Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Permitting the Continued Listing and Trading of the WisdomTree Emerging Markets Multifactor Fund and the WisdomTree International Multifactor Fund, 58763-58769 [2019-23859]

Download as PDF Federal Register / Vol. 84, No. 212 / Friday, November 1, 2019 / Notices purposes in connection with trading in the Shares. The Exchange also asserts that it has a general policy prohibiting the distribution of material, non-public information by its employees. According to the Exchange, other than Commentaries .01(a)(1), (a)(2), (b)(1), (b)(4), (b)(5), and (e) to NYSE Arca Rule 8.600–E, as described above, the Fund’s portfolio will meet all other requirements of NYSE Arca Rule 8.600– E. The Commission believes that, based on the representations of the Exchange with respect to the Fund’s investment objective and proposed holdings and restrictions, the proposal is consistent with the requirements of Section 6(b)(5) of the Act. The Exchange represents that all statements and representations made in this filing regarding (a) the description of the portfolio or reference assets, (b) limitations on portfolio holdings or reference assets, and (c) the applicability of Exchange listing rules specified in this rule filing shall constitute continued listing requirements for listing the Shares. In addition, the Exchange represents that the issuer must notify the Exchange of any failure by the Fund to comply with the continued listing requirements and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor 61 for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Rule 5.5– E(m). For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendment No. 2, is consistent with Section 6(b)(5) of the Act 62 and the rules and regulations thereunder applicable to a national securities exchange. IV. Solicitation of Comments on Amendment No. 2 to the Proposed Rule Change Interested persons are invited to submit written views, data, and arguments concerning whether Amendment No. 2 is consistent with the 61 The Commission notes that certain proposals for the listing and trading of exchange-traded products include a representation that the exchange will ‘‘surveil’’ for compliance with the continued listing requirements. See, e.g., Securities Exchange Act Release No. 77499 (April 1, 2016), 81 FR 20428, 20432 (April 7, 2016) (SR–BATS–2016–04). In the context of this representation, it is the Commission’s view that ‘‘monitor’’ and ‘‘surveil’’ both mean ongoing oversight of compliance with the continued listing requirements. Therefore, the Commission does not view ‘‘monitor’’ as a more or less stringent obligation than ‘‘surveil’’ with respect to the continued listing requirements. 62 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 19:23 Oct 31, 2019 Jkt 250001 Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–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 on or before November 22, 2019. V. Accelerated Approval of the Proposed Rule Change, as Modified by Amendment No. 2 The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 2, prior to the thirtieth day after the date of publication of notice of the filing of Amendment No. 2 in the Federal Register. The Commission notes that Amendment No. 2 clarified PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 58763 representations to reflect changes adopted in Commentary .01(b)(5) to NYSE Arca Rule 8.600–E; conformed a requirement relating to certain investment restrictions from ‘‘average loan maturity’’ to ‘‘weighted average loan age’’; and provided additional arguments in support of the Fund’s proposed changes to its investments and investment restrictions. Amendment No. 2 also provided non-substantive clarifications and technical changes. The additional information in Amendment No. 2 assisted the Commission in evaluating the Exchange’s proposal and in determining that the trading of the Shares under the proposal is consistent with the Act. Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,63 to approve the proposed rule change, as modified by Amendment No. 2, on an accelerated basis. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,64 that the proposed rule change (SR–NYSEArca– 2019–33), as modified by Amendment No. 2, be, and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.65 Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–23858 Filed 10–31–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–87409; File No. SR– NYSEArca–2019–73] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Permitting the Continued Listing and Trading of the WisdomTree Emerging Markets Multifactor Fund and the WisdomTree International Multifactor Fund October 28, 2019. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on October 15, 2019, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission 63 15 U.S.C. 78s(b)(2). 64 Id. 65 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 E:\FR\FM\01NON1.SGM 01NON1 58764 Federal Register / Vol. 84, No. 212 / Friday, November 1, 2019 / Notices (‘‘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 permit the continued listing and trading of the WisdomTree Emerging Markets Multifactor Fund and the WisdomTree International Multifactor Fund, under NYSE Arca Rule 8.600–E (‘‘Managed Fund Shares’’). 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 Pursuant to NYSE Arca Rule 8.600–E, the Exchange proposes to permit the continued listing and trading of the WisdomTree Emerging Markets Multifactor Fund (‘‘Emerging Markets Fund’’) and the WisdomTree International Multifactor Fund (‘‘International Fund’’) (each a Fund, and collectively, the ‘‘Funds’’), that do not otherwise meet the standards set forth in Rule 8.600–E, Commentary .01(e), as described below. The shares (‘‘Shares’’) of the Funds commenced trading on the Exchange on August 10, 2018 pursuant to the generic listing criteria in Commentary .01 to NYSE Arca Rule 8.600–E (‘‘Managed Fund Shares’’).4 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) organized as an open-end VerDate Sep<11>2014 19:23 Oct 31, 2019 Jkt 250001 The Shares are offered by the WisdomTree Trust (the ‘‘Trust’’). WisdomTree Asset Management, Inc. (the ‘‘Adviser’’) acts as adviser to the Funds. Mellon Investments Corporation acts as sub-adviser (the ‘‘Sub-Adviser’’) to the Funds. The Trust is registered with the Commission as an investment company and has most recently updated its registration statement on Form N–1A (‘‘Registration Statement’’) with the Commission on behalf of the Funds that includes disclosure described herein.5 Commentary .06 to Rule 8.600–E provides that, if the investment adviser to the investment company issuing Managed Fund Shares is affiliated with a broker-dealer, such investment adviser shall erect and maintain a ‘‘fire wall’’ between the investment adviser and the broker-dealer with respect to access to information concerning the composition and/or changes to such investment company portfolio.6 In addition, Commentary .06 further requires that personnel who make decisions on the investment company’s portfolio composition must be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the investment company or similar entity that invests in a portfolio of securities selected by its investment adviser consistent with its investment objectives and policies. In contrast, an open-end investment company that issues Investment Company Units, listed and traded on the Exchange under NYSE Arca Rule 5.2–E(j)(3), seeks to provide investment results that correspond generally to the price and yield performance of a specific foreign or domestic stock index, fixed income securities index or combination thereof. 5 See Registration Statement (File Nos. 333– 132380 and 811–21864) and filings dated August 1, 2019. The description of the operation of the Trust and the Funds herein is based, in part, on the information in the Registration Statement. 6 An investment adviser to an open-end fund is required to be registered under the Investment Advisers Act of 1940 (the ‘‘Advisers Act’’). As a result, the Adviser, Sub-Adviser and their related personnel are subject to the provisions of Rule 204A–1 under the Advisers Act relating to codes of ethics. This Rule requires investment advisers to adopt a code of ethics that reflects the fiduciary nature of the relationship to clients as well as compliance with other applicable securities laws. Accordingly, procedures designed to prevent the communication and misuse of non-public information by an investment adviser must be consistent with Rule 204A–1 under the Advisers Act. In addition, Rule 206(4)–7 under the Advisers Act makes it unlawful for an investment adviser to provide investment advice to clients unless such investment adviser has (i) adopted and implemented written policies and procedures reasonably designed to prevent violation, by the investment adviser and its supervised persons, of the Advisers Act and the Commission rules adopted thereunder; (ii) implemented, at a minimum, an annual review regarding the adequacy of the policies and procedures established pursuant to subparagraph (i) above and the effectiveness of their implementation; and (iii) designated an individual (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 applicable investment company portfolio. The Adviser is not registered as a broker-dealer and is not affiliated with a broker-dealer. The Sub-Adviser is affiliated with multiple broker-dealers and has implemented and will maintain a ‘‘fire wall’’ with respect to such broker-dealers and their personnel regarding access to information concerning the composition and/or changes to a Fund’s portfolio. In addition, Sub-Adviser personnel who make decisions regarding a Fund’s portfolio are subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding such Fund’s portfolio. In the event (a) the Adviser or 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 brokerdealer, it will implement and maintain a fire wall with respect to its relevant personnel or its broker-dealer affiliate regarding access to information concerning the composition 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. The Exchange submits this proposal in order to allow the Funds to hold OTC currency swaps and OTC currency forwards in a manner that may not comply with Commentary .01(e) to Rule 8.600–E.7 Specifically, the aggregate gross notional value of each Fund’s investments in OTC derivatives may exceed 20% of Fund assets, calculated as the aggregate gross notional value of such OTC derivatives.8 The Exchange proposes that up to 50% of each Fund’s assets (calculated as the aggregate gross notional value of the OTC derivatives) may be invested in OTC derivatives, that is, currency swaps and currency forwards, that are used to reduce (that is, ‘‘hedge’’) currency risk arising from each Fund’s investments. Each Fund’s investments in OTC derivatives, other 7 In particular, the Funds may not meet the requirement under Commentary .01(e) to Rule 8.600–E, which provides that a portfolio may hold OTC derivatives, including forwards, options and swaps on commodities, currencies and financial instruments (e.g., stocks, fixed income, interest rates, and volatility) or a basket or index of any of the foregoing; however, on both an initial and continuing basis, no more than 20% of the assets in the portfolio may be invested in OTC derivatives. For purposes of calculating this limitation, a portfolio’s investment in OTC derivatives will be calculated as the aggregate gross notional value of the OTC derivatives. 