Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, To Make Certain Changes Regarding the Investments of the PIMCO Enhanced Short Maturity Active ESG Exchange-Traded Fund, 37139-37142 [2020-13207]
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Federal Register / Vol. 85, No. 119 / Friday, June 19, 2020 / Notices
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venues that they may participate on and
direct their order flow, including 13
other equities exchanges and offexchange venues, including 32
alternative trading systems.
Additionally, the Exchange represents a
small percentage of the overall market.
Based on publicly available information,
no single equities exchange has more
than 20% of the market share.25
Therefore, no exchange possesses
significant pricing power in the
execution of order flow. Indeed,
participants can readily choose to send
their orders to other exchange and offexchange venues if they deem fee levels
at those other venues to be more
favorable. Moreover, the Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 26 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’.27 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
25 See Cboe Global Markets U.S. Equities Market
Volume Summary (May 28, 2020), available at
https://markets.cboe.com/us/equities/market_share/.
26 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
27 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21)).
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 28 and paragraph (f) of Rule
19b–4 29 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission 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–
CboeBZX–2020–047 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–CboeBZX–2020–047. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBZX–2020–047, and
should be submitted on or before July
10, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–13205 Filed 6–18–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89068; File No. SR–
NYSEArca–2020–37]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Approving a
Proposed Rule Change, as Modified by
Amendment No. 1, To Make Certain
Changes Regarding the Investments of
the PIMCO Enhanced Short Maturity
Active ESG Exchange-Traded Fund
June 15, 2020.
I. Introduction
On April 29, 2020, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to make certain changes
regarding the investments of the PIMCO
Enhanced Short Maturity Active ESG
Exchange-Traded Fund (‘‘Fund’’). On
May 4, 2020, the Exchange filed
Amendment No. 1 to the proposed rule
change, which superseded and replaced
30 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
28 15
U.S.C. 78s(b)(3)(A).
29 17 CFR 240.19b–4(f).
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Federal Register / Vol. 85, No. 119 / Friday, June 19, 2020 / Notices
the proposed rule change in its entirety.
The proposed rule change, as modified
by Amendment No. 1, was published for
comment in the Federal Register on
May 12, 2020.3 The Commission has
received no comment letters on the
proposal. This order approves the
proposed rule change, as modified by
Amendment No. 1.
I. Description of the Proposed Rule
Change, as Modified by Amendment
No. 1
The Exchange proposes certain
changes, as described below, 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 (‘‘Managed Fund Shares’’).4
The Fund is a series of PIMCO ETF
Trust (‘‘Trust’’).5 Pacific Investment
Management Company LLC is the
investment adviser (‘‘Adviser’’) to the
Fund.6 PIMCO Investments LLC is the
distributor of the Shares and State Street
Bank & Trust Co. acts as the custodian
and transfer agent for the Fund.
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A. Fund Investments
According to the Exchange, the
investment objective of the Fund is to
seek maximum current income,
consistent with preservation of capital
and daily liquidity, while incorporating
the Adviser’s environment, social
responsibility, and governance (‘‘ESG’’)
investment strategy. In managing the
Fund’s portfolio, the Adviser may avoid
3 See Securities Exchange Act Release No. 88822
(May 6, 2020), 85 FR 28061 (‘‘Notice’’).
4 The Shares commenced trading on the Exchange
on December 10, 2019.
5 The Exchange states that the Trust is registered
under the Investment Company Act of 1940 (‘‘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’’). In addition, the
Exchange states that 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).
6 The Exchange states that 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. 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 brokerdealer, it will implement and maintain a fire wall
with respect to its relevant personnel or its brokerdealer affiliate regarding access to information
concerning the composition and/or changes to the
portfolio, and will be subject to procedures
designed to prevent the use and dissemination of
material non-public information regarding such
portfolio.
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investment in the securities of issuers
whose ESG practices are not to the
Adviser’s satisfaction.
Under normal market conditions,7 the
Fund invests at least 80% of its net
assets in a diversified portfolio of fixed
income securities of varying maturities,
which may be represented by forwards,
and will consist of the following
(collectively, ‘‘Fixed Income
Instruments’’):
• Securities issued or guaranteed by
the U.S. government, its agencies, or
U.S. government-sponsored entities;
• 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
• 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
7 The term ‘‘normal market conditions’’ is defined
in NYSE Arca Rule 8.600–E(c)(5).
