Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the AdvisorShares Q Portfolio Blended Allocation ETF and AdvisorShares Q Dynamic Growth ETF Under Rule 8.900-E, 71366-71373 [2020-24786]
Download as PDF
<![CDATA[
71366
Federal Register / Vol. 85, No. 217 / Monday, November 9, 2020 / Notices
institute proceedings to determine
whether to disapprove, the proposed
rule change (File No. SR–NYSEArca–
2020–82).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–24788 Filed 11–6–20; 8:45 am]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90323; File No. SR–
NYSEArca–2020–94]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade Shares
of the AdvisorShares Q Portfolio
Blended Allocation ETF and
AdvisorShares Q Dynamic Growth ETF
Under Rule 8.900–E
November 3, 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 October
20, 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. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
khammond on DSKJM1Z7X2PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the following under Rule
8.900–E (Managed Portfolio Shares):
AdvisorShares Q Portfolio Blended
Allocation ETF and AdvisorShares Q
Dynamic Growth ETF. 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
6 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
16:35 Nov 06, 2020
Jkt 253001
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.
1. Purpose
NYSE Arca Rule 8.900–E permits the
listing and trading, or trading pursuant
to unlisted trading privileges (‘‘UTP’’),
of Managed Portfolio Shares, which are
securities issued by an actively managed
open-end investment management
company.4 Rule 8.900–E(b)(1) requires
the Exchange to file separate proposals
under Section 19(b) of the Act before
listing and trading any series of
Managed Portfolio Shares on the
Exchange. Therefore, the Exchange is
submitting this proposal in order to list
and trade Managed Portfolio Shares of
the AdvisorShares Q Portfolio Blended
Allocation ETF and AdvisorShares Q
Dynamic Growth ETF (each a ‘‘Fund’’
and, collectively, the ‘‘Funds’’) under
Rule 8.900–E.
Description of the Funds and the Trust
The shares of each Fund (the
‘‘Shares’’) will be issued by the
AdvisorShares Trust (the ‘‘Trust’’), a
statutory trust organized under the laws
of the State of Delaware and registered
with the Commission as an open-end
management investment company.5 The
4 Rule 8.900–E(c)(1) provides that the term
‘‘Managed Portfolio Share’’ means a security that (a)
represents an interest in an investment company
registered under the Investment Company Act of
1940 (‘‘Investment Company’’) organized as an
open-end management investment company that
invests in a portfolio of securities selected by the
Investment Company’s investment adviser
consistent with the Investment Company’s
investment objectives and policies; (b) is issued in
a Creation Unit, or multiples thereof, in return for
a designated portfolio of instruments (and/or an
amount of cash) with a value equal to the next
determined net asset value and delivered to the
Authorized Participant (as defined in the
Investment Company’s Form N–1A filed with the
Commission) through a Confidential Account; (c)
when aggregated into a Redemption Unit, or
multiples thereof, may be redeemed for a
designated portfolio of instruments (and/or an
amount of cash) with a value equal to the next
determined net asset value delivered to the
Confidential Account for the benefit of the
Authorized Participant; and (d) the portfolio
holdings for which are disclosed within at least 60
days following the end of every fiscal quarter.
5 The Trust is registered under the 1940 Act. On
September 11, 2020, the Trust filed a registration
statement on Form N–1A under the Securities Act
PO 00000
Frm 00064
Fmt 4703
Sfmt 4703
investment adviser to each Fund will be
AdvisorShares Investments, LLC (the
‘‘Adviser’’). The investment sub-advisor
to each Fund will be ThinkBetter, LLC.
Foreside Fund Services, LLC (the
‘‘Distributor’’) will serve as the
distributor of each of the Funds’ Shares.
All statements and representations
made in this filing regarding (a) the
description of the portfolio or reference
assets, (b) limitations on portfolio
holdings or reference assets, or (c) the
applicability of Exchange rules shall
constitute continued listing
requirements for listing the Shares on
the Exchange, as provided under Rule
8.900–E(b)(1).
Rule 8.900–E(b)(4) provides that, if
the investment adviser to the
Investment Company issuing Managed
Portfolio Shares is registered as a
broker-dealer or is affiliated with a
broker-dealer, such investment adviser
will erect and maintain a ‘‘fire wall’’
between the investment adviser and
personnel of the broker-dealer or brokerdealer affiliate, as applicable, with
respect to access to information
concerning the composition of and/or
changes to such Investment Company
portfolio and/or the Creation Basket.6
Any person related to the investment
adviser or Investment Company who
makes decisions pertaining to the
Investment Company’s portfolio
composition or has access to
information regarding the Investment
Company’s portfolio composition or
changes thereto or the Creation Basket
must be subject to procedures designed
to prevent the use and dissemination of
material non-public information
regarding the applicable Investment
of 1933 (the ‘‘1933 Act’’) and the 1940 Act for the
Funds (File Nos. 333–157876 and 811–22110)
(‘‘Registration Statement’’). The description of the
operation of the Trust and the Funds herein is
based, in part, on the Registration Statement. The
Trust has filed an application for an order under
Section 6(c) of the 1940 Act for exemptions from
various provisions of the 1940 Act and rules
thereunder (the ‘‘Exemptive Application’’) (File No.
812–15146). The Exchange will not commence
trading in Shares of the Funds until the
Commission has issued an order granting the
exemptions requested in the Exemptive
Application.
6 Rule 8.900–E(c)(5) provides that the term
‘‘Creation Basket’’ means, on any given business
day, the names and quantities of the specified
instruments (and/or an amount of cash) that are
required for an AP Representative to deposit inkind on behalf of an Authorized Participant in
exchange for a Creation Unit and the names and
quantities of the specified instruments (and/or an
amount of cash) that will be transferred in-kind to
an AP Representative on behalf of an Authorized
Participant in exchange for a Redemption Unit,
which will be identical and will be transmitted to
each AP Representative before the commencement
of trading.
E:\FR\FM\09NON1.SGM
09NON1
Federal Register / Vol. 85, No. 217 / Monday, November 9, 2020 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
Company portfolio or changes thereto or
the Creation Basket.
Rule 8.900–E(b)(4) is similar to
Commentary .03(a)(i) and (iii) to Rule
5.2–E(j)(3); however, Commentary .03(a)
in connection with the establishment 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.7 Rule 8.900–E(b)(4) is also
similar to Commentary .06 to Rule
8.600–E related to Managed Fund
Shares, except that Rule 8.900–E(b)(4)
relates to establishment and
maintenance of a ‘‘fire wall’’ between
the investment adviser and personnel of
the broker-dealer or broker-dealer
affiliate, as applicable, with respect to
an Investment Company’s portfolio and
Creation Basket, and not just to the
underlying portfolio, as is the case with
Managed Fund Shares. The Adviser is
not registered as a broker-dealer but is
affiliated with a broker-dealer. The
Adviser has implemented and will
maintain a ‘‘fire wall’’ with respect to
such broker-dealer affiliate regarding
access to information concerning the
composition of and/or changes to a
Fund’s portfolio and/or Creation Basket.
In the event (a) the Adviser or any
sub-adviser becomes registered as a
broker-dealer or becomes newly
affiliated with a broker-dealer, or (b) any
new adviser or sub-adviser is a
registered broker-dealer, or becomes
affiliated with a broker-dealer, it will
implement and maintain a fire wall with
respect to personnel of the broker-dealer
or broker-dealer affiliate regarding
7 An investment adviser to an open-end fund is
required to be registered under the Investment
Advisers Act of 1940 (the ‘‘Advisers Act’’). As a
result, the Adviser and its related personnel will be
subject to the provisions of Rule 204A–1 under the
Advisers Act relating to codes of ethics. This Rule
requires investment advisers to adopt a code of
ethics that reflects the fiduciary nature of the
relationship to clients as well as compliance with
other applicable securities laws. Accordingly,
procedures designed to prevent the communication
and misuse of non-public information by an
investment adviser must be consistent with Rule
204A–1 under the Advisers Act. In addition, Rule
206(4)–7 under the Advisers Act makes it unlawful
for an investment adviser to provide investment
advice to clients unless such investment adviser has
(i) adopted and implemented written policies and
procedures reasonably designed to prevent
violations, by the investment adviser and its
supervised persons, of the Advisers Act and the
Commission rules adopted thereunder; (ii)
implemented, at a minimum, an annual review
regarding the adequacy of the policies and
procedures established pursuant to subparagraph (i)
above and the effectiveness of their
implementation; and (iii) designated an individual
(who is a supervised person) responsible for
administering the policies and procedures adopted
under subparagraph (i) above. The Funds will also
be required to comply with Exchange rules relating
to disclosure, including Rule 5.3–E(i).
VerDate Sep<11>2014
20:06 Nov 06, 2020
Jkt 253001
access to information concerning the
composition and/or changes to the
portfolio and/or Creation Basket. Any
person related to the Adviser or the
Trust who makes decisions pertaining to
a Fund’s portfolio composition or that
has access to information regarding a
Fund’s portfolio composition or that has
access to information regarding a Fund’s
portfolio or changes thereto or the
Creation Basket will be subject to
procedures designed to prevent the use
and dissemination of material nonpublic information regarding such
portfolio or changes thereto and the
Creation Basket.
Further, Rule 8.900–E(b)(5) requires
that any person or entity, including an
AP Representative, custodian, Reporting
Authority, distributor, or administrator,
who has access to non-public
information regarding the Investment
Company’s portfolio composition or
changes thereto or the Creation Basket,
must be subject to procedures
reasonably designed to prevent the use
and dissemination of material nonpublic information regarding the
applicable Investment Company
portfolio or changes thereto or the
Creation Basket. Moreover, if any such
person or entity is registered as a brokerdealer or affiliated with a broker-dealer,
such person or entity will erect and
maintain a ‘‘fire wall’’ between the
person or entity and the broker-dealer
with respect to access to information
concerning the composition and/or
changes to such Investment Company
portfolio or Creation Basket.
Description of the Funds 8
Each Fund’s holdings will conform to
the permissible investments as set forth
in the Exemptive Application and the
holdings will be consistent with all
requirements in the Exemptive
Application.9
AdvisorShares Q Portfolio Blended
Allocation ETF
The Fund is an actively managed ETF
that is primarily a ‘‘fund of funds.’’ The
8 The Exchange represents that, for initial and/or
continued listing, each Fund will be in compliance
with Rule 10A–3 under the Act. See 17 CFR
240.10A–3.
9 Pursuant to the Exemptive Application, the only
permissible investments for a Fund are the
following that trade on a U.S. exchange
contemporaneously with the Funds’ Shares:
exchange-traded funds (‘‘ETFs’’), exchange-traded
notes, exchange-listed common stocks, exchangetraded American Depositary Receipts, exchangetraded real estate investment trusts, exchangetraded commodity pools, exchange-traded metals
trusts, exchange-traded currency trusts and
exchange-traded futures, as well as cash and cash
equivalents (short-term U.S. Treasury securities,
government money market funds, and repurchase
agreements).
