Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, Regarding Investments of the PIMCO Enhanced Short Maturity Active ESG Exchange-Traded Fund, 28061-28068 [2020-10060]
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Federal Register / Vol. 85, No. 92 / Tuesday, May 12, 2020 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
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 17 and Rule
19b–4(f)(6) thereunder.18 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 19 and Rule 19b–4(f)(6)(iii)
thereunder.20
A proposed rule change filed under
Rule 19b–4(f)(6) 21 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),22 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing because the proposed rule change
merely clarifies the IEX Fee Schedule’s
description of physical port connections
offered by IEX. The Exchange believes
that waiver of the operative delay is
consistent with the protection of
investors and the public interest
because it will allow the Exchange to
provide clarity to market participants
about which physical port connections
may be used to connect to the
Production Systems and the ITF,
thereby permitting the Exchange to
avoid any potential confusion on the
part of its Members and their associated
persons. For this reason, and because
17 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
19 15 U.S.C. 78s(b)(3)(A).
20 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
21 17 CFR 240.19b–4(f)(6).
22 17 CFR 240.19b–4(f)(6)(iii).
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18 17
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the proposal does not raise any novel
issues or affect fees, the Commission
believes that waiver of the 30-day
operative delay is consistent with the
protection of investors and the public
interest. According, the Commission
hereby waives the 30-day operative
delay and designates the proposal
operative upon filing.23
At any time within 60 days of the
filing of this proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
IEX–2020–06 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–IEX–2020–06. 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
23 For purposed only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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28061
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–IEX–2020–06, and should
be submitted on or before June 2, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–10057 Filed 5–11–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88822; File No. SR–
NYSEArca–2020–37]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change, as Modified by
Amendment No. 1, Regarding
Investments of the PIMCO Enhanced
Short Maturity Active ESG ExchangeTraded Fund
May 6, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on April 29,
2020, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. On May 4, 2020, the
Exchange filed Amendment No. 1 to the
proposed rule change, which
superseded and replaced the proposed
rule change in its entirety. The
Commission is publishing this notice to
solicit comments on the proposed rule
24 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
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Federal Register / Vol. 85, No. 92 / Tuesday, May 12, 2020 / Notices
change, as modified by Amendment No.
1, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes certain
changes regarding investments of the
PIMCO Enhanced Short Maturity Active
ESG Exchange-Traded Fund (the
‘‘Fund’’), a series of PIMCO ETF Trust
(the ‘‘Trust’’), shares of which are
currently listed and traded on the
Exchange under NYSE Arca Rule 8.600–
E (‘‘Managed Fund Shares’’).4 This
Amendment No. 1 to SR–NYSEArca–
2020–37 replaces SR–NYSEArca–2020–
37 as originally filed and supersedes
such filing in its entirety. The proposed
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
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1. Purpose
The Exchange proposes certain
changes, described below under
‘‘Application of Generic Listing
Requirements,’’ regarding investments
of the Fund. The shares (‘‘Shares’’) of
the Fund are currently listed and traded
on the Exchange under Commentary .01
to NYSE Arca Rule 8.600–E, which
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) (‘‘1940 Act’’) 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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provides generic criteria applicable to
the listing and trading of Managed Fund
Shares.5
Pacific Investment Management
Company LLC is the investment adviser
(‘‘PIMCO’’ or ‘‘Adviser’’) to the Fund.
PIMCO Investments LLC is the
distributor (‘‘Distributor’’) for the Fund’s
Shares. State Street Bank & Trust Co.
acts as the custodian and transfer agent
(‘‘Custodian’’ or ‘‘Transfer Agent’’) for
the Fund. Shares are offered by PIMCO
ETF Trust, which is registered with the
Commission as an open-end
management investment company.6
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. In addition,
Commentary .06 further requires that
personnel who make decisions on the
open-end fund’s portfolio composition
must be subject to procedures designed
to prevent the use and dissemination of
material nonpublic information
regarding the open-end fund’s portfolio.
Commentary .06 to Rule 8.600–E is
similar to Commentary .03(a)(i) and (iii)
to NYSE Arca Rule 5.2–E(j)(3); however,
Commentary .06 in connection with the
establishment and maintenance of a
‘‘fire wall’’ between the investment
adviser and the broker-dealer reflects
the applicable open-end fund’s
portfolio, not an underlying benchmark
index, as is the case with index-based
funds.
The Adviser is not registered as a
broker-dealer but is affiliated with a
broker-dealer and has implemented and
will maintain a fire wall with respect to
such broker-dealer affiliate regarding
access to information concerning the
composition and/or changes to the
portfolio. In the event (a) the Adviser
becomes registered as a broker-dealer or
newly affiliated with one or more
5 Shares commenced trading on the Exchange on
December 10, 2019 pursuant to Commentary .01 to
NYSE Arca Rule 8.600–E.
6 The Trust is registered under the 1940 Act. On
November 12, 2019, the Trust filed with the
Commission its registration statement on Form N–
1A under the Securities Act of 1933 (15 U.S.C. 77a),
and under the 1940 Act relating to the Fund (File
Nos. 333–155395 and 811–22250) (‘‘Registration
Statement’’). The description of the operation of the
Trust and the Fund herein is based, in part, on the
Registration Statement. In addition, the
Commission has issued an order upon which the
Trust may rely, granting certain exemptive relief
under the 1940 Act. See Investment Company Act
Release No. 28993 (November 10, 2009) (File No.
812–13571).
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broker-dealers, 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.
PIMCO Enhanced Short Maturity Active
ESG Exchange-Traded Fund
According to the Registration
Statement, the investment objective of
the Fund is to seek maximum current
income, consistent with preservation of
capital and daily liquidity, while
incorporating PIMCO’s environment,
social responsibility, and governance
(‘‘ESG’’) investment strategy. Under
normal market conditions,7 the Fund
invests at least 80% of its net assets in
a diversified portfolio of ‘‘Fixed Income
Instruments’’ (defined below) of varying
maturities, which may be represented
by forwards.
In managing the Fund’s portfolio,
PIMCO may avoid investment in the
securities of issuers whose business
practices with respect to ESG practices
are not to PIMCO’s satisfaction.
Pursuant to this investment strategy,
the Fund may invest in the following
fixed income securities (together,
‘‘Fixed Income Instruments’’):
• securities issued or guaranteed by
the U.S. government, its agencies, or
U.S. government-sponsored entities
(‘‘U.S. government securities’’);
• corporate debt securities of U.S. and
non-U.S. issuers, including convertible
securities and corporate commercial
paper;
• mortgage-backed securities
(‘‘MBS’’) and other asset-backed
securities (‘‘ABS’’), including nonagency, non-government-sponsored
entity (‘‘GSE’’) and privately-issued
mortgage-related and other asset-backed
securities (‘‘Private ABS/MBS’’),
collateralized bond obligations
(‘‘CBOs’’), collateralized loan
obligations (‘‘CLOs’’), and other
collateralized debt obligations
(‘‘CDOs’’); 8
7 The term ‘‘normal market conditions’’ is defined
in NYSE Arca Rule 8.600–E(c)(5).
8 For avoidance of doubt, ‘‘Private ABS/MBS’’ as
referenced herein are non-agency, non-GSE and
privately-issued mortgage-related and other assetbacked securities as stated in Commentary .01(b)(5)
to NYSE Arca Rule 8.600–E. However, for purposes
of this filing, CDOs, CBOs, and CLOs are excluded
from the term Private ABS/MBS. CDOs/CBOs/CLOs
are distinguishable from ABS because they are
collateralized by bank loans or by corporate or
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• inflation-indexed bonds issued both
by governments and corporations;
• structured notes, including hybrid
or ‘‘indexed’’ securities and eventlinked bonds;
• bank capital and trust preferred
securities;
• loan participations and
assignments;
• delayed funding loans and
revolving credit facilities;
• bank certificates of deposit, fixed
time deposits and bankers’ acceptances;
• repurchase agreements on Fixed
Income Instruments and reverse
repurchase agreements on Fixed Income
Instruments;
• debt securities issued by states or
local governments and their agencies,
authorities and other governmentsponsored enterprises;
• obligations of non-U.S.
governments or their subdivisions,
agencies and government-sponsored
enterprises; and
• obligations of international agencies
or supranational entities.
With respect to Fixed Income
Instruments, the Fund may invest,
without limitation, in U.S. dollardenominated securities of foreign
issuers, U.S. dollar-denominated
instruments of foreign issuers, and
securities denominated in foreign
currencies.
The Fund may invest in to-beannounced transactions. The Fund may
also purchase and sell securities on a
when-issued, delayed delivery or
forward commitment basis.
The Fund may, without limitation,
seek to obtain market exposure to the
securities in which it primarily invests
by entering into a series of purchase and
sale contracts or by using other
investment techniques (such as buy
backs or dollar rolls).
The Fund may hold cash and cash
equivalents.9
The Fund may invest in, to the extent
permitted by Section 12(d) of the 1940
Act or exemptive relief therefrom, other
affiliated and unaffiliated funds, such as
open-end or closed-end management
investment companies, including other
exchange-traded funds (‘‘ETFs’’).10
government fixed income securities and not by
consumer and other loans made by non-bank
lenders, including student loans.
9 For purposes of this filing, the term ‘‘cash
equivalents’’ includes the short-term instruments
enumerated in Commentary .01(c) to NYSE Arca
Rule 8.600–E.
10 For purposes of this filing, the term ‘‘ETFs’’ are
Investment Company Units (as described in NYSE
Arca Rule 5.2–E(j)(3)); Portfolio Depositary Receipts
(as described in NYSE Arca Rule 8.100–E); and
Managed Fund Shares (as described in NYSE Arca
Rule 8.600–E). All ETFs will be listed and traded
on national securities exchanges. While the Fund
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Use of Derivatives by the Fund
The Fund may invest in forwards to
(i) provide exposure to Fixed Income
Instruments, (ii) enhance returns, (iii)
manage portfolio duration, or (iv)
manage the risk of securities price
fluctuations. Investments in forwards
will be made in accordance with the
1940 Act and consistent with the Fund’s
investment objective and policies.
To limit the potential risk associated
with such transactions, the Fund may
enter into offsetting transactions or
segregate or ‘‘earmark’’ assets
determined to be liquid by the Adviser
in accordance with procedures
established by the Trust’s Board of
Trustees (the ‘‘Board’’) and in
accordance with the 1940 Act or as
permitted by applicable Commission
guidance. These procedures have been
adopted consistent with Section 18 of
the 1940 Act and related Commission
guidance. In addition, the Fund has
included risk disclosure in its offering
documents, including leveraging risk.