8 The Exchange states that ‘‘Private ABS/MBS’’ as
referenced in the filing 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, the
Exchange also states that 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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• obligations of international agencies
or supranational entities.
With respect to Fixed Income
Instruments, the Fund may invest,
without limitation, in U.S. dollardenominated securities and 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 also 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
B. Use of Derivatives by the Fund
The Exchange states that the Fund
may invest in forwards to (1) provide
exposure to Fixed Income Instruments,
(2) enhance returns, (3) manage
portfolio duration, or (4) 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. The Exchange
states that, 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 and in accordance with the
1940 Act or as permitted by applicable
Commission guidance. In addition, the
Fund has included risk disclosure in its
offering documents, including
leveraging risk.11
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 The Exchange states that 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. According to the Exchange, while the
Fund may invest in inverse ETFs, the Fund will not
invest in leveraged (e.g., 2X, ¥2X, 3X or ¥3X)
ETFs.
11 The Exchange states that leveraging risk is the
risk that certain transactions of the Fund, including
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According to the Exchange, 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 Exchange states that
the Adviser understands that market
makers and participants should be able
to value derivatives as long as the
positions are disclosed with relevant
information. Further, according to the
Exchange, 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 the
Exchange states should ensure that
Shares will not trade at a material
discount or premium in relation to their
NAV.
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C. Application of Generic Listing
Requirements
The Exchange states that the proposed
changes described below will 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 Exchange
states that the Fund’s portfolio will meet
all requirements of Commentary .01 to
NYSE Arca Rule 8.600–E except for
those set forth in Commentary
.01(b)(1),12 Commentary .01(b)(4) 13 and
Commentary .01(b)(5).14
According to the Exchange, the
Fund’s portfolio 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
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.
12 Commentary .01(b)(1) requires 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.
13 Commentary .01(b)(4) requires that component
securities that in 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.
14 Commentary .01(b)(5) provides that nonagency, non-GSE and privately-issued mortgagerelated and other asset-backed securities
components of a portfolio shall not account, in the
aggregate, for more than 20% of the weight of the
portfolio.
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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. Investments in
Private ABS/MBS and CDOs/CBOs/
CLOs will not be subject to a required
minimum original principal amount
outstanding.
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).15 Instead, the Exchange
proposes that: (1) 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; (2) 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); and (3) CDOs/
CBOs/CLOs, which will be subject to a
separate limit of 20% of the Fund’s total
assets, will also not be required to
comply with the criteria in Commentary
.01(b)(4).
In addition, the Exchange states that
the Fund’s portfolio will not comply
with the requirement in Commentary
.01(b)(5) to Rule 8.600–E that
investments in non-agency, nongovernment 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.
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–E.
II. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change, as
modified by Amendment No. 1, is
consistent with the Act and the rules
15 See
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supra note 13.
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37141
and regulations thereunder applicable to
a national securities exchange.16 In
particular, the Commission finds that
the proposed rule change, as modified
by Amendment No. 1, is consistent with
Section 6(b)(5) of the Act,17 which
requires, among other things, that the
Exchange’s rules be 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 a national market system, and, in
general, to protect investors and the
public interest.
According to the Exchange, other than
Commentary .01(b)(1), (b)(4) and (b)(5)
to Rule 8.600–E, the Fund will meet all
other requirements of NYSE Arca Rule
8.600–E, and the Shares of the Fund
will conform to the continued listing
criteria under NYSE Arca Rule 8.600–E.
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 of the portfolio,
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. The
Exchange represents that at least 50% of
the fixed income weight of the Fund’s
portfolio will still be required to have a
substantial minimum original principal
amount outstanding.18 The Exchange
asserts that not subjecting Private ABS/
MBS and CDOs/CBOs/CLOs to a
standard for minimum original
principal amount outstanding would
allow the Fund to invest in a larger
variety of Private ABS/MBS and CDOs/
CBOs/CLOs, which would help the
Fund meet its investment objective and
diversify its holdings in such
securities.19 In addition, the Exchange
states that the Adviser has represented
that, with respect to the Fund’s
investments in CDOs/CBOs/CLOs, the
Fund will invest principally in the
16 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
17 15 U.S.C. 78f(b)(5).