PO 00000
Frm 00065
Fmt 4703
Sfmt 4703
71367
Fund’s investment objective is to seek to
maximize total return over the longterm. The Fund will invest in ETFs
representing all asset classes, including,
but not limited to, treasury bonds,
municipal bonds, investment grade
corporate bonds, high-yield U.S.
corporate bonds, U.S. and foreign
equities, and commodities.
AdvisorShares Q Dynamic Growth ETF
The Fund is an actively managed ETF
that is primarily a ‘‘fund of funds.’’ The
Fund seeks to achieve long-term growth.
The Fund will invest in ETFs
representing all asset classes, including,
but not limited to, treasury bonds,
municipal bonds, investment grade
corporate bonds, high-yield U.S.
corporate bonds, U.S. and foreign
equities, commodities, and volatility
products.
Investment Restrictions
Each Fund’s holdings will be
consistent with all requirements
described in the Exemptive
Application.10
Each Fund’s investments, including
derivatives, will be consistent with its
investment objective and will not be
used to enhance leverage (although
certain derivatives and other
investments may result in leverage).
That is, for each Fund, the Fund’s
investments will not be used to seek
performance that is the multiple or
inverse multiple (e.g., 2X or –3X) of the
Fund’s investment objective.
Creations and Redemptions of Shares
Creations and redemptions of Shares
will take place as described in Rule
8.900–E. Specifically, in connection
with the creation and redemption of
Creation Units 11 and Redemption
Units,12 the delivery or receipt of any
portfolio securities in-kind will be
required to be effected through a
separate confidential brokerage account
(a ‘‘Confidential Account’’).13
10 See
id.
8.900–E(c)(6) provides that the term
‘‘Creation Unit’’ means a specified minimum
number of Managed Portfolio Shares issued by an
Investment Company at the request of an
Authorized Participant in return for a designated
portfolio of instruments and/or cash.
12 Rule 8.900–E(c)(7) provides that the term
‘‘Redemption Unit’’ means a specified minimum
number of Managed Portfolio Shares that may be
redeemed to an Investment Company at the request
of an Authorized Participant in return for a
portfolio of instruments and/or cash.
13 Rule 8.900–E(c)(4) provides that the term
‘‘Confidential Account’’ means an account owned
by an Authorized Participant and held with an AP
Representative on behalf of the Authorized
Participant. The account will be established and
governed by contractual agreement between the AP
Representative and the Authorized Participant
11 Rule
E:\FR\FM\09NON1.SGM
Continued
09NON1
71368
Federal Register / Vol. 85, No. 217 / Monday, November 9, 2020 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
Authorized Participants (‘‘AP’’), as
defined in the applicable Form N–1A
filed with the Commission, will sign an
agreement with an AP Representative 14
establishing the Confidential Account
for the benefit of the AP. AP
Representatives will be broker-dealers.
An AP must be a Depository Trust
Company Participant that has executed
an authorized participant agreement
(‘‘Participant Agreement’’) with the
Distributor with respect to the creation
and redemption of Creation Units and
Redemption Units and formed a
Confidential Account for its benefit in
accordance with the terms of the
Participant Agreement. For purposes of
creations or redemptions, all
transactions will be effected through the
respective AP’s Confidential Account,
for the benefit of the AP, without
disclosing the identity of such securities
to the AP.
Each AP Representative will be given,
before the commencement of trading
each Business Day (as defined below),
the Creation Basket (as described below)
for that day. This information will
permit an AP that has established a
Confidential Account with an AP
Representative to instruct the AP
Representative to buy and sell positions
in the portfolio securities to permit
creation and redemption of Creation
Units and Redemption Units. Shares of
each Fund will be issued and redeemed
in Creation Units and Redemption
Units, the size of which will be
specified in the Registration Statement.
The size of Creation Units and
Redemption Units is subject to change.
The Funds will offer and redeem
Creation Units and Redemption Units
on a continuous basis at the net asset
value (‘‘NAV’’) per Share next
determined after receipt of an order in
proper form. The NAV per Share of each
Fund will be determined as of the close
of regular trading on the Exchange on
each day that the Exchange is open (a
‘‘Business Day’’). The Funds will sell
and redeem Creation Units and
solely for the purposes of creation and redemption,
while keeping confidential the Creation Basket
constituents of each series of Managed Portfolio
Shares, including from the Authorized Participant.
The books and records of the Confidential Account
will be maintained by the AP Representative on
behalf of the Authorized Participant.
14 Rule 8.900–E(c)(3) provides that the term ‘‘AP
Representative’’ means an unaffiliated brokerdealer, with which an Authorized Participant has
signed an agreement to establish a Confidential
Account for the benefit of such Authorized
Participant, that will deliver or receive, on behalf
of the Authorized Participant, all consideration to
or from the Investment Company in a creation or
redemption. An AP Representative will not be
permitted to disclose the Creation Basket to any
person, including the Authorized Participants.
VerDate Sep<11>2014
16:35 Nov 06, 2020
Jkt 253001
Redemption Units only on Business
Days.
In order to keep costs low and permit
each Fund to be as fully invested as
possible, Shares will be purchased and
redeemed in Creation Units and
Redemption Units and generally on an
in-kind basis. Accordingly, except
where the purchase or redemption will
include cash under the circumstances
described in the Exemptive Application,
APs will be required to purchase
Creation Units by making an in-kind
deposit of a designated portfolio of
securities (‘‘Deposit Securities’’), and
APs redeeming their Shares will receive
an in-kind transfer of a designated
portfolio of securities (‘‘Redemption
Securities’’) through the AP
Representative in their Confidential
Account.15 On any given Business Day,
the names and quantities of the
instruments that constitute the Deposit
Securities and the names and quantities
of the instruments that constitute the
Redemption Securities will be identical,
and these instruments may be referred
to, in the case of either a purchase or a
redemption, as the ‘‘Creation Basket.’’
marketplaces, to avoid revealing the
composition of the Creation Basket.
Generally, all orders to purchase
Creation Units must be received by the
Distributor no later than 3:00 p.m. E.T.
(‘‘Order Cut-Off Time’’) on the date such
order is placed (‘‘Transmittal Date’’) in
order for the purchaser to receive the
NAV per Share determined on the
Transmittal Date. As with all existing
ETFs, if there is a difference between
the NAV attributable to a Creation Unit
and the aggregate market value of the
Creation Basket exchanged for the
Creation Unit, the party conveying
instruments with the lower value will
also pay to the other an amount in cash
equal to that difference (the ‘‘Balancing
Amount’’).
Purchases of Shares will be settled inkind and/or cash for an amount equal to
the applicable NAV per Share
purchased plus applicable transaction
fees.16 Other than the Balancing
Amount, the Fund will substitute cash
only under exceptional circumstances
and as set forth under the Fund’s
policies and procedures governing the
composition of Creation Baskets.
Placement of Purchase Orders
Each Fund will issue Shares through
the Distributor on a continuous basis at
NAV. The Exchange represents that the
issuance of Shares will operate in a
manner substantially similar to that of
other ETFs. Each Fund will issue Shares
only at the NAV per Share next
determined after an order in proper
form is received.
The Distributor will furnish
acknowledgements to those placing
such orders that the orders have been
accepted, but the Distributor may reject
any order which is not submitted in
proper form, as described in each
Fund’s prospectus or Statement of
Additional Information (‘‘SAI’’). The
NAV of each Fund is expected to be
determined once each Business Day as
of the close of the regular trading
session on the NYSE (ordinarily 4:00
p.m. E.T.) (the ‘‘Valuation Time’’). To
initiate a purchase of Shares, an AP
must submit to the Distributor an
irrevocable order to purchase such
Shares after the most recent prior
Valuation Time. In purchasing the
necessary securities, the AP
Representative will use methods, such
as breaking the transaction into multiple
transactions and transacting in multiple
Authorized Participant Redemption
15 According to the Registration Statement, the
Funds must comply with the federal securities laws
in accepting Deposit Securities and satisfying
redemptions with Redemption Securities, including
that the Deposit Securities and Redemption
Securities are sold in transactions that would be
exempt from registration under the 1933 Act.
PO 00000
Frm 00066
Fmt 4703
Sfmt 4703
The Shares may be redeemed to a
Fund in Redemption Unit size or
multiples thereof as described below.
Redemption orders of Redemption Units
must be placed by or through an AP
(‘‘AP Redemption Order’’) in proper
form. Redemption Units of a Fund will
be redeemable at their NAV per Share
next determined after receipt of a
request for redemption by the Trust in
the manner specified below before the
Order Cut-Off Time. To initiate an AP
Redemption Order, an AP must submit
to the Distributor an irrevocable order to
redeem such Redemption Unit no later
than the Order Cut-Off Time on the
Transmittal Date. A transaction fee may
be imposed to offset costs associated
with redemption orders.
In the case of a redemption, the AP
would enter into an irrevocable
redemption order, and then the
applicable Fund would instruct its
custodian to deliver the Redemption
Securities to the appropriate
Confidential Account. The Authorized
Participant would direct the AP
Representative on when that day to
liquidate those securities. As with the
purchase of securities, the AP
Representative will use methods, such
as breaking the transaction into multiple
transactions and transacting in multiple
16 To the extent that a Fund allows creations or
redemptions to be conducted in cash, such
transactions will be effected in the same manner for
all APs transacting in cash.
E:\FR\FM\09NON1.SGM
09NON1
Federal Register / Vol. 85, No. 217 / Monday, November 9, 2020 / Notices
marketplaces, to avoid revealing the
composition of the Creation Basket.
Redemptions will occur primarily inkind, although redemption payments
may also be made partly or wholly in
cash. The Participant Agreement signed
by each AP will require establishment of
a Confidential Account to receive
distributions of securities in-kind upon
redemption. Each AP will be required to
open a Confidential Account with an AP
Representative in order to facilitate
orderly processing of redemptions.
khammond on DSKJM1Z7X2PROD with NOTICES
Net Asset Value
The NAV will be calculated
separately for the Shares of each Fund
on each Business Day. Each Fund’s
NAV is determined as of the close of
regular trading on the NYSE, normally
4:00 p.m., Eastern Time. The NAV of
each Fund is computed by (i) taking the
current market value of its total assets,
(ii) subtracting any liabilities, and (iii)
dividing that amount by the total
number of shares owned by
shareholders.
Each Fund generally values its
portfolio investments at market prices. If
market prices are unavailable or a Fund
thinks that they are unreliable, or when
the value of a security has been
materially affected by events occurring
after the relevant market closes, the
Fund will price those securities at fair
value as determined in good faith using
methods approved by the Fund’s Board.
More information about the valuation
of each Fund’s holdings can be found in
the SAI.
