Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To Amend NYSE Arca Rule 8.900-E To Adopt Generic Listing Standards for Managed Portfolio Shares, 630-633 [2020-29283]

Download as PDF 630 Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSENAT–2020–39 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–NYSENAT–2020–39. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, on business days between the hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE, Washington, DC 20549. Copies of such 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–NYSENAT–2020–39 and should be submitted on or before January 27, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–29213 Filed 1–5–21; 8:45 am] jbell on DSKJLSW7X2PROD with NOTICES BILLING CODE 8011–01–P 25 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:08 Jan 05, 2021 Jkt 253001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90835; File No. SR– NYSEArca–2020–84] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To Amend NYSE Arca Rule 8.900–E To Adopt Generic Listing Standards for Managed Portfolio Shares December 31, 2020. I. Introduction On September 22, 2020, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend NYSE Arca Rule 8.900–E to adopt generic listing standards for Managed Portfolio Shares. On October 2, 2020, the Exchange filed Amendment No. 1 to the proposed rule change. The proposed rule change, as modified by Amendment No. 1, was published for comment in the Federal Register on October 13, 2020.3 On November 13, 2020, pursuant to Section 19(b)(2) of the Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.5 The Commission has received no comments on the proposed rule change. The Commission is publishing this order to solicit comments on the proposed rule change from interested persons and to institute proceedings pursuant to Section 19(b)(2)(B) of the Act 6 to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1. II. Description of the Proposed Rule Change The Exchange adopted listing standards for Managed Portfolio Shares as set forth in NYSE Arca Rule 8.900– 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 90104 (October 7, 2020), 85 FR 64598 (‘‘Notice’’). 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 90418, 85 FR 73812 (November 19, 2020). The Commission designated January 11, 2021, as the date by which the Commission shall approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change. 6 15 U.S.C. 78s(b)(2)(B). 2 17 PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 E.7 A Managed Portfolio Share is a security that (a) represents an interest in an investment company (‘‘Investment Company’’), registered under the Investment Company Act of 1940 (‘‘1940 Act’’) 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,8 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; 9 (c) when aggregated into a Redemption Unit,10 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 7 See Securities Exchange Act Release No. 88648 (April 15, 2020), 85 FR 22200 (April 21, 2020) (SR– NYSEArca–2020–32) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Adopt a New NYSE Arca Rule 8.900–E). 8 NYSE Arca Rule 8.900–E(c)(6) defines the term ‘‘Creation Unit’’ as 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. 9 NYSE Arca Rule 8.900–E(c)(4) defines the term ‘‘Confidential Account’’ as ‘‘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.’’ NYSE Arca Rule 8.900–E(c)(3) defines the term ‘‘AP Representative’’ as ‘‘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.’’ 10 NYSE Arca Rule 8.900–E(c)(7) defines the term ‘‘Redemption Unit’’ as 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. E:\FR\FM\06JAN1.SGM 06JAN1 Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices quarter.11 Further, each series of Managed Portfolio Shares widely disseminates a Verified Intraday Indicative Value or ‘‘VIIV’’ 12 in one second intervals during the Core Trading Session.13 NYSE Arca Rule 8.900–E(b)(1) currently requires that the Exchange submit a proposed rule change with the Commission to list and trade each new series of Managed Portfolio Shares.14 The Exchange proposes to amend NYSE Arca Rule 8.900–E to adopt ‘‘generic’’ listing standards that would allow the Exchange to approve the listing and trading (including pursuant to unlisted trading privileges) of series of Managed Portfolio Shares that satisfy those generic listing standards pursuant to Rule 19b–4(e) under the Act.15 11 See NYSE Arca Rule 8.900–E(c)(1). Arca Rule 8.900–E(c)(2) defines the term ‘‘Verified Intraday Indicative Value’’ (‘‘VIIV’’) as 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. 13 NYSE Arca Rule 8.900–E(d)(2)(A) requires for continued listing that the VIIV for a series of Managed Portfolio Shares 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, and be disseminated to all market participants at the same time. 14 The Exchange notes that the Commission has approved listing and trading of series of Managed Portfolio Shares on the Exchange under NYSE Arca Rule 8.900–E and on another national securities exchange under substantially equivalent listing rules. See Securities Exchange Act Release Nos. 89633 (August 25, 2020), 85 FR 53868 (August 31, 2020) (SR–NYSEArca–2020–48) (Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, to List and Trade Shares of Gabelli ETFs under Rule 8.900–E) (‘‘Gabelli Approval Order’’); 88247 (February 20, 2020), 85 FR 11137 (February 26, 2020) (SR–CboeBZX–2019–102) (Notice of Filing of Amendment No. 3 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 3 Thereto, to List and Trade Shares of the ClearBridge Focus Value ETF under BZX Rule 14.11(k)) (‘‘ClearBridge Approval Order’’); 88175 (February 12, 2020), 85 FR 9494 (February 19, 2020) (SR–CboeBZX–2019–057) (Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 2 Thereto, to List and Trade Shares of the American Century Focused Dynamic Growth ETF and American Century Focused Large Cap Value ETF under BZX Rule 14.11(k)) (‘‘American Century Approval Order’’ and, together with the Gabelli Approval Order and the ClearBridge Approval Order, ‘‘Approval Orders’’). 