18 See Notice, supra note 3, at 28064–65.
19 See id. at 28065.
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senior-most tranches of these securities,
generally those with an AAA
investment rating that have first claim
in the capital structure and that have
less sensitivity to the credit risk of the
underlying assets (e.g., bank loans or
commercial real estate).20 The
Commission notes that it has previously
approved the listing of other series of
Managed Fund Shares for which the
fixed income weight of the portfolio
does not comply with Commentary
.01(b)(1) to Rule 8.600–E.21
In addition, 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).22 Instead, the
Exchange proposes to allow up to 50%
of the Fund’s portfolio to be composed
of fixed income securities which would
not satisfy the criteria in Commentary
.01(b)(4). Specifically, the Exchange
proposes that: (1) The Fund may invest
up to 10% of its total assets in fixed
income securities that do not satisfy the
criteria of Commentary .01(b)(4),
excluding Private ABS/MBS and CDOs/
CBOs/CLOs; (2) the Fund’s investments
in Private ABS/MBS, which may
constitute up to 20% of the Fund’s total
assets, will not be required to satisfy the
criteria of Commentary .01(b)(4); and (3)
the Fund’s investments in CDOs/CBOs/
CLOs, which may constitute up to 20%
of the Fund’s total assets, also will not
be required to satisfy the criteria of
Commentary .01(b)(4). The Commission
notes that it has previously approved
the listing of other series of Managed
Fund Shares with similar investment
strategies that are permitted to hold a
similar percentage of fixed income
securities that do not meet one of the
criteria set forth in
Commentary.01(b)(4).23
Finally, the Fund will not comply
with the requirement in Commentary
.01(b)(5) to Rule 8.600–E that
investments in non-agency, nongovernment sponsored entity and
20 See
id.
e.g., 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).
22 See supra note 13.
23 See, e.g., 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) (‘‘PGIM Ultra Short Bond ETF Order’’).
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21 See,
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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. The Exchange believes that
these limitations will help the Fund
maintain portfolio diversification and
reduce manipulation risk.24 In addition,
the Exchange states that the Fund’s
investment in CDOs/CBOs/CLOs will be
subject to the Fund’s liquidity
procedures as adopted by the Trust’s
Board of Trustees, and the Adviser does
not expect that such investments will
have any material impact on the
liquidity of the Fund’s investments.25
The Commission notes that it has
previously approved the listing of other
series of Managed Fund Shares that are
permitted to hold private asset backed
and mortgage-backed securities in
excess of the levels permitted under
Commentary .01(b)(5).26
The Exchange represents that all
statements and representations made in
the filing regarding (1) the description of
the portfolio holdings or reference
assets, (2) limitations on portfolio
holdings or reference assets, or (3) the
applicability of Exchange listing rules
specified in the filing shall constitute
continued listing requirements for
listing the Shares of the Fund on the
Exchange. In addition, the Exchange
states that the issuer must notify the
Exchange of any failure by the Fund to
comply with the continued listing
requirements, and, pursuant to its
obligations under Section 19(g)(1) of the
Act, the Exchange will monitor 27 for
compliance with the continued listing
requirements. If the Fund is not in
compliance with the applicable listing
24 See
Notice, supra note 3, at 28065.
id.
26 See, e.g., PGIM Ultra Short Bond ETF Order,
supra note 23; Securities Exchange Act Release No.
87410 (October 28, 2019), 84 FR 58750 (November
1, 2019) (SR–NYSEArca–2019–33) (Order
Approving a Proposed Rule Change, as Modified by
Amendment No. 2, Regarding Changes to
Investments of the First Trust TCW Unconstrained
Plus Bond ETF).
27 The Commission notes that certain proposals
for the listing and trading of exchange-traded
products include a representation that the exchange
will ‘‘surveil’’ for compliance with the continued
listing requirements. See, e.g., Securities Exchange
Act Release No. 77499 (April 1, 2016), 81 FR 20428,
20432 (April 7, 2016) (SR–BATS–2016–04). In the
context of this representation, it is the
Commission’s view that ‘‘monitor’’ and ‘‘surveil’’
both mean ongoing oversight of compliance with
the continued listing requirements. Therefore, the
Commission does not view ‘‘monitor’’ as a more or
less stringent obligation than ‘‘surveil’’ with respect
to the continued listing requirements.