Leveraging risk is the risk that certain
transactions of the Fund, including the
Fund’s use of forwards, may give rise to
leverage, causing the Fund to be more
volatile than if it had not been
leveraged.
Impact on Arbitrage Mechanism
The Adviser believes there will be
minimal, if any, impact to the arbitrage
mechanism as a result of the Fund’s use
of forwards. The Adviser understands
that market makers and participants
should be able to value derivatives as
long as the positions are disclosed with
relevant information. The Adviser
believes that the price at which Shares
trade will continue to be disciplined by
arbitrage opportunities created by the
ability to purchase or redeem Shares at
their net asset value (‘‘NAV’’), which
should ensure that Shares will not trade
at a material discount or premium in
relation to their NAV.
Creation and Redemption of Shares
The Fund offers and issues Shares at
the NAV per Share only in aggregations
of a 50,000 Shares or multiples thereof
(‘‘Creation Units’’), with certain large
institutional investors who have entered
into agreements with the Distributor
(‘‘Authorized Participants’’) generally in
exchange for a basket of securities (the
‘‘Deposit Securities’’) together with a
deposit of a specified cash payment (the
‘‘Cash Component’’). Alternatively, the
Fund may issue and redeem Creation
Units in exchange for a specified allcash payment (‘‘Cash Deposit’’). The
may invest in inverse ETFs, the Fund will not
invest in leveraged (e.g., 2X, -2X, 3X or -3X) ETFs.
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28063
size of a Creation Unit is subject to
change. Shares are redeemable by the
Fund only in Creation Units, and,
generally, in exchange for securities
and/or cash.
A ‘‘Business Day’’ with respect to the
Fund is each day the Exchange is open.
Orders from Authorized Participants to
create or redeem Creation Units will
only be accepted on a Business Day.
The consideration for purchase of
Creation Units may consist of: (i)
Deposit Securities and the Cash
Component, which will generally
correspond pro rata, to the extent
practicable, to the Fund securities, or,
alternatively; (ii) the Cash Deposit.
Together, the Deposit Securities and
Cash Component or, alternatively, the
Cash Deposit, constitute the ‘‘Fund
Deposit,’’ which represents the
minimum initial and subsequent
investment amount for a Creation Unit
of the Fund.
PIMCO, through the National
Securities Clearing Corporation
(‘‘NSCC’’), makes available on each
Business Day, prior to the opening of
business (subject to amendments) on the
Exchange (currently 9:30 a.m., Eastern
time (‘‘E.T.’’)), the identity and the
required number of each Deposit
Security and the amount of the Cash
Component (or Cash Deposit) to be
included in the current Fund Deposit
(based on information from the end of
the previous Business Day).
The Deposit Securities and Cash
Component (or Cash Deposit) are subject
to any adjustments, as described below,
in order to effect purchases of Creation
Units of the Fund until such time as the
next-announced composition of the
Deposit Securities and Cash Component
(or Cash Deposit) is made available.
The Trust may require the
substitution of an amount of cash (a
‘‘cash-in-lieu’’ amount) to replace any
Deposit Security of the Fund. The
amount of cash contributed will be
equivalent to the value of the
instrument listed as a Deposit Security,
as determined by the Trust. The Trust
reserves the right to permit or require
the substitution of a ‘‘cash-in-lieu’’
amount to be added to replace any
Deposit Security that is a to-be
announced (‘‘TBA’’) transaction, that
may not be available in sufficient
quantity for delivery, that may not be
eligible for trading by a Participating
Party (defined below), that may not be
permitted to be registered in the name
of the Trust as a result of an in-kind
creation order pursuant to local law or
market convention, or that may not be
eligible for transfer through the systems
of the Depository Trust Company
(‘‘DTC’’) or the Clearing Process (as
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discussed below), or the Federal Reserve
System for U.S. Treasury securities. The
Trust also reserves the right to permit or
require a ‘‘cash-in-lieu’’ amount where
the delivery of Deposit Securities by the
Authorized Participant (as described
below) would be restricted under the
securities laws or where the delivery of
Deposit Securities from an investor to
the Authorized Participant would result
in the disposition of Deposit Securities
by the Authorized Participant becoming
restricted under the securities laws, and
in certain other situations. The Trust
may permit a ‘‘cash-in-lieu’’ amount for
any reason at the Trust’s sole discretion
but is not required to do so.
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Redemption of Creation Units
Shares may be redeemed only in
Creation Units at their NAV next
determined after receipt of a redemption
request in proper form on a Business
Day and only through a Participating
Party 11 or DTC Participant 12 who has
executed a Participant Agreement. The
Fund will not redeem shares in amounts
less than Creation Units. Beneficial
owners must accumulate enough shares
to constitute a Creation Unit in order to
have such shares redeemed by the Trust.
With respect to the Fund, as
mentioned above, PIMCO, through the
NSCC, makes available immediately
prior to the opening of business on the
Exchange (currently 9:30 a.m., E.T.) on
each Business Day, the identity of the
Fund’s securities and/or an amount of
cash that will be delivered in exchange
for a redemption request received in
proper form on that day. Fund securities
received on redemption (‘‘Fund
Securities’’) may not be identical to
Deposit Securities that are used for the
creation of Creation Units.
Unless cash-only redemptions are
available or specified for the Fund, the
redemption proceeds for a Creation Unit
will generally consist of Fund
Securities—as announced on the
Business Day of the request for a
redemption order received in proper
form—plus cash in an amount equal to
the difference between the NAV of the
Shares being redeemed, as next
determined after a receipt of a request
11 A ‘‘Participating Party’’ is a broker-dealer or
other participant in the clearing process through the
Continuous Net Settlement System of the NSCC (the
‘‘Clearing Process’’), a clearing agency that is
registered with the SEC; or (ii) a DTC Participant,
and must have executed an agreement with the
Distributor (and accepted by the Transfer Agent),
with respect to creations and redemptions of
Creation Units (‘‘Participant Agreement’’).
12 DTC participants include securities brokers and
dealers, banks, trust companies, clearing
corporations and other institutions that directly or
indirectly maintain a custodial relationship with
Depository Trust Company.
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in proper form, and the value of the
Fund Securities (the ‘‘Cash Redemption
Amount’’), less a redemption
transaction fee, if applicable.
Application of Generic Listing
Requirements
The Exchange is submitting this
proposed rule change because the
changes described below would result
in the portfolio for the Fund not meeting
all of the ‘‘generic’’ listing requirements
of Commentary .01 to NYSE Arca Rule
8.600–E applicable to the listing of
Managed Fund Shares. The Fund’s
portfolio would meet all such
requirements except for those set forth
in Commentary .01(b)(1), Commentary
.01(b)(4) and Commentary .01(b)(5).
Specifically, the Fund:
• Will not comply with the
requirement in Commentary .01(b)(1)
that components that in the aggregate
account for at least 75% of the fixed
income weight of the portfolio each
shall have a minimum original principal
amount outstanding of $100 million or
more. Instead, the Exchange proposes
that components, excluding Private
ABS/MBS and CDOs/CBOs/CLOs that,
in the aggregate, account for at least
50% of the fixed income weight of the
portfolio each shall have a minimum
original principal amount outstanding
of $50 million or more. Private ABS/
MBS and CDOs/CBOs/CLOs would not
be subject to a requirement for a
minimum original principal amount
outstanding.
• will not comply with the
requirement in Commentary .01(b)(5) to
Rule 8.600–E that investments in nonagency, non-government sponsored
entity and privately issued mortgagerelated and other asset-backed securities
(i.e., Private ABS/MBS) not account, in
the aggregate, for more than 20% of the
weight of the portfolio.13 Instead, the
Fund will not invest more than 20% of
the Fund’s total assets in Private ABS/
MBS or more than 20% of the Fund’s
total assets in U.S. or foreign CDOs/
CBOs/CLOs.
• will not comply with the
requirements in Commentary .01(b)(4)
to Rule 8.600–E that component
securities that in the aggregate account
for at least 90% of the fixed income
weight of the portfolio meet one of the
criteria specified in Commentary
13 Commentary .01(b)(5) to NYSE Arca Rule
8.600–E provides that non-agency, non-government
sponsored entity and privately issued mortgagerelated and other asset-backed securities
components of a portfolio may not account, in the
aggregate, for more than 20% of the weight of the
portfolio.
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.01(b)(4).14 Instead, the Exchange
proposes that (i) the Fund’s investments
in fixed income securities that do not
meet any of the criteria in Commentary
.01(b)(4) will not exceed 10% of the
total assets of the Fund, excluding
Private ABS/MBS and CDOs/CBOs/
CLOs; (ii) Private ABS/MBS, which will
be limited to 20% of the Fund’s total
assets, will not be required to comply
with any of the criteria in Commentary
.01(b)(4) to Rule 8.600–E; and (iii)
CDOs/CBOs/CLOs also will not be
subject to any of the criteria in
Commentary .01(b)(4) but will be
separately limited to 20% of the Fund’s
total assets.
Deviations from the generic
requirements are necessary for the Fund
to achieve its investment objective in a
manner that is cost-effective and that
maximizes investors’ returns. Further,
the proposed alternative requirements
are narrowly tailored to allow the Fund
to achieve its investment objective in
manner that is consistent with the
principles of Section 6(b)(5) of the Act.
As a result, it is in the public interest
to approve listing and trading of Shares
of the Fund on the Exchange pursuant
to the requirements set forth herein.
As noted above, the Fund will not
comply with the requirement in
Commentary .01(b)(1) to Rule 8.600–E
that components that in the aggregate
account for at least 75% of the fixed
income weight of the portfolio each
shall have a minimum original principal
amount outstanding of $100 million or
more. Instead, the Exchange proposes
that components, excluding Private
ABS/MBS and CDOs/CBOs/CLOs, that
in the aggregate account for at least 50%
of the fixed income weight of the
portfolio each shall have a minimum
original principal amount outstanding
of $50 million or more. Private ABS/
MBS and CDOs/CBOs/CLOs will not be
subject to a requirement for a minimum
original principal amount outstanding.