15 17 CFR 240.19b–4(e). Rule 19b–4(e)(1) under the Act provides that the listing and trading of a new derivative securities product by a selfregulatory organization (‘‘SRO’’) is not deemed a proposed rule change, pursuant to paragraph (c)(1) of Rule 19b–4, if the Commission has approved, pursuant to Section 19(b) of the Act, the SRO’s trading rules, procedures and listing standards for the product class that would include the new derivative securities product and the SRO has a jbell on DSKJLSW7X2PROD with NOTICES 12 NYSE VerDate Sep<11>2014 19:08 Jan 05, 2021 Jkt 253001 A. Proposed Amendments to Rule 8.900–E The Exchange proposes to amend Rule 8.900–E(b)(1) to state that the Exchange may approve Managed Portfolio Shares for listing and/or trading (including pursuant to unlisted trading privileges) pursuant to Rule 19b–4(e) under the Act. The Exchange would also specify within proposed Rule 8.900–E(b)(1) that components of a series of Managed Portfolio Shares listed pursuant to Rule 19b–4(e) shall satisfy the criteria set forth in Rule 8.900–E and Commentary .01 thereto upon initial listing and on a continual basis. In addition, the Exchange would specify that it will file separate proposals under Section 19(b) of the Act before the listing and trading of a series of Managed Portfolio Shares with components that do not satisfy the criteria set forth in proposed Commentary .01 or components other than those specified in proposed Commentary .01.16 Proposed Commentary .01(a) to Rule 8.900–E would provide that the portfolio holdings for a series of Managed Portfolio Shares shall include only the following components: (1) U.S. exchange-traded securities that are common stocks; preferred stocks; American Depositary Receipts; and real estate investment trusts; (2) U.S. exchange-traded funds that are listed under the following NYSE Arca rules: Investment Company Units (Rule 5.2–E(j)(3)); Exchange-Traded Fund Shares (Rule 5.2–E(j)(8)); Portfolio Depositary Receipts (Rule 8.100–E); Managed Fund Shares (Rule 8.600–E); Active Proxy Portfolio Shares (Rule 8.601–E); and Managed Portfolio Shares (Rule 8.900–E); (3) Equity Gold Shares (listed under NYSE Arca Rule 5.2–E(j)(5)) (4) Index-Linked Securities (listed under NYSE Arca Rule 5.2–E(j)(6)); (5) Commodity-Based Trust Shares (listed under NYSE Arca Rule 8.201–E); surveillance program for the product class. See 17 CFR 240.19b–4(e)(1). Under Rule 19b–4(e), the term ‘‘new derivative securities product’’ means any type of option, warrant, hybrid securities product or any other security, other than a single equity option or a security futures product, whose value is based, in whole or in part, upon the performance of, or interest in, an underlying instrument. See 17 CFR 240.19b–4(e). Under Rule 19b–4(c)(1), a stated policy, practice, or interpretation of the SRO shall be deemed to be a proposed rule change unless it is reasonably and fairly implied by an existing rule of the SRO. 17 CFR 240.19b–4(c)(1). 17 CFR 240.19b–4(c)(1). 16 For example, according to the Exchange, if the components of a series of Managed Portfolio Shares included a security or asset that is not specified in proposed Commentary .01, the Exchange would file a separate proposed rule change with the Commission to list the series of Managed Portfolio Shares. PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 631 (6) Currency Trust Shares (listed under NYSE Arca Rule 8.202–E); (7) The following securities, which are required to be organized as commodity pools: Commodity Index Trust Shares (listed under NYSE Arca Rule 8.203–E); Commodity Futures Trust Shares (listed under NYSE Arca Rule 8.204–E); Trust Units (listed under NYSE Arca Rule 8.500–E); and Managed Trust Securities (listed under NYSE Arca Rule 8.700–E); (8) The following securities if organized as commodity pools: Trust Issued Receipts (listed under NYSE Arca Rule 8.200–E) and Partnership Units (listed under NYSE Arca Rule 8.300–E); (9) U.S. exchange-traded futures that trade contemporaneously with shares of a series of Managed Portfolio Shares in the Exchange’s Core Trading Session; and (10) Cash and cash equivalents, which cash equivalents would be limited to short-term U.S. Treasury securities, government money market funds, and repurchase agreements. Proposed Commentary .01(b) to Rule 8.900–E would provide that a series of Managed Portfolio Shares will not hold short positions in securities and other financial instruments referenced in the list of permitted investments in proposed Commentary .01(a). Proposed Commentary .01(c) would provide that the securities referenced in proposed Commentary .01(a)(2)–(8) would also include securities listed on another national securities exchange pursuant to substantially equivalent listing rules. The Exchange states that the securities and financial instruments enumerated in proposed Commentary .01(a) to Rule 8.900–E are consistent with, and limited to, the ‘‘permissible investments’’ for series of Managed Portfolio Shares previously approved by the Commission for Exchange listing and trading, as described in the Approval Orders 17 and as permitted by their respective exemptive relief under the 1940 Act. The Exchange also states that the regulatory staff of the Exchange, or the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’), on behalf of the Exchange, will communicate as needed regarding trading in Managed Portfolio Shares, other exchange-traded equity securities and futures contracts with other markets that are members of the Intermarket Surveillance Group (‘‘ISG’’), including U.S. exchanges on which the components are traded. In addition, the Exchange may obtain information regarding trading in 17 See E:\FR\FM\06JAN1.SGM supra note 14. 