8 The Adviser and Sub-Adviser monitor counterparty credit risk exposure (including for OTC derivatives) and evaluate counterparty credit quality on a continuous basis. E:\FR\FM\01NON1.SGM 01NON1 Federal Register / Vol. 84, No. 212 / Friday, November 1, 2019 / Notices than OTC derivatives used to hedge each Fund’s portfolio against currency risk, will be limited to 20% of the assets in each Fund’s portfolio, calculated as the aggregate gross notional value of such OTC derivatives. The only OTC derivatives that each Fund may invest in are currency swaps and currency forwards. Otherwise, the Funds comply with, and will continue to comply with, all other listing requirements on an initial and continued listing basis under Commentary .01(e) to Rule 8.600–E for Managed Fund Shares (‘‘Generic Listing Standards’’). WisdomTree Emerging Markets Multifactor Fund According to the Registration Statement, the Emerging Markets Fund seeks capital appreciation. The Emerging Markets Fund is actively managed using a model-based approach and seeks to achieve its investment objective by investing primarily in equity securities of emerging markets that exhibit certain characteristics that the Adviser believes to be indicative of positive future returns based on a model developed by the Adviser. The Adviser seeks to identify equity securities of emerging markets countries that have the highest potential for returns based on proprietary measures of fundamental factors, such as value and quality, and technical factors, such as momentum and correlation. The Adviser employs a quantitative model to identify which securities the Emerging Markets Fund might purchase and sell and opportune times for purchases and sales. At a minimum, the Emerging Markets Fund’s portfolio will be rebalanced quarterly according to the Adviser’s quantitative model, although a more active approach may be taken depending on such factors as market conditions and investment opportunities, and the number of holdings in the Emerging Markets Fund may vary. The Sub-Adviser, with oversight by the Adviser, is responsible for the day-to-day management of the Emerging Markets Fund’s portfolio in implementing the foregoing modelsbased approach. The Adviser’s strategy, as implemented by the Sub-Adviser, seeks to manage the Emerging Markets Fund’s currency risk by dynamically hedging currency fluctuations in the relative value of the applicable foreign currencies against the U.S. dollar (the ‘‘Emerging Markets Currency Hedge’’), ranging from a 0% to 100% hedge. The hedge ratios are adjusted as frequently as weekly utilizing signals such as interest rate differentials, momentum, and value. VerDate Sep<11>2014 19:23 Oct 31, 2019 Jkt 250001 Under normal market conditions,9 the Emerging Markets Fund will hold only the following instruments: Non-U.S. Component Stocks,10 U.S. Component Stocks 11 (in addition to U.S. exchangelisted exchange-traded funds (‘‘ETFs’’)),12 American Depository Receipts (‘‘ADRs’’), cash and cash equivalents,13 OTC currency forwards and OTC currency swaps. As noted above, all of the Emerging Markets Fund’s holdings meet, and will continue to meet, the Generic Listing Standards with the exception of its holdings in OTC currency forwards and OTC currency swaps, which, following the effectiveness of this proposal, may exceed the requirement under Rule 8.600–E, Commentary .01(e), that prohibits the aggregate gross notional value of OTC derivatives from exceeding 20% of the weight of the portfolio (including gross notional exposures). WisdomTree International Multifactor Fund According to the Registration Statement, the International Fund seeks capital appreciation. The International Fund is actively managed using a model-based approach and seeks to achieve its investment objective by investing primarily in equity securities of developed markets, excluding the United States and Canada, that exhibit certain characteristics that the Adviser believes to be indicative of positive future returns based on a model developed by the Adviser. The Adviser seeks to identify equity securities of developed countries, excluding the United States and Canada, that have the highest potential for returns based on proprietary measures of fundamental factors, such as value and quality, and technical factors, such as momentum and correlation. The Adviser employs a quantitative model to identify which securities the International Fund might purchase and sell and opportune times for purchases and sales. At a minimum, the International Fund’s portfolio will be rebalanced quarterly according to the 9 The term ‘‘normal market conditions’’ is defined in NYSE Arca Rule 8.600–E(c)(5). 10 See Commentary .01(a)(2) to Rule 8.600–E. 11 See Commentary .01(a)(1) to Rule 8.600–E. 12 For purposes of this filing, the term ‘‘ETFs’’ includes 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. The Fund will not invest in inverse or leveraged (e.g., 2X, –2X, 3X or –3X) ETFs. 13 For purposes of this filing, cash equivalents are the short-term instruments enumerated in Commentary .01(c) to Rule 8.600–E. PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 58765 Adviser’s quantitative model, although a more active approach may be taken depending on such factors as market conditions and investment opportunities, and the number of holdings in the International Fund may vary. The Sub-Adviser, with oversight by the Adviser, is responsible for the day-to-day management of the International Fund’s portfolio in implementing the foregoing modelsbased approach. The Adviser’s strategy, as implemented by the Sub-Adviser, seeks to manage the International Fund’s currency risk by dynamically hedging currency fluctuations in the relative value of the applicable foreign currencies against the U.S. dollar (the ‘‘International Multifactor Currency Hedge’’ and collectively, with the Emerging Markets Currency Hedge, the ‘‘Currency Hedge’’), ranging from a 0% to 100% hedge. The hedge ratios are adjusted as frequently as weekly utilizing signals such as interest rate differentials, momentum, and value. Under normal market conditions, the International Fund will hold only the following instruments: Non-U.S. Component Stocks, U.S. Component Stocks (in addition to U.S. exchangelisted ETFs), ADRs, cash and cash equivalents, and OTC currency forwards and OTC currency swaps. As noted above, the International Fund’s holdings meet the Generic Listing Standards with the exception of its holdings in OTC currency forwards and OTC currency swaps, which may not meet the requirement under Rule 8.600–E, Commentary .01(e) that prevents the aggregate gross notional value of OTC derivatives from exceeding 20% of the weight of the portfolio (including gross notional exposures).14 The Trust is required to comply with Rule 10A–3 under the Act 15 for the initial and continued listing of the Shares of each Fund. In addition, the Exchange represents that the Shares of each Fund will meet and be subject to all other requirements of the Generic Listing Standards and continued listing requirements for Managed Fund Shares under Exchange Rule 8.600–E. All statements and representations made in this filing regarding the description of the portfolio or reference assets, limitations on portfolio holdings or reference assets, dissemination and availability of reference assets and portfolio indicative values, and the 14 Because the Fund is not in compliance with Rule 8.600–E, Commentary .01(e), the Exchange has commenced delisting proceedings pursuant to Rule 5.5–E(m), including issuing a deficiency notification. 15 17 CFR 240.10A–3. E:\FR\FM\01NON1.SGM 01NON1 58766 Federal Register / Vol. 84, No. 212 / Friday, November 1, 2019 / Notices applicability of Exchange listing rules specified in this filing shall constitute continued listing requirements for the Funds. The Trust, on behalf of the Funds, has represented to the Exchange that it will advise the Exchange of any failure by a Fund or the Shares to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will surveil for compliance with the continued listing requirements. If a Fund is not or the Shares are not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under Exchange Rule 5.5– E(m). Application of Generic Listing Requirements The Exchange is submitting this proposed rule change because the portfolios for the Funds will not meet all of the Generic Listing Standards of Commentary .01 to NYSE Arca Rule 8.600–E applicable to the listing of Managed Fund Shares. Each Fund’s portfolio will meet all such requirements except for those set forth in Commentary .01(e) (with respect to OTC Derivatives), as described below.16 As described above, the Funds meet all of the Generic Listing Standards except with respect to their holdings in OTC currency forwards and OTC currency swaps, which would be used to achieve their respective Currency Hedge. The Exchange believes that this proposal does not raise any novel or substantive issues for the Commission to review because there are numerous filings that were either effective upon filing or that the Commission has approved for the listing and trading of series of Managed Fund Shares that employ similar hedging strategies.17 16 See note 7, supra. Securities Exchange Act Release Nos. 85474 (March 29, 2019), 84 FR 13371 (April 4, 2019) (SR–CboeBZX–2019–019) (notice of filing and immediate effectiveness of a proposed rule change to make certain changes to the listing rule governing the listing and trading of the shares of the WisdomTree Japan Multifactor Fund and the WisdomTree Europe Multifactor Fund to allow each fund to hedge its foreign currency exposure with up to 50% gross notional exposure to OTC currency swaps); 84143 (September 14, 2018), 83 FR 47659 (September 20, 2018) (SR–CboeBZX–2018–019) (order approving the listing and trading of eighteen series of Managed Fund Shares that allowed each series to hedge its foreign equity position with up to 50% gross notional exposure to OTC currency swaps); 84818 (December 13, 2018), 83 FR 65189 (December 19, 2018) (SR–NYSEArca–2018–75) (order approving the listing and trading of a series of Managed Fund Shares that may hold up to 50% of the aggregate gross notional value of the fund’s portfolio in OTC derivatives for the purpose of reducing currency, interest rate, credit, or duration risk, in addition to allowing the fund to hold an additional 20% of non-hedging OTC derivatives); 17 