At least 50% of the fixed income weight
of the Fund’s portfolio, excluding
Private ABS/MBS and CDOs/CBOs/
CLOs, will continue to be subject to a
substantial minimum (i.e., $50 million)
14 Commentary .01(b)(4) provides that component
securities that in the aggregate account for at least
90% of the fixed income weight of the portfolio
must be either: (a) From issuers that are required
to file reports pursuant to Sections 13 and 15(d) of
the Act; (b) from issuers that have a worldwide
market value of its outstanding common equity held
by non-affiliates of $700 million or more; (c) from
issuers that have outstanding securities that are
notes, bonds debentures, or evidence of
indebtedness having a total remaining principal
amount of at least $1 billion; (d) exempted
securities as defined in Section 3(a)(12) of the Act;
or (e) from issuers that are a government of a foreign
country or a political subdivision of a foreign
country.
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original principal amount
outstanding.15 By excluding Private
ABS/MBS and CDOs/CBOs/CLOs from
this requirement, the Fund will be able
to better diversify its holdings in such
securities, and will be able to invest in
a larger variety of Private ABS/MBS and
CDOs/CBOs/CLOs that have
characteristics consistent with the
Fund’s investment objective to seek
maximum current income, consistent
with preservation of capital and daily
liquidity, while incorporating PIMCO’s
ESG investment strategy. These
characteristics may include, for
example, Private ABS/MBS and CDOs/
CBOs/CLOs with investment grade
credit rating or liquidity comparable to
fixed income securities with a much
greater amount outstanding. The
Adviser represents that, with respect to
the Fund’s investments in CDOs/CBOs/
CLOs, the Fund will invest principally
in the senior-most tranches of these
securities, generally with an AAA
investment rating which have first claim
in the capital structure and generally
have less sensitivity to the credit risk of
the underlying assets (e.g., bank loans or
commercial real estate).
The Fund will not comply with the
requirement in Commentary .01(b)(5) to
Rule 8.600–E that investments in nonagency, non-government sponsored
entity and privately issued mortgagerelated and other asset-backed securities
(i.e., Private ABS/MBS) not account, in
the aggregate, for more than 20% of the
weight of the portfolio. Instead, the
Fund will not invest more than 20% of
the Fund’s total assets in Private ABS/
MBS or more than 20% of the Fund’s
total assets in U.S. or foreign CDOs/
CBOs/CLOs.16 The Exchange believes
that these 20% limitations will help the
Fund maintain portfolio diversification
and will reduce manipulation risk. In
addition, the Fund’s investment in
CDOs/CBOs/CLOs will be subject to the
Fund’s liquidity procedures as adopted
by the Board, and the Adviser does not
15 The Exchange notes that the Commission has
previously approved a proposed rule change
granting the same proposals in regard to
Commentary .01(b)(1) to Rule 8.600–E. See
Securities Exchange Act Release No. 86841 (August
30, 2019), 84 FR 47024 (September 6, 2019) (SR–
NYSEArca–2019–38) (Order Approving a Proposed
Rule Change, as Modified by Amendments No. 1
and No. 2, To Amend the Listing Rule Applicable
to Shares of the Aware Ultra-Short Duration
Enhanced Income ETF).
16 The Exchange notes that the Commission has
previously approved a proposed rule change
granting the same proposals in regard to
Commentary .01(b)(5) to Rule 8.600–E. See
Securities Exchange Act Release No. 87576
(November 20, 2019), 84 FR 65206 (November 26,
2019) (SR–NYSEArca–2019–14) (Order Approving a
Proposed Rule Change, as Modified by Amendment
No. 1, Relating to the Permitted Investments of the
PGIM Ultra Short Bond ETF).
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expect that investments in CDOs/CBOs/
CLOs of up to 20% of the total assets of
the Fund will have any material impact
on the liquidity of the Fund’s
investments.
The Fund will not comply with the
requirements in Commentary .01(b)(4)
to Rule 8.600–E that component
securities that in the aggregate account
for at least 90% of the fixed income
weight of the portfolio meet one of the
criteria specified in Commentary
.01(b)(4). Instead, the Exchange
proposes that: (i) The Fund’s
investments in fixed income securities
that do not meet any of the criteria in
Commentary .01(b)(4) will not exceed
10% of the total assets of the Fund,
excluding Private ABS/MBS and CDOs/
CBOs/CLOs; (ii) Private ABS/MBS,
which will be limited to 20% of the
Fund’s total assets, will not be required
to comply with the criteria in
Commentary .01(b)(4)(a) through (e) to
Rule 8.600–E; and (iii) CDOs/CBOs/
CLOs also will not be subject to the
criteria in Commentary .01(b)(4)(a)
through (e) but will be subject to a limit
of 20%, measured with respect to the
total assets of the Fund. 17
The Exchange accordingly believes
that it is appropriate and in the public
interest to approve listing and trading of
Shares of the Fund on the Exchange
notwithstanding that the Fund would
not meet the requirements of
Commentary .01(b)(1), (b)(4) and (b)(5)
to Rule 8.600–E. The Exchange notes
that, other than Commentary .01(b)(1),
Commentary .01 (b)(4) and Commentary
.01(b)(5) to Rule 8.600–E, the Fund’s
portfolio will meet all other
requirements of Rule 8.600.
Availability of Information
The Fund’s website (www.pimco.com)
will include the prospectus for the Fund
that may be downloaded. The Fund’s
website will include additional
quantitative information updated on a
daily basis including, for the Fund, (1)
daily trading volume, the prior Business
Day’s reported closing price, NAV and
midpoint of the bid/ask spread at the
time of calculation of such NAV (the
‘‘Bid/Ask Price’’),18 and a calculation of
17 The Exchange notes that the Commission has
previously approved a proposed rule change
granting the same proposals in regard to
Commentary .01(b)(4) to Rule 8.600–E. See
Securities Exchange Act Release No. 87576
(November 20, 2019), 84 FR 65206 (November 26,
2019) (SR–NYSEArca–2019–14) (Order Approving a
Proposed Rule Change, as Modified by Amendment
No. 1, Relating to the Permitted Investments of the
PGIM Ultra Short Bond ETF).
18 The Bid/Ask Price of the Fund’s Shares will be
determined using the mid-point of the highest bid
and the lowest offer on the Exchange as of the time
of calculation of the Fund’s NAV. The records
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28065
the premium and discount of the Bid/
Ask Price against the NAV, and (2) data
in chart format displaying the frequency
distribution of discounts and premiums
of the daily Bid/Ask Price against the
NAV, within appropriate ranges, for
each of the four previous calendar
quarters. On each Business Day, before
commencement of trading in Shares in
the Core Trading Session on the
Exchange, the Fund will disclose on its
website the Disclosed Portfolio as
defined in NYSE Arca Rule 8.600–
E(c)(2) that forms the basis for the
Fund’s calculation of NAV at the end of
the Business Day.19
On a daily basis, the Fund will
disclose the information required under
NYSE Arca Rule 8.600–E(c)(2) to the
extent applicable. The website
information will be publicly available at
no charge.
In addition, a basket composition file,
which includes the security names and
share quantities, if applicable, required
to be delivered in exchange for the
Fund’s Shares, together with estimates
and actual cash components, will be
publicly disseminated daily prior to the
opening of the Exchange via the NSCC.
The basket represents one Creation Unit
of the Fund. Authorized Participants
may refer to the basket composition file
for information regarding fixed income
securities, and any other instrument that
may comprise the Fund’s basket on a
given day.
Investors can also obtain the Trust’s
Statement of Additional Information
(‘‘SAI’’), the Fund’s Shareholder
Reports, and the Fund’s Forms N–CSR
and Forms N–CEN, filed twice a year.
The Fund’s SAI and Shareholder
Reports will be available free upon
request from the Trust, and those
documents and the Form N–CSR, Form
N–PX and Form N–CEN may be viewed
on-screen or downloaded from the
Commission’s website at www.sec.gov.
Intra-day and closing price
information regarding fixed income
securities will be available from major
market data vendors. For ETFs, intraday
price quotations will generally be
available from broker-dealers and
trading platforms (as applicable).
Intraday and other price information for
the fixed income securities in which the
Fund will invest will be available
through subscription services, such as
relating to Bid/Ask Prices will be retained by the
Fund and its service providers.
19 Under accounting procedures followed by the
Fund, trades made on the prior Business Day (‘‘T’’)
will be booked and reflected in NAV on the current
Business Day (‘‘T + 1’’). Accordingly, the Fund will
be able to disclose at the beginning of the Business
Day the portfolio that will form the basis for the
NAV calculation at the end of the Business Day.
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Bloomberg, Markit and Thomson
Reuters, which can be accessed by
Authorized Participants and other
market participants. Price information
for forwards and for affiliated and
unaffiliated funds, such as open-end or
closed-end management investment
companies, is available from major
market data vendors. Additionally, the
Trade Reporting and Compliance Engine
(‘‘TRACE’’) of the Financial Industry
Regulatory Authority (‘‘FINRA’’) will be
a source of price information for
corporate bonds, and Private ABS/MBS,
to the extent transactions in such
securities are reported to TRACE.20
Money market funds are typically
priced once each Business Day and their
prices will be available through the
applicable fund’s website or from major
market data vendors. Electronic
Municipal Market Access (‘‘EMMA’’)
will be a source of price information for
municipal bonds. Price information
regarding U.S. government securities,
repurchase agreements, reverse
repurchase agreements and cash
equivalents generally may be obtained
from brokers and dealers who make
markets in such securities or through
nationally recognized pricing services
through subscription agreements.
Information regarding market price
and trading volume of the Shares will be
continually available on a real-time
basis throughout the day on brokers’
computer screens and other electronic
services. Information regarding the
previous day’s closing price and trading
volume information for the Shares will
be published daily in the financial
section of newspapers.
Quotation and last sale information
for the Shares will be available via the
Consolidated Tape Association (‘‘CTA’’)
high-speed line. In addition, the
Portfolio Indicative Value (‘‘PIV’’), as
defined in NYSE Arca Rule 8.600–
E(c)(3), will be widely disseminated by
one or more major market data vendors
at least every 15 seconds during the
Core Trading Session.
Trading Halts
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
jbell on DSKJLSW7X2PROD with NOTICES
20 Broker-dealers
that are FINRA member firms
have an obligation to report transactions in
specified debt securities to TRACE to the extent
required under applicable FINRA rules. Generally,
such debt securities will have at issuance a maturity
that exceeds one calendar year. For fixed income
securities that are not reported to TRACE, (i)
intraday price quotations will generally be available
from broker-dealers and trading platforms (as
applicable) and (ii) price information will be
available from feeds from market data vendors,
published or other public sources, or online
information services, as described above.
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18:47 May 11, 2020
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halt or suspend trading in the Shares of
the Fund. Trading in Shares of the Fund
will be halted if the circuit breaker
parameters in NYSE Arca Rule 7.12–E
have been reached. Trading also may be
halted because of market conditions or
for reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable. Trading in the Fund’s
Shares also will be subject to Rule
8.600–E(d)(2)(D) (‘‘Trading Halts’’).