Information showing the number of
days that the market price of each
Fund’s Shares was greater than the
Fund’s NAV (i.e., at a premium) or less
than the Fund’s NAV (i.e., at a discount)
for various time periods is available on
the Funds’ website at
www.advisorshares.com.
Availability of Information
The Funds’ website,
www.advisorshares.com, will include a
form of the prospectus for each Fund
that may be downloaded. The Funds’
website will include additional
quantitative information updated on a
daily basis, including, for each Fund,
the prior Business Day’s NAV, market
price, the bid/ask spreads at the time of
calculation of such NAV (the ‘‘Bid/Ask
Price’’),17 and a calculation of the
premium and discount of the market
price or Bid/Ask Price against the NAV.
17 The Bid/Ask Price of a Fund’s Shares is
determined using the mid-point between the
current national best bid and offer at the time of
calculation of such Fund’s NAV. The records
relating to Bid/Ask Prices will be retained by the
Funds or their service providers.
VerDate Sep<11>2014
16:35 Nov 06, 2020
Jkt 253001
The website and information will be
publicly available at no charge.
Form N–PORT requires reporting of a
Fund’s complete portfolio holdings on a
position-by-position basis on a quarterly
basis within 60 days after fiscal quarter
end. Investors can obtain a Fund’s SAI,
its shareholder reports, its Form N–CSR,
filed twice a year, and its Form N–CEN,
filed annually. Each Fund’s SAI and
shareholder reports are available free
upon request from the Investment
Company, and those documents and the
Form N–PORT, Form N–CSR, and Form
N–CEN may be viewed onscreen or
downloaded from the Commission’s
website at www.sec.gov.
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 Verified Intraday
Indicative Value (‘‘VIIV’’), as defined in
Rule 8.900–E(c)(2),18 will be widely
disseminated by the Reporting
Authority 19 and/or one or more major
market data vendors in one second
intervals during the Exchange’s Core
Trading Session.
Dissemination of the VIIV
With respect to trading of the Shares,
the ability of market participants to buy
and sell Shares at prices near the VIIV
is dependent upon their assessment that
the VIIV is a reliable, indicative realtime value for a Fund’s underlying
holdings. Market participants are
expected to accept the VIIV as a reliable,
18 Rule 8.900–E(c)(2) provides that the term
‘‘Verified Intraday Indicative Value’’ is the
indicative value of a Managed Portfolio Share based
on all of the holdings of a series of Managed
Portfolio Shares as of the close of business on the
prior business day and, for corporate actions, based
on the applicable holdings as of the opening of
business on the current business day, priced and
disseminated in one second intervals during the
Core Trading Session by the Reporting Authority.
19 Rule 8.900–E(c)(8) provides that the term
‘‘Reporting Authority’’ in respect of a particular
series of Managed Portfolio Shares means the
Exchange, an institution, or a reporting service
designated by the Exchange or by the exchange that
lists a particular series of Managed Portfolio Shares
(if the Exchange is trading such series pursuant to
unlisted trading privileges), as the official source for
calculating and reporting information relating to
such series, including, but not limited to, the NAV,
the VIIV, or other information relating to the
issuance, redemption, or trading of Managed
Portfolio Shares. A series of Managed Portfolio
Shares may have more than one Reporting
Authority, each having different functions.
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
71369
indicative real-time value because (1)
the VIIV will be calculated and
disseminated based on a Fund’s actual
portfolio holdings, (2) the securities in
which a Fund plans to invest are
generally highly liquid and actively
traded and trade at the same time as the
Fund and therefore generally have
accurate real time pricing available, and
(3) market participants will have a daily
opportunity to evaluate whether the
VIIV at or near the close of trading is
indeed predictive of the actual NAV.
The VIIV will be widely disseminated
by the Reporting Authority and/or by
one or more major market data vendors
in one second intervals during the Core
Trading Session. The VIIV is based on
the current market value of the
securities in a Fund’s portfolio that day.
The methodology for calculating the
VIIV will be available on the Funds’
website. The VIIV is intended to provide
investors and other market participants
with a highly correlated per Share value
of the underlying portfolio that can be
compared to the current market price.
Therefore, under normal circumstances
the VIIV would be effectively a near real
time approximation of each Fund’s
NAV, available free of charge from one
or more market data vendors, which is
computed only once a day.
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
a Fund.20 Trading in Shares of a Fund
will be halted if the circuit breaker
parameters in 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 Shares will
be subject to Rule 8.900–E(d)(2)(C),
which sets forth circumstances under
which Shares of a Fund will be halted.
Specifically, Rule 8.900–E(d)(2)(C)(i)
provides that the Exchange may
consider all relevant factors in
exercising its discretion to halt trading
in a series of Managed Portfolio Shares.
Trading may be halted because of
market conditions or for reasons that, in
the view of the Exchange, make trading
in the series of Managed Portfolio
Shares inadvisable. These may include:
(a) The extent to which trading is not
occurring in the securities and/or the
financial instruments composing the
portfolio; or (b) whether other unusual
conditions or circumstances detrimental
20 See
E:\FR\FM\09NON1.SGM
Rule 7.12–E.
09NON1
71370
Federal Register / Vol. 85, No. 217 / Monday, November 9, 2020 / Notices
to the maintenance of a fair and orderly
market are present.21
Rule 8.900–E(d)(2)(C)(ii) provides
that, if the Exchange becomes aware
that: (i) The VIIV of a series of Managed
Portfolio Shares is not being calculated
or disseminated in one second intervals,
as required; (ii) the NAV with respect to
a series of Managed Portfolio Shares is
not disseminated to all market
participants at the same time; (iii) the
holdings of a series of Managed
Portfolio Shares are not made available
on at least a quarterly basis as required
under the 1940 Act; or (iv) such
holdings are not made available to all
market participants at the same time
(except as otherwise permitted under
the currently applicable exemptive
order or no-action relief granted by the
Commission or Commission staff to the
Investment Company with respect to the
series of Managed Portfolio Shares), it
will halt trading in such series until
such time as the VIIV, the net asset
value, or the holdings are available, as
required.
khammond on DSKJM1Z7X2PROD with NOTICES
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 Exchange in all trading sessions in
accordance with Rule 7.34–E(a). As
provided in 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.
The Shares will conform to the initial
and continued listing criteria under
Rule 8.900–E, as well as all terms in the
Exemptive Application. The Exchange
will obtain a representation from the
issuer of the Shares of each Fund that
the NAV per Share of each Fund will be
21 The Exemptive Application provides that the
Investment Company or their agent will request that
the Exchange halt trading in the applicable series
of Managed Portfolio Shares where: (i) The intraday
indicative values calculated by the calculation
engines differ by more than 25 basis points for 60
seconds in connection with pricing of the VIIV; or
(ii) holdings representing 10% or more of a series
of Managed Portfolio Shares’ portfolio have become
subject to a trading halt or otherwise do not have
readily available market quotations. Any such
requests will be one of many factors considered in
order to determine whether to halt trading in a
series of Managed Portfolio Shares, and the
Exchange retains sole discretion in determining
whether trading should be halted. As provided in
the Exemptive Application, each series of Managed
Portfolio Shares would employ a pricing
verification agent to continuously compare two
intraday indicative values during regular trading
hours in order to ensure the accuracy of the VIIV.
VerDate Sep<11>2014
16:35 Nov 06, 2020
Jkt 253001
calculated daily and will be made
available to all market participants at
the same time.
Surveillance
The Exchange believes that its
surveillance procedures are adequate to
properly monitor the trading of Shares
on the Exchange during all trading
sessions and to deter and detect
violations of Exchange rules and the
applicable federal securities laws.
Trading of Shares through the Exchange
will be subject to the Exchange’s
surveillance procedures for derivative
products. As part of these surveillance
procedures and consistent with Rule
8.900–E(b)(3) and 8.900–E(d)(2)(B), the
Adviser will upon request make
available to the Exchange and/or
FINRA, on behalf of the Exchange, the
daily portfolio holdings of a Fund. The
issuer of the Shares of each Fund will
be required to represent to the Exchange
that it will advise the Exchange of any
failure by a Fund to comply with the
continued listing requirements, and,
pursuant to its obligations under
Section 19(g)(1) of the Exchange Act, the
Exchange will surveil for compliance
with the continued listing requirements.
If a Fund is not in compliance with the
applicable listing requirements, the
Exchange will commence delisting
procedures under Exchange Rule 5.5–
E(m).
FINRA, on behalf of the Exchange, or
the regulatory staff of the Exchange, or
both, will communicate as needed
regarding trading in the Shares and
certain exchange-traded instruments
with other markets and other entities
that are members of the Intermarket
Surveillance Group (‘‘ISG’’), and FINRA,
on behalf of the Exchange, or the
regulatory staff of the Exchange, or both,
may obtain trading information
regarding trading such securities from
such markets and other entities. In
addition, the Exchange may obtain
information regarding trading in the
Shares and certain exchange-traded
instruments from markets and other
entities that are members of ISG or with
which the Exchange has in place a
comprehensive surveillance sharing
agreement.
In addition, the Exchange also has a
general policy prohibiting the
distribution of material, non-public
information by its employees.
Information Bulletin
Prior to the commencement of
trading, the Exchange will inform its
Equity Trading Permit (‘‘ETP’’) Holders
in an Information Bulletin (‘‘Bulletin’’)
of the special characteristics and risks
associated with trading the Shares.
PO 00000
Frm 00068
Fmt 4703
Sfmt 4703
Specifically, the Bulletin will discuss
the following: (1) The procedures for
purchases and redemptions of Shares;
(2) Rule 9.2–E(a), which imposes a duty
of due diligence on its ETP Holders to
learn the essential facts relating to every
customer prior to trading the Shares; (3)
how information regarding the VIIV is
disseminated; (4) the requirement that
ETP Holders deliver a prospectus to
investors purchasing newly issued
Shares prior to or concurrently with the
confirmation of a transaction; (5) trading
information; and (6) that the portfolio
holdings of the Shares are not disclosed
on a daily basis.
In addition, the Bulletin will
reference that the Funds are 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 Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,22 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,23 in particular, in that it is
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.
The Exchange believes that this
proposed rule change is designed to
prevent fraudulent and manipulative
acts and practices in that the Funds
would meet each of the rules relating to
listing and trading of Managed Portfolio
Shares. To the extent that a Fund is not
in compliance with such rules, the
Exchange would either prevent the
Fund from listing and trading on the
Exchange or commence delisting
procedures under Rule 8.900–E(d)(2)(B).