06JAN1 632 Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices jbell on DSKJLSW7X2PROD with NOTICES Managed Portfolio Shares from other markets that are members of the ISG, including all U.S. securities exchanges and futures exchanges on which the equity securities and futures contracts are traded. The Exchange represents that its surveillance procedures are adequate to continue to properly monitor the trading of Managed Portfolio Shares in all trading sessions and to deter and detect violations of Exchange rules. Specifically, the Exchange intends to utilize its existing surveillance procedures applicable to derivative products, which will include Managed Portfolio Shares, to monitor trading in the Managed Portfolio Shares. The Exchange states that the Managed Portfolio Shares will conform to the initial and continued listing criteria under Rule 8.900–E. All Managed Portfolio Shares listed and/or traded pursuant to Rule 8.900–E (including pursuant to unlisted trading privileges) are subject to all Exchange rules and procedures that currently govern the trading of equity securities on the Exchange. The issuer of a series of Managed Portfolio Shares will be required to comply with Rule 10A–3 under the Act for the initial and continued listing of Managed Portfolio Shares, as provided under NYSE Arca Rule 5.3–E. Further, according to the Exchange, prior to listing pursuant to proposed amended Rule 8.900–E and proposed Commentary .01 thereto, an issuer would be required to represent to the Exchange that it will advise the Exchange of any failure by a series of Managed Portfolio Shares to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If a series of Managed Portfolio Shares is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Rule 5.5–E(m). III. Proceedings To Determine Whether To Approve or Disapprove SR– NYSEArca–2020–84, as Modified by Amendment No. 1, and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act 18 to determine whether the proposed rule change should be approved or disapproved. Institution of such proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change. Institution of 18 15 U.S.C. 78s(b)(2)(B). VerDate Sep<11>2014 19:08 Jan 05, 2021 Jkt 253001 proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as described below, the Commission seeks and encourages interested persons to provide additional comment on the proposed rule change to inform the Commission’s analysis of whether to approve or disapprove the proposed rule change. Pursuant to Section 19(b)(2)(B) of the Act,19 the Commission is providing notice of the grounds for disapproval under consideration. The Commission is instituting proceedings to allow for additional analysis of the proposed rule change’s consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and to protect investors and the public interest, and not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers.20 The Exchange proposes to adopt generic listing standards for Managed Portfolio Shares, which would allow the Exchange to list and trade Managed Portfolio Shares that meet the requirements of NYSE Arca Rule 8.900– E and Commentary .01 without filing a proposed rule change with the Commission. As noted above, however, the Exchange only recently adopted Rule 8.900–E to permit the listing and trading of Managed Portfolio Shares on the Exchange.21 Further, the Exchange states that only three series of Managed Portfolio Shares are currently listed and traded on BZX and does not indicate whether any series are currently listed and traded on the Exchange.22 19 Id. 20 15 U.S.C. 78f(b)(5). supra note 7 and accompanying text. The Commission notes that it also recently approved a substantively similar rule for the listing and trading of Managed Portfolio Shares on Cboe BZX Exchange, Inc. (‘‘BZX’’). See Securities Exchange Act Release No. 87759 (December 16, 2019), 84 FR 70223 (December 20, 2019) (Notice of Filing of Amendment Nos. 4 and 5, and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment Nos. 4 and 5, to Adopt BZX Rule 14.11(k) to Permit the Listing and Trading of Managed Portfolio Shares). 22 See Notice, supra note 3, at 64600. See also Approval Orders, supra note 14. The Commission 21 See PO 00000 Frm 00133 Fmt 4703 Sfmt 4703 Accordingly, the Commission and the Exchange, as well as the marketplace, more generally, have limited experience with respect to this type of new derivative securities product.23 In the past, a new derivative securities product typically had a significant history of being listed and traded on an exchange before the Commission approved its generic listing standards. For example, the Commission approved the Exchange’s listing standards for Managed Fund Shares in 2008, but did not approve the generic listing standards for the same until 2016.24 Given the relatively short amount of time the Commission has had to oversee and observe Managed Portfolio Shares and other similarly structured exchange traded products, the Commission is concerned that there is insufficient experience to determine that the proposal to permit generic listing and trading of Managed Portfolio Shares is consistent with Section 6(b)(5) of the Act, including whether the proposal is designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest. Under the Commission’s Rules of Practice, the ‘‘burden to demonstrate that a proposed rule change is consistent with the Exchange Act and the rules and regulations issued thereunder . . . is on the [SRO] that proposed the rule change.’’ 