proceedings 
does not indicate that the Commission has reached any conclusions with 
respect to any of the

[[Page 45819]]

issues involved. Rather, as described below, the Commission seeks and 
encourages interested persons to provide comments on the proposed rule 
change.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Act,\22\ the Commission is 
providing notice of the grounds for disapproval under consideration. 
The Commission is instituting proceedings to allow for additional 
analysis of the proposed rule change's consistency with Section 6(b)(5) 
of the Act, which requires, among other things, that the rules of a 
national securities exchange be ``designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and ``to protect investors and the public 
interest.'' \23\
---------------------------------------------------------------------------

    \22\ Id.
    \23\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission asks that commenters address the sufficiency of the 
Exchange's statements in support of the proposal, which are set forth 
in the Notice,\24\ in addition to any other comments they may wish to 
submit about the proposed rule change. In particular, the Commission 
seeks comment on the following questions and asks commenters to submit 
data where appropriate to support their views.
---------------------------------------------------------------------------

    \24\ See Notice, supra note 3.
---------------------------------------------------------------------------

    If the listing rules for the Shares were amended as proposed, 
including the average loan maturity thresholds for Private ABS/MBS, 
would the listing rule continue to ensure that a substantial portion of 
the Fund's portfolio consists of Fixed Income Securities for which 
information is publicly available? If not, are there reasons why it may 
not be necessary that information be publicly available for Private 
ABS/MBS (as distinguished from other types of Fixed Income Securities)?
    Has the Exchange adequately supported the use of the proposed 
average loan maturity thresholds for Private ABS/MBS? Why or why not? 
What further information regarding these thresholds would be useful to 
market participants?
    Does the Fund's proposal to not invest more than 2% of its total 
assets in any one Fixed Income Security on a per CUSIP basis mitigate 
concerns that the Fund's investment in such securities would be readily 
susceptible to market manipulation. Why or why not?
    Would the proposed increased investments in Private ABS/MBS by the 
Fund increase the susceptibility of the Shares to manipulation? If so, 
why; if not, why not? If the Fund's permitted investments were expanded 
to the extent proposed, would any other restrictions on the Fund's 
permitted investments be appropriate in order for the proposed rule 
change to be consistent with Section 6(b)(5) of the Act?

III. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
issues identified above, as well as any other concerns they may have 
with the proposal. In particular, the Commission invites the written 
views of interested persons concerning whether the proposal is 
consistent with Section 6(b)(5) or any other provision of the Act, or 
the rules and regulations thereunder. Although there do not appear to 
be any issues relevant to approval or disapproval that would be 
facilitated by an oral presentation of views, data, and arguments, the 
Commission will consider, pursuant to Rule 19b-4, any request for an 
opportunity to make an oral presentation.\25\
---------------------------------------------------------------------------

    \25\ Section 19(b)(2) of the Act, as amended by the Securities 
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Acts Amendments of 1975, Senate Comm. 
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by September 20, 2019. Any person who wishes to file a 
rebuttal to any other person's submission must file that rebuttal by 
October 4, 2019. The Commission asks that commenters address the 
sufficiency of the Exchange's statements in support of the proposal, in 
addition to any other comments they may wish to submit about the 
proposed rule change.
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEArca-2019-33 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2019-33. 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-NYSEArca-2019-33 and should be submitted 
by September 20, 2019. Rebuttal comments should be submitted by October 
4, 2019.
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-18750 Filed 8-29-19; 8:45 am]
 BILLING CODE 8011-01-P
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