Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the ALPS Active REIT ETF of ALPS ETF Trust To List and Trade Shares of the Fund Under Nasdaq Rule 5750, 8972-8977 [2021-02711]

Download as PDF 8972 Federal Register / Vol. 86, No. 26 / Wednesday, February 10, 2021 / Notices disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4, any request for an opportunity to make an oral presentation.17 Interested persons are invited to submit written data, views, and arguments regarding whether the Amended Proposed Rule Change should be approved or disapproved by February 24, 2021. Any person who wishes to file a rebuttal to any other person’s submission must file that rebuttal by March 8, 2021. 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 No. SR– FINRA–2020–038 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 No. SR–FINRA–2020–038. 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 Amended Proposed Rule Change that are filed with the Commission, and all written communications relating to the Amended 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 such filing also will be available for 17 Section 19(b)(2) of the Act, as amended by the Securities Acts Amendments of 1975, Public Law 94–29, 89 Stat. 97 (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 Acts Amendments of 1975, Report of the Senate Committee on Banking, Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). VerDate Sep<11>2014 18:53 Feb 09, 2021 Jkt 253001 inspection and copying at the principal office of FINRA. 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 No. SR–FINRA–2020–038 and should be submitted on or before February 24, 2021. If comments are received, any rebuttal comments should be submitted on or before March 8, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–02715 Filed 2–9–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91062; File No. SR– NASDAQ–2021–005] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the ALPS Active REIT ETF of ALPS ETF Trust To List and Trade Shares of the Fund Under Nasdaq Rule 5750 February 4, 2021. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 25, 2021, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘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 proposes a rule change relating to the ALPS Active REIT ETF (the ‘‘Fund’’) of ALPS ETF Trust (the ‘‘Trust’’), to list and trade shares of the Fund under Nasdaq Rule 5750 (‘‘Proxy Portfolio Shares’’). The shares of the 18 17 CFR 200.30–3(a)(12); 17 CFR 200.30– 3(a)(57). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 Fund are collectively referred to herein as the ‘‘Shares.’’ (b) Not applicable. [sic] The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/nasdaq/rules, 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 Exchange 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 these 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 aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Commission has approved the listing and trading of Proxy Portfolio Shares under Nasdaq Rule 5750, which governs the listing and trading of Proxy Portfolio Shares on the Exchange.3 The Fund is an actively-managed exchange-traded fund (‘‘ETF’’). The Shares are offered by the Trust, which was established as a Delaware statutory trust on September 13, 2007.4 The Trust, which is registered with the Commission as an investment company under the Investment Company Act of 1940 (the ‘‘1940 Act’’), has filed a registration statement on Form N–1A (‘‘Registration Statement’’) relating to the Fund with the Commission.5 The Fund is a series of the Trust. ALPS Advisors, Inc. (‘‘Adviser’’) is the investment adviser to the Fund. ALPS Portfolio Solutions Distributor, Inc. is the principal underwriter and distributor of the Fund’s Shares. ALPS Fund Services, Inc. acts as the administrator and provides fund 3 The Commission approved Nasdaq Rule 5750 in Securities Exchange Act Release No. 89110 (June 22, 2020), 85 FR 38461 (June 26, 2020) (SR– NASDAQ–2020–032). 4 The Commission has issued an order, upon which the Trust may rely, granting certain exemptive relief under the 1940 Act. See Investment Company Act Release No. 34181 (Jan. 21, 2021) (‘‘Exemptive Order’’). 5 The Registration Statement is available on the Commission’s website at https://www.sec.gov/ Archives/edgar/data/1414040/ 000139834420019856/fp0058104_485apos.htm. E:\FR\FM\10FEN1.SGM 10FEN1 Federal Register / Vol. 86, No. 26 / Wednesday, February 10, 2021 / Notices accounting services to the Fund. State Street Bank and Trust Company acts as the custodian and transfer agent to the Fund. Nasdaq Rule 5750(b)(5) provides that if the investment adviser to the investment company issuing Proxy Portfolio Shares 6 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 and/or changes to the Fund Portfolio 7 and/or the Proxy Basket.8 In addition, Nasdaq Rule 5750(b)(5) further requires that any person related to the investment adviser or Investment Company who makes decisions pertaining to the Investment Company’s Fund Portfolio and/or the Proxy Basket or has access to nonpublic information regarding the Fund Portfolio and/or Proxy Basket or changes thereto must be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the Fund Portfolio or the Proxy Basket or changes thereto.9 In addition, any person or entity, including a custodian, Reporting Authority,10 distributor, or administrator, who has access to nonpublic information regarding the Fund Portfolio or the Proxy Basket or changes thereto, must be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the applicable Fund Portfolio or the Proxy Basket or changes thereto. 