25 The notes that, since the initial filing of the Exchange’s proposal, additional Managed Portfolio Shares have been approved, or filed pursuant to (b)(3)(A) under Section 19 of the Exchange Act, for listing on a national securities exchange. See Securities Exchange Act Release Nos. 90528 (November 30, 2020), 85 FR 78389 (December 4, 2020) (Order Approving a Proposed Rule Change, as Modified by Amendment No. 2, to List and Trade Shares of Alger Mid Cap 40 ETF and Alger 25 ETF Under Rule 8.900–E); 90683 (December 16, 2020), 85 FR 83665 (December 22, 2020) (Order Approving a Proposed Rule Change, as Modified by Amendments No. 1 and No. 2, to List and Trade Shares of the AdvisorShares Q Portfolio Blended Allocation ETF and AdvisorShares Q Dynamic Growth ETF Under NYSE Arca Rule 8.900–E). 23 See supra note 15. 24 See Securities Exchange Act Release No. 78397 (July 22, 2016), 81 FR 49320 (July 27, 2016 (SR– NYSEArca–2015–110) (Order Granting Approval of Proposed Rule Change, as Modified by Amendment No. 7 Thereto, Amending NYSE Arca Equities Rule 8.600 to Adopt Generic Listing Standards for Managed Fund Shares) and Securities Exchange Act Release No. 57619 (April 4, 2008), 73 FR 19544 (April 10, 2008) (Notice of Filing of Amendment No. 1 to Proposed Rule Change and Order Granting Accelerated Approval of Such Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to Rules Permitting the Listing and Trading of Managed Fund Shares, Trading Hours and Halts, Listing Fees Applicable to Managed Fund Shares, and the Listing and Trading of Shares of the PowerShares Active AlphaQ Fund, PowerShares Active Alpha Multi-Cap Fund, PowerShares Active Mega-Cap Portfolio, and the PowerShares Active Low Duration Portfolio). 25 17 CFR 201.700(b)(3). E:\FR\FM\06JAN1.SGM 06JAN1 Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices description of a proposed rule change, its purpose and operation, its effect, and a legal analysis of its consistency with applicable requirements must all be sufficiently detailed and specific to support an affirmative Commission finding,26 and any failure of an SRO to provide this information may result in the Commission not having a sufficient basis to make an affirmative finding that a proposed rule change is consistent with the Act and the applicable rules and regulations.27 The Commission notes that the Exchange has provided no data or analysis to support the determination that, in the absence of significant market or regulatory experience, its proposal to permit the listing and trading of Managed Portfolio Shares pursuant to a generic listing standards raises no new or novel concerns. Accordingly, the Commission is instituting proceedings to allow for additional consideration and comment on the issues raised herein, including whether the proposal is consistent with the Act. IV. Procedure: Request for Written Comments The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal. In particular, the Commission invites the written views of interested persons concerning whether the proposal is consistent with Section 6(b)(5) 28 of the Act or any other provision of the Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4 under the Act,29 any request for an opportunity to make an oral presentation.30 Interested persons are invited to submit written data, views, and arguments regarding whether the 26 See id. id. 28 15 U.S.C. 78f(b)(5). 29 17 CFR 240.19b–4. 30 Section 19(b)(2) of the Act, as amended by the Securities Act Amendments of 1975, Public Law 94–29 (June 4, 1975), grants the Commission flexibility to determine what type of proceeding— either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Act Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). jbell on DSKJLSW7X2PROD with NOTICES 27 See VerDate Sep<11>2014 19:08 Jan 05, 2021 Jkt 253001 proposal should be approved or disapproved by January 27, 2021. Any person who wishes to file a rebuttal to any other person’s submission must file that rebuttal by February 10, 2021. The Commission asks that commenters address the sufficiency of the Exchange’s statements in support of the proposal, which are set forth in the Notice,31 in addition to any other comments they may wish to submit about the proposed rule change. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2020–84 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–2020–84. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSEArca–2020–84 and should be submitted by January 27, 2021. Rebuttal comments should be submitted by February 10, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.32 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–29283 Filed 1–5–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90831; File No. SR– PEARL–2020–36] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 3100, Registration Requirements, To Adopt Temporary Interpretation and Policy .13 (Temporary Extension of the Limited Period for Registered Persons To Function as Principals) December 30, 2020. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on December 28, 2020, MIAX PEARL, LLC (‘‘MIAX PEARL’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing a proposal to amend Exchange Rule 3100, Registration Requirements, to adopt temporary Interpretation and Policy .13 (Temporary Extension of the Limited Period for Registered Persons to Function as Principals). The text of the proposed rule change is available on the Exchange’s website at https://www.miaxoptions.com/rulefilings/pearl, at MIAX PEARL’s principal office, and at the Commission’s Public Reference Room. 32 17 CFR 200.30–3(a)(57). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 31 See PO 00000 Notice, supra note 3. Frm 00134 Fmt 4703 Sfmt 4703 633 E:\FR\FM\06JAN1.SGM 06JAN1