See VerDate Sep<11>2014 19:23 Oct 31, 2019 Jkt 250001 Further, the Exchange believes that, while the portfolios of the Funds may not meet Commentary .01(e) to Rule 8– 600–E, the policy issues that the rule is intended to address are otherwise mitigated by the structure and purpose of the Currency Hedge within the Funds.18 Specifically, the Exchange believes that the policy issues that Commentary .01(e) to Rule 8–600–E is intended to address are mitigated by the way that the Funds would use OTC currency forwards and OTC currency swaps. The rule is intended to mitigate concerns around the manipulability of a particular underlying reference asset or derivatives contract and to minimize counterparty risk. While the Currency Hedge positions taken by the Funds may not meet the Generic Listing Standards related to OTC derivatives holdings, the policy concerns about limiting exposure to potentially manipulable underlying reference assets that the Generic Listing Standards are intended to address are otherwise mitigated by the liquidity in the underlying spot currency market that prevents manipulation of the reference prices used by the Currency Hedge. The Funds will attempt to limit counterparty risk in OTC currency forwards and OTC currency swaps by: (i) Entering into such contracts only with counterparties that Adviser and/or Sub-Adviser believes are creditworthy; (ii) limiting a Fund’s exposure to each counterparty; and (iii) monitoring the 82591 (January 26, 2018), 83 FR 4707 (February 1, 2018) (SR–BatsBZX–2017–54) (the ‘‘Inflation Hedged Fund’’) (order approving the listing and trading of a series of Managed Fund Shares that could gain up to 50% gross notional exposure to OTC derivatives in order to hedge against inflation in the fund’s portfolio); and 83363 (June 1, 2018), 83 FR 26531 (June 7, 2018) (SR–CboeBZX–2018– 036) (notice of filing and immediate effectiveness of a proposal to allow the Inflation Hedged Fund to move increase its potential exposure to OTC derivative instruments from 50% to 60% of the fund’s gross notional value). See also SR– NYSEArca–2017–09 (Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 2, Regarding Investments of the Janus Short Duration Income ETF Listed Under NYSE Arca Equities Rule 8.600); SR–NYSEArca– 2018–75 (Order Approving a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Regarding the Listing and Trading of Shares of the PGIM Ultra Short Bond ETF); SR–NYSEArca–2018– 98 (Notice of Filing of Amendment No. 4 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 4, To List and Trade Shares of the iShares Commodity MultiStrategy ETF Under NYSE Arca Rule 8.600–E); and SR–NYSEArca–2018–83 (Notice of Filing of Amendment No. 4 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 4, Regarding Changes to Investments of the iShares Bloomberg Roll Select Commodity Strategy ETF). 18 Each Fund expects to invest in excess of 80% of its net assets in Non-U.S. Component Stocks in a manner that will comply with the Generic Listing Standards. PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 creditworthiness of each counterparty and the Fund’s exposure to each counterparty on an ongoing basis. Availability of Information As noted above, the Funds will each comply with the requirements for Managed Fund Shares related to Disclosed Portfolio, Net Asset Value (‘‘NAV’’), and the Portfolio Indicative Value. Additionally, the intra-day, closing and settlement prices of NonU.S. Component Stocks, U.S. Component Stocks, ADRs, and ETFs will be readily available from the securities exchanges on which such securities are traded, as well as published or other public sources, or online information services such as Bloomberg or Reuters. Intraday price quotations on OTC currency forwards and OTC currency swaps are available from major broker-dealer firms and from third-parties, which may provide prices free with a time delay or in real-time for a paid fee. Price information for cash equivalents will be available from major market data vendors. Each Fund’s Disclosed Portfolio will be available on the issuer’s website (www.WisdomTree.com) free of charge. Each Fund’s website will include the prospectus for the applicable Fund and additional information related to NAV and other applicable quantitative information. Information regarding market price and trading volume of the Shares will be continuously available throughout the day on brokers’ computer screens and other electronic services. Information regarding the previous day’s closing price and trading volume for the Shares will be published daily in the financial section of newspapers. Trading in the Shares may be halted for market conditions or for reasons that, in the view of the Exchange, make trading inadvisable. The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. The Exchange has appropriate rules to facilitate trading in the shares during all trading sessions. Surveillance The Exchange represents that trading in the Shares are subject to the existing trading surveillances, administered by FINRA on behalf of the Exchange, or by regulatory staff of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws. The Exchange represents that these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect E:\FR\FM\01NON1.SGM 01NON1 Federal Register / Vol. 84, No. 212 / Friday, November 1, 2019 / Notices violations of Exchange rules and federal securities laws applicable to trading on the Exchange.19 The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations. The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares, U.S. Component Stocks, ETFs, ADRs and certain of the Non-U.S. Component Stocks that are held by each Fund with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in such securities and financial instruments from such markets and other entities.20 In addition, the Exchange may obtain information regarding trading in such securities and financial instruments from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. In addition, FINRA, on behalf of the Exchange, is able to access, as needed, trade information for certain fixed income securities held by the Fund reported to FINRA’s TRACE. In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees. All statements and representations made in this filing regarding the description of the portfolio or reference assets, limitations on portfolio holdings or reference assets, dissemination and availability of reference assets and portfolio indicative values, and the applicability of Exchange listing rules specified in this filing shall constitute continued listing requirements for the Funds. The issuer must notify the Exchange of any failure by a Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange 19 FINRA conducts cross-market surveillances on behalf of the Exchange pursuant to a regulatory services agreement. The Exchange is responsible for FINRA’s performance under this regulatory services agreement. 20 For a list of the current members of ISG, see www.isgportal.org. The Exchange notes that not all components of the Disclosed Portfolio may trade on markets that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. VerDate Sep<11>2014 19:23 Oct 31, 2019 Jkt 250001 will monitor for compliance with the continued listing requirements. If a Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Rule 5.5–E(m). 2. Statutory Basis The Exchange believes that the proposal is consistent with Section 6(b) of the Act 21 in general and Section 6(b)(5) of the Act 22 in particular in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. Specifically, the Exchange believes that the proposal is consistent with Rule 6(b)(5) of the Act in that is designed to prevent fraudulent and manipulative acts and practices because the policy concerns about limiting exposure to potentially manipulable underlying reference assets that the Generic Listing Standards are intended to address, specifically Commentary .01(e) to Rule 8.600–E, related to OTC derivatives holdings, are otherwise mitigated by the liquidity in the underlying spot currency market that prevents manipulation of the reference prices used by the Currency Hedge. Specifically, the Exchange believes that the policy issues that Commentary .01(e) to Rule 8.600–E is intended to address are mitigated by the way that the Funds would use OTC currency forwards and OTC currency swaps. The rule is intended to mitigate concerns around the manipulability of a particular underlying reference asset or derivatives contract and to minimize counterparty risk. As noted above, while the Currency Hedge positions that might be taken by the Funds may not meet the Generic Listing Standards related to OTC derivatives holdings, the policy concerns about limiting exposure to potentially manipulable underlying reference assets that the Generic Listing Standards are intended to address are otherwise mitigated by the liquidity in the underlying spot currency market that prevents manipulation of the reference prices used by the Currency Hedge. The Funds will attempt to limit counterparty risk in OTC currency forwards and OTC currency swaps by: 21 15 22 15 PO 00000 U.S.C. 78f. U.S.C. 78f(b)(5). Frm 00092 Fmt 4703 (i) Entering into such contracts only with counterparties the Adviser and/or Sub-Adviser believes are creditworthy; (ii) limiting a Fund’s exposure to each counterparty; and (iii) monitoring the creditworthiness of each counterparty and the Fund’s exposure to each counterparty on an ongoing basis. The Exchange also notes that there are numerous filings that were either effective upon filing or that the Commission has approved for the listing and trading of series of Managed Fund Shares that employ similar hedging strategies.23 The Exchange believes that it is appropriate and in the public interest to allow the Funds, for hedging purposes only, to exceed the 20% limit in Commentary .01(e) to Rule 8.600–E of portfolio assets that may be invested in OTC derivatives to a maximum of 50% of Fund assets (calculated as the aggregate gross notional value of the OTC derivatives). Under Commentary .01(e), a series of Managed Fund Shares listed under the Generic Listing Standards may invest up to 20% of its assets (calculated as the aggregate gross notional value) in OTC derivatives. Because the Funds, in furtherance of their investment objective, may invest a substantial percentage of their investments in OTC currency forwards and OTC currency swaps, the 20% limit in Commentary .01(e) to Rule 8.600 could result in the Funds being unable to fully pursue their investment objective while attempting to sufficiently mitigate investment risks. The inability of the Funds to adequately hedge their holdings would effectively limit the Funds’ ability to invest in certain instruments, or could expose the Funds to additional investment risk. The Exchange believes that its surveillance procedures are adequate to properly monitor the trading of the Funds on the Exchange during all trading sessions and to deter and detect violations of Exchange rules and the applicable federal securities laws. Trading of the Funds through the Exchange will be subject to the Exchange’s surveillance procedures for derivative products, including Managed Fund Shares. All statements and representations made in this filing regarding the description of the portfolio or reference assets, limitations on portfolio holdings or reference assets, dissemination and availability of reference assets and portfolio indicative values, and the applicability of Exchange listing rules specified in this filing shall constitute continued listing requirements for the Funds. The Trust, 23 See Sfmt 4703 58767 E:\FR\FM\01NON1.SGM note 17, supra. 