Specifically, the Exchange would
consider the suspension of trading, and
commence delisting proceedings under
Rule 8.900–E(d)(2)(B), of a Fund under
any of the following circumstances: (a)
If, following the initial twelve-month
period after commencement of trading
on the Exchange, there are fewer than 50
beneficial holders of the Fund; (b) if the
Exchange has halted trading in a Fund
because the VIIV is interrupted pursuant
to Rule 8.900–E(d)(2)(C)(ii) and such
22 15
23 15
E:\FR\FM\09NON1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
09NON1
khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 85, No. 217 / Monday, November 9, 2020 / Notices
interruption persists past the trading
day in which it occurred or is no longer
available; (c) if the Exchange has halted
trading in a Fund because the net asset
value with respect to such Fund is not
disseminated to all market participants
at the same time, the holdings of such
Fund are not made available on at least
a quarterly basis as required under the
1940 Act, or such holdings are not made
available to all market participants at
the same time pursuant to Rule 8.900–
E(d)(2)(C)(ii) and such issue persists
past the trading day in which it
occurred; (d) if the Exchange has halted
trading in Shares of a Fund pursuant to
Rule 8.900–E(d)(2)(C)(i) and such issue
persists past the trading day in which it
occurred; (e) if a Fund has failed to file
any filings required by the Commission
or if the Exchange is aware that a Fund
is not in compliance with the conditions
of any currently applicable exemptive
order or no-action relief granted by the
Commission or Commission staff with
respect to the Fund; (f) if any of the
continued listing requirements set forth
in Rule 8.900–E are not continuously
maintained; (g) if any of the statements
of representations regarding (a) the
description of the portfolio, (b)
limitations on portfolio holdings, or (c)
the applicability of Exchange listing
rules as specified herein to permit the
listing and trading of a Fund, are not
continuously maintained; or (h) if such
other event shall occur or condition
exists which, in the opinion of the
Exchange, makes further dealings on the
Exchange inadvisable.
As discussed above, 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 affiliate
broker-dealer regarding access to
information concerning the composition
and/or changes to a Fund’s portfolio and
Creation Basket. In the event that (a) the
Adviser or sub-adviser becomes
registered as a broker-dealer or becomes
newly affiliated with a broker-dealer, or
(b) any new adviser or sub-adviser is a
registered broker-dealer or becomes
affiliated with a broker-dealer, the
Adviser will implement and maintain a
fire wall with respect to personnel of the
broker-dealer or broker-dealer affiliate
regarding access to information
concerning the composition and/or
changes to the portfolio and/or Creation
Basket. Any person related to the
Adviser or the Trust who makes
decisions pertaining to a Fund’s
portfolio composition or that has access
to information regarding a Fund’s
portfolio or changes thereto or the
Creation Basket will be subject to
VerDate Sep<11>2014
16:35 Nov 06, 2020
Jkt 253001
procedures designed to prevent the use
and dissemination of material nonpublic information regarding such
portfolio or changes thereto and the
Creation Basket.
In addition, Rule 8.900–E(b)(5)
requires that any person or entity,
including an AP Representative,
custodian, Reporting Authority,
distributor, or administrator, who has
access to non-public information
regarding the Investment Company’s
portfolio composition or changes thereto
or the Creation Basket, must be subject
to procedures designed to prevent the
use and dissemination of material nonpublic information regarding the
applicable Investment Company
portfolio or changes thereto or the
Creation Basket. Moreover, if any such
person or entity is registered as a brokerdealer or affiliated with a broker-dealer,
such person or entity will erect and
maintain a ‘‘fire wall’’ between the
person or entity and the broker-dealer
with respect to access to information
concerning the composition and/or
changes to such Investment Company
portfolio or Creation Basket. Any person
or entity who has access to information
regarding a Fund’s portfolio
composition or changes thereto or the
Creation Basket will be subject to
procedures designed to prevent the use
and dissemination of material nonpublic information regarding the
portfolio or changes thereto or the
Creation Basket.
The Exchange further believes that
Rule 8.900–E is designed to prevent
fraudulent and manipulative acts and
practices related to the listing and
trading of Shares of the Funds because
it provides meaningful requirements
about both the data that will be made
publicly available about the Shares, as
well as the information that will only be
available to certain parties and the
controls on such information.
Specifically, the Exchange believes that
the requirements related to information
protection set forth in Rule 8.900–
E(b)(5) will act as a safeguard against
misuse and improper dissemination of
information related to a Fund’s portfolio
composition, the Creation Basket, or
changes thereto. The requirement that
any person or entity implement
procedures to prevent the use and
dissemination of material non-public
information regarding the portfolio or
Creation Basket will act to prevent any
individual or entity from sharing such
information externally and the internal
‘‘fire wall’’ requirements applicable
where an entity is a registered brokerdealer or affiliated with a broker-dealer
will act to make sure that no entity will
be able to misuse the data for their own
PO 00000
Frm 00069
Fmt 4703
Sfmt 4703
71371
purposes. Accordingly, the Exchange
believes that this proposal is designed to
prevent fraudulent and manipulative
acts and practices.
The Exchange further believes that the
proposal is designed to prevent
fraudulent and manipulative acts and
practices related to the listing and
trading of Shares of the Funds and to
promote just and equitable principles of
trade and to protect investors and the
public interest because the Exchange
would halt trading under certain
circumstances under which trading in
the Shares of a Fund may be
inadvisable. Specifically, trading in the
Shares will be subject to Rule 8.900–
E(d)(2)(C)(i), which provides that the
Exchange may consider all relevant
factors in exercising its discretion to
halt trading in a Fund. Trading may be
halted because of market conditions or
for reasons that, in the view of the
Exchange, make trading in the series of
Managed Portfolio Shares inadvisable.
These may include: (a) The extent to
which trading is not occurring in the
securities and/or the financial
instruments composing the portfolio; or
(b) whether other unusual conditions or
circumstances detrimental to the
maintenance of a fair and orderly
market are present.24 Additionally,
trading in the Shares will be subject to
Rule 8.900–E(d)(2)(C)(ii), which
provides that the Exchange would halt
trading where the Exchange becomes
aware that: (a) The VIIV of a series of
Managed Portfolio Shares is not being
calculated or disseminated in one
second intervals, as required; (b) the net
asset value with respect to a series of
Managed Portfolio Shares is not
disseminated to all market participants
at the same time; (c) the holdings of a
series of Managed Portfolio Shares are
not made available on at least a
quarterly basis as required under the
1940 Act; or (d) such holdings are not
made available to all market
participants at the same time (except as
otherwise permitted under the currently
applicable exemptive order or no-action
relief granted by the Commission or
Commission staff to the Investment
Company with respect to the series of
Managed Portfolio Shares). The
Exchange would halt trading in such
Shares until such time as the VIIV, the
NAV, or the holdings are available, as
required.
With respect to the proposed listing
and trading of Shares of the Funds, the
Exchange believes that the proposed
rule change is designed to prevent
fraudulent and manipulative acts and
practices in that the Shares will be
24 See
E:\FR\FM\09NON1.SGM
supra note 21.
09NON1
khammond on DSKJM1Z7X2PROD with NOTICES
71372
Federal Register / Vol. 85, No. 217 / Monday, November 9, 2020 / Notices
listed and traded on the Exchange
pursuant to the initial and continued
listing criteria in Rule 8.900–E.25 Each
Fund’s holdings will conform to the
permissible investments as set forth in
the Exemptive Application.26 As noted
above, FINRA, on behalf of the
Exchange, or the regulatory staff of the
Exchange, or both, will communicate as
needed regarding trading in the Shares
and the underlying exchange-traded
instruments with other markets and
other entities that are members of the
ISG, and FINRA, on behalf of the
Exchange, or the regulatory staff of the
Exchange, or both, may obtain trading
information regarding trading such
instruments from such markets and
other entities. In addition, the Exchange
may obtain information regarding
trading in the Shares and the underlying
exchange-traded instruments from
markets and other entities that are
members of ISG or with which the
Exchange has in place a comprehensive
surveillance sharing agreement.
With respect to trading of Shares of
the Funds, the ability of market
participants to buy and sell Shares at
prices near the VIIV is dependent upon
their assessment that the VIIV is a
reliable, indicative real-time value for a
Fund’s underlying holdings. Market
participants are expected to accept the
VIIV as a reliable, indicative real-time
value because (1) the VIIV will be
calculated and disseminated based on a
Fund’s actual portfolio holdings, (2) the
securities in which the Funds plan to
invest are generally highly liquid and
actively traded and trade at the same
time as the Funds and therefore
generally have accurate real time pricing
available, and (3) market participants
will have a daily opportunity to
evaluate whether the VIIV at or near the
close of trading is indeed predictive of
the actual NAV.
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 that the NAV per
Share of the Funds will be calculated
daily and that the NAV will be made
available to all market participants at
the same time. Investors can also obtain
a Fund’s SAI, its shareholder reports, its
Form N–CSR (filed twice a year), and its
Form N–CEN (filed annually). A Fund’s
SAI and shareholder reports will be
available free upon request from the
applicable Fund, and those documents
25 The Exchange represents that, for initial and/
or continued listing, each Fund will be in
compliance with Rule 10A–3 under the Act. See 17
CFR 240.10A–3.
26 See supra note 9.
VerDate Sep<11>2014
16:35 Nov 06, 2020
Jkt 253001
and the Form N–PORT, Form N–CSR,
and Form N–CEN may be viewed onscreen or downloaded from the
Commission’s website at www.sec.gov.
In addition, a large amount of
information will be publicly available
regarding the Funds and the Shares,
thereby promoting market transparency.
Quotation and last sale information for
the Shares will be available via the CTA
high-speed line. Information regarding
the VIIV will be widely disseminated in
one second intervals throughout the
Core Trading Session by the Reporting
Authority and/or one or more major
market data vendors. The website for
the Funds will include a prospectus for
the Funds that may be downloaded, and
additional data relating to NAV and
other applicable quantitative
information, updated on a daily basis.
Moreover, prior to the commencement
of trading, the Exchange will inform its
members in an Information Bulletin of
the special characteristics and risks
associated with trading the Shares.
In addition, as noted above, investors
will have ready access to the VIIV, and
quotation and last sale information for
the Shares. The Shares will conform to
the initial and continued listing criteria
under Rule 8.900–E. Each Fund’s
investments, including derivatives, will
be consistent with its investment
objective and will not be used to
enhance leverage (although certain
derivatives and other investments may
result in leverage). That is, the Fund’s
investments will not be used to seek
performance that is the multiple or
inverse multiple (e.g., 2X or –3X) of the
Fund’s investment objective.
The Exchange also believes that 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 actively-managed exchange-traded
products 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 comprehensive surveillance
sharing agreement. In addition, as noted
above, investors will have ready access
to information regarding the VIIV and
quotation and last sale information for
the Shares.
For the above reasons, the Exchange
believes that the proposed rule change
is consistent with the requirements of
Section 6(b)(5) of the Act.