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 Fund Portfolio or Proxy Basket. In the event (a) the Adviser or any sub-adviser registers 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 another broker-dealer, it will implement and will maintain a fire wall with respect to its relevant personnel and/or such broker-dealer affiliate, as applicable, regarding access to information 6 The term ‘‘Proxy 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 specified aggregate minimum number in return for a deposit of a specified Proxy Basket and/or a cash amount with a value equal to the next determined net asset value; (C) when aggregated in the same specified minimum number, may be redeemed at a holder’s request, which holder will be paid specified Proxy Basket and/or a cash amount with a value equal to the next determined net asset value; and (D) the portfolio holdings for which are disclosed within at least 60 days following the end of every fiscal quarter. 7 The term ‘‘Fund Portfolio’’ means the identities and quantities of the securities and other assets held by the Investment Company that will form the basis for the Investment Company’s calculation of net asset value at the end of the business day. 8 The term ‘‘Proxy Basket’’ means the identities and quantities of the securities and other assets included in a basket that is designed to closely track the daily performance of the Fund Portfolio, as provided in the exemptive relief under the 1940 Act applicable to a series of Proxy Portfolio Shares. The website for each series of Proxy Portfolio Shares shall disclose the following information regarding the Proxy Basket as required under Rule 5750, to the extent applicable: (A) Ticker symbol; (B) CUSIP or other identifier; (C) Description of holding; (D) Quantity of each security or other asset held; and (E) Percentage weight of the holding in the portfolio. 9 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 are subject to the provisions of Rule 204A–1 under the Advisers Act relating to codes of ethics. This Rule requires investment advisers to adopt a code of ethics that reflects the fiduciary nature of the relationship to clients as well as compliance with other applicable securities laws. Accordingly, procedures designed to prevent the communication and misuse of non-public information by an investment adviser must be consistent with Rule 204A–1 under the Advisers Act. In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful for an investment adviser to provide investment advice to clients unless such investment adviser has (i) adopted and implemented written policies and procedures reasonably designed to prevent violation, by the investment adviser and its supervised persons, of the Advisers Act and the Commission rules adopted thereunder; (ii) implemented, at a minimum, an annual review regarding the adequacy of the policies and procedures established pursuant to subparagraph (i) above and the effectiveness of their implementation; and (iii) designated an individual (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. 10 The term ‘‘Reporting Authority’’ in respect of a particular series of Proxy 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 Proxy 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 Proxy Basket; the Fund Portfolio; the amount of any cash distribution to holders of Proxy Portfolio Shares, net asset value, or other information relating to the issuance, redemption or trading of Proxy Portfolio Shares. A series of Proxy Portfolio Shares may have more than one Reporting Authority, each having different functions. VerDate Sep<11>2014 18:53 Feb 09, 2021 Jkt 253001 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 8973 concerning the composition and/or changes to the Fund’s Portfolio and/or the Proxy Basket and will be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the Fund’s Portfolio and/or the Proxy Basket. The Fund intends to qualify each year as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. The Fund’s Principal Investment Strategies The investment objective of the Fund will be to seek total return through dividends and capital appreciation. Under normal market conditions,11 the Fund will seek to achieve its investment objective by investing at least 80% of its net assets in exchange-traded equity securities of real estate investment trusts. Under the terms of the Exemptive Order,12 the Fund’s investments are limited to the following: ETFs, exchange-traded notes, exchange listed common stocks (excluding ‘‘penny stocks’’ as defined in Rule 3a51–1 under the Act), exchange-traded preferred stocks, exchange-traded American Depositary Receipts (ADRs), exchangetraded real estate investment trusts, exchange-traded commodity pools, exchange-traded metals trusts, and exchange-traded currency trusts, in each case that are traded on a U.S. securities exchange contemporaneously with the Fund Shares; exchange-traded futures that trade contemporaneously with the Fund Shares that are U.S. listed futures contracts where the future contract’s reference asset is an asset that the Fund could invest in directly, or in the case of an index future, is based on an index of a type of asset that the Fund could invest in directly; common stocks listed on a foreign exchange that trade on such exchange contemporaneously with the Fund Shares; and cash and cash equivalents (which are short-term U.S. Treasury securities, government money market funds, and repurchase agreements). The Fund’s holdings will conform to the permissible investments 11 The term ‘‘normal market conditions’’ as used herein, is defined in Nasdaq Rule 5750(c)(4). On a temporary basis, including for defensive purposes, during the initial invest-up period and during periods of high cash inflows or outflows, the Fund may depart from its principal investment strategies; for example, it may hold a higher than normal proportion of its assets in cash. During such periods, the Fund may not be able to achieve its investment objective. The Fund may adopt a defensive strategy when the Adviser or any subadviser believes securities in which such Fund normally invests have elevated risks due to political or economic factors and in other extraordinary circumstances. 