01NON1 58768 Federal Register / Vol. 84, No. 212 / Friday, November 1, 2019 / Notices on behalf of the Funds, has represented to the Exchange that it will advise the Exchange of any failure by a Fund or the Shares to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will surveil for compliance with the continued listing requirements. If a Fund or the Shares are not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under Exchange Rule 5.5– E(m). As described above, all ADRs and ETFs will be listed on a U.S. national securities exchange, all of which are members of ISG or are exchanges with which the Exchange has in place a comprehensive surveillance sharing agreement. The Exchange may obtain information regarding trading in the Funds, U.S. Component Stocks, ETFs, ADRs, and certain Non-U.S. Component Stocks held by each Fund via the ISG, from other exchanges that are members or affiliates of the ISG, or with which the Exchange has entered into a comprehensive surveillance sharing agreement. Additionally, the Exchange or FINRA, on behalf of the Exchange, are able to access, as needed, trade information for certain fixed income instruments reported to TRACE. For the above reasons, the Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change will facilitate the continued listing and trading 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 The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 24 and Rule 24 15 U.S.C. 78s(b)(3)(A)(iii). VerDate Sep<11>2014 19:23 Oct 31, 2019 Jkt 250001 19b–4(f)(6) thereunder.25 Because the 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, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 26 and Rule 19b–4(f)(6)(iii) thereunder.27 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 28 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 29 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay so that the proposed rule change may become operative upon filing. The Commission notes that there are numerous filings that were either effective upon filing or that the Commission approved for the listing and trading of series of Managed Fund Shares that employ similar hedging strategies 30 and does not believe this proposal raises new or novel issues. The Commission also notes that, except for the changes in this proposed rule change, the Funds comply with, and will continue to comply with, all other listing requirements on an initial and continued listing basis under Commentary .01(e) to Rule 8.600–E. The Commission therefore believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest and hereby waives the operative delay and designates the proposed rule change operative upon filing.31 At any time within 60 days of the filing of such 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 25 17 CFR 240.19b–4(f)(6). U.S.C. 78s(b)(3)(A)(iii). 27 17 CFR 240.19b–4(f)(6). 28 Id. 29 17 CFR 240.19b–4(f)(6)(iii). 30 See note 17, supra. 31 For purposes only of waiving the 30-day operative delay, the Commission also has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 26 15 PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2019–73 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–2019–73. 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–2019–73 and should be submitted on or before November 22, 2019. E:\FR\FM\01NON1.SGM 01NON1 Federal Register / Vol. 84, No. 212 / Friday, November 1, 2019 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.32 Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–23859 Filed 10–31–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 33678; 812–15060] OSI ETF Trust and O’Shares Investment Advisers, LLC; Notice of Application October 29, 2019. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice. AGENCY: Notice of an application under section 6(c) of the Investment Company Act of 1940 (‘‘Act’’) for an exemption from section 15(a) of the Act, as well as from certain disclosure requirements in rule 20a–1 under the Act, Item 19(a)(3) of Form N–1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A under the Securities Exchange Act of 1934 (‘‘1934 Act’’), and sections 6–07(2)(a), (b), and (c) of Regulation S–X (‘‘Disclosure Requirements’’). APPLICANTS: OSI ETF Trust (‘‘Trust’’), a Delaware statutory trust registered under the Act as an open-end management investment company with multiple series (each a ‘‘Fund’’) and O’Shares Investment Advisers, LLC (‘‘Initial Adviser’’), a Delaware limited liability company registered as an investment adviser under the Investment Advisers Act of 1940 (‘‘Advisers Act’’) that serves an investment adviser to the Funds (collectively with the Trust, the ‘‘Applicants’’). SUMMARY OF APPLICATION: The requested exemption would permit Applicants to enter into and materially amend subadvisory agreements with subadvisers without shareholder approval and would grant relief from the Disclosure Requirements as they relate to fees paid to the subadvisers. FILING DATES: The application was filed on August 20, 2019, and amended on October 4, 2019. HEARING OR NOTIFICATION OF HEARING: An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the 32 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:23 Oct 31, 2019 Jkt 250001 Commission’s Secretary and serving Applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on November 25, 2019, and should be accompanied by proof of service on the Applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to rule 0– 5 under the Act, hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission’s Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. Applicants: Louise Anne Poirier, O’Shares Investment Advisers, LLC, 1010 Sherbrooke Street W, Suite 2105, Montreal, QC H3A 2R7 Canada and Michael W. Mundt, Stradley Ronon Stevens & Young, LLP, 1250 Connecticut Avenue NW, Ste. 500, Washington, DC 20036. FOR FURTHER INFORMATION CONTACT: Laura L. Solomon, Senior Counsel, at (202) 551–6915, or Kaitlin C. Bottock, Branch Chief, at (202) 551–6821 (Division of Investment Management, Chief Counsel’s Office). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained via the Commission’s website by searching for the file number or an Applicant using the ‘‘Company’’ name box, at https://www.sec.gov/ search/search.htm or by calling (202) 551–8090. I. Requested Exemptive Relief 1. Applicants request an order to permit the Adviser,1 subject to the approval of the board of trustees of each Trust (collectively, the ‘‘Board’’),2 including a majority of the trustees who are not ‘‘interested persons’’ of the Trust or the Adviser, as defined in section 2(a)(19) of the Act (the ‘‘Independent Trustees’’), without obtaining 1 The term ‘‘Adviser’’ means (i) the Initial Adviser, (ii) its successors, and (iii) any entity controlling, controlled by or under common control with, the Initial Adviser or its successors that serves as the primary adviser to a Subadvised Fund. For the purposes of the requested order, ‘‘successor’’ is limited to an entity or entities that result from a reorganization into another jurisdiction or a change in the type of business organization. Any other Adviser also will be registered with the Commission as an investment adviser under the Advisers Act. 2 The term ‘‘Board’’ also includes the board of trustees or directors of a future Subadvised Fund (as defined below), if different from the board of trustees (‘‘Trustees’’) of the Trust. PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 58769 shareholder approval, to: (i) Select investment subadvisers (‘‘Subadvisers’’) for all or a portion of the assets of one or more of the Funds pursuant to an investment subadvisory agreement with each Subadviser (each a ‘‘Subadvisory Agreement’’); and (ii) materially amend Subadvisory Agreements with the Subadvisers. 2. Applicants also request an order exempting the Subadvised Funds (as defined below) from the Disclosure Requirements, which require each Fund to disclose fees paid to a Subadviser. Applicants seek relief to permit each Subadvised Fund to disclose (as a dollar amount and a percentage of the Fund’s net assets): (i) The aggregate fees paid to the Adviser and any Wholly-Owned Subadvisers; and (ii) the aggregate fees paid to Affiliated and Non-Affiliated Subadvisers (‘‘Aggregate Fee Disclosure’’).3 Applicants seek an exemption to permit a Subadvised Fund to include only the Aggregate Fee Disclosure.4 3. Applicants request that the relief apply to Applicants, as well as to any future Fund and any other existing or future registered open-end management investment company or series thereof that intends to rely on the requested order in the future and that: (i) Is advised by the Adviser; (ii) uses the multi-manager structure described in the application; and (iii) complies with the terms and conditions of the application (each, a ‘‘Subadvised Fund’’).5 II. Management of the Subadvised Funds 4. The Adviser serves or will serve as the investment adviser to each 3 A ‘‘Wholly-Owned Subadviser’’ is any investment adviser that is (1) an indirect or direct ‘‘wholly-owned subsidiary’’ (as such term is defined in the Act) of the Adviser, (2) a ‘‘sister company’’ of the Adviser that is an indirect or direct ‘‘wholly-owned subsidiary’’ of the same company that indirectly or directly wholly owns the Adviser (the Adviser’s ‘‘parent company’’), or (3) a parent company of the Adviser. An ‘‘Affiliated Subadviser’’ is any investment subadviser that is not a Wholly-Owned Subadviser, but is an ‘‘affiliated person’’ (as defined in section 2(a)(3) of the Act) of a Subadvised Fund or the Adviser for reasons other than serving as investment subadviser to one or more Funds. A ‘‘Non-Affiliated Subadviser’’ is any investment adviser that is not an ‘‘affiliated person’’ (as defined in the Act) of a Fund or the Adviser, except to the extent that an affiliation arises solely because the Subadviser serves as a subadviser to one or more Funds. 4 Applicants note that all other items required by sections 6–07(2)(a), (b) and (c) of Regulation S–X will be disclosed. 5 All registered open-end investment companies that currently intend to rely on the requested order are named as Applicants. Any entity that relies on the requested order will do so only in accordance with the terms and conditions contained in the application. E:\FR\FM\01NON1.SGM 01NON1