Trading Rules
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. Shares will trade on
the NYSE Arca Marketplace from 4:00
a.m. to 8:00 p.m. E.T. in accordance
with NYSE Arca Rule 7.34–E (Trading
Sessions). The Exchange has
appropriate rules to facilitate
transactions in the Shares during all
trading sessions. As provided in NYSE
Arca Rule 7.6–E, the minimum price
variation (‘‘MPV’’) for quoting and entry
of orders in equity securities traded on
the NYSE Arca Marketplace is $0.01,
with the exception of securities that are
priced less than $1.00 for which the
MPV for order entry is $0.0001.
With the exception of the
requirements of Commentary .01(b)(1),
(b)(4) and (b)(5) to Rule 8.600–E as
described above in ‘‘Application of
Generic Listing Requirements,’’ the
Shares of the Fund will conform to the
continued listing criteria under NYSE
Arca Rule 8.600–E. Consistent with
NYSE Arca Rule 8.600–E(d)(2)(B)(ii), the
Adviser will implement and maintain,
or be subject to, procedures designed to
prevent the use and dissemination of
material non-public information
regarding the actual components of the
Fund’s portfolio.
The Exchange has obtained a
representation from the issuer of the
Shares that the NAV per Share will be
calculated daily and that the NAV and
the Disclosed Portfolio will be made
available to all market participants at
the same time. The Fund’s investments
will be consistent with its investment
goal and will not be used to enhance
leverage.
Surveillance
The Exchange represents that trading
in the Shares will be 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
PO 00000
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monitor Exchange trading of the Shares
in all trading sessions and to deter and
detect violations of Exchange rules and
federal securities laws applicable to
trading on the Exchange.21
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 and ETFs with
other markets and other entities that are
members of the Intermarket
Surveillance Group (‘‘ISG’’), and the
Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading
information regarding trading in such
securities from such markets and other
entities.22 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 TRACE. FINRA also
can access data obtained from the
Municipal Securities Rulemaking Board
(‘‘MSRB’’) relating to certain municipal
bond trading activity for surveillance
purposes in connection with trading in
the Shares.
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 (a) the
description of the portfolio or reference
asset, (b) limitations on portfolio
holdings or reference assets, or (c) the
applicability of Exchange listing rules
specified in this rule filing shall
constitute continued listing
requirements for listing the Shares of
the Fund on the Exchange.
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 for compliance with the
continued listing requirements. If the
21 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.
22 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 (‘‘CSSA’’).
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Fund is not in compliance with the
applicable listing requirements, the
Exchange will commence delisting
procedures under NYSE Arca Rule 5.5–
E (m).
jbell on DSKJLSW7X2PROD with NOTICES
Information Bulletin
The Exchange will inform its Equity
Trading Permit Holders in an
Information Bulletin (‘‘Bulletin’’) of the
special characteristics and risks
associated with trading the Shares.
Specifically, the Bulletin will discuss
the following: (1) The procedures for
purchases and redemptions of Shares in
Creation Unit aggregations (and that
Shares are not individually redeemable);
(2) NYSE Arca Rule 9.2–E(a), which
imposes a duty of due diligence on its
Equity Trading Permit Holders to learn
the essential facts relating to every
customer prior to trading the Shares; (3)
the risks involved in trading the Shares
during the applicable Trading Sessions
when an updated PIV will not be
calculated or publicly disseminated; (4)
how information regarding the PIV and
the Disclosed Portfolio is disseminated;
(5) the requirement that Equity Trading
Permit Holders deliver a prospectus to
investors purchasing newly issued
Shares prior to or concurrently with the
confirmation of a transaction; and (6)
trading information.
In addition, the Bulletin will
reference that the Fund is subject to
various fees and expenses described in
the Registration Statement. The Bulletin
will discuss any exemptive, no-action,
and interpretive relief granted by the
Commission from any rules under the
Act. The Bulletin will also disclose that
the NAV for the Shares will be
calculated after 4:00 p.m., E.T. each
trading day.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) of the Act that an
exchange have rules that are designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to remove
impediments to, and perfect the
mechanism of a free and open market
and, in general, to protect investors and
the public interest.
The Exchange believes that the
proposed rule change is designed to
prevent fraudulent and manipulative
acts and practices in that the Shares are
listed and traded on the Exchange
pursuant to the initial and continued
listing criteria in NYSE Arca Rule
8.600–E. The Exchange has in place
surveillance procedures that are
adequate to properly monitor trading in
the Shares in all trading sessions and to
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18:47 May 11, 2020
Jkt 250001
deter and detect violations of Exchange
rules and federal securities laws
applicable to trading on the Exchange.
The Adviser is not registered as a
broker-dealer, but the Adviser is
affiliated with a broker-dealer and has
implemented and will maintain a ‘‘fire
wall’’ with respect to such broker-dealer
regarding access to information
concerning the composition and/or
changes to the Fund’s portfolio. The
Exchange or FINRA, on behalf of the
Exchange, or both, will communicate as
needed regarding trading in the Shares
and ETFs 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 from such markets and other
entities. 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 TRACE. FINRA also
can access data obtained from the MSRB
relating to certain municipal bond
trading activity for surveillance
purposes in connection with trading in
the Shares.
The proposed rule change is designed
to promote just and equitable principles
of trade and to protect investors and the
public interest in that the Exchange will
obtain a representation from the issuer
of the Shares that the NAV per Share
will be calculated daily and that the
NAV and the Disclosed Portfolio will be
made available to all market
participants at the same time. In
addition, a large amount of information
is publicly available regarding the Fund
and the Shares, thereby promoting
market transparency. The website for
the Fund includes a form of the
prospectus for the Fund and additional
data relating to NAV and other
applicable quantitative information.
Trading in Shares of the Fund will be
halted if the circuit breaker parameters
in NYSE Arca Rule 7.12–E have been
reached or because of market conditions
or for reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable, and trading in the Shares
will be subject to NYSE Arca Rule
8.600–E (d)(2)(D), which sets forth
circumstances under which trading in
the Shares of the Fund may be halted.
In addition, as noted above, investors
will have ready access to information
regarding the Fund’s holdings, NAV, the
PIV, the Disclosed Portfolio, and
quotation and last sale information for
the Shares.
As described above, deviations from
the generic requirements are necessary
for the Fund to achieve its investment
objective in a manner that is cost-
PO 00000
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28067
effective and that maximizes investors’
returns. Further, the proposed
alternative requirements are narrowly
tailored to allow the Fund to achieve its
investment objective in manner that is
consistent with the principles of Section
6(b)(5) of the Act. As a result, it is in the
public interest to approve listing and
trading of Shares of the Fund on the
Exchange pursuant to the requirements
set forth herein.23
As discussed above, the Fund will not
comply with the requirement in
Commentary .01(b)(1) to Rule 8.600–E
that components that in the aggregate
account for at least 75% of the fixed
income weight of the portfolio each
have a minimum original principal
amount outstanding of $100 million or
more. Instead, the Exchange proposes
that components, excluding Private
ABS/MBS and CDOs/CBOs/CLOs, that
in the aggregate account for at least 50%
of the fixed income weight of the
portfolio each shall have a minimum
original principal amount outstanding
of $50 million or more. Private ABS/
MBS and CDOs/CBOs/CLOs would not
be subject to a requirement for a
minimum original principal amount
outstanding. The Exchange believes this
alternative is appropriate because at
least 50% of the fixed income weight of
the Fund’s portfolio, excluding Private
ABS/MBS and CDOs/CBOs/CLOs,
would continue to be subject to a
substantial minimum (i.e., $50 million)
original principal amount outstanding.
In addition, by excluding Private ABS/
MBS and CDOs/CBOs/CLOs from this
requirement, the Fund will be able to
better diversify its holdings in such
securities, and would be able to invest
in a larger variety of Private ABS/MBS
and CDOs/CBOs/CLOs that have
characteristics consistent with the
Fund’s investment objective to seek
maximum current income, consistent
with preservation of capital and daily
liquidity, while incorporating PIMCO’s
ESG investment strategy.
The Fund will not comply with the
requirement in Commentary .01(b)(5) to
Rule 8.600–E that investments in nonagency, non-government sponsored
entity and privately issued mortgagerelated and other asset-backed securities
(i.e., Private ABS/MBS) not account, in
the aggregate, for more than 20% of the
weight of the portfolio. Instead, the
Fund will not invest more than 20% of
the Fund’s total assets in Private ABS/
MBS or more than 20% of the Fund’s
total assets in U.S. or foreign CDOs/
23 The Exchange represents that, for continued
listing, the Fund will be in compliance with Rule
10A–3 under the Act, as provided by NYSE Arca
Rule 5.3–E.
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CBOs/CLOs.24 The Exchange believes
that these 20% limitations will help the
Fund maintain portfolio diversification
and will reduce manipulation risk. In
addition, the Fund’s investment in
CDOs/CBOs/CLOs will be subject to the
Fund’s liquidity procedures as adopted
by the Board, and the Adviser does not
expect that investments in CDOs/CBOs/
CLOs of up to 20% of the total assets of
the Fund will have any material impact
on the liquidity of the Fund’s
investments.
The Fund will not comply with the
requirements in Commentary .01(b)(4)
to Rule 8.600–E that component
securities that in the aggregate account
for at least 90% of the fixed income
weight of the portfolio meet one of the
criteria specified in Commentary
.01(b)(4). Instead, the Exchange
proposes that: (i) The Fund’s
investments in fixed income securities
that do not meet any of the criteria in
Commentary .01(b)(4) will not exceed
10% of the total assets of the Fund,
excluding Private ABS/MBS and CDOs/
CBOs/CLOs; (ii) Private ABS/MBS,
which will be limited to 20% of the
Fund’s total assets, will not be required
to comply with any of the criteria in
Commentary .01(b)(4); and (iii) CDOs/
CBOs/CLOs also will not be subject to
any of the criteria in Commentary
.01(b)(4) but will be separately limited
to 20% of the Fund’s total assets.
The Adviser represents that, with
respect to the Fund’s investments in
CDOs/CBOs/CLOs, the Fund will invest
principally in the senior-most tranches
of these securities, generally with an
AAA investment rating which have first
claim in the capital structure and
generally have less sensitivity to the
credit risk of the underlying assets (e.g.,
bank loans or commercial real estate).