PO 00000
Frm 00070
Fmt 4703
Sfmt 4703
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 purposes of the Act. The
Exchange believes the proposed rule
change would permit the listing and
trading of additional actively-managed
exchange-traded products, thereby
promoting competition among
exchange-traded products 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 is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2020–94 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–2020–94. 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
E:\FR\FM\09NON1.SGM
09NON1
Federal Register / Vol. 85, No. 217 / Monday, November 9, 2020 / Notices
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–2020–94, and
should be submitted on or before
November 30, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–24786 Filed 11–6–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90327; File No. SR–
NYSEAMER–2020–66]
Self-Regulatory Organizations; NYSE
American, LLC; Notice of Designation
of a Longer Period for Commission
Action on a Proposed Rule Change To
Amend the Exchange’s Co-Location
Services To Establish Procedures for
the Allocation of Cabinets to Its CoLocated Users
thereunder,2 a proposed rule change to
establish procedures as part of the
Exchange’s co-location rules to allocate
cabinets to its co-located users in
situations where the Exchange cannot
satisfy the user demand for cabinets.
The proposed rule change was
published for comment in the Federal
Register on September 21, 2020.3 The
Commission received no comments on
the proposed rule change.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding, or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the notice for this
proposed rule change is November 5,
2020. The Commission is extending this
45-day time period.
The Commission finds it appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change.
Accordingly, the Commission, pursuant
to Section 19(b)(2) of the Act,5
designates December 20, 2020, as the
date by which the Commission shall
either approve or disapprove, or
institute proceedings to determine
whether to disapprove, the proposed
rule change (File No. SR–NYSEAMER–
2020–66).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–24789 Filed 11–6–20; 8:45 am]
BILLING CODE 8011–01–P
khammond on DSKJM1Z7X2PROD with NOTICES
November 3, 2020.
On September 2, 2020, NYSE
American, LLC (‘‘NYSE American’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
27 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
VerDate Sep<11>2014
16:35 Nov 06, 2020
Jkt 253001
2 17
CFR 240.19b–4.
Securities Exchange Act Release No. 89880
(September 15, 2020), 85 FR 59365 (SR–
NYSEAMER–2020–66).
4 15 U.S.C. 78s(b)(2).
5 Id.
6 17 CFR 200.30–3(a)(31).
3 See
PO 00000
Frm 00071
Fmt 4703
Sfmt 4703
71373
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–146, OMB Control No.
3235–0134]
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: U.S. Securities and Exchange
Commission, Office of FOIA Services,
100 F St NE, Washington, DC 20549–
2736
Extension:
Rule 15c1–7
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 15c1–7 (17 CFR
240.15c1–7) under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.) (‘‘Exchange Act’’). The
Commission plans to submit this
existing collection of information to the
Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 15c1–7 states that any act of a
broker-dealer designed to effect
securities transactions with or for a
customer account over which the
broker-dealer (directly or through an
agent or employee) has discretion will
be considered a fraudulent,
manipulative, or deceptive practice
under the federal securities laws, unless
a record is made of the transaction
immediately by the broker-dealer. The
record must include (a) the name of the
customer, (b) the name, amount, and
price of the security, and (c) the date
and time when such transaction took
place.
The Commission estimates that 362
respondents collect information related
to approximately 400,000 transactions
annually under Rule 15c1–7 and that
each respondent would spend
approximately 5 minutes on the
collection of information for each
transaction, for approximately 33,333
aggregate hours per year (approximately
92.1 hours per respondent).
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information to be collected; and
(d) ways to minimize the burden of the
collection of information on
E:\FR\FM\09NON1.SGM
09NON1
]]>Agencies
[Federal Register Volume 85, Number 217 (Monday, November 9, 2020)]
[Notices]
[Pages 71366-71373]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24786]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90323; File No. SR-NYSEArca-2020-94]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of the AdvisorShares Q
Portfolio Blended Allocation ETF and AdvisorShares Q Dynamic Growth ETF
Under Rule 8.900-E
November 3, 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 October 20, 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. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade shares of the following
under Rule 8.900-E (Managed Portfolio Shares): AdvisorShares Q
Portfolio Blended Allocation ETF and AdvisorShares Q Dynamic Growth
ETF. 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
1. Purpose
NYSE Arca Rule 8.900-E permits the listing and trading, or trading
pursuant to unlisted trading privileges (``UTP''), of Managed Portfolio
Shares, which are securities issued by an actively managed open-end
investment management company.\4\ Rule 8.900-E(b)(1) requires the
Exchange to file separate proposals under Section 19(b) of the Act
before listing and trading any series of Managed Portfolio Shares on
the Exchange. Therefore, the Exchange is submitting this proposal in
order to list and trade Managed Portfolio Shares of the AdvisorShares Q
Portfolio Blended Allocation ETF and AdvisorShares Q Dynamic Growth ETF
(each a ``Fund'' and, collectively, the ``Funds'') under Rule 8.900-E.
---------------------------------------------------------------------------
\4\ Rule 8.900-E(c)(1) provides that the term ``Managed
Portfolio Share'' means a security that (a) represents an interest
in an investment company registered under the Investment Company Act
of 1940 (``Investment Company'') organized as an open-end management
investment company that invests in a portfolio of securities
selected by the Investment Company's investment adviser consistent
with the Investment Company's investment objectives and policies;
(b) is issued in a Creation Unit, or multiples thereof, in return
for a designated portfolio of instruments (and/or an amount of cash)
with a value equal to the next determined net asset value and
delivered to the Authorized Participant (as defined in the
Investment Company's Form N-1A filed with the Commission) through a
Confidential Account; (c) when aggregated into a Redemption Unit, or
multiples thereof, may be redeemed for a designated portfolio of
instruments (and/or an amount of cash) with a value equal to the
next determined net asset value delivered to the Confidential
Account for the benefit of the Authorized Participant; and (d) the
portfolio holdings for which are disclosed within at least 60 days
following the end of every fiscal quarter.
---------------------------------------------------------------------------
Description of the Funds and the Trust
The shares of each Fund (the ``Shares'') will be issued by the
AdvisorShares Trust (the ``Trust''), a statutory trust organized under
the laws of the State of Delaware and registered with the Commission as
an open-end management investment company.\5\ The investment adviser to
each Fund will be AdvisorShares Investments, LLC (the ``Adviser''). The
investment sub-advisor to each Fund will be ThinkBetter, LLC. Foreside
Fund Services, LLC (the ``Distributor'') will serve as the distributor
of each of the Funds' Shares. All statements and representations made
in this filing regarding (a) the description of the portfolio or
reference assets, (b) limitations on portfolio holdings or reference
assets, or (c) the applicability of Exchange rules shall constitute
continued listing requirements for listing the Shares on the Exchange,
as provided under Rule 8.900-E(b)(1).
---------------------------------------------------------------------------
\5\ The Trust is registered under the 1940 Act. On September 11,
2020, the Trust filed a registration statement on Form N-1A under
the Securities Act of 1933 (the ``1933 Act'') and the 1940 Act for
the Funds (File Nos. 333-157876 and 811-22110) (``Registration
Statement''). The description of the operation of the Trust and the
Funds herein is based, in part, on the Registration Statement. The
Trust has filed an application for an order under Section 6(c) of
the 1940 Act for exemptions from various provisions of the 1940 Act
and rules thereunder (the ``Exemptive Application'') (File No. 812-
15146). The Exchange will not commence trading in Shares of the
Funds until the Commission has issued an order granting the
exemptions requested in the Exemptive Application.
---------------------------------------------------------------------------
Rule 8.900-E(b)(4) provides that, if the investment adviser to the
Investment Company issuing Managed Portfolio Shares is registered as a
broker-dealer or is affiliated with a broker-dealer, such investment
adviser will erect and maintain a ``fire wall'' between the investment
adviser and personnel of the broker-dealer or broker-dealer affiliate,
as applicable, with respect to access to information concerning the
composition of and/or changes to such Investment Company portfolio and/
or the Creation Basket.\6\ Any person related to the investment adviser
or Investment Company who makes decisions pertaining to the Investment
Company's portfolio composition or has access to information regarding
the Investment Company's portfolio composition or changes thereto or
the Creation Basket must be subject to procedures designed to prevent
the use and dissemination of material non-public information regarding
the applicable Investment
[[Page 71367]]
Company portfolio or changes thereto or the Creation Basket.
---------------------------------------------------------------------------
\6\ Rule 8.900-E(c)(5) provides that the term ``Creation
Basket'' means, on any given business day, the names and quantities
of the specified instruments (and/or an amount of cash) that are
required for an AP Representative to deposit in-kind on behalf of an
Authorized Participant in exchange for a Creation Unit and the names
and quantities of the specified instruments (and/or an amount of
cash) that will be transferred in-kind to an AP Representative on
behalf of an Authorized Participant in exchange for a Redemption
Unit, which will be identical and will be transmitted to each AP
Representative before the commencement of trading.
---------------------------------------------------------------------------
Rule 8.900-E(b)(4) is similar to Commentary .03(a)(i) and (iii) to
Rule 5.2-E(j)(3); however, Commentary .03(a) in connection with the
establishment 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.\7\
Rule 8.900-E(b)(4) is also similar to Commentary .06 to Rule 8.600-E
related to Managed Fund Shares, except that Rule 8.900-E(b)(4) relates
to establishment and maintenance of a ``fire wall'' between the
investment adviser and personnel of the broker-dealer or broker-dealer
affiliate, as applicable, with respect to an Investment Company's
portfolio and Creation Basket, and not just to the underlying
portfolio, as is the case with Managed Fund Shares. The Adviser is not
registered as a broker-dealer but is affiliated with a broker-dealer.
The Adviser has implemented and will maintain a ``fire wall'' with
respect to such broker-dealer affiliate regarding access to information
concerning the composition of and/or changes to a Fund's portfolio and/
or Creation Basket.
---------------------------------------------------------------------------
\7\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Adviser and its related personnel will be
subject to the provisions of Rule 204A-1 under the Advisers Act
relating to codes of ethics. This Rule requires investment advisers
to adopt a code of ethics that reflects the fiduciary nature of the
relationship to clients as well as compliance with other applicable
securities laws. Accordingly, procedures designed to prevent the
communication and misuse of non-public information by an investment
adviser must be consistent with Rule 204A-1 under the Advisers Act.
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful
for an investment adviser to provide investment advice to clients
unless such investment adviser has (i) adopted and implemented
written policies and procedures reasonably designed to prevent
violations, by the investment adviser and its supervised persons, of
the Advisers Act and the Commission rules adopted thereunder; (ii)
implemented, at a minimum, an annual review regarding the adequacy
of the policies and procedures established pursuant to subparagraph
(i) above and the effectiveness of their implementation; and (iii)
designated an individual (who is a supervised person) responsible
for administering the policies and procedures adopted under
subparagraph (i) above. The Funds will also be required to comply
with Exchange rules relating to disclosure, including Rule 5.3-E(i).