12 See supra note 4. E:\FR\FM\10FEN1.SGM 10FEN1 8974 Federal Register / Vol. 86, No. 26 / Wednesday, February 10, 2021 / Notices as set forth in the Exemptive Order and the holdings will be consistent with all requirements in the Exemptive Order. Any foreign common stocks held by the Fund will be traded on an exchange that is a member of the Intermarket Surveillance Group (‘‘ISG’’) or with which the Exchange has in place a comprehensive surveillance sharing agreement. Surveillance The Exchange believes that its surveillance procedures are adequate to properly monitor the trading of Proxy Portfolio 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 Proxy Portfolio Shares on the Exchange will be subject to the Exchange’s surveillance procedures for derivative products. The Exchange will require the issuer of each series of Proxy Portfolio Shares listed on the Exchange to represent to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Exchange Act, the Exchange will surveil for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under the Nasdaq 5800 Series. In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees. The Adviser will upon request make available to the Exchange and/or Financial Industry Regulatory Authority (‘‘FINRA’’), on behalf of the Exchange, the daily Fund Portfolio of each series of Proxy Portfolio Shares. The Exchange believes that this is appropriate because it will provide the Exchange or FINRA, on behalf of the Exchange, with access to the daily Fund Portfolio of any series of Proxy Portfolio Shares upon request on an as needed basis. The Exchange believes that the ability to access the information on an as needed basis will provide it with sufficient information to perform the necessary regulatory functions associated with listing and trading series of Proxy Portfolio Shares on the Exchange, including the ability to monitor compliance with the initial and continued listing requirements as well as the ability to surveil for manipulation of the Shares. Trading Halts With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to VerDate Sep<11>2014 18:53 Feb 09, 2021 Jkt 253001 halt or suspend trading in the Shares of the Fund. Nasdaq will halt trading in the Shares under the conditions specified in Nasdaq Rules 4120 and 4121, including the trading pauses under Nasdaq Rules 4120(a)(11) and (12). Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Proxy Portfolio Shares inadvisable. These may include: (1) The extent to which trading is not occurring in the securities and/or the financial instruments composing the Proxy Basket or Fund Portfolio; or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. Trading in the Proxy Portfolio Shares also will be subject to Rule 5750(d)(2)(D), which sets forth circumstances under which a series of Proxy Portfolio Shares may be halted. Trading Rules Nasdaq deems the Shares to be equity securities, thus rendering trading in the Shares subject to Nasdaq’s existing rules governing the trading of equity securities. Nasdaq will allow trading in the Shares from 4:00 a.m. until 8:00 p.m., Eastern Time. The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in Nasdaq Rule 5750(b)(3), the minimum price variation for quoting and entry of orders in Proxy Portfolio Shares traded on the Exchange is $0.01. Availability of Information 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 Statement of Additional Information, 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 are available for 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 on-screen or downloaded from the Commission’s website at www.sec.gov. The Exchange also notes that the Exemptive Order provides that an issuer will comply with Regulation Fair Disclosure, which prohibits selective disclosure of any material non-public information, which otherwise does not apply to issuers of Proxy Portfolio Shares. 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 PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 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. Proxy Basket for the Proposed Fund For the Fund, the Proxy Basket will consist of all of the Fund’s portfolio holdings but will be weighted differently, subject to a minimum weightings overlap of 90% with the Fund’s Portfolio at the beginning of each business day. Intraday pricing information for all constituents of the Proxy Basket that are exchange-traded, which includes all eligible instruments except cash and cash equivalents, will be available on the exchanges on which they are traded and through subscription services. Intraday pricing information for cash equivalents will be available through subscription services and/or pricing services. The Exchange notes that the Fund’s net asset value (‘‘NAV’’) will