25 See
PO 00000
Frm 00083
Fmt 4703
Sfmt 4703
requirements, the Exchange will
commence delisting procedures under
NYSE Arca Rule 5.5–E(m).
This approval order is based on all of
the Exchange’s representations,
including those set forth above and in
Amendment No. 1. For the foregoing
reasons, the Commission finds that the
proposed rule change, as modified by
Amendment No. 1, is consistent with
Section 6(b)(5) of the Act 28 and the
rules and regulations thereunder
applicable to a national securities
exchange.
III. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,29 that the
proposed rule change (SR–NYSEArca–
2020–37), as modified by Amendment
No. 1, be, and it hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–13207 Filed 6–18–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89070; File No. SR–MRX–
2020–12]
Self-Regulatory Organizations; Nasdaq
MRX, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the MRX
Disciplinary Rules in General 5 To
Incorporate by Reference The Nasdaq
Stock Market LLC’s Series 8000 and
9000 Rules
June 15, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 10,
2020, Nasdaq MRX, LLC (‘‘MRX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
28 15
U.S.C. 78f(b)(5).
29 Id.
30 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\19JNN1.SGM
19JNN1
]]>Agencies
[Federal Register Volume 85, Number 119 (Friday, June 19, 2020)]
[Notices]
[Pages 37139-37142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13207]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89068; File No. SR-NYSEArca-2020-37]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a
Proposed Rule Change, as Modified by Amendment No. 1, To Make Certain
Changes Regarding the Investments of the PIMCO Enhanced Short Maturity
Active ESG Exchange-Traded Fund
June 15, 2020.
I. Introduction
On April 29, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to make certain changes regarding the investments
of the PIMCO Enhanced Short Maturity Active ESG Exchange-Traded Fund
(``Fund''). On May 4, 2020, the Exchange filed Amendment No. 1 to the
proposed rule change, which superseded and replaced
[[Page 37140]]
the proposed rule change in its entirety. The proposed rule change, as
modified by Amendment No. 1, was published for comment in the Federal
Register on May 12, 2020.\3\ The Commission has received no comment
letters on the proposal. This order approves the proposed rule change,
as modified by Amendment No. 1.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 88822 (May 6, 2020),
85 FR 28061 (``Notice'').
---------------------------------------------------------------------------
I. Description of the Proposed Rule Change, as Modified by Amendment
No. 1
The Exchange proposes certain changes, as described below,
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 (``Managed Fund Shares'').\4\ The Fund is a
series of PIMCO ETF Trust (``Trust'').\5\ Pacific Investment Management
Company LLC is the investment adviser (``Adviser'') to the Fund.\6\
PIMCO Investments LLC is the distributor of the Shares and State Street
Bank & Trust Co. acts as the custodian and transfer agent for the Fund.
---------------------------------------------------------------------------
\4\ The Shares commenced trading on the Exchange on December 10,
2019.
\5\ The Exchange states that the Trust is registered under the
Investment Company Act of 1940 (``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''). In addition, the Exchange
states that 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).
\6\ The Exchange states that 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. 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.
---------------------------------------------------------------------------
A. Fund Investments
According to the Exchange, the investment objective of the Fund is
to seek maximum current income, consistent with preservation of capital
and daily liquidity, while incorporating the Adviser's environment,
social responsibility, and governance (``ESG'') investment strategy. In
managing the Fund's portfolio, the Adviser may avoid investment in the
securities of issuers whose ESG practices are not to the Adviser's
satisfaction.
Under normal market conditions,\7\ the Fund invests at least 80% of
its net assets in a diversified portfolio of fixed income securities of
varying maturities, which may be represented by forwards, and will
consist of the following (collectively, ``Fixed Income Instruments''):
---------------------------------------------------------------------------
\7\ The term ``normal market conditions'' is defined in NYSE
Arca Rule 8.600-E(c)(5).
---------------------------------------------------------------------------
Securities issued or guaranteed by the U.S. government,
its agencies, or U.S. government-sponsored entities;
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\ The Exchange states that ``Private ABS/MBS'' as referenced
in the filing 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, the Exchange also
states that 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.
---------------------------------------------------------------------------
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 and
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 also 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\ The Exchange states that 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. According to the Exchange, while the
Fund may invest in inverse ETFs, the Fund will not invest in
leveraged (e.g., 2X, -2X, 3X or -3X) ETFs.