The proposed rule change is designed
to perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest in that
it will facilitate the listing and trading
of an additional type of actively
managed ETF that will enhance
competition among market participants,
to the benefit of investors and the
marketplace. As noted above, the
Exchange has in place surveillance
procedures relating to trading in the
Shares and may obtain information via
ISG from other exchanges that are
jbell on DSKJLSW7X2PROD with NOTICES
24 The
Exchange notes that the Commission has
previously approved a proposed rule change
granting the same proposals in regard to
Commentary .01(b)(5) to Rule 8.600–E. See
Securities Exchange Act Release No. 87576
(November 20, 2019), 84 FR 65206 (November 26,
2019) (SR–NYSEArca–2019–14) (Order Approving a
Proposed Rule Change, as Modified by Amendment
No. 1, Relating to the Permitted Investments of the
PGIM Ultra Short Bond ETF).
VerDate Sep<11>2014
18:47 May 11, 2020
Jkt 250001
members of ISG or with which the
Exchange has entered into a CSSA. In
addition, as noted above, investors have
ready access to information regarding
the Fund’s holdings, NAV, the PIV, the
Disclosed Portfolio, and quotation and
last sale information for the Shares.
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 a change to the Fund’s
investments similar to investments of
other actively managed ETFs, shares of
which have been approved for Exchange
listing and trading,25 that principally
hold fixed income securities, and 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
Within 45 days of the date of
publication of this notice in the Federal
Register or up to 90 days (i) as the
Commission may designate if it finds
such longer period to be appropriate
and publishes its reasons for so finding
or (ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) by order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as modified by Amendment No.
1, is consistent with the Act. Comments
may be submitted by any of the
following methods:
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2020–37 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–2020–37. 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–2020–37 and
should be submitted on or before June
2, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–10060 Filed 5–11–20; 8:45 am]
BILLING CODE 8011–01–P
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
25 See
PO 00000
notes 13–15, supra.
Frm 00084
Fmt 4703
26 17
Sfmt 9990
E:\FR\FM\12MYN1.SGM
CFR 200.30–3(a)(12).
12MYN1
]]>Agencies
[Federal Register Volume 85, Number 92 (Tuesday, May 12, 2020)]
[Notices]
[Pages 28061-28068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10060]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88822; File No. SR-NYSEArca-2020-37]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change, as Modified by Amendment No. 1, Regarding
Investments of the PIMCO Enhanced Short Maturity Active ESG Exchange-
Traded Fund
May 6, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on April 29, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. On May 4, 2020, the Exchange filed Amendment No. 1 to the
proposed rule change, which superseded and replaced the proposed rule
change in its entirety. The Commission is publishing this notice to
solicit comments on the proposed rule
[[Page 28062]]
change, as modified by Amendment No. 1, 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes certain changes regarding investments of the
PIMCO Enhanced Short Maturity Active ESG Exchange-Traded Fund (the
``Fund''), a series of PIMCO ETF Trust (the ``Trust''), shares of which
are currently listed and traded on the Exchange under NYSE Arca Rule
8.600-E (``Managed Fund Shares'').\4\ This Amendment No. 1 to SR-
NYSEArca-2020-37 replaces SR-NYSEArca-2020-37 as originally filed and
supersedes such filing in its entirety. The proposed 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.
---------------------------------------------------------------------------
\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) (``1940 Act'') 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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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes certain changes, described below under
``Application of Generic Listing Requirements,'' regarding investments
of the Fund. The shares (``Shares'') of the Fund are currently listed
and traded on the Exchange under Commentary .01 to NYSE Arca Rule
8.600-E, which provides generic criteria applicable to the listing and
trading of Managed Fund Shares.\5\
---------------------------------------------------------------------------
\5\ Shares commenced trading on the Exchange on December 10,
2019 pursuant to Commentary .01 to NYSE Arca Rule 8.600-E.
---------------------------------------------------------------------------
Pacific Investment Management Company LLC is the investment adviser
(``PIMCO'' or ``Adviser'') to the Fund. PIMCO Investments LLC is the
distributor (``Distributor'') for the Fund's Shares. State Street Bank
& Trust Co. acts as the custodian and transfer agent (``Custodian'' or
``Transfer Agent'') for the Fund. Shares are offered by PIMCO ETF
Trust, which is registered with the Commission as an open-end
management investment company.\6\
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\6\ The Trust is registered under the 1940 Act. On November 12,
2019, the Trust filed with the Commission its registration statement
on Form N-1A under the Securities Act of 1933 (15 U.S.C. 77a), and
under the 1940 Act relating to the Fund (File Nos. 333-155395 and
811-22250) (``Registration Statement''). The description of the
operation of the Trust and the Fund herein is based, in part, on the
Registration Statement. In addition, the Commission has issued an
order upon which the Trust may rely, granting certain exemptive
relief under the 1940 Act. See Investment Company Act Release No.
28993 (November 10, 2009) (File No. 812-13571).
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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. In
addition, Commentary .06 further requires that personnel who make
decisions on the open-end fund's portfolio composition must be subject
to procedures designed to prevent the use and dissemination of material
nonpublic information regarding the open-end fund's portfolio.
Commentary .06 to Rule 8.600-E is similar to Commentary .03(a)(i) and
(iii) to NYSE Arca Rule 5.2-E(j)(3); however, Commentary .06 in
connection with the establishment and maintenance of a ``fire wall''
between the investment adviser and the broker-dealer reflects the
applicable open-end fund's portfolio, not an underlying benchmark
index, as is the case with index-based funds.
The Adviser is not registered as a broker-dealer but is affiliated
with a broker-dealer and has implemented and will maintain a fire wall
with respect to such broker-dealer affiliate regarding access to
information concerning the composition and/or changes to the portfolio.
In the event (a) the Adviser becomes registered as a broker-dealer or
newly affiliated with one or more broker-dealers, 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.
PIMCO Enhanced Short Maturity Active ESG Exchange-Traded Fund
According to the Registration Statement, the investment objective
of the Fund is to seek maximum current income, consistent with
preservation of capital and daily liquidity, while incorporating
PIMCO's environment, social responsibility, and governance (``ESG'')
investment strategy. Under normal market conditions,\7\ the Fund
invests at least 80% of its net assets in a diversified portfolio of
``Fixed Income Instruments'' (defined below) of varying maturities,
which may be represented by forwards.
---------------------------------------------------------------------------
\7\ The term ``normal market conditions'' is defined in NYSE
Arca Rule 8.600-E(c)(5).
---------------------------------------------------------------------------
In managing the Fund's portfolio, PIMCO may avoid investment in the
securities of issuers whose business practices with respect to ESG
practices are not to PIMCO's satisfaction.
Pursuant to this investment strategy, the Fund may invest in the
following fixed income securities (together, ``Fixed Income
Instruments''):
securities issued or guaranteed by the U.S. government,
its agencies, or U.S. government-sponsored entities (``U.S. government
securities'');
corporate debt securities of U.S. and non-U.S. issuers,
including convertible securities and corporate commercial paper;
mortgage-backed securities (``MBS'') and other asset-
backed securities (``ABS''), including non-agency, non-government-
sponsored entity (``GSE'') and privately-issued mortgage-related and
other asset-backed securities (``Private ABS/MBS''), collateralized
bond obligations (``CBOs''), collateralized loan obligations
(``CLOs''), and other collateralized debt obligations (``CDOs''); \8\
---------------------------------------------------------------------------
\8\ For avoidance of doubt, ``Private ABS/MBS'' as referenced
herein are non-agency, non-GSE and privately-issued mortgage-related
and other asset-backed securities as stated in Commentary .01(b)(5)
to NYSE Arca Rule 8.600-E. However, for purposes of this filing,
CDOs, CBOs, and CLOs are excluded from the term Private ABS/MBS.
CDOs/CBOs/CLOs are distinguishable from ABS because they are
collateralized by bank loans or by corporate or government fixed
income securities and not by consumer and other loans made by non-
bank lenders, including student loans.
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[[Page 28063]]
inflation-indexed bonds issued both by governments and
corporations;
structured notes, including hybrid or ``indexed''
securities and event-linked bonds;
bank capital and trust preferred securities;
loan participations and assignments;
delayed funding loans and revolving credit facilities;
bank certificates of deposit, fixed time deposits and
bankers' acceptances;
repurchase agreements on Fixed Income Instruments and
reverse repurchase agreements on Fixed Income Instruments;
debt securities issued by states or local governments and
their agencies, authorities and other government-sponsored enterprises;
obligations of non-U.S. governments or their subdivisions,
agencies and government-sponsored enterprises; and
obligations of international agencies or supranational
entities.
With respect to Fixed Income Instruments, the Fund may invest,
without limitation, in U.S. dollar-denominated securities of foreign
issuers, U.S. dollar-denominated instruments of foreign issuers, and
securities denominated in foreign currencies.
The Fund may invest in to-be-announced transactions. The Fund may
also purchase and sell securities on a when-issued, delayed delivery or
forward commitment basis.
The Fund may, without limitation, seek to obtain market exposure to
the securities in which it primarily invests by entering into a series
of purchase and sale contracts or by using other investment techniques
(such as buy backs or dollar rolls).
The Fund may hold cash and cash equivalents.\9\
---------------------------------------------------------------------------
\9\ For purposes of this filing, the term ``cash equivalents''
includes the short-term instruments enumerated in Commentary .01(c)
to NYSE Arca Rule 8.600-E.
---------------------------------------------------------------------------
The Fund may invest in, to the extent permitted by Section 12(d) of
the 1940 Act or exemptive relief therefrom, other affiliated and
unaffiliated funds, such as open-end or closed-end management
investment companies, including other exchange-traded funds
(``ETFs'').\10\
---------------------------------------------------------------------------
\10\ For purposes of this filing, the term ``ETFs'' are
Investment Company Units (as described in NYSE Arca Rule 5.2-
E(j)(3)); Portfolio Depositary Receipts (as described in NYSE Arca
Rule 8.100-E); and Managed Fund Shares (as described in NYSE Arca
Rule 8.600-E). All ETFs will be listed and traded on national
securities exchanges. While the Fund may invest in inverse ETFs, the
Fund will not invest in leveraged (e.g., 2X, -2X, 3X or -3X) ETFs.
---------------------------------------------------------------------------
Use of Derivatives by the Fund
The Fund may invest in forwards to (i) provide exposure to Fixed
Income Instruments, (ii) enhance returns, (iii) manage portfolio
duration, or (iv) manage the risk of securities price fluctuations.
Investments in forwards will be made in accordance with the 1940 Act
and consistent with the Fund's investment objective and policies.