Agencies

[Federal Register Volume 86, Number 3 (Wednesday, January 6, 2021)]
[Notices]
[Pages 630-633]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29283]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90835; File No. SR-NYSEArca-2020-84]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting 
Proceedings To Determine Whether To Approve or Disapprove a Proposed 
Rule Change, as Modified by Amendment No. 1, To Amend NYSE Arca Rule 
8.900-E To Adopt Generic Listing Standards for Managed Portfolio Shares

December 31, 2020.

I. Introduction

    On September 22, 2020, NYSE Arca, Inc. (``NYSE Arca'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend NYSE Arca Rule 8.900-E 
to adopt generic listing standards for Managed Portfolio Shares. On 
October 2, 2020, the Exchange filed Amendment No. 1 to the proposed 
rule change. The proposed rule change, as modified by Amendment No. 1, 
was published for comment in the Federal Register on October 13, 
2020.\3\ On November 13, 2020, pursuant to Section 19(b)(2) of the 
Act,\4\ the Commission designated a longer period within which to 
approve the proposed rule change, disapprove the proposed rule change, 
or institute proceedings to determine whether to disapprove the 
proposed rule change.\5\ The Commission has received no comments on the 
proposed rule change. The Commission is publishing this order to 
solicit comments on the proposed rule change from interested persons 
and to institute proceedings pursuant to Section 19(b)(2)(B) of the Act 
\6\ to determine whether to approve or disapprove the proposed rule 
change, as modified by Amendment No. 1.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 90104 (October 7, 
2020), 85 FR 64598 (``Notice'').
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 90418, 85 FR 73812 
(November 19, 2020). The Commission designated January 11, 2021, as 
the date by which the Commission shall approve or disapprove, or 
institute proceedings to determine whether to disapprove, the 
proposed rule change.
    \6\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The Exchange adopted listing standards for Managed Portfolio Shares 
as set forth in NYSE Arca Rule 8.900-E.\7\ A Managed Portfolio Share is 
a security that (a) represents an interest in an investment company 
(``Investment Company''), registered under the Investment Company Act 
of 1940 (``1940 Act'') 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,\8\ 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; \9\ (c) when 
aggregated into a Redemption Unit,\10\ 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

[[Page 631]]

quarter.\11\ Further, each series of Managed Portfolio Shares widely 
disseminates a Verified Intraday Indicative Value or ``VIIV'' \12\ in 
one second intervals during the Core Trading Session.\13\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 88648 (April 15, 
2020), 85 FR 22200 (April 21, 2020) (SR-NYSEArca-2020-32) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Adopt 
a New NYSE Arca Rule 8.900-E).
    \8\ NYSE Arca Rule 8.900-E(c)(6) defines the term ``Creation 
Unit'' as 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.
    \9\ NYSE Arca Rule 8.900-E(c)(4) defines the term ``Confidential 
Account'' as ``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.'' NYSE Arca Rule 8.900-E(c)(3) 
defines the term ``AP Representative'' as ``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.''
    \10\ NYSE Arca Rule 8.900-E(c)(7) defines the term ``Redemption 
Unit'' as 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.
    \11\ See NYSE Arca Rule 8.900-E(c)(1).
    \12\ NYSE Arca Rule 8.900-E(c)(2) defines the term ``Verified 
Intraday Indicative Value'' (``VIIV'') as 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.
    \13\ NYSE Arca Rule 8.900-E(d)(2)(A) requires for continued 
listing that the VIIV for a series of Managed Portfolio Shares 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, and be disseminated to all market participants at 
the same time.
---------------------------------------------------------------------------

    NYSE Arca Rule 8.900-E(b)(1) currently requires that the Exchange 
submit a proposed rule change with the Commission to list and trade 
each new series of Managed Portfolio Shares.\14\ The Exchange proposes 
to amend NYSE Arca Rule 8.900-E to adopt ``generic'' listing standards 
that would allow the Exchange to approve the listing and trading 
(including pursuant to unlisted trading privileges) of series of 
Managed Portfolio Shares that satisfy those generic listing standards 
pursuant to Rule 19b-4(e) under the Act.\15\
---------------------------------------------------------------------------

    \14\ The Exchange notes that the Commission has approved listing 
and trading of series of Managed Portfolio Shares on the Exchange 
under NYSE Arca Rule 8.900-E and on another national securities 
exchange under substantially equivalent listing rules. See 
Securities Exchange Act Release Nos. 89633 (August 25, 2020), 85 FR 
53868 (August 31, 2020) (SR-NYSEArca-2020-48) (Order Approving a 
Proposed Rule Change, as Modified by Amendment No. 1, to List and 
Trade Shares of Gabelli ETFs under Rule 8.900-E) (``Gabelli Approval 
Order''); 88247 (February 20, 2020), 85 FR 11137 (February 26, 2020) 
(SR-CboeBZX-2019-102) (Notice of Filing of Amendment No. 3 and Order 
Granting Accelerated Approval of a Proposed Rule Change, as Modified 
by Amendment No. 3 Thereto, to List and Trade Shares of the 
ClearBridge Focus Value ETF under BZX Rule 14.11(k)) (``ClearBridge 
Approval Order''); 88175 (February 12, 2020), 85 FR 9494 (February 
19, 2020) (SR-CboeBZX-2019-057) (Notice of Filing of Amendment No. 2 
and Order Granting Accelerated Approval of a Proposed Rule Change, 
as Modified by Amendment No. 2 Thereto, to List and Trade Shares of 
the American Century Focused Dynamic Growth ETF and American Century 
Focused Large Cap Value ETF under BZX Rule 14.11(k)) (``American 
Century Approval Order'' and, together with the Gabelli Approval 
Order and the ClearBridge Approval Order, ``Approval Orders'').
    \15\ 17 CFR 240.19b-4(e). Rule 19b-4(e)(1) under the Act 
provides that the listing and trading of a new derivative securities 
product by a self-regulatory organization (``SRO'') is not deemed a 
proposed rule change, pursuant to paragraph (c)(1) of Rule 19b-4, if 
the Commission has approved, pursuant to Section 19(b) of the Act, 
the SRO's trading rules, procedures and listing standards for the 
product class that would include the new derivative securities 
product and the SRO has a surveillance program for the product 
class. See 17 CFR 240.19b-4(e)(1). Under Rule 19b-4(e), the term 
``new derivative securities product'' means any type of option, 
warrant, hybrid securities product or any other security, other than 
a single equity option or a security futures product, whose value is 
based, in whole or in part, upon the performance of, or interest in, 
an underlying instrument. See 17 CFR 240.19b-4(e). Under Rule 19b-
4(c)(1), a stated policy, practice, or interpretation of the SRO 
shall be deemed to be a proposed rule change unless it is reasonably 
and fairly implied by an existing rule of the SRO. 17 CFR 240.19b-
4(c)(1). 17 CFR 240.19b-4(c)(1).
---------------------------------------------------------------------------