---------------------------------------------------------------------------
In the event (a) the Adviser or any sub-adviser becomes registered
as a broker-dealer or becomes newly affiliated with a broker-dealer, or
(b) any new adviser or sub-adviser is a registered broker-dealer, or
becomes affiliated with a broker-dealer, it will implement and maintain
a fire wall with respect to personnel of the broker-dealer or broker-
dealer affiliate regarding access to information concerning the
composition and/or changes to the portfolio and/or Creation Basket. Any
person related to the Adviser or the Trust who makes decisions
pertaining to a Fund's portfolio composition or that has access to
information regarding a Fund's portfolio composition or that has access
to information regarding a Fund's portfolio or changes thereto or the
Creation Basket will be subject to procedures designed to prevent the
use and dissemination of material non-public information regarding such
portfolio or changes thereto and the Creation Basket.
Further, Rule 8.900-E(b)(5) requires that any person or entity,
including an AP Representative, custodian, Reporting Authority,
distributor, or administrator, who has access to non-public information
regarding the Investment Company's portfolio composition or changes
thereto or the Creation Basket, must be subject to procedures
reasonably designed to prevent the use and dissemination of material
non-public information regarding the applicable Investment Company
portfolio or changes thereto or the Creation Basket. Moreover, if any
such person or entity is registered as a broker-dealer or affiliated
with a broker-dealer, such person or entity will erect and maintain a
``fire wall'' between the person or entity and the broker-dealer with
respect to access to information concerning the composition and/or
changes to such Investment Company portfolio or Creation Basket.
---------------------------------------------------------------------------
\8\ The Exchange represents that, for initial and/or continued
listing, each Fund will be in compliance with Rule 10A-3 under the
Act. See 17 CFR 240.10A-3.
---------------------------------------------------------------------------
Description of the Funds \8\
Each Fund's holdings will conform to the permissible investments as
set forth in the Exemptive Application and the holdings will be
consistent with all requirements in the Exemptive Application.\9\
---------------------------------------------------------------------------
\9\ Pursuant to the Exemptive Application, the only permissible
investments for a Fund are the following that trade on a U.S.
exchange contemporaneously with the Funds' Shares: exchange-traded
funds (``ETFs''), exchange-traded notes, exchange-listed common
stocks, exchange-traded American Depositary Receipts, exchange-
traded real estate investment trusts, exchange-traded commodity
pools, exchange-traded metals trusts, exchange-traded currency
trusts and exchange-traded futures, as well as cash and cash
equivalents (short-term U.S. Treasury securities, government money
market funds, and repurchase agreements).
---------------------------------------------------------------------------
AdvisorShares Q Portfolio Blended Allocation ETF
The Fund is an actively managed ETF that is primarily a ``fund of
funds.'' The Fund's investment objective is to seek to maximize total
return over the long-term. The Fund will invest in ETFs representing
all asset classes, including, but not limited to, treasury bonds,
municipal bonds, investment grade corporate bonds, high-yield U.S.
corporate bonds, U.S. and foreign equities, and commodities.
AdvisorShares Q Dynamic Growth ETF
The Fund is an actively managed ETF that is primarily a ``fund of
funds.'' The Fund seeks to achieve long-term growth. The Fund will
invest in ETFs representing all asset classes, including, but not
limited to, treasury bonds, municipal bonds, investment grade corporate
bonds, high-yield U.S. corporate bonds, U.S. and foreign equities,
commodities, and volatility products.
Investment Restrictions
Each Fund's holdings will be consistent with all requirements
described in the Exemptive Application.\10\
---------------------------------------------------------------------------
\10\ See id.
---------------------------------------------------------------------------
Each Fund's investments, including derivatives, will be consistent
with its investment objective and will not be used to enhance leverage
(although certain derivatives and other investments may result in
leverage). That is, for each Fund, the Fund's investments will not be
used to seek performance that is the multiple or inverse multiple
(e.g., 2X or -3X) of the Fund's investment objective.
Creations and Redemptions of Shares
Creations and redemptions of Shares will take place as described in
Rule 8.900-E. Specifically, in connection with the creation and
redemption of Creation Units \11\ and Redemption Units,\12\ the
delivery or receipt of any portfolio securities in-kind will be
required to be effected through a separate confidential brokerage
account (a ``Confidential Account'').\13\
[[Page 71368]]
Authorized Participants (``AP''), as defined in the applicable Form N-
1A filed with the Commission, will sign an agreement with an AP
Representative \14\ establishing the Confidential Account for the
benefit of the AP. AP Representatives will be broker-dealers. An AP
must be a Depository Trust Company Participant that has executed an
authorized participant agreement (``Participant Agreement'') with the
Distributor with respect to the creation and redemption of Creation
Units and Redemption Units and formed a Confidential Account for its
benefit in accordance with the terms of the Participant Agreement. For
purposes of creations or redemptions, all transactions will be effected
through the respective AP's Confidential Account, for the benefit of
the AP, without disclosing the identity of such securities to the AP.
---------------------------------------------------------------------------
\11\ Rule 8.900-E(c)(6) provides that the term ``Creation Unit''
means a specified minimum number of Managed Portfolio Shares issued
by an Investment Company at the request of an Authorized Participant
in return for a designated portfolio of instruments and/or cash.
\12\ Rule 8.900-E(c)(7) provides that the term ``Redemption
Unit'' means a specified minimum number of Managed Portfolio Shares
that may be redeemed to an Investment Company at the request of an
Authorized Participant in return for a portfolio of instruments and/
or cash.
\13\ Rule 8.900-E(c)(4) provides that the term ``Confidential
Account'' means an account owned by an Authorized Participant and
held with an AP Representative on behalf of the Authorized
Participant. The account will be established and governed by
contractual agreement between the AP Representative and the
Authorized Participant solely for the purposes of creation and
redemption, while keeping confidential the Creation Basket
constituents of each series of Managed Portfolio Shares, including
from the Authorized Participant. The books and records of the
Confidential Account will be maintained by the AP Representative on
behalf of the Authorized Participant.
\14\ Rule 8.900-E(c)(3) provides that the term ``AP
Representative'' means an unaffiliated broker-dealer, with which an
Authorized Participant has signed an agreement to establish a
Confidential Account for the benefit of such Authorized Participant,
that will deliver or receive, on behalf of the Authorized
Participant, all consideration to or from the Investment Company in
a creation or redemption. An AP Representative will not be permitted
to disclose the Creation Basket to any person, including the
Authorized Participants.
---------------------------------------------------------------------------
Each AP Representative will be given, before the commencement of
trading each Business Day (as defined below), the Creation Basket (as
described below) for that day. This information will permit an AP that
has established a Confidential Account with an AP Representative to
instruct the AP Representative to buy and sell positions in the
portfolio securities to permit creation and redemption of Creation
Units and Redemption Units. Shares of each Fund will be issued and
redeemed in Creation Units and Redemption Units, the size of which will
be specified in the Registration Statement. The size of Creation Units
and Redemption Units is subject to change. The Funds will offer and
redeem Creation Units and Redemption Units on a continuous basis at the
net asset value (``NAV'') per Share next determined after receipt of an
order in proper form. The NAV per Share of each Fund will be determined
as of the close of regular trading on the Exchange on each day that the
Exchange is open (a ``Business Day''). The Funds will sell and redeem
Creation Units and Redemption Units only on Business Days.
In order to keep costs low and permit each Fund to be as fully
invested as possible, Shares will be purchased and redeemed in Creation
Units and Redemption Units and generally on an in-kind basis.
Accordingly, except where the purchase or redemption will include cash
under the circumstances described in the Exemptive Application, APs
will be required to purchase Creation Units by making an in-kind
deposit of a designated portfolio of securities (``Deposit
Securities''), and APs redeeming their Shares will receive an in-kind
transfer of a designated portfolio of securities (``Redemption
Securities'') through the AP Representative in their Confidential
Account.\15\ On any given Business Day, the names and quantities of the
instruments that constitute the Deposit Securities and the names and
quantities of the instruments that constitute the Redemption Securities
will be identical, and these instruments may be referred to, in the
case of either a purchase or a redemption, as the ``Creation Basket.''
---------------------------------------------------------------------------
\15\ According to the Registration Statement, the Funds must
comply with the federal securities laws in accepting Deposit
Securities and satisfying redemptions with Redemption Securities,
including that the Deposit Securities and Redemption Securities are
sold in transactions that would be exempt from registration under
the 1933 Act.
---------------------------------------------------------------------------
Placement of Purchase Orders
Each Fund will issue Shares through the Distributor on a continuous
basis at NAV. The Exchange represents that the issuance of Shares will
operate in a manner substantially similar to that of other ETFs. Each
Fund will issue Shares only at the NAV per Share next determined after
an order in proper form is received.
The Distributor will furnish acknowledgements to those placing such
orders that the orders have been accepted, but the Distributor may
reject any order which is not submitted in proper form, as described in
each Fund's prospectus or Statement of Additional Information
(``SAI''). The NAV of each Fund is expected to be determined once each
Business Day as of the close of the regular trading session on the NYSE
(ordinarily 4:00 p.m. E.T.) (the ``Valuation Time''). To initiate a
purchase of Shares, an AP must submit to the Distributor an irrevocable
order to purchase such Shares after the most recent prior Valuation
Time. In purchasing the necessary securities, the AP Representative
will use methods, such as breaking the transaction into multiple
transactions and transacting in multiple marketplaces, to avoid
revealing the composition of the Creation Basket.
Generally, all orders to purchase Creation Units must be received
by the Distributor no later than 3:00 p.m. E.T. (``Order Cut-Off
Time'') on the date such order is placed (``Transmittal Date'') in
order for the purchaser to receive the NAV per Share determined on the
Transmittal Date. As with all existing ETFs, if there is a difference
between the NAV attributable to a Creation Unit and the aggregate
market value of the Creation Basket exchanged for the Creation Unit,
the party conveying instruments with the lower value will also pay to
the other an amount in cash equal to that difference (the ``Balancing
Amount'').
Purchases of Shares will be settled in-kind and/or cash for an
amount equal to the applicable NAV per Share purchased plus applicable
transaction fees.\16\ Other than the Balancing Amount, the Fund will
substitute cash only under exceptional circumstances and as set forth
under the Fund's policies and procedures governing the composition of
Creation Baskets.
---------------------------------------------------------------------------
\16\ To the extent that a Fund allows creations or redemptions
to be conducted in cash, such transactions will be effected in the
same manner for all APs transacting in cash.
---------------------------------------------------------------------------
Authorized Participant Redemption
The Shares may be redeemed to a Fund in Redemption Unit size or
multiples thereof as described below. Redemption orders of Redemption
Units must be placed by or through an AP (``AP Redemption Order'') in
proper form. Redemption Units of a Fund will be redeemable at their NAV
per Share next determined after receipt of a request for redemption by
the Trust in the manner specified below before the Order Cut-Off Time.