To limit the potential risk associated with such transactions, the
Fund may enter into offsetting transactions or segregate or ``earmark''
assets determined to be liquid by the Adviser in accordance with
procedures established by the Trust's Board of Trustees (the ``Board'')
and in accordance with the 1940 Act or as permitted by applicable
Commission guidance. These procedures have been adopted consistent with
Section 18 of the 1940 Act and related Commission guidance. In
addition, the Fund has included risk disclosure in its offering
documents, including leveraging risk. Leveraging risk is the risk that
certain transactions of the Fund, including the Fund's use of forwards,
may give rise to leverage, causing the Fund to be more volatile than if
it had not been leveraged.
Impact on Arbitrage Mechanism
The Adviser believes there will be minimal, if any, impact to the
arbitrage mechanism as a result of the Fund's use of forwards. The
Adviser understands that market makers and participants should be able
to value derivatives as long as the positions are disclosed with
relevant information. The Adviser believes that the price at which
Shares trade will continue to be disciplined by arbitrage opportunities
created by the ability to purchase or redeem Shares at their net asset
value (``NAV''), which should ensure that Shares will not trade at a
material discount or premium in relation to their NAV.
Creation and Redemption of Shares
The Fund offers and issues Shares at the NAV per Share only in
aggregations of a 50,000 Shares or multiples thereof (``Creation
Units''), with certain large institutional investors who have entered
into agreements with the Distributor (``Authorized Participants'')
generally in exchange for a basket of securities (the ``Deposit
Securities'') together with a deposit of a specified cash payment (the
``Cash Component''). Alternatively, the Fund may issue and redeem
Creation Units in exchange for a specified all-cash payment (``Cash
Deposit''). The size of a Creation Unit is subject to change. Shares
are redeemable by the Fund only in Creation Units, and, generally, in
exchange for securities and/or cash.
A ``Business Day'' with respect to the Fund is each day the
Exchange is open. Orders from Authorized Participants to create or
redeem Creation Units will only be accepted on a Business Day.
The consideration for purchase of Creation Units may consist of:
(i) Deposit Securities and the Cash Component, which will generally
correspond pro rata, to the extent practicable, to the Fund securities,
or, alternatively; (ii) the Cash Deposit. Together, the Deposit
Securities and Cash Component or, alternatively, the Cash Deposit,
constitute the ``Fund Deposit,'' which represents the minimum initial
and subsequent investment amount for a Creation Unit of the Fund.
PIMCO, through the National Securities Clearing Corporation
(``NSCC''), makes available on each Business Day, prior to the opening
of business (subject to amendments) on the Exchange (currently 9:30
a.m., Eastern time (``E.T.'')), the identity and the required number of
each Deposit Security and the amount of the Cash Component (or Cash
Deposit) to be included in the current Fund Deposit (based on
information from the end of the previous Business Day).
The Deposit Securities and Cash Component (or Cash Deposit) are
subject to any adjustments, as described below, in order to effect
purchases of Creation Units of the Fund until such time as the next-
announced composition of the Deposit Securities and Cash Component (or
Cash Deposit) is made available.
The Trust may require the substitution of an amount of cash (a
``cash-in-lieu'' amount) to replace any Deposit Security of the Fund.
The amount of cash contributed will be equivalent to the value of the
instrument listed as a Deposit Security, as determined by the Trust.
The Trust reserves the right to permit or require the substitution of a
``cash-in-lieu'' amount to be added to replace any Deposit Security
that is a to-be announced (``TBA'') transaction, that may not be
available in sufficient quantity for delivery, that may not be eligible
for trading by a Participating Party (defined below), that may not be
permitted to be registered in the name of the Trust as a result of an
in-kind creation order pursuant to local law or market convention, or
that may not be eligible for transfer through the systems of the
Depository Trust Company (``DTC'') or the Clearing Process (as
[[Page 28064]]
discussed below), or the Federal Reserve System for U.S. Treasury
securities. The Trust also reserves the right to permit or require a
``cash-in-lieu'' amount where the delivery of Deposit Securities by the
Authorized Participant (as described below) would be restricted under
the securities laws or where the delivery of Deposit Securities from an
investor to the Authorized Participant would result in the disposition
of Deposit Securities by the Authorized Participant becoming restricted
under the securities laws, and in certain other situations. The Trust
may permit a ``cash-in-lieu'' amount for any reason at the Trust's sole
discretion but is not required to do so.
Redemption of Creation Units
Shares may be redeemed only in Creation Units at their NAV next
determined after receipt of a redemption request in proper form on a
Business Day and only through a Participating Party \11\ or DTC
Participant \12\ who has executed a Participant Agreement. The Fund
will not redeem shares in amounts less than Creation Units. Beneficial
owners must accumulate enough shares to constitute a Creation Unit in
order to have such shares redeemed by the Trust.
---------------------------------------------------------------------------
\11\ A ``Participating Party'' is a broker-dealer or other
participant in the clearing process through the Continuous Net
Settlement System of the NSCC (the ``Clearing Process''), a clearing
agency that is registered with the SEC; or (ii) a DTC Participant,
and must have executed an agreement with the Distributor (and
accepted by the Transfer Agent), with respect to creations and
redemptions of Creation Units (``Participant Agreement'').
\12\ DTC participants include securities brokers and dealers,
banks, trust companies, clearing corporations and other institutions
that directly or indirectly maintain a custodial relationship with
Depository Trust Company.
---------------------------------------------------------------------------
With respect to the Fund, as mentioned above, PIMCO, through the
NSCC, makes available immediately prior to the opening of business on
the Exchange (currently 9:30 a.m., E.T.) on each Business Day, the
identity of the Fund's securities and/or an amount of cash that will be
delivered in exchange for a redemption request received in proper form
on that day. Fund securities received on redemption (``Fund
Securities'') may not be identical to Deposit Securities that are used
for the creation of Creation Units.
Unless cash-only redemptions are available or specified for the
Fund, the redemption proceeds for a Creation Unit will generally
consist of Fund Securities--as announced on the Business Day of the
request for a redemption order received in proper form--plus cash in an
amount equal to the difference between the NAV of the Shares being
redeemed, as next determined after a receipt of a request in proper
form, and the value of the Fund Securities (the ``Cash Redemption
Amount''), less a redemption transaction fee, if applicable.
Application of Generic Listing Requirements
The Exchange is submitting this proposed rule change because the
changes described below would result in the portfolio for the Fund not
meeting all of the ``generic'' listing requirements of Commentary .01
to NYSE Arca Rule 8.600-E applicable to the listing of Managed Fund
Shares. The Fund's portfolio would meet all such requirements except
for those set forth in Commentary .01(b)(1), Commentary .01(b)(4) and
Commentary .01(b)(5). Specifically, the Fund:
Will not comply with the requirement in Commentary
.01(b)(1) that components that in the aggregate account for at least
75% of the fixed income weight of the portfolio each shall have a
minimum original principal amount outstanding of $100 million or more.
Instead, the Exchange proposes that components, excluding Private ABS/
MBS and CDOs/CBOs/CLOs that, in the aggregate, account for at least 50%
of the fixed income weight of the portfolio each shall have a minimum
original principal amount outstanding of $50 million or more. Private
ABS/MBS and CDOs/CBOs/CLOs would not be subject to a requirement for a
minimum original principal amount outstanding.
will not comply with the requirement in Commentary
.01(b)(5) to Rule 8.600-E that investments in non-agency, non-
government sponsored entity and privately issued mortgage-related and
other asset-backed securities (i.e., Private ABS/MBS) not account, in
the aggregate, for more than 20% of the weight of the portfolio.\13\
Instead, the Fund will not invest more than 20% of the Fund's total
assets in Private ABS/MBS or more than 20% of the Fund's total assets
in U.S. or foreign CDOs/CBOs/CLOs.
---------------------------------------------------------------------------
\13\ Commentary .01(b)(5) to NYSE Arca Rule 8.600-E provides
that non-agency, non-government sponsored entity and privately
issued mortgage-related and other asset-backed securities components
of a portfolio may not account, in the aggregate, for more than 20%
of the weight of the portfolio.
---------------------------------------------------------------------------
will not comply with the requirements in Commentary
.01(b)(4) to Rule 8.600-E that component securities that in the
aggregate account for at least 90% of the fixed income weight of the
portfolio meet one of the criteria specified in Commentary
.01(b)(4).\14\ Instead, the Exchange proposes that (i) the Fund's
investments in fixed income securities that do not meet any of the
criteria in Commentary .01(b)(4) will not exceed 10% of the total
assets of the Fund, excluding Private ABS/MBS and CDOs/CBOs/CLOs; (ii)
Private ABS/MBS, which will be limited to 20% of the Fund's total
assets, will not be required to comply with any of the criteria in
Commentary .01(b)(4) to Rule 8.600-E; and (iii) CDOs/CBOs/CLOs also
will not be subject to any of the criteria in Commentary .01(b)(4) but
will be separately limited to 20% of the Fund's total assets.
---------------------------------------------------------------------------
\14\ Commentary .01(b)(4) provides that component securities
that in the aggregate account for at least 90% of the fixed income
weight of the portfolio must be either: (a) From issuers that are
required to file reports pursuant to Sections 13 and 15(d) of the
Act; (b) from issuers that have a worldwide market value of its
outstanding common equity held by non-affiliates of $700 million or
more; (c) from issuers that have outstanding securities that are
notes, bonds debentures, or evidence of indebtedness having a total
remaining principal amount of at least $1 billion; (d) exempted
securities as defined in Section 3(a)(12) of the Act; or (e) from
issuers that are a government of a foreign country or a political
subdivision of a foreign country.
---------------------------------------------------------------------------
Deviations from the generic requirements are necessary for the Fund
to achieve its investment objective in a manner that is cost-effective
and that maximizes investors' returns. Further, the proposed
alternative requirements are narrowly tailored to allow the Fund to
achieve its investment objective in manner that is consistent with the
principles of Section 6(b)(5) of the Act. As a result, it is in the
public interest to approve listing and trading of Shares of the Fund on
the Exchange pursuant to the requirements set forth herein.