---------------------------------------------------------------------------
B. Use of Derivatives by the Fund
The Exchange states that the Fund may invest in forwards to (1)
provide exposure to Fixed Income Instruments, (2) enhance returns, (3)
manage portfolio duration, or (4) 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. The Exchange states that, 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 and in accordance with the 1940 Act or as permitted
by applicable Commission guidance. In addition, the Fund has included
risk disclosure in its offering documents, including leveraging
risk.\11\
---------------------------------------------------------------------------
\11\ The Exchange states that 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.
---------------------------------------------------------------------------
[[Page 37141]]
According to the Exchange, 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 Exchange states that the Adviser
understands that market makers and participants should be able to value
derivatives as long as the positions are disclosed with relevant
information. Further, according to the Exchange, 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 the Exchange states
should ensure that Shares will not trade at a material discount or
premium in relation to their NAV.
C. Application of Generic Listing Requirements
The Exchange states that the proposed changes described below will
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 Exchange states
that the Fund's portfolio will meet all requirements of Commentary .01
to NYSE Arca Rule 8.600-E except for those set forth in Commentary
.01(b)(1),\12\ Commentary .01(b)(4) \13\ and Commentary .01(b)(5).\14\
---------------------------------------------------------------------------
\12\ Commentary .01(b)(1) requires 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.
\13\ Commentary .01(b)(4) requires that component securities
that in 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.
\14\ Commentary .01(b)(5) provides that non-agency, non-GSE and
privately-issued mortgage-related and other asset-backed securities
components of a portfolio shall not account, in the aggregate, for
more than 20% of the weight of the portfolio.
---------------------------------------------------------------------------
According to the Exchange, the Fund's portfolio 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. Investments in
Private ABS/MBS and CDOs/CBOs/CLOs will not be subject to a required
minimum original principal amount outstanding.
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).\15\ Instead, the Exchange proposes that: (1) 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; (2)
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); and (3) CDOs/CBOs/CLOs, which will be subject to a separate
limit of 20% of the Fund's total assets, will also not be required to
comply with the criteria in Commentary .01(b)(4).
---------------------------------------------------------------------------
\15\ See supra note 13.
---------------------------------------------------------------------------
In addition, the Exchange states that the Fund's portfolio 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.
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-E.
II. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change, as modified by Amendment No. 1, is consistent with the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\16\ In particular, the Commission finds that the
proposed rule change, as modified by Amendment No. 1, is consistent
with Section 6(b)(5) of the Act,\17\ which requires, among other
things, that the Exchange's rules be 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 a national market system, and, in
general, to protect investors and the public interest.
---------------------------------------------------------------------------
\16\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
According to the Exchange, other than Commentary .01(b)(1), (b)(4)
and (b)(5) to Rule 8.600-E, the Fund will meet all other requirements
of NYSE Arca Rule 8.600-E, and the Shares of the Fund will conform to
the continued listing criteria under NYSE Arca Rule 8.600-E.
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 of
the portfolio, 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. The Exchange represents that at least 50% of the
fixed income weight of the Fund's portfolio will still be required to
have a substantial minimum original principal amount outstanding.\18\
The Exchange asserts that not subjecting Private ABS/MBS and CDOs/CBOs/
CLOs to a standard for minimum original principal amount outstanding
would allow the Fund to invest in a larger variety of Private ABS/MBS
and CDOs/CBOs/CLOs, which would help the Fund meet its investment
objective and diversify its holdings in such securities.\19\ In
addition, the Exchange states that the Adviser has represented that,
with respect to the Fund's investments in CDOs/CBOs/CLOs, the Fund will
invest principally in the
[[Page 37142]]
senior-most tranches of these securities, generally those with an AAA
investment rating that have first claim in the capital structure and
that have less sensitivity to the credit risk of the underlying assets
(e.g., bank loans or commercial real estate).\20\ The Commission notes
that it has previously approved the listing of other series of Managed
Fund Shares for which the fixed income weight of the portfolio does not
comply with Commentary .01(b)(1) to Rule 8.600-E.\21\
---------------------------------------------------------------------------
\18\ See Notice, supra note 3, at 28064-65.
\19\ See id. at 28065.
\20\ See id.
\21\ See, e.g., 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).