To initiate an AP Redemption Order, an AP must submit to the
Distributor an irrevocable order to redeem such Redemption Unit no
later than the Order Cut-Off Time on the Transmittal Date. A
transaction fee may be imposed to offset costs associated with
redemption orders.
In the case of a redemption, the AP would enter into an irrevocable
redemption order, and then the applicable Fund would instruct its
custodian to deliver the Redemption Securities to the appropriate
Confidential Account. The Authorized Participant would direct the AP
Representative on when that day to liquidate those securities. As with
the purchase of securities, the AP Representative will use methods,
such as breaking the transaction into multiple transactions and
transacting in multiple
[[Page 71369]]
marketplaces, to avoid revealing the composition of the Creation
Basket.
Redemptions will occur primarily in-kind, although redemption
payments may also be made partly or wholly in cash. The Participant
Agreement signed by each AP will require establishment of a
Confidential Account to receive distributions of securities in-kind
upon redemption. Each AP will be required to open a Confidential
Account with an AP Representative in order to facilitate orderly
processing of redemptions.
Net Asset Value
The NAV will be calculated separately for the Shares of each Fund
on each Business Day. Each Fund's NAV is determined as of the close of
regular trading on the NYSE, normally 4:00 p.m., Eastern Time. The NAV
of each Fund is computed by (i) taking the current market value of its
total assets, (ii) subtracting any liabilities, and (iii) dividing that
amount by the total number of shares owned by shareholders.
Each Fund generally values its portfolio investments at market
prices. If market prices are unavailable or a Fund thinks that they are
unreliable, or when the value of a security has been materially
affected by events occurring after the relevant market closes, the Fund
will price those securities at fair value as determined in good faith
using methods approved by the Fund's Board.
More information about the valuation of each Fund's holdings can be
found in the SAI.
Information showing the number of days that the market price of
each Fund's Shares was greater than the Fund's NAV (i.e., at a premium)
or less than the Fund's NAV (i.e., at a discount) for various time
periods is available on the Funds' website at www.advisorshares.com.
Availability of Information
The Funds' website, www.advisorshares.com, will include a form of
the prospectus for each Fund that may be downloaded. The Funds' website
will include additional quantitative information updated on a daily
basis, including, for each Fund, the prior Business Day's NAV, market
price, the bid/ask spreads at the time of calculation of such NAV (the
``Bid/Ask Price''),\17\ and a calculation of the premium and discount
of the market price or Bid/Ask Price against the NAV. The website and
information will be publicly available at no charge.
---------------------------------------------------------------------------
\17\ The Bid/Ask Price of a Fund's Shares is determined using
the mid-point between the current national best bid and offer at the
time of calculation of such Fund's NAV. The records relating to Bid/
Ask Prices will be retained by the Funds or their service providers.
---------------------------------------------------------------------------
Form N-PORT requires reporting of a Fund's complete portfolio
holdings on a position-by-position basis on a quarterly basis within 60
days after fiscal quarter end. Investors can obtain a Fund's SAI, its
shareholder reports, its Form N-CSR, filed twice a year, and its Form
N-CEN, filed annually. Each Fund's SAI and shareholder reports are
available free upon request from the Investment Company, and those
documents and the Form N-PORT, Form N-CSR, and Form N-CEN may be viewed
onscreen or downloaded from the Commission's website at www.sec.gov.
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 Verified Intraday
Indicative Value (``VIIV''), as defined in Rule 8.900-E(c)(2),\18\ will
be widely disseminated by the Reporting Authority \19\ and/or one or
more major market data vendors in one second intervals during the
Exchange's Core Trading Session.
---------------------------------------------------------------------------
\18\ Rule 8.900-E(c)(2) provides that the term ``Verified
Intraday Indicative Value'' is the indicative value of a Managed
Portfolio Share based on all of the holdings of a series of Managed
Portfolio Shares as of the close of business on the prior business
day and, for corporate actions, based on the applicable holdings as
of the opening of business on the current business day, priced and
disseminated in one second intervals during the Core Trading Session
by the Reporting Authority.
\19\ Rule 8.900-E(c)(8) provides that the term ``Reporting
Authority'' in respect of a particular series of Managed Portfolio
Shares means the Exchange, an institution, or a reporting service
designated by the Exchange or by the exchange that lists a
particular series of Managed Portfolio Shares (if the Exchange is
trading such series pursuant to unlisted trading privileges), as the
official source for calculating and reporting information relating
to such series, including, but not limited to, the NAV, the VIIV, or
other information relating to the issuance, redemption, or trading
of Managed Portfolio Shares. A series of Managed Portfolio Shares
may have more than one Reporting Authority, each having different
functions.
---------------------------------------------------------------------------
Dissemination of the VIIV
With respect to trading of the Shares, the ability of market
participants to buy and sell Shares at prices near the VIIV is
dependent upon their assessment that the VIIV is a reliable, indicative
real-time value for a Fund's underlying holdings. Market participants
are expected to accept the VIIV as a reliable, indicative real-time
value because (1) the VIIV will be calculated and disseminated based on
a Fund's actual portfolio holdings, (2) the securities in which a Fund
plans to invest are generally highly liquid and actively traded and
trade at the same time as the Fund and therefore generally have
accurate real time pricing available, and (3) market participants will
have a daily opportunity to evaluate whether the VIIV at or near the
close of trading is indeed predictive of the actual NAV.
The VIIV will be widely disseminated by the Reporting Authority
and/or by one or more major market data vendors in one second intervals
during the Core Trading Session. The VIIV is based on the current
market value of the securities in a Fund's portfolio that day. The
methodology for calculating the VIIV will be available on the Funds'
website. The VIIV is intended to provide investors and other market
participants with a highly correlated per Share value of the underlying
portfolio that can be compared to the current market price. Therefore,
under normal circumstances the VIIV would be effectively a near real
time approximation of each Fund's NAV, available free of charge from
one or more market data vendors, which is computed only once a day.
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 a Fund.\20\ Trading in Shares of a Fund will
be halted if the circuit breaker parameters in 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 Shares will be subject to Rule 8.900-
E(d)(2)(C), which sets forth circumstances under which Shares of a Fund
will be halted.
---------------------------------------------------------------------------
\20\ See Rule 7.12-E.
---------------------------------------------------------------------------
Specifically, Rule 8.900-E(d)(2)(C)(i) provides that the Exchange
may consider all relevant factors in exercising its discretion to halt
trading in a series of Managed Portfolio Shares. Trading may be halted
because of market conditions or for reasons that, in the view of the
Exchange, make trading in the series of Managed Portfolio Shares
inadvisable. These may include: (a) The extent to which trading is not
occurring in the securities and/or the financial instruments composing
the portfolio; or (b) whether other unusual conditions or circumstances
detrimental
[[Page 71370]]
to the maintenance of a fair and orderly market are present.\21\
---------------------------------------------------------------------------
\21\ The Exemptive Application provides that the Investment
Company or their agent will request that the Exchange halt trading
in the applicable series of Managed Portfolio Shares where: (i) The
intraday indicative values calculated by the calculation engines
differ by more than 25 basis points for 60 seconds in connection
with pricing of the VIIV; or (ii) holdings representing 10% or more
of a series of Managed Portfolio Shares' portfolio have become
subject to a trading halt or otherwise do not have readily available
market quotations. Any such requests will be one of many factors
considered in order to determine whether to halt trading in a series
of Managed Portfolio Shares, and the Exchange retains sole
discretion in determining whether trading should be halted. As
provided in the Exemptive Application, each series of Managed
Portfolio Shares would employ a pricing verification agent to
continuously compare two intraday indicative values during regular
trading hours in order to ensure the accuracy of the VIIV.
---------------------------------------------------------------------------
Rule 8.900-E(d)(2)(C)(ii) provides that, if the Exchange becomes
aware that: (i) The VIIV of a series of Managed Portfolio Shares is not
being calculated or disseminated in one second intervals, as required;
(ii) the NAV with respect to a series of Managed Portfolio Shares is
not disseminated to all market participants at the same time; (iii) the
holdings of a series of Managed Portfolio Shares are not made available
on at least a quarterly basis as required under the 1940 Act; or (iv)
such holdings are not made available to all market participants at the
same time (except as otherwise permitted under the currently applicable
exemptive order or no-action relief granted by the Commission or
Commission staff to the Investment Company with respect to the series
of Managed Portfolio Shares), it will halt trading in such series until
such time as the VIIV, the net asset value, or the holdings are
available, as required.
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 Exchange in all trading sessions in accordance with Rule 7.34-E(a).
As provided in 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.
The Shares will conform to the initial and continued listing
criteria under Rule 8.900-E, as well as all terms in the Exemptive
Application. The Exchange will obtain a representation from the issuer
of the Shares of each Fund that the NAV per Share of each Fund will be
calculated daily and will be made available to all market participants
at the same time.
Surveillance
The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of Shares on the Exchange during all
trading sessions and to deter and detect violations of Exchange rules
and the applicable federal securities laws. Trading of Shares through
the Exchange will be subject to the Exchange's surveillance procedures
for derivative products. As part of these surveillance procedures and
consistent with Rule 8.900-E(b)(3) and 8.900-E(d)(2)(B), the Adviser
will upon request make available to the Exchange and/or FINRA, on
behalf of the Exchange, the daily portfolio holdings of a Fund. The
issuer of the Shares of each Fund will be required to represent to the
Exchange that it will advise the Exchange of any failure by a Fund to
comply with the continued listing requirements, and, pursuant to its
obligations under Section 19(g)(1) of the Exchange Act, the Exchange
will surveil for compliance with the continued listing requirements. If
a Fund is not in compliance with the applicable listing requirements,
the Exchange will commence delisting procedures under Exchange Rule
5.5-E(m).
FINRA, on behalf of the Exchange, or the regulatory staff of the
Exchange, or both, will communicate as needed regarding trading in the
Shares and certain exchange-traded instruments with other markets and
other entities that are members of the Intermarket Surveillance Group
(``ISG''), and FINRA, on behalf of the Exchange, or the regulatory
staff of the Exchange, or both, may obtain trading information
regarding trading such securities from such markets and other entities.
In addition, the Exchange may obtain information regarding trading in
the Shares and certain exchange-traded instruments from markets and
other entities that are members of ISG or with which the Exchange has
in place a comprehensive surveillance sharing agreement.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
Equity Trading Permit (``ETP'') 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;
(2) Rule 9.2-E(a), which imposes a duty of due diligence on its ETP
Holders to learn the essential facts relating to every customer prior
to trading the Shares; (3) how information regarding the VIIV is
disseminated; (4) the requirement that ETP Holders deliver a prospectus
to investors purchasing newly issued Shares prior to or concurrently
with the confirmation of a transaction; (5) trading information; and
(6) that the portfolio holdings of the Shares are not disclosed on a
daily basis.