Agencies

[Federal Register Volume 84, Number 212 (Friday, November 1, 2019)]
[Notices]
[Pages 58763-58769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23859]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87409; File No. SR-NYSEArca-2019-73]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Permitting the 
Continued Listing and Trading of the WisdomTree Emerging Markets 
Multifactor Fund and the WisdomTree International Multifactor Fund

October 28, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on October 15, 2019, NYSE Arca, Inc. (``NYSE Arca'' or 
``Exchange'') filed with the Securities and Exchange Commission

[[Page 58764]]

(``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to permit the continued listing and trading 
of the WisdomTree Emerging Markets Multifactor Fund and the WisdomTree 
International Multifactor Fund, under NYSE Arca Rule 8.600-E (``Managed 
Fund Shares''). 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
    Pursuant to NYSE Arca Rule 8.600-E, the Exchange proposes to permit 
the continued listing and trading of the WisdomTree Emerging Markets 
Multifactor Fund (``Emerging Markets Fund'') and the WisdomTree 
International Multifactor Fund (``International Fund'') (each a Fund, 
and collectively, the ``Funds''), that do not otherwise meet the 
standards set forth in Rule 8.600-E, Commentary .01(e), as described 
below. The shares (``Shares'') of the Funds commenced trading on the 
Exchange on August 10, 2018 pursuant to the generic listing criteria in 
Commentary .01 to NYSE Arca Rule 8.600-E (``Managed Fund Shares'').\4\
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    \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) organized as an open-end 
investment company or similar entity that invests in a portfolio of 
securities selected by its investment adviser consistent with its 
investment objectives and policies. In contrast, an open-end 
investment company that issues Investment Company Units, listed and 
traded on the Exchange under NYSE Arca Rule 5.2-E(j)(3), seeks to 
provide investment results that correspond generally to the price 
and yield performance of a specific foreign or domestic stock index, 
fixed income securities index or combination thereof.
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    The Shares are offered by the WisdomTree Trust (the ``Trust''). 
WisdomTree Asset Management, Inc. (the ``Adviser'') acts as adviser to 
the Funds. Mellon Investments Corporation acts as sub-adviser (the 
``Sub-Adviser'') to the Funds. The Trust is registered with the 
Commission as an investment company and has most recently updated its 
registration statement on Form N-1A (``Registration Statement'') with 
the Commission on behalf of the Funds that includes disclosure 
described herein.\5\
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    \5\ See Registration Statement (File Nos. 333-132380 and 811-
21864) and filings dated August 1, 2019. The description of the 
operation of the Trust and the Funds herein is based, in part, on 
the information in the Registration Statement.
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    Commentary .06 to Rule 8.600-E provides that, if the investment 
adviser to the investment company issuing Managed Fund Shares is 
affiliated with a broker-dealer, such investment adviser shall erect 
and maintain a ``fire wall'' between the investment adviser and the 
broker-dealer with respect to access to information concerning the 
composition and/or changes to such investment company portfolio.\6\ In 
addition, Commentary .06 further requires that personnel who make 
decisions on the investment company's portfolio composition must be 
subject to procedures designed to prevent the use and dissemination of 
material nonpublic information regarding the applicable investment 
company portfolio. The Adviser is not registered as a broker-dealer and 
is not affiliated with a broker-dealer. The Sub-Adviser is affiliated 
with multiple broker-dealers and has implemented and will maintain a 
``fire wall'' with respect to such broker-dealers and their personnel 
regarding access to information concerning the composition and/or 
changes to a Fund's portfolio. In addition, Sub-Adviser personnel who 
make decisions regarding a Fund's portfolio are subject to procedures 
designed to prevent the use and dissemination of material nonpublic 
information regarding such Fund's portfolio. In the event (a) the 
Adviser or Sub-Adviser becomes registered as a broker-dealer or newly 
affiliated with a broker-dealer, or (b) any new adviser or sub-adviser 
is a registered broker-dealer or becomes affiliated with a broker-
dealer, it will implement and maintain a fire wall with respect to its 
relevant personnel or its broker-dealer affiliate regarding access to 
information concerning the composition 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.
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    \6\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). As a result, the Adviser, Sub-Adviser and their related 
personnel are subject to the provisions of Rule 204A-1 under the 
Advisers Act relating to codes of ethics. This Rule requires 
investment advisers to adopt a code of ethics that reflects the 
fiduciary nature of the relationship to clients as well as 
compliance with other applicable securities laws. Accordingly, 
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with 
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under 
the Advisers Act makes it unlawful for an investment adviser to 
provide investment advice to clients unless such investment adviser 
has (i) adopted and implemented written policies and procedures 
reasonably designed to prevent violation, by the investment adviser 
and its supervised persons, of the Advisers Act and the Commission 
rules adopted thereunder; (ii) implemented, at a minimum, an annual 
review regarding the adequacy of the policies and procedures 
established pursuant to subparagraph (i) above and the effectiveness 
of their implementation; and (iii) designated an individual (who is 
a supervised person) responsible for administering the policies and 
procedures adopted under subparagraph (i) above.
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    The Exchange submits this proposal in order to allow the Funds to 
hold OTC currency swaps and OTC currency forwards in a manner that may 
not comply with Commentary .01(e) to Rule 8.600-E.\7\ Specifically, the 
aggregate gross notional value of each Fund's investments in OTC 
derivatives may exceed 20% of Fund assets, calculated as the aggregate 
gross notional value of such OTC derivatives.\8\ The Exchange proposes 
that up to 50% of each Fund's assets (calculated as the aggregate gross 
notional value of the OTC derivatives) may be invested in OTC 
derivatives, that is, currency swaps and currency forwards, that are 
used to reduce (that is, ``hedge'') currency risk arising from each 
Fund's investments. Each Fund's investments in OTC derivatives, other