form the basis for creations and redemptions for the Fund and creations and redemptions will work in a manner substantively identical to that of series of Managed Fund Shares.13 The Adviser expects that the Shares of the Fund will generally be created and redeemed in-kind, with limited exceptions. The names and quantities of the instruments that constitute the basket of securities for creations and redemptions will be the same as the Fund’s Proxy Basket, except to the extent purchases and redemptions are made entirely or in part on a cash basis. In the event that the value of the Proxy Basket is not the same as the Fund’s NAV, the creation and redemption baskets will consist of the securities included in the Proxy Basket plus or minus an amount of cash equal to the difference between the NAV and the value of the Proxy Basket, as further described below. The Proxy Basket will be constructed utilizing a proprietary algorithmic process that will be applied to the Fund Portfolio on a daily basis. The Proxy Basket will be publicly available on the Fund website before the commencement of trading in Fund Shares on each business day. The Proxy Basket will contain all of the names of the securities in the Fund Portfolio, and only the securities that are in the Fund Portfolio (and also could contain cash to represent the Fund Portfolio’s holdings of cash). The Proxy Basket will have a minimum overlap of 90% with the Fund Portfolio at the beginning of each business day, with the precise 13 See E:\FR\FM\10FEN1.SGM Nasdaq Rule 5735. 10FEN1 Federal Register / Vol. 86, No. 26 / Wednesday, February 10, 2021 / Notices percentage of aggregate overlap in weightings from 90% to 100% to be randomly generated each day. In addition to the disclosure of the Proxy Basket, the Fund will also publish the ‘‘Guardrail Amount’’ on its website on each business day before the commencement of trading in Shares on the Exchange. The Guardrail Amount is the maximum deviation between the weightings of the specific securities and cash positions in the Proxy Basket from the weightings of those specific securities and cash positions in the Fund Portfolio. The Guardrail Amount is intended to ensure that no individual security in the Proxy Basket will be overweighted or underweighted by more than the publicly disclosed percentage when compared to the actual weighting of each security within the Fund Portfolio as of the beginning of each business day. The Adviser expects the performance of the Proxy Basket and the Fund Portfolio to be closely aligned in light of the construction of the Proxy Basket, and does not expect the ‘‘Tracking Error’’ to exceed 1%. ‘‘Tracking Error’’ is defined to mean the standard deviation over the past three months of the daily difference, in percentage terms, between the Proxy Basket per Share NAV and that of the Fund at the end of the business day. The Fund will also disclose the entirety of its portfolio holdings, including the name, identifier, market value and weight of each security and instrument in the portfolio, at a minimum within at least 60 days following the end of every fiscal quarter. As described above, the Exchange notes that the concept of the Proxy Basket employed under this structure is designed to provide investors with the traditional benefits of ETFs while protecting the Fund from the potential for front running or free riding of portfolio transactions, which could adversely impact the performance of the Fund. Additional Information The Exchange represents that the Shares of the Fund will continue to comply with all other proposed requirements applicable to Proxy Portfolio Shares, including the dissemination of key information such as the Proxy Basket, the Fund Portfolio, and NAV, suspension of trading or removal, trading halts, surveillance, minimum price variation for quoting and order entry, an information circular informing members of the special characteristics and risks associated with trading in the series of Proxy Portfolio Shares, and firewalls as set forth in the VerDate Sep<11>2014 18:53 Feb 09, 2021 Jkt 253001 proposed Exchange rules applicable to Proxy Portfolio Shares. Price information for the exchangelisted instruments held by the Fund, including both U.S. and non-U.S. listed equity securities and U.S. exchangelisted futures will be available through major market data vendors or securities exchanges listing and trading such securities. Moreover, U.S.-listed equity securities held by the Fund will trade on markets that are a member of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.14 Any foreign common stocks held by the Fund will be traded on an exchange that is a member of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. All futures contracts that the Fund may invest in will be traded on a U.S. futures exchange. The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares, underlying U.S. exchange-listed equity securities, and U.S. exchange-listed futures with other markets and other entities that are members of ISG, and the Exchange or FINRA, on behalf 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, underlying equity securities, and U.S. exchange-listed futures from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. All statements and representations made in this filing regarding the description of the portfolio or reference assets, limitations on portfolio holdings or reference assets, dissemination and availability of reference assets (as applicable) such as the Fund Portfolio and Proxy Basket, or the applicability of