---------------------------------------------------------------------------
In addition, 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).\22\ Instead, the Exchange proposes to allow up to 50% of the
Fund's portfolio to be composed of fixed income securities which would
not satisfy the criteria in Commentary .01(b)(4). Specifically, the
Exchange proposes that: (1) The Fund may invest up to 10% of its total
assets in fixed income securities that do not satisfy the criteria of
Commentary .01(b)(4), excluding Private ABS/MBS and CDOs/CBOs/CLOs; (2)
the Fund's investments in Private ABS/MBS, which may constitute up to
20% of the Fund's total assets, will not be required to satisfy the
criteria of Commentary .01(b)(4); and (3) the Fund's investments in
CDOs/CBOs/CLOs, which may constitute up to 20% of the Fund's total
assets, also will not be required to satisfy the criteria of Commentary
.01(b)(4). The Commission notes that it has previously approved the
listing of other series of Managed Fund Shares with similar investment
strategies that are permitted to hold a similar percentage of fixed
income securities that do not meet one of the criteria set forth in
Commentary.01(b)(4).\23\
---------------------------------------------------------------------------
\22\ See supra note 13.
\23\ See, e.g., 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) (``PGIM Ultra Short Bond ETF Order'').
---------------------------------------------------------------------------
Finally, 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. The Exchange believes that these
limitations will help the Fund maintain portfolio diversification and
reduce manipulation risk.\24\ In addition, the Exchange states that the
Fund's investment in CDOs/CBOs/CLOs will be subject to the Fund's
liquidity procedures as adopted by the Trust's Board of Trustees, and
the Adviser does not expect that such investments will have any
material impact on the liquidity of the Fund's investments.\25\ The
Commission notes that it has previously approved the listing of other
series of Managed Fund Shares that are permitted to hold private asset
backed and mortgage-backed securities in excess of the levels permitted
under Commentary .01(b)(5).\26\
---------------------------------------------------------------------------
\24\ See Notice, supra note 3, at 28065.
\25\ See id.
\26\ See, e.g., PGIM Ultra Short Bond ETF Order, supra note 23;
Securities Exchange Act Release No. 87410 (October 28, 2019), 84 FR
58750 (November 1, 2019) (SR-NYSEArca-2019-33) (Order Approving a
Proposed Rule Change, as Modified by Amendment No. 2, Regarding
Changes to Investments of the First Trust TCW Unconstrained Plus
Bond ETF).
---------------------------------------------------------------------------
The Exchange represents that all statements and representations
made in the filing regarding (1) the description of the portfolio
holdings or reference assets, (2) limitations on portfolio holdings or
reference assets, or (3) the applicability of Exchange listing rules
specified in the filing shall constitute continued listing requirements
for listing the Shares of the Fund on the Exchange. In addition, the
Exchange states that the issuer must notify the Exchange of any failure
by the Fund to comply with the continued listing requirements, and,
pursuant to its obligations under Section 19(g)(1) of the Act, the
Exchange will monitor \27\ for compliance with the continued listing
requirements. If the Fund is not in compliance with the applicable
listing requirements, the Exchange will commence delisting procedures
under NYSE Arca Rule 5.5-E(m).
---------------------------------------------------------------------------
\27\ The Commission notes that certain proposals for the listing
and trading of exchange-traded products include a representation
that the exchange will ``surveil'' for compliance with the continued
listing requirements. See, e.g., Securities Exchange Act Release No.
77499 (April 1, 2016), 81 FR 20428, 20432 (April 7, 2016) (SR-BATS-
2016-04). In the context of this representation, it is the
Commission's view that ``monitor'' and ``surveil'' both mean ongoing
oversight of compliance with the continued listing requirements.
Therefore, the Commission does not view ``monitor'' as a more or
less stringent obligation than ``surveil'' with respect to the
continued listing requirements.
---------------------------------------------------------------------------
This approval order is based on all of the Exchange's
representations, including those set forth above and in Amendment No.
1. For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendment No. 1, is consistent with Section
6(b)(5) of the Act \28\ and the rules and regulations thereunder
applicable to a national securities exchange.
---------------------------------------------------------------------------
\28\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
III. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\29\ that the proposed rule change (SR-NYSEArca-2020-37), as
modified by Amendment No. 1, be, and it hereby is, approved.
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\29\ Id.
\30\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-13207 Filed 6-18-20; 8:45 am]
BILLING CODE 8011-01-P