[[Page 58765]]

than OTC derivatives used to hedge each Fund's portfolio against 
currency risk, will be limited to 20% of the assets in each Fund's 
portfolio, calculated as the aggregate gross notional value of such OTC 
derivatives. The only OTC derivatives that each Fund may invest in are 
currency swaps and currency forwards.
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    \7\ In particular, the Funds may not meet the requirement under 
Commentary .01(e) to Rule 8.600-E, which provides that a portfolio 
may hold OTC derivatives, including forwards, options and swaps on 
commodities, currencies and financial instruments (e.g., stocks, 
fixed income, interest rates, and volatility) or a basket or index 
of any of the foregoing; however, on both an initial and continuing 
basis, no more than 20% of the assets in the portfolio may be 
invested in OTC derivatives. For purposes of calculating this 
limitation, a portfolio's investment in OTC derivatives will be 
calculated as the aggregate gross notional value of the OTC 
derivatives.
    \8\ The Adviser and Sub-Adviser monitor counterparty credit risk 
exposure (including for OTC derivatives) and evaluate counterparty 
credit quality on a continuous basis.
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    Otherwise, the Funds comply with, and will continue to comply with, 
all other listing requirements on an initial and continued listing 
basis under Commentary .01(e) to Rule 8.600-E for Managed Fund Shares 
(``Generic Listing Standards'').
WisdomTree Emerging Markets Multifactor Fund
    According to the Registration Statement, the Emerging Markets Fund 
seeks capital appreciation. The Emerging Markets Fund is actively 
managed using a model-based approach and seeks to achieve its 
investment objective by investing primarily in equity securities of 
emerging markets that exhibit certain characteristics that the Adviser 
believes to be indicative of positive future returns based on a model 
developed by the Adviser. The Adviser seeks to identify equity 
securities of emerging markets countries that have the highest 
potential for returns based on proprietary measures of fundamental 
factors, such as value and quality, and technical factors, such as 
momentum and correlation. The Adviser employs a quantitative model to 
identify which securities the Emerging Markets Fund might purchase and 
sell and opportune times for purchases and sales. At a minimum, the 
Emerging Markets Fund's portfolio will be rebalanced quarterly 
according to the Adviser's quantitative model, although a more active 
approach may be taken depending on such factors as market conditions 
and investment opportunities, and the number of holdings in the 
Emerging Markets Fund may vary. The Sub-Adviser, with oversight by the 
Adviser, is responsible for the day-to-day management of the Emerging 
Markets Fund's portfolio in implementing the foregoing models-based 
approach.
    The Adviser's strategy, as implemented by the Sub-Adviser, seeks to 
manage the Emerging Markets Fund's currency risk by dynamically hedging 
currency fluctuations in the relative value of the applicable foreign 
currencies against the U.S. dollar (the ``Emerging Markets Currency 
Hedge''), ranging from a 0% to 100% hedge. The hedge ratios are 
adjusted as frequently as weekly utilizing signals such as interest 
rate differentials, momentum, and value.
    Under normal market conditions,\9\ the Emerging Markets Fund will 
hold only the following instruments: Non-U.S. Component Stocks,\10\ 
U.S. Component Stocks \11\ (in addition to U.S. exchange-listed 
exchange-traded funds (``ETFs'')),\12\ American Depository Receipts 
(``ADRs''), cash and cash equivalents,\13\ OTC currency forwards and 
OTC currency swaps. As noted above, all of the Emerging Markets Fund's 
holdings meet, and will continue to meet, the Generic Listing Standards 
with the exception of its holdings in OTC currency forwards and OTC 
currency swaps, which, following the effectiveness of this proposal, 
may exceed the requirement under Rule 8.600-E, Commentary .01(e), that 
prohibits the aggregate gross notional value of OTC derivatives from 
exceeding 20% of the weight of the portfolio (including gross notional 
exposures).
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    \9\ The term ``normal market conditions'' is defined in NYSE 
Arca Rule 8.600-E(c)(5).
    \10\ See Commentary .01(a)(2) to Rule 8.600-E.
    \11\ See Commentary .01(a)(1) to Rule 8.600-E.
    \12\ For purposes of this filing, the term ``ETFs'' includes 
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. The Fund will not invest in inverse or 
leveraged (e.g., 2X, -2X, 3X or -3X) ETFs.
    \13\ For purposes of this filing, cash equivalents are the 
short-term instruments enumerated in Commentary .01(c) to Rule 
8.600-E.
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WisdomTree International Multifactor Fund
    According to the Registration Statement, the International Fund 
seeks capital appreciation. The International Fund is actively managed 
using a model-based approach and seeks to achieve its investment 
objective by investing primarily in equity securities of developed 
markets, excluding the United States and Canada, that exhibit certain 
characteristics that the Adviser believes to be indicative of positive 
future returns based on a model developed by the Adviser. The Adviser 
seeks to identify equity securities of developed countries, excluding 
the United States and Canada, that have the highest potential for 
returns based on proprietary measures of fundamental factors, such as 
value and quality, and technical factors, such as momentum and 
correlation. The Adviser employs a quantitative model to identify which 
securities the International Fund might purchase and sell and opportune 
times for purchases and sales. At a minimum, the International Fund's 
portfolio will be rebalanced quarterly according to the Adviser's 
quantitative model, although a more active approach may be taken 
depending on such factors as market conditions and investment 
opportunities, and the number of holdings in the International Fund may 
vary. The Sub-Adviser, with oversight by the Adviser, is responsible 
for the day-to-day management of the International Fund's portfolio in 
implementing the foregoing models-based approach.
    The Adviser's strategy, as implemented by the Sub-Adviser, seeks to 
manage the International Fund's currency risk by dynamically hedging 
currency fluctuations in the relative value of the applicable foreign 
currencies against the U.S. dollar (the ``International Multifactor 
Currency Hedge'' and collectively, with the Emerging Markets Currency 
Hedge, the ``Currency Hedge''), ranging from a 0% to 100% hedge. The 
hedge ratios are adjusted as frequently as weekly utilizing signals 
such as interest rate differentials, momentum, and value.
    Under normal market conditions, the International Fund will hold 
only the following instruments: Non-U.S. Component Stocks, U.S. 
Component Stocks (in addition to U.S. exchange-listed ETFs), ADRs, cash 
and cash equivalents, and OTC currency forwards and OTC currency swaps. 
As noted above, the International Fund's holdings meet the Generic 
Listing Standards with the exception of its holdings in OTC currency 
forwards and OTC currency swaps, which may not meet the requirement 
under Rule 8.600-E, Commentary .01(e) that prevents the aggregate gross 
notional value of OTC derivatives from exceeding 20% of the weight of 
the portfolio (including gross notional exposures).\14\
---------------------------------------------------------------------------

    \14\ Because the Fund is not in compliance with Rule 8.600-E, 
Commentary .01(e), the Exchange has commenced delisting proceedings 
pursuant to Rule 5.5-E(m), including issuing a deficiency 
notification.
---------------------------------------------------------------------------

    The Trust is required to comply with Rule 10A-3 under the Act \15\ 
for the initial and continued listing of the Shares of each Fund. In 
addition, the Exchange represents that the Shares of each Fund will 
meet and be subject to all other requirements of the Generic Listing 
Standards and continued listing requirements for Managed Fund Shares 
under Exchange Rule 8.600-E. All statements and representations made in 
this filing regarding the description of the portfolio or reference 
assets, limitations on portfolio holdings or reference assets, 
dissemination and availability of reference assets and portfolio 
indicative values, and the