A. Proposed Amendments to Rule 8.900-E

    The Exchange proposes to amend Rule 8.900-E(b)(1) to state that the 
Exchange may approve Managed Portfolio Shares for listing and/or 
trading (including pursuant to unlisted trading privileges) pursuant to 
Rule 19b-4(e) under the Act. The Exchange would also specify within 
proposed Rule 8.900-E(b)(1) that components of a series of Managed 
Portfolio Shares listed pursuant to Rule 19b-4(e) shall satisfy the 
criteria set forth in Rule 8.900-E and Commentary .01 thereto upon 
initial listing and on a continual basis. In addition, the Exchange 
would specify that it will file separate proposals under Section 19(b) 
of the Act before the listing and trading of a series of Managed 
Portfolio Shares with components that do not satisfy the criteria set 
forth in proposed Commentary .01 or components other than those 
specified in proposed Commentary .01.\16\
---------------------------------------------------------------------------

    \16\ For example, according to the Exchange, if the components 
of a series of Managed Portfolio Shares included a security or asset 
that is not specified in proposed Commentary .01, the Exchange would 
file a separate proposed rule change with the Commission to list the 
series of Managed Portfolio Shares.
---------------------------------------------------------------------------

    Proposed Commentary .01(a) to Rule 8.900-E would provide that the 
portfolio holdings for a series of Managed Portfolio Shares shall 
include only the following components:
    (1) U.S. exchange-traded securities that are common stocks; 
preferred stocks; American Depositary Receipts; and real estate 
investment trusts;
    (2) U.S. exchange-traded funds that are listed under the following 
NYSE Arca rules: Investment Company Units (Rule 5.2-E(j)(3)); Exchange-
Traded Fund Shares (Rule 5.2-E(j)(8)); Portfolio Depositary Receipts 
(Rule 8.100-E); Managed Fund Shares (Rule 8.600-E); Active Proxy 
Portfolio Shares (Rule 8.601-E); and Managed Portfolio Shares (Rule 
8.900-E);
    (3) Equity Gold Shares (listed under NYSE Arca Rule 5.2-E(j)(5))
    (4) Index-Linked Securities (listed under NYSE Arca Rule 5.2-
E(j)(6));
    (5) Commodity-Based Trust Shares (listed under NYSE Arca Rule 
8.201-E);
    (6) Currency Trust Shares (listed under NYSE Arca Rule 8.202-E);
    (7) The following securities, which are required to be organized as 
commodity pools: Commodity Index Trust Shares (listed under NYSE Arca 
Rule 8.203-E); Commodity Futures Trust Shares (listed under NYSE Arca 
Rule 8.204-E); Trust Units (listed under NYSE Arca Rule 8.500-E); and 
Managed Trust Securities (listed under NYSE Arca Rule 8.700-E);
    (8) The following securities if organized as commodity pools: Trust 
Issued Receipts (listed under NYSE Arca Rule 8.200-E) and Partnership 
Units (listed under NYSE Arca Rule 8.300-E);
    (9) U.S. exchange-traded futures that trade contemporaneously with 
shares of a series of Managed Portfolio Shares in the Exchange's Core 
Trading Session; and
    (10) Cash and cash equivalents, which cash equivalents would be 
limited to short-term U.S. Treasury securities, government money market 
funds, and repurchase agreements.
    Proposed Commentary .01(b) to Rule 8.900-E would provide that a 
series of Managed Portfolio Shares will not hold short positions in 
securities and other financial instruments referenced in the list of 
permitted investments in proposed Commentary .01(a). Proposed 
Commentary .01(c) would provide that the securities referenced in 
proposed Commentary .01(a)(2)-(8) would also include securities listed 
on another national securities exchange pursuant to substantially 
equivalent listing rules.
    The Exchange states that the securities and financial instruments 
enumerated in proposed Commentary .01(a) to Rule 8.900-E are consistent 
with, and limited to, the ``permissible investments'' for series of 
Managed Portfolio Shares previously approved by the Commission for 
Exchange listing and trading, as described in the Approval Orders \17\ 
and as permitted by their respective exemptive relief under the 1940 
Act.
---------------------------------------------------------------------------