As noted above, the Fund will not comply with the requirement in
Commentary .01(b)(1) to Rule 8.600-E that components that in the
aggregate account for at least 75% of the fixed income weight of the
portfolio each shall have a minimum original principal amount
outstanding of $100 million or more. Instead, the Exchange proposes
that components, excluding Private ABS/MBS and CDOs/CBOs/CLOs, that in
the aggregate account for at least 50% of the fixed income weight of
the portfolio each shall have a minimum original principal amount
outstanding of $50 million or more. Private ABS/MBS and CDOs/CBOs/CLOs
will not be subject to a requirement for a minimum original principal
amount outstanding. At least 50% of the fixed income weight of the
Fund's portfolio, excluding Private ABS/MBS and CDOs/CBOs/CLOs, will
continue to be subject to a substantial minimum (i.e., $50 million)
[[Page 28065]]
original principal amount outstanding.\15\ By excluding Private ABS/MBS
and CDOs/CBOs/CLOs from this requirement, the Fund will be able to
better diversify its holdings in such securities, and will be able to
invest in a larger variety of Private ABS/MBS and CDOs/CBOs/CLOs that
have characteristics consistent with the Fund's investment objective to
seek maximum current income, consistent with preservation of capital
and daily liquidity, while incorporating PIMCO's ESG investment
strategy. These characteristics may include, for example, Private ABS/
MBS and CDOs/CBOs/CLOs with investment grade credit rating or liquidity
comparable to fixed income securities with a much greater amount
outstanding. The Adviser represents that, with respect to the Fund's
investments in CDOs/CBOs/CLOs, the Fund will invest principally in the
senior-most tranches of these securities, generally with an AAA
investment rating which have first claim in the capital structure and
generally have less sensitivity to the credit risk of the underlying
assets (e.g., bank loans or commercial real estate).
---------------------------------------------------------------------------
\15\ The Exchange notes that the Commission has previously
approved a proposed rule change granting the same proposals in
regard to Commentary .01(b)(1) to Rule 8.600-E. See Securities
Exchange Act Release No. 86841 (August 30, 2019), 84 FR 47024
(September 6, 2019) (SR-NYSEArca-2019-38) (Order Approving a
Proposed Rule Change, as Modified by Amendments No. 1 and No. 2, To
Amend the Listing Rule Applicable to Shares of the Aware Ultra-Short
Duration Enhanced Income ETF).
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The Fund will not comply with the requirement in Commentary
.01(b)(5) to Rule 8.600-E that investments in non-agency, non-
government sponsored entity and privately issued mortgage-related and
other asset-backed securities (i.e., Private ABS/MBS) not account, in
the aggregate, for more than 20% of the weight of the portfolio.
Instead, the Fund will not invest more than 20% of the Fund's total
assets in Private ABS/MBS or more than 20% of the Fund's total assets
in U.S. or foreign CDOs/CBOs/CLOs.\16\ The Exchange believes that these
20% limitations will help the Fund maintain portfolio diversification
and will reduce manipulation risk. In addition, the Fund's investment
in CDOs/CBOs/CLOs will be subject to the Fund's liquidity procedures as
adopted by the Board, and the Adviser does not expect that investments
in CDOs/CBOs/CLOs of up to 20% of the total assets of the Fund will
have any material impact on the liquidity of the Fund's investments.
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\16\ The Exchange notes that the Commission has previously
approved a proposed rule change granting the same proposals in
regard to Commentary .01(b)(5) to Rule 8.600-E. See Securities
Exchange Act Release No. 87576 (November 20, 2019), 84 FR 65206
(November 26, 2019) (SR-NYSEArca-2019-14) (Order Approving a
Proposed Rule Change, as Modified by Amendment No. 1, Relating to
the Permitted Investments of the PGIM Ultra Short Bond ETF).
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The Fund will not comply with the requirements in Commentary
.01(b)(4) to Rule 8.600-E that component securities that in the
aggregate account for at least 90% of the fixed income weight of the
portfolio meet one of the criteria specified in Commentary .01(b)(4).
Instead, the Exchange proposes that: (i) The Fund's investments in
fixed income securities that do not meet any of the criteria in
Commentary .01(b)(4) will not exceed 10% of the total assets of the
Fund, excluding Private ABS/MBS and CDOs/CBOs/CLOs; (ii) Private ABS/
MBS, which will be limited to 20% of the Fund's total assets, will not
be required to comply with the criteria in Commentary .01(b)(4)(a)
through (e) to Rule 8.600-E; and (iii) CDOs/CBOs/CLOs also will not be
subject to the criteria in Commentary .01(b)(4)(a) through (e) but will
be subject to a limit of 20%, measured with respect to the total assets
of the Fund. \17\
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\17\ The Exchange notes that the Commission has previously
approved a proposed rule change granting the same proposals in
regard to Commentary .01(b)(4) to Rule 8.600-E. See Securities
Exchange Act Release No. 87576 (November 20, 2019), 84 FR 65206
(November 26, 2019) (SR-NYSEArca-2019-14) (Order Approving a
Proposed Rule Change, as Modified by Amendment No. 1, Relating to
the Permitted Investments of the PGIM Ultra Short Bond ETF).
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The Exchange accordingly believes that it is appropriate and in the
public interest to approve listing and trading of Shares of the Fund on
the Exchange notwithstanding that the Fund would not meet the
requirements of Commentary .01(b)(1), (b)(4) and (b)(5) to Rule 8.600-
E. The Exchange notes that, other than Commentary .01(b)(1), Commentary
.01 (b)(4) and Commentary .01(b)(5) to Rule 8.600-E, the Fund's
portfolio will meet all other requirements of Rule 8.600.
Availability of Information
The Fund's website (www.pimco.com) will include the prospectus for
the Fund that may be downloaded. The Fund's website will include
additional quantitative information updated on a daily basis including,
for the Fund, (1) daily trading volume, the prior Business Day's
reported closing price, NAV and midpoint of the bid/ask spread at the
time of calculation of such NAV (the ``Bid/Ask Price''),\18\ and a
calculation of the premium and discount of the Bid/Ask Price against
the NAV, and (2) data in chart format displaying the frequency
distribution of discounts and premiums of the daily Bid/Ask Price
against the NAV, within appropriate ranges, for each of the four
previous calendar quarters. On each Business Day, before commencement
of trading in Shares in the Core Trading Session on the Exchange, the
Fund will disclose on its website the Disclosed Portfolio as defined in
NYSE Arca Rule 8.600-E(c)(2) that forms the basis for the Fund's
calculation of NAV at the end of the Business Day.\19\
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\18\ The Bid/Ask Price of the Fund's Shares will be determined
using the mid-point of the highest bid and the lowest offer on the
Exchange as of the time of calculation of the Fund's NAV. The
records relating to Bid/Ask Prices will be retained by the Fund and
its service providers.
\19\ Under accounting procedures followed by the Fund, trades
made on the prior Business Day (``T'') will be booked and reflected
in NAV on the current Business Day (``T + 1''). Accordingly, the
Fund will be able to disclose at the beginning of the Business Day
the portfolio that will form the basis for the NAV calculation at
the end of the Business Day.
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On a daily basis, the Fund will disclose the information required
under NYSE Arca Rule 8.600-E(c)(2) to the extent applicable. The
website information will be publicly available at no charge.
In addition, a basket composition file, which includes the security
names and share quantities, if applicable, required to be delivered in
exchange for the Fund's Shares, together with estimates and actual cash
components, will be publicly disseminated daily prior to the opening of
the Exchange via the NSCC. The basket represents one Creation Unit of
the Fund. Authorized Participants may refer to the basket composition
file for information regarding fixed income securities, and any other
instrument that may comprise the Fund's basket on a given day.
Investors can also obtain the Trust's Statement of Additional
Information (``SAI''), the Fund's Shareholder Reports, and the Fund's
Forms N-CSR and Forms N-CEN, filed twice a year. The Fund's SAI and
Shareholder Reports will be available free upon request from the Trust,
and those documents and the Form N-CSR, Form N-PX and Form N-CEN may be
viewed on-screen or downloaded from the Commission's website at
www.sec.gov.
Intra-day and closing price information regarding fixed income
securities will be available from major market data vendors. For ETFs,
intraday price quotations will generally be available from broker-
dealers and trading platforms (as applicable). Intraday and other price
information for the fixed income securities in which the Fund will
invest will be available through subscription services, such as
[[Page 28066]]
Bloomberg, Markit and Thomson Reuters, which can be accessed by
Authorized Participants and other market participants. Price
information for forwards and for affiliated and unaffiliated funds,
such as open-end or closed-end management investment companies, is
available from major market data vendors. Additionally, the Trade
Reporting and Compliance Engine (``TRACE'') of the Financial Industry
Regulatory Authority (``FINRA'') will be a source of price information
for corporate bonds, and Private ABS/MBS, to the extent transactions in
such securities are reported to TRACE.\20\ Money market funds are
typically priced once each Business Day and their prices will be
available through the applicable fund's website or from major market
data vendors. Electronic Municipal Market Access (``EMMA'') will be a
source of price information for municipal bonds. Price information
regarding U.S. government securities, repurchase agreements, reverse
repurchase agreements and cash equivalents generally may be obtained
from brokers and dealers who make markets in such securities or through
nationally recognized pricing services through subscription agreements.
---------------------------------------------------------------------------
\20\ Broker-dealers that are FINRA member firms have an
obligation to report transactions in specified debt securities to
TRACE to the extent required under applicable FINRA rules.
Generally, such debt securities will have at issuance a maturity
that exceeds one calendar year. For fixed income securities that are
not reported to TRACE, (i) intraday price quotations will generally
be available from broker-dealers and trading platforms (as
applicable) and (ii) price information will be available from feeds
from market data vendors, published or other public sources, or
online information services, as described above.
---------------------------------------------------------------------------
Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers.
Quotation and last sale information for the Shares will be
available via the Consolidated Tape Association (``CTA'') high-speed
line. In addition, the Portfolio Indicative Value (``PIV''), as defined
in NYSE Arca Rule 8.600-E(c)(3), will be widely disseminated by one or
more major market data vendors at least every 15 seconds during the
Core Trading Session.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund. Trading in Shares of the Fund will
be halted if the circuit breaker parameters in NYSE Arca Rule 7.12-E
have been reached. Trading also may be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. Trading in the Fund's Shares also
will be subject to Rule 8.600-E(d)(2)(D) (``Trading Halts'').
Trading Rules
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. Shares will trade on
the NYSE Arca Marketplace from 4:00 a.m. to 8:00 p.m. E.T. in
accordance with NYSE Arca Rule 7.34-E (Trading Sessions). The Exchange
has appropriate rules to facilitate transactions in the Shares during
all trading sessions. As provided in NYSE Arca Rule 7.6-E, the minimum
price variation (``MPV'') for quoting and entry of orders in equity
securities traded on the NYSE Arca Marketplace is $0.01, with the
exception of securities that are priced less than $1.00 for which the
MPV for order entry is $0.0001.