[[Page 58766]]

applicability of Exchange listing rules specified in this filing shall 
constitute continued listing requirements for the Funds. The Trust, on 
behalf of the Funds, has represented to the Exchange that it will 
advise the Exchange of any failure by a Fund or the Shares to comply 
with the continued listing requirements, and, pursuant to its 
obligations under Section 19(g)(1) of the Act, the Exchange will 
surveil for compliance with the continued listing requirements. If a 
Fund is not or the Shares are not in compliance with the applicable 
listing requirements, the Exchange will commence delisting procedures 
under Exchange Rule 5.5-E(m).
---------------------------------------------------------------------------

    \15\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Application of Generic Listing Requirements
    The Exchange is submitting this proposed rule change because the 
portfolios for the Funds will not meet all of the Generic Listing 
Standards of Commentary .01 to NYSE Arca Rule 8.600-E applicable to the 
listing of Managed Fund Shares. Each Fund's portfolio will meet all 
such requirements except for those set forth in Commentary .01(e) (with 
respect to OTC Derivatives), as described below.\16\
---------------------------------------------------------------------------

    \16\ See note 7, supra.
---------------------------------------------------------------------------

    As described above, the Funds meet all of the Generic Listing 
Standards except with respect to their holdings in OTC currency 
forwards and OTC currency swaps, which would be used to achieve their 
respective Currency Hedge. The Exchange believes that this proposal 
does not raise any novel or substantive issues for the Commission to 
review because there are numerous filings that were either effective 
upon filing or that the Commission has approved for the listing and 
trading of series of Managed Fund Shares that employ similar hedging 
strategies.\17\
---------------------------------------------------------------------------

    \17\ See Securities Exchange Act Release Nos. 85474 (March 29, 
2019), 84 FR 13371 (April 4, 2019) (SR-CboeBZX-2019-019) (notice of 
filing and immediate effectiveness of a proposed rule change to make 
certain changes to the listing rule governing the listing and 
trading of the shares of the WisdomTree Japan Multifactor Fund and 
the WisdomTree Europe Multifactor Fund to allow each fund to hedge 
its foreign currency exposure with up to 50% gross notional exposure 
to OTC currency swaps); 84143 (September 14, 2018), 83 FR 47659 
(September 20, 2018) (SR-CboeBZX-2018-019) (order approving the 
listing and trading of eighteen series of Managed Fund Shares that 
allowed each series to hedge its foreign equity position with up to 
50% gross notional exposure to OTC currency swaps); 84818 (December 
13, 2018), 83 FR 65189 (December 19, 2018) (SR-NYSEArca-2018-75) 
(order approving the listing and trading of a series of Managed Fund 
Shares that may hold up to 50% of the aggregate gross notional value 
of the fund's portfolio in OTC derivatives for the purpose of 
reducing currency, interest rate, credit, or duration risk, in 
addition to allowing the fund to hold an additional 20% of non-
hedging OTC derivatives); 82591 (January 26, 2018), 83 FR 4707 
(February 1, 2018) (SR-BatsBZX-2017-54) (the ``Inflation Hedged 
Fund'') (order approving the listing and trading of a series of 
Managed Fund Shares that could gain up to 50% gross notional 
exposure to OTC derivatives in order to hedge against inflation in 
the fund's portfolio); and 83363 (June 1, 2018), 83 FR 26531 (June 
7, 2018) (SR-CboeBZX-2018-036) (notice of filing and immediate 
effectiveness of a proposal to allow the Inflation Hedged Fund to 
move increase its potential exposure to OTC derivative instruments 
from 50% to 60% of the fund's gross notional value). See also SR-
NYSEArca-2017-09 (Notice of Filing of Amendment No. 2 and Order 
Granting Accelerated Approval of a Proposed Rule Change, as Modified 
by Amendment No. 2, Regarding Investments of the Janus Short 
Duration Income ETF Listed Under NYSE Arca Equities Rule 8.600); SR-
NYSEArca-2018-75 (Order Approving a Proposed Rule Change, as 
Modified by Amendment No. 1 Thereto, Regarding the Listing and 
Trading of Shares of the PGIM Ultra Short Bond ETF); SR-NYSEArca-
2018-98 (Notice of Filing of Amendment No. 4 and Order Granting 
Accelerated Approval of a Proposed Rule Change, as Modified by 
Amendment No. 4, To List and Trade Shares of the iShares Commodity 
Multi-Strategy ETF Under NYSE Arca Rule 8.600-E); and SR-NYSEArca-
2018-83 (Notice of Filing of Amendment No. 4 and Order Granting 
Accelerated Approval of a Proposed Rule Change, as Modified by 
Amendment No. 4, Regarding Changes to Investments of the iShares 
Bloomberg Roll Select Commodity Strategy ETF).
---------------------------------------------------------------------------

    Further, the Exchange believes that, while the portfolios of the 
Funds may not meet Commentary .01(e) to Rule 8-600-E, the policy issues 
that the rule is intended to address are otherwise mitigated by the 
structure and purpose of the Currency Hedge within the Funds.\18\ 
Specifically, the Exchange believes that the policy issues that 
Commentary .01(e) to Rule 8-600-E is intended to address are mitigated 
by the way that the Funds would use OTC currency forwards and OTC 
currency swaps. The rule is intended to mitigate concerns around the 
manipulability of a particular underlying reference asset or 
derivatives contract and to minimize counterparty risk. While the 
Currency Hedge positions taken by the Funds may not meet the Generic 
Listing Standards related to OTC derivatives holdings, the policy 
concerns about limiting exposure to potentially manipulable underlying 
reference assets that the Generic Listing Standards are intended to 
address are otherwise mitigated by the liquidity in the underlying spot 
currency market that prevents manipulation of the reference prices used 
by the Currency Hedge. The Funds will attempt to limit counterparty 
risk in OTC currency forwards and OTC currency swaps by: (i) Entering 
into such contracts only with counterparties that Adviser and/or Sub-
Adviser believes are creditworthy; (ii) limiting a Fund's exposure to 
each counterparty; and (iii) monitoring the creditworthiness of each 
counterparty and the Fund's exposure to each counterparty on an ongoing 
basis.
---------------------------------------------------------------------------

    \18\ Each Fund expects to invest in excess of 80% of its net 
assets in Non-U.S. Component Stocks in a manner that will comply 
with the Generic Listing Standards.
---------------------------------------------------------------------------

Availability of Information
    As noted above, the Funds will each comply with the requirements 
for Managed Fund Shares related to Disclosed Portfolio, Net Asset Value 
(``NAV''), and the Portfolio Indicative Value. Additionally, the intra-
day, closing and settlement prices of Non-U.S. Component Stocks, U.S. 
Component Stocks, ADRs, and ETFs will be readily available from the 
securities exchanges on which such securities are traded, as well as 
published or other public sources, or online information services such 
as Bloomberg or Reuters. Intraday price quotations on OTC currency 
forwards and OTC currency swaps are available from major broker-dealer 
firms and from third-parties, which may provide prices free with a time 
delay or in real-time for a paid fee. Price information for cash 
equivalents will be available from major market data vendors. Each 
Fund's Disclosed Portfolio will be available on the issuer's website 
(www.WisdomTree.com) free of charge. Each Fund's website will include 
the prospectus for the applicable Fund and additional information 
related to NAV and other applicable quantitative information. 
Information regarding market price and trading volume of the Shares 
will be continuously available throughout the day on brokers' computer 
screens and other electronic services. Information regarding the 
previous day's closing price and trading volume for the Shares will be 
published daily in the financial section of newspapers. Trading in the 
Shares may be halted for market conditions or for reasons that, in the 
view of the Exchange, make trading inadvisable. The Exchange deems the 
Shares to be equity securities, thus rendering trading in the Shares 
subject to the Exchange's existing rules governing the trading of 
equity securities. The Exchange has appropriate rules to facilitate 
trading in the shares during all trading sessions.
Surveillance
    The Exchange represents that trading in the Shares are subject to 
the existing trading surveillances, administered by FINRA on behalf of 
the Exchange, or by regulatory staff of the Exchange, which are 
designed to detect violations of Exchange rules and applicable federal 
securities laws. The Exchange represents that these procedures are 
adequate to properly monitor Exchange trading of the Shares in all 
trading sessions and to deter and detect