    \17\ See supra note 14.
---------------------------------------------------------------------------

    The Exchange also states that the regulatory staff of the Exchange, 
or the Financial Industry Regulatory Authority, Inc. (``FINRA''), on 
behalf of the Exchange, will communicate as needed regarding trading in 
Managed Portfolio Shares, other exchange-traded equity securities and 
futures contracts with other markets that are members of the 
Intermarket Surveillance Group (``ISG''), including U.S. exchanges on 
which the components are traded. In addition, the Exchange may obtain 
information regarding trading in

[[Page 632]]

Managed Portfolio Shares from other markets that are members of the 
ISG, including all U.S. securities exchanges and futures exchanges on 
which the equity securities and futures contracts are traded. The 
Exchange represents that its surveillance procedures are adequate to 
continue to properly monitor the trading of Managed Portfolio Shares in 
all trading sessions and to deter and detect violations of Exchange 
rules. Specifically, the Exchange intends to utilize its existing 
surveillance procedures applicable to derivative products, which will 
include Managed Portfolio Shares, to monitor trading in the Managed 
Portfolio Shares.
    The Exchange states that the Managed Portfolio Shares will conform 
to the initial and continued listing criteria under Rule 8.900-E. All 
Managed Portfolio Shares listed and/or traded pursuant to Rule 8.900-E 
(including pursuant to unlisted trading privileges) are subject to all 
Exchange rules and procedures that currently govern the trading of 
equity securities on the Exchange. The issuer of a series of Managed 
Portfolio Shares will be required to comply with Rule 10A-3 under the 
Act for the initial and continued listing of Managed Portfolio Shares, 
as provided under NYSE Arca Rule 5.3-E.
    Further, according to the Exchange, prior to listing pursuant to 
proposed amended Rule 8.900-E and proposed Commentary .01 thereto, an 
issuer would be required to represent to the Exchange that it will 
advise the Exchange of any failure by a series of Managed Portfolio 
Shares to comply with the continued listing requirements, and, pursuant 
to its obligations under Section 19(g)(1) of the Act, the Exchange will 
monitor for compliance with the continued listing requirements. If a 
series of Managed Portfolio Shares is not in compliance with the 
applicable listing requirements, the Exchange will commence delisting 
procedures under NYSE Arca Rule 5.5-E(m).

III. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEArca-2020-84, as Modified by Amendment No. 1, and Grounds for 
Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \18\ to determine whether the proposed rule 
change should be approved or disapproved. Institution of such 
proceedings is appropriate at this time in view of the legal and policy 
issues raised by the proposed rule change. Institution of proceedings 
does not indicate that the Commission has reached any conclusions with 
respect to any of the issues involved. Rather, as described below, the 
Commission seeks and encourages interested persons to provide 
additional comment on the proposed rule change to inform the 
Commission's analysis of whether to approve or disapprove the proposed 
rule change.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Act,\19\ the Commission is 
providing notice of the grounds for disapproval under consideration. 
The Commission is instituting proceedings to allow for additional 
analysis of the proposed rule change's consistency with Section 6(b)(5) 
of the Act, which requires, among other things, that the rules of a 
national securities exchange be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and to protect 
investors and the public interest, and not be designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.\20\
---------------------------------------------------------------------------

    \19\ Id.
    \20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange proposes to adopt generic listing standards for 
Managed Portfolio Shares, which would allow the Exchange to list and 
trade Managed Portfolio Shares that meet the requirements of NYSE Arca 
Rule 8.900-E and Commentary .01 without filing a proposed rule change 
with the Commission. As noted above, however, the Exchange only 
recently adopted Rule 8.900-E to permit the listing and trading of 
Managed Portfolio Shares on the Exchange.\21\ Further, the Exchange 
states that only three series of Managed Portfolio Shares are currently 
listed and traded on BZX and does not indicate whether any series are 
currently listed and traded on the Exchange.\22\ Accordingly, the 
Commission and the Exchange, as well as the marketplace, more 
generally, have limited experience with respect to this type of new 
derivative securities product.\23\ In the past, a new derivative 
securities product typically had a significant history of being listed 
and traded on an exchange before the Commission approved its generic 
listing standards. For example, the Commission approved the Exchange's 
listing standards for Managed Fund Shares in 2008, but did not approve 
the generic listing standards for the same until 2016.\24\ Given the 
relatively short amount of time the Commission has had to oversee and 
observe Managed Portfolio Shares and other similarly structured 
exchange traded products, the Commission is concerned that there is 
insufficient experience to determine that the proposal to permit 
generic listing and trading of Managed Portfolio Shares is consistent 
with Section 6(b)(5) of the Act, including whether the proposal is 
designed to prevent fraudulent and manipulative acts and practices and 
to protect investors and the public interest.
---------------------------------------------------------------------------