With the exception of the requirements of Commentary .01(b)(1),
(b)(4) and (b)(5) to Rule 8.600-E as described above in ``Application
of Generic Listing Requirements,'' the Shares of the Fund will conform
to the continued listing criteria under NYSE Arca Rule 8.600-E.
Consistent with NYSE Arca Rule 8.600-E(d)(2)(B)(ii), the Adviser will
implement and maintain, or be subject to, procedures designed to
prevent the use and dissemination of material non-public information
regarding the actual components of the Fund's portfolio.
The Exchange has obtained a representation from the issuer of the
Shares that the NAV per Share will be calculated daily and that the NAV
and the Disclosed Portfolio will be made available to all market
participants at the same time. The Fund's investments will be
consistent with its investment goal and will not be used to enhance
leverage.
Surveillance
The Exchange represents that trading in the Shares will be 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 violations of Exchange rules
and federal securities laws applicable to trading on the Exchange.\21\
---------------------------------------------------------------------------
\21\ 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 and ETFs with
other markets and other entities that are members of the Intermarket
Surveillance Group (``ISG''), and the Exchange or FINRA, on behalf of
the Exchange, or both, may obtain trading information regarding trading
in such securities from such markets and other entities.\22\ 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 TRACE. FINRA also can access data obtained from
the Municipal Securities Rulemaking Board (``MSRB'') relating to
certain municipal bond trading activity for surveillance purposes in
connection with trading in the Shares.
---------------------------------------------------------------------------
\22\ 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 (``CSSA'').
---------------------------------------------------------------------------
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
(a) the description of the portfolio or reference asset, (b)
limitations on portfolio holdings or reference assets, or (c) the
applicability of Exchange listing rules specified in this rule filing
shall constitute continued listing requirements for listing the Shares
of the Fund on the Exchange.
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 for compliance with the continued listing requirements. If the
[[Page 28067]]
Fund is not in compliance with the applicable listing requirements, the
Exchange will commence delisting procedures under NYSE Arca Rule 5.5-E
(m).
Information Bulletin
The Exchange will inform its Equity Trading Permit Holders in an
Information Bulletin (``Bulletin'') of the special characteristics and
risks associated with trading the Shares. Specifically, the Bulletin
will discuss the following: (1) The procedures for purchases and
redemptions of Shares in Creation Unit aggregations (and that Shares
are not individually redeemable); (2) NYSE Arca Rule 9.2-E(a), which
imposes a duty of due diligence on its Equity Trading Permit Holders to
learn the essential facts relating to every customer prior to trading
the Shares; (3) the risks involved in trading the Shares during the
applicable Trading Sessions when an updated PIV will not be calculated
or publicly disseminated; (4) how information regarding the PIV and the
Disclosed Portfolio is disseminated; (5) the requirement that Equity
Trading Permit Holders deliver a prospectus to investors purchasing
newly issued Shares prior to or concurrently with the confirmation of a
transaction; and (6) trading information.
In addition, the Bulletin will reference that the Fund is subject
to various fees and expenses described in the Registration Statement.
The Bulletin will discuss any exemptive, no-action, and interpretive
relief granted by the Commission from any rules under the Act. The
Bulletin will also disclose that the NAV for the Shares will be
calculated after 4:00 p.m., E.T. each trading day.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) of the Act that an exchange have
rules that are designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares are listed and traded on the Exchange pursuant to the initial
and continued listing criteria in NYSE Arca Rule 8.600-E. The Exchange
has in place surveillance procedures that are adequate to properly
monitor trading in the Shares in all trading sessions and to deter and
detect violations of Exchange rules and federal securities laws
applicable to trading on the Exchange. The Adviser is not registered as
a broker-dealer, but the Adviser is affiliated with a broker-dealer and
has implemented and will maintain a ``fire wall'' with respect to such
broker-dealer regarding access to information concerning the
composition and/or changes to the Fund's portfolio. The Exchange or
FINRA, on behalf of the Exchange, or both, will communicate as needed
regarding trading in the Shares and ETFs 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 from such markets and other
entities. 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 TRACE. FINRA also can access
data obtained from the MSRB relating to certain municipal bond trading
activity for surveillance purposes in connection with trading in the
Shares.
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation from the issuer of the
Shares that the NAV per Share will be calculated daily and that the NAV
and the Disclosed Portfolio will be made available to all market
participants at the same time. In addition, a large amount of
information is publicly available regarding the Fund and the Shares,
thereby promoting market transparency. The website for the Fund
includes a form of the prospectus for the Fund and additional data
relating to NAV and other applicable quantitative information. Trading
in Shares of the Fund will be halted if the circuit breaker parameters
in NYSE Arca Rule 7.12-E have been reached or because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable, and trading in the Shares will be
subject to NYSE Arca Rule 8.600-E (d)(2)(D), which sets forth
circumstances under which trading in the Shares of the Fund may be
halted. In addition, as noted above, investors will have ready access
to information regarding the Fund's holdings, NAV, the PIV, the
Disclosed Portfolio, and quotation and last sale information for the
Shares.
As described above, deviations from the generic requirements are
necessary for the Fund to achieve its investment objective in a manner
that is cost-effective and that maximizes investors' returns. Further,
the proposed alternative requirements are narrowly tailored to allow
the Fund to achieve its investment objective in manner that is
consistent with the principles of Section 6(b)(5) of the Act. As a
result, it is in the public interest to approve listing and trading of
Shares of the Fund on the Exchange pursuant to the requirements set
forth herein.\23\
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\23\ The Exchange represents that, for continued listing, the
Fund will be in compliance with Rule 10A-3 under the Act, as
provided by NYSE Arca Rule 5.3-E.
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As discussed above, the Fund will not comply with the requirement
in Commentary .01(b)(1) to Rule 8.600-E that components that in the
aggregate account for at least 75% of the fixed income weight of the
portfolio each have a minimum original principal amount outstanding of
$100 million or more. Instead, the Exchange proposes that components,
excluding Private ABS/MBS and CDOs/CBOs/CLOs, that in the aggregate
account for at least 50% of the fixed income weight of the portfolio
each shall have a minimum original principal amount outstanding of $50
million or more. Private ABS/MBS and CDOs/CBOs/CLOs would not be
subject to a requirement for a minimum original principal amount
outstanding. The Exchange believes this alternative is appropriate
because at least 50% of the fixed income weight of the Fund's
portfolio, excluding Private ABS/MBS and CDOs/CBOs/CLOs, would continue
to be subject to a substantial minimum (i.e., $50 million) original
principal amount outstanding. In addition, by excluding Private ABS/MBS
and CDOs/CBOs/CLOs from this requirement, the Fund will be able to
better diversify its holdings in such securities, and would be able to
invest in a larger variety of Private ABS/MBS and CDOs/CBOs/CLOs that
have characteristics consistent with the Fund's investment objective to
seek maximum current income, consistent with preservation of capital
and daily liquidity, while incorporating PIMCO's ESG investment
strategy.
The Fund will not comply with the requirement in Commentary
.01(b)(5) to Rule 8.600-E that investments in non-agency, non-
government sponsored entity and privately issued mortgage-related and
other asset-backed securities (i.e., Private ABS/MBS) not account, in
the aggregate, for more than 20% of the weight of the portfolio.
Instead, the Fund will not invest more than 20% of the Fund's total
assets in Private ABS/MBS or more than 20% of the Fund's total assets
in U.S. or foreign CDOs/
[[Page 28068]]
CBOs/CLOs.\24\ The Exchange believes that these 20% limitations will
help the Fund maintain portfolio diversification and will reduce
manipulation risk. In addition, the Fund's investment in CDOs/CBOs/CLOs
will be subject to the Fund's liquidity procedures as adopted by the
Board, and the Adviser does not expect that investments in CDOs/CBOs/
CLOs of up to 20% of the total assets of the Fund will have any
material impact on the liquidity of the Fund's investments.
---------------------------------------------------------------------------
\24\ The Exchange notes that the Commission has previously
approved a proposed rule change granting the same proposals in
regard to Commentary .01(b)(5) to Rule 8.600-E. See Securities
Exchange Act Release No. 87576 (November 20, 2019), 84 FR 65206
(November 26, 2019) (SR-NYSEArca-2019-14) (Order Approving a
Proposed Rule Change, as Modified by Amendment No. 1, Relating to
the Permitted Investments of the PGIM Ultra Short Bond ETF).
---------------------------------------------------------------------------
The Fund will not comply with the requirements in Commentary
.01(b)(4) to Rule 8.600-E that component securities that in the
aggregate account for at least 90% of the fixed income weight of the
portfolio meet one of the criteria specified in Commentary .01(b)(4).
Instead, the Exchange proposes that: (i) The Fund's investments in
fixed income securities that do not meet any of the criteria in
Commentary .01(b)(4) will not exceed 10% of the total assets of the
Fund, excluding Private ABS/MBS and CDOs/CBOs/CLOs; (ii) Private ABS/
MBS, which will be limited to 20% of the Fund's total assets, will not
be required to comply with any of the criteria in Commentary .01(b)(4);
and (iii) CDOs/CBOs/CLOs also will not be subject to any of the
criteria in Commentary .01(b)(4) but will be separately limited to 20%
of the Fund's total assets.
The Adviser represents that, with respect to the Fund's investments
in CDOs/CBOs/CLOs, the Fund will invest principally in the senior-most
tranches of these securities, generally with an AAA investment rating
which have first claim in the capital structure and generally have less
sensitivity to the credit risk of the underlying assets (e.g., bank
loans or commercial real estate).
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of actively managed ETF that will enhance
competition among market participants, to the benefit of investors and
the marketplace. As noted above, the Exchange has in place surveillance
procedures relating to trading in the Shares and may obtain information
via ISG from other exchanges that are members of ISG or with which the
Exchange has entered into a CSSA. In addition, as noted above,
investors have ready access to information regarding the Fund's
holdings, NAV, the PIV, the Disclosed Portfolio, and quotation and last
sale information for the Shares.
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 a change to the Fund's investments
similar to investments of other actively managed ETFs, shares of which
have been approved for Exchange listing and trading,\25\ that
principally hold fixed income securities, and that will enhance
competition among market participants, to the benefit of investors and
the marketplace.
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\25\ See notes 13-15, supra.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or up to 90 days (i) as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or (ii) as to which the self-regulatory
organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as modified by Amendment No. 1, 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-2020-37 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-2020-37. 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-2020-37 and should be submitted
on or before June 2, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10060 Filed 5-11-20; 8:45 am]
BILLING CODE 8011-01-P