In addition, the Bulletin will reference that the Funds are 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 Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\22\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\23\ in particular, in that it
is 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.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78f(b).
\23\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that this proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Funds would meet each of the rules relating to listing and trading of
Managed Portfolio Shares. To the extent that a Fund is not in
compliance with such rules, the Exchange would either prevent the Fund
from listing and trading on the Exchange or commence delisting
procedures under Rule 8.900-E(d)(2)(B). Specifically, the Exchange
would consider the suspension of trading, and commence delisting
proceedings under Rule 8.900-E(d)(2)(B), of a Fund under any of the
following circumstances: (a) If, following the initial twelve-month
period after commencement of trading on the Exchange, there are fewer
than 50 beneficial holders of the Fund; (b) if the Exchange has halted
trading in a Fund because the VIIV is interrupted pursuant to Rule
8.900-E(d)(2)(C)(ii) and such
[[Page 71371]]
interruption persists past the trading day in which it occurred or is
no longer available; (c) if the Exchange has halted trading in a Fund
because the net asset value with respect to such Fund is not
disseminated to all market participants at the same time, the holdings
of such Fund are not made available on at least a quarterly basis as
required under the 1940 Act, or such holdings are not made available to
all market participants at the same time pursuant to Rule 8.900-
E(d)(2)(C)(ii) and such issue persists past the trading day in which it
occurred; (d) if the Exchange has halted trading in Shares of a Fund
pursuant to Rule 8.900-E(d)(2)(C)(i) and such issue persists past the
trading day in which it occurred; (e) if a Fund has failed to file any
filings required by the Commission or if the Exchange is aware that a
Fund is not in compliance with the conditions of any currently
applicable exemptive order or no-action relief granted by the
Commission or Commission staff with respect to the Fund; (f) if any of
the continued listing requirements set forth in Rule 8.900-E are not
continuously maintained; (g) if any of the statements of
representations regarding (a) the description of the portfolio, (b)
limitations on portfolio holdings, or (c) the applicability of Exchange
listing rules as specified herein to permit the listing and trading of
a Fund, are not continuously maintained; or (h) if such other event
shall occur or condition exists which, in the opinion of the Exchange,
makes further dealings on the Exchange inadvisable.
As discussed above, 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 affiliate broker-
dealer regarding access to information concerning the composition and/
or changes to a Fund's portfolio and Creation Basket. In the event that
(a) the Adviser or sub-adviser becomes registered as a broker-dealer or
becomes newly affiliated with a broker-dealer, or (b) any new adviser
or sub-adviser is a registered broker-dealer or becomes affiliated with
a broker-dealer, the Adviser will implement and maintain a fire wall
with respect to personnel of the broker-dealer or broker-dealer
affiliate regarding access to information concerning the composition
and/or changes to the portfolio and/or Creation Basket. Any person
related to the Adviser or the Trust who makes decisions pertaining to a
Fund's portfolio composition or that has access to information
regarding a Fund's portfolio or changes thereto or the Creation Basket
will be subject to procedures designed to prevent the use and
dissemination of material non-public information regarding such
portfolio or changes thereto and the Creation Basket.
In addition, Rule 8.900-E(b)(5) requires that any person or entity,
including an AP Representative, custodian, Reporting Authority,
distributor, or administrator, who has access to non-public information
regarding the Investment Company's portfolio composition or changes
thereto or the Creation Basket, must be subject to procedures designed
to prevent the use and dissemination of material non-public information
regarding the applicable Investment Company portfolio or changes
thereto or the Creation Basket. Moreover, if any such person or entity
is registered as a broker-dealer or affiliated with a broker-dealer,
such person or entity will erect and maintain a ``fire wall'' between
the person or entity and the broker-dealer with respect to access to
information concerning the composition and/or changes to such
Investment Company portfolio or Creation Basket. Any person or entity
who has access to information regarding a Fund's portfolio composition
or changes thereto or the Creation Basket will be subject to procedures
designed to prevent the use and dissemination of material non-public
information regarding the portfolio or changes thereto or the Creation
Basket.
The Exchange further believes that Rule 8.900-E is designed to
prevent fraudulent and manipulative acts and practices related to the
listing and trading of Shares of the Funds because it provides
meaningful requirements about both the data that will be made publicly
available about the Shares, as well as the information that will only
be available to certain parties and the controls on such information.
Specifically, the Exchange believes that the requirements related to
information protection set forth in Rule 8.900-E(b)(5) will act as a
safeguard against misuse and improper dissemination of information
related to a Fund's portfolio composition, the Creation Basket, or
changes thereto. The requirement that any person or entity implement
procedures to prevent the use and dissemination of material non-public
information regarding the portfolio or Creation Basket will act to
prevent any individual or entity from sharing such information
externally and the internal ``fire wall'' requirements applicable where
an entity is a registered broker-dealer or affiliated with a broker-
dealer will act to make sure that no entity will be able to misuse the
data for their own purposes. Accordingly, the Exchange believes that
this proposal is designed to prevent fraudulent and manipulative acts
and practices.
The Exchange further believes that the proposal is designed to
prevent fraudulent and manipulative acts and practices related to the
listing and trading of Shares of the Funds and to promote just and
equitable principles of trade and to protect investors and the public
interest because the Exchange would halt trading under certain
circumstances under which trading in the Shares of a Fund may be
inadvisable. Specifically, trading in the Shares will be subject to
Rule 8.900-E(d)(2)(C)(i), which provides that the Exchange may consider
all relevant factors in exercising its discretion to halt trading in a
Fund. Trading may be halted because of market conditions or for reasons
that, in the view of the Exchange, make trading in the series of
Managed Portfolio Shares inadvisable. These may include: (a) The extent
to which trading is not occurring in the securities and/or the
financial instruments composing the portfolio; or (b) whether other
unusual conditions or circumstances detrimental to the maintenance of a
fair and orderly market are present.\24\ Additionally, trading in the
Shares will be subject to Rule 8.900-E(d)(2)(C)(ii), which provides
that the Exchange would halt trading where the Exchange becomes aware
that: (a) The VIIV of a series of Managed Portfolio Shares is not being
calculated or disseminated in one second intervals, as required; (b)
the net asset value with respect to a series of Managed Portfolio
Shares is not disseminated to all market participants at the same time;
(c) the holdings of a series of Managed Portfolio Shares are not made
available on at least a quarterly basis as required under the 1940 Act;
or (d) such holdings are not made available to all market participants
at the same time (except as otherwise permitted under the currently
applicable exemptive order or no-action relief granted by the
Commission or Commission staff to the Investment Company with respect
to the series of Managed Portfolio Shares). The Exchange would halt
trading in such Shares until such time as the VIIV, the NAV, or the
holdings are available, as required.
---------------------------------------------------------------------------
\24\ See supra note 21.
---------------------------------------------------------------------------
With respect to the proposed listing and trading of Shares of the
Funds, the Exchange believes that the proposed rule change is designed
to prevent fraudulent and manipulative acts and practices in that the
Shares will be
[[Page 71372]]
listed and traded on the Exchange pursuant to the initial and continued
listing criteria in Rule 8.900-E.\25\ Each Fund's holdings will conform
to the permissible investments as set forth in the Exemptive
Application.\26\ As noted above, FINRA, on behalf of the Exchange, or
the regulatory staff of the Exchange, or both, will communicate as
needed regarding trading in the Shares and the underlying exchange-
traded instruments with other markets and other entities that are
members of the ISG, and FINRA, on behalf of the Exchange, or the
regulatory staff of the Exchange, or both, may obtain trading
information regarding trading such instruments from such markets and
other entities. In addition, the Exchange may obtain information
regarding trading in the Shares and the underlying exchange-traded
instruments from markets and other entities that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.
---------------------------------------------------------------------------
\25\ The Exchange represents that, for initial and/or continued
listing, each Fund will be in compliance with Rule 10A-3 under the
Act. See 17 CFR 240.10A-3.
\26\ See supra note 9.
---------------------------------------------------------------------------
With respect to trading of Shares of the Funds, the ability of
market participants to buy and sell Shares at prices near the VIIV is
dependent upon their assessment that the VIIV is a reliable, indicative
real-time value for a Fund's underlying holdings. Market participants
are expected to accept the VIIV as a reliable, indicative real-time
value because (1) the VIIV will be calculated and disseminated based on
a Fund's actual portfolio holdings, (2) the securities in which the
Funds plan to invest are generally highly liquid and actively traded
and trade at the same time as the Funds and therefore generally have
accurate real time pricing available, and (3) market participants will
have a daily opportunity to evaluate whether the VIIV at or near the
close of trading is indeed predictive of the actual NAV.
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 that the NAV per Share
of the Funds will be calculated daily and that the NAV will be made
available to all market participants at the same time. Investors can
also obtain a Fund's SAI, its shareholder reports, its Form N-CSR
(filed twice a year), and its Form N-CEN (filed annually). A Fund's SAI
and shareholder reports will be available free upon request from the
applicable Fund, and those documents and the Form N-PORT, Form N-CSR,
and Form N-CEN may be viewed on-screen or downloaded from the
Commission's website at www.sec.gov. In addition, a large amount of
information will be publicly available regarding the Funds and the
Shares, thereby promoting market transparency. Quotation and last sale
information for the Shares will be available via the CTA high-speed
line. Information regarding the VIIV will be widely disseminated in one
second intervals throughout the Core Trading Session by the Reporting
Authority and/or one or more major market data vendors. The website for
the Funds will include a prospectus for the Funds that may be
downloaded, and additional data relating to NAV and other applicable
quantitative information, updated on a daily basis. Moreover, prior to
the commencement of trading, the Exchange will inform its members in an
Information Bulletin of the special characteristics and risks
associated with trading the Shares.
In addition, as noted above, investors will have ready access to
the VIIV, and quotation and last sale information for the Shares. The
Shares will conform to the initial and continued listing criteria under
Rule 8.900-E. Each Fund's investments, including derivatives, will be
consistent with its investment objective and will not be used to
enhance leverage (although certain derivatives and other investments
may result in leverage). That is, the Fund's investments will not be
used to seek performance that is the multiple or inverse multiple
(e.g., 2X or -3X) of the Fund's investment objective.
The Exchange also believes that 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 actively-managed exchange-traded
products 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
comprehensive surveillance sharing agreement. In addition, as noted
above, investors will have ready access to information regarding the
VIIV and quotation and last sale information for the Shares.
For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes the
proposed rule change would permit the listing and trading of additional
actively-managed exchange-traded products, thereby promoting
competition among exchange-traded products 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 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-2020-94 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-2020-94. 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
[[Page 71373]]
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-2020-94, and should be
submitted on or before November 30, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
---------------------------------------------------------------------------
\27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-24786 Filed 11-6-20; 8:45 am]
BILLING CODE 8011-01-P