    \21\ See supra note 7 and accompanying text. The Commission 
notes that it also recently approved a substantively similar rule 
for the listing and trading of Managed Portfolio Shares on Cboe BZX 
Exchange, Inc. (``BZX''). See Securities Exchange Act Release No. 
87759 (December 16, 2019), 84 FR 70223 (December 20, 2019) (Notice 
of Filing of Amendment Nos. 4 and 5, and Order Granting Accelerated 
Approval of a Proposed Rule Change, as Modified by Amendment Nos. 4 
and 5, to Adopt BZX Rule 14.11(k) to Permit the Listing and Trading 
of Managed Portfolio Shares).
    \22\ See Notice, supra note 3, at 64600. See also Approval 
Orders, supra note 14. The Commission notes that, since the initial 
filing of the Exchange's proposal, additional Managed Portfolio 
Shares have been approved, or filed pursuant to (b)(3)(A) under 
Section 19 of the Exchange Act, for listing on a national securities 
exchange. See Securities Exchange Act Release Nos. 90528 (November 
30, 2020), 85 FR 78389 (December 4, 2020) (Order Approving a 
Proposed Rule Change, as Modified by Amendment No. 2, to List and 
Trade Shares of Alger Mid Cap 40 ETF and Alger 25 ETF Under Rule 
8.900-E); 90683 (December 16, 2020), 85 FR 83665 (December 22, 2020) 
(Order Approving a Proposed Rule Change, as Modified by Amendments 
No. 1 and No. 2, to List and Trade Shares of the AdvisorShares Q 
Portfolio Blended Allocation ETF and AdvisorShares Q Dynamic Growth 
ETF Under NYSE Arca Rule 8.900-E).
    \23\ See supra note 15.
    \24\ See Securities Exchange Act Release No. 78397 (July 22, 
2016), 81 FR 49320 (July 27, 2016 (SR-NYSEArca-2015-110) (Order 
Granting Approval of Proposed Rule Change, as Modified by Amendment 
No. 7 Thereto, Amending NYSE Arca Equities Rule 8.600 to Adopt 
Generic Listing Standards for Managed Fund Shares) and Securities 
Exchange Act Release No. 57619 (April 4, 2008), 73 FR 19544 (April 
10, 2008) (Notice of Filing of Amendment No. 1 to Proposed Rule 
Change and Order Granting Accelerated Approval of Such Proposed Rule 
Change, as Modified by Amendment No. 1 Thereto, Relating to Rules 
Permitting the Listing and Trading of Managed Fund Shares, Trading 
Hours and Halts, Listing Fees Applicable to Managed Fund Shares, and 
the Listing and Trading of Shares of the PowerShares Active AlphaQ 
Fund, PowerShares Active Alpha Multi-Cap Fund, PowerShares Active 
Mega-Cap Portfolio, and the PowerShares Active Low Duration 
Portfolio).
---------------------------------------------------------------------------

    Under the Commission's Rules of Practice, the ``burden to 
demonstrate that a proposed rule change is consistent with the Exchange 
Act and the rules and regulations issued thereunder . . . is on the 
[SRO] that proposed the rule change.'' \25\ The

[[Page 633]]

description of a proposed rule change, its purpose and operation, its 
effect, and a legal analysis of its consistency with applicable 
requirements must all be sufficiently detailed and specific to support 
an affirmative Commission finding,\26\ and any failure of an SRO to 
provide this information may result in the Commission not having a 
sufficient basis to make an affirmative finding that a proposed rule 
change is consistent with the Act and the applicable rules and 
regulations.\27\ The Commission notes that the Exchange has provided no 
data or analysis to support the determination that, in the absence of 
significant market or regulatory experience, its proposal to permit the 
listing and trading of Managed Portfolio Shares pursuant to a generic 
listing standards raises no new or novel concerns.
---------------------------------------------------------------------------

    \25\ 17 CFR 201.700(b)(3).
    \26\ See id.
    \27\ See id.
---------------------------------------------------------------------------

    Accordingly, the Commission is instituting proceedings to allow for 
additional consideration and comment on the issues raised herein, 
including whether the proposal is consistent with the Act.

IV. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
issues identified above, as well as any other concerns they may have 
with the proposal. In particular, the Commission invites the written 
views of interested persons concerning whether the proposal is 
consistent with Section 6(b)(5) \28\ of the Act or any other provision 
of the Act, or the rules and regulations thereunder. Although there do 
not appear to be any issues relevant to approval or disapproval that 
would be facilitated by an oral presentation of views, data, and 
arguments, the Commission will consider, pursuant to Rule 19b-4 under 
the Act,\29\ any request for an opportunity to make an oral 
presentation.\30\
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78f(b)(5).
    \29\ 17 CFR 240.19b-4.
    \30\ Section 19(b)(2) of the Act, as amended by the Securities 
Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Act Amendments of 1975, Senate Comm. on 
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by January 27, 2021. Any person who wishes to file a 
rebuttal to any other person's submission must file that rebuttal by 
February 10, 2021. The Commission asks that commenters address the 
sufficiency of the Exchange's statements in support of the proposal, 
which are set forth in the Notice,\31\ in addition to any other 
comments they may wish to submit about the proposed rule change. 
Comments may be submitted by any of the following methods:
---------------------------------------------------------------------------

    \31\ See Notice, supra note 3.
---------------------------------------------------------------------------

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-2020-84 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-2020-84. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEArca-2020-84 and should be submitted 
by January 27, 2021. Rebuttal comments should be submitted by February 
10, 2021.
---------------------------------------------------------------------------

    \32\ 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-29283 Filed 1-5-21; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.