[[Page 58767]]

violations of Exchange rules and federal securities laws applicable to 
trading on the Exchange.\19\
---------------------------------------------------------------------------

    \19\ FINRA conducts cross-market surveillances on behalf of the 
Exchange pursuant to a regulatory services agreement. The Exchange 
is responsible for FINRA's performance under this regulatory 
services agreement.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations.
    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares, U.S. Component 
Stocks, ETFs, ADRs and certain of the Non-U.S. Component Stocks that 
are held by each Fund with other markets and other entities that are 
members of the ISG, and the Exchange or FINRA, on behalf of the 
Exchange, or both, may obtain trading information regarding trading in 
such securities and financial instruments from such markets and other 
entities.\20\ In addition, the Exchange may obtain information 
regarding trading in such securities and financial instruments from 
markets and other entities that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement. 
In addition, FINRA, on behalf of the Exchange, is able to access, as 
needed, trade information for certain fixed income securities held by 
the Fund reported to FINRA's TRACE.
---------------------------------------------------------------------------

    \20\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio may trade on markets that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement.
---------------------------------------------------------------------------

    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
    All statements and representations made in this filing regarding 
the description of the portfolio or reference assets, limitations on 
portfolio holdings or reference assets, dissemination and availability 
of reference assets and portfolio indicative values, and the 
applicability of Exchange listing rules specified in this filing shall 
constitute continued listing requirements for the Funds.
    The issuer must notify the Exchange of any failure by a Fund to 
comply with the continued listing requirements, and, pursuant to its 
obligations under Section 19(g)(1) of the Act, the Exchange will 
monitor for compliance with the continued listing requirements. If a 
Fund is not in compliance with the applicable listing requirements, the 
Exchange will commence delisting procedures under NYSE Arca Rule 5.5-
E(m).
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \21\ in general and Section 6(b)(5) of the Act \22\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f.
    \22\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Exchange believes that the proposal is consistent 
with Rule 6(b)(5) of the Act in that is designed to prevent fraudulent 
and manipulative acts and practices because the policy concerns about 
limiting exposure to potentially manipulable underlying reference 
assets that the Generic Listing Standards are intended to address, 
specifically Commentary .01(e) to Rule 8.600-E, related to OTC 
derivatives holdings, are otherwise mitigated by the liquidity in the 
underlying spot currency market that prevents manipulation of the 
reference prices used by the Currency Hedge. Specifically, the Exchange 
believes that the policy issues that Commentary .01(e) to Rule 8.600-E 
is intended to address are mitigated by the way that the Funds would 
use OTC currency forwards and OTC currency swaps. The rule is intended 
to mitigate concerns around the manipulability of a particular 
underlying reference asset or derivatives contract and to minimize 
counterparty risk. As noted above, while the Currency Hedge positions 
that might be taken by the Funds may not meet the Generic Listing 
Standards related to OTC derivatives holdings, the policy concerns 
about limiting exposure to potentially manipulable underlying reference 
assets that the Generic Listing Standards are intended to address are 
otherwise mitigated by the liquidity in the underlying spot currency 
market that prevents manipulation of the reference prices used by the 
Currency Hedge. The Funds will attempt to limit counterparty risk in 
OTC currency forwards and OTC currency swaps by: (i) Entering into such 
contracts only with counterparties the Adviser and/or Sub-Adviser 
believes are creditworthy; (ii) limiting a Fund's exposure to each 
counterparty; and (iii) monitoring the creditworthiness of each 
counterparty and the Fund's exposure to each counterparty on an ongoing 
basis.
    The Exchange also notes that there are numerous filings that were 
either effective upon filing or that the Commission has approved for 
the listing and trading of series of Managed Fund Shares that employ 
similar hedging strategies.\23\
---------------------------------------------------------------------------

    \23\ See note 17, supra.
---------------------------------------------------------------------------

    The Exchange believes that it is appropriate and in the public 
interest to allow the Funds, for hedging purposes only, to exceed the 
20% limit in Commentary .01(e) to Rule 8.600-E of portfolio assets that 
may be invested in OTC derivatives to a maximum of 50% of Fund assets 
(calculated as the aggregate gross notional value of the OTC 
derivatives). Under Commentary .01(e), a series of Managed Fund Shares 
listed under the Generic Listing Standards may invest up to 20% of its 
assets (calculated as the aggregate gross notional value) in OTC 
derivatives. Because the Funds, in furtherance of their investment 
objective, may invest a substantial percentage of their investments in 
OTC currency forwards and OTC currency swaps, the 20% limit in 
Commentary .01(e) to Rule 8.600 could result in the Funds being unable 
to fully pursue their investment objective while attempting to 
sufficiently mitigate investment risks. The inability of the Funds to 
adequately hedge their holdings would effectively limit the Funds' 
ability to invest in certain instruments, or could expose the Funds to 
additional investment risk.
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of the Funds on the Exchange during all 
trading sessions and to deter and detect violations of Exchange rules 
and the applicable federal securities laws.
    Trading of the Funds through the Exchange will be subject to the 
Exchange's surveillance procedures for derivative products, including 
Managed Fund Shares. All statements and representations made in this 
filing regarding the description of the portfolio or reference assets, 
limitations on portfolio holdings or reference assets, dissemination 
and availability of reference assets and portfolio indicative values, 
and the applicability of Exchange listing rules specified in this 
filing shall constitute continued listing requirements for the Funds. 
The Trust,

[[Page 58768]]

on behalf of the Funds, has represented to the Exchange that it will 
advise the Exchange of any failure by a Fund or the Shares to comply 
with the continued listing requirements, and, pursuant to its 
obligations under Section 19(g)(1) of the Act, the Exchange will 
surveil for compliance with the continued listing requirements. If a 
Fund or the Shares are not in compliance with the applicable listing 
requirements, the Exchange will commence delisting procedures under 
Exchange Rule 5.5-E(m).
    As described above, all ADRs and ETFs will be listed on a U.S. 
national securities exchange, all of which are members of ISG or are 
exchanges with which the Exchange has in place a comprehensive 
surveillance sharing agreement. The Exchange may obtain information 
regarding trading in the Funds, U.S. Component Stocks, ETFs, ADRs, and 
certain Non-U.S. Component Stocks held by each Fund via the ISG, from 
other exchanges that are members or affiliates of the ISG, or with 
which the Exchange has entered into a comprehensive surveillance 
sharing agreement. Additionally, the Exchange or FINRA, on behalf of 
the Exchange, are able to access, as needed, trade information for 
certain fixed income instruments reported to TRACE.
    For the above reasons, the Exchange believes that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change will facilitate the continued listing and trading 
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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \24\ and Rule 19b-4(f)(6) thereunder.\25\ 
Because the 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, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \26\ and Rule 19b-
4(f)(6)(iii) thereunder.\27\
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \25\ 17 CFR 240.19b-4(f)(6).
    \26\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \27\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \28\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \29\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay so 
that the proposed rule change may become operative upon filing. The 
Commission notes that there are numerous filings that were either 
effective upon filing or that the Commission approved for the listing 
and trading of series of Managed Fund Shares that employ similar 
hedging strategies \30\ and does not believe this proposal raises new 
or novel issues. The Commission also notes that, except for the changes 
in this proposed rule change, the Funds comply with, and will continue 
to comply with, all other listing requirements on an initial and 
continued listing basis under Commentary .01(e) to Rule 8.600-E. The 
Commission therefore believes that waiver of the 30-day operative delay 
is consistent with the protection of investors and the public interest 
and hereby waives the operative delay and designates the proposed rule 
change operative upon filing.\31\
---------------------------------------------------------------------------

    \28\ Id.
    \29\ 17 CFR 240.19b-4(f)(6)(iii).
    \30\ See note 17, supra.
    \31\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEArca-2019-73 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-2019-73. 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-2019-73 and should be submitted 
on or before November 22, 2019.


[[Page 58769]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
---------------------------------------------------------------------------

    \32\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-23859 Filed 10-31-19; 8:45 am]
 BILLING CODE 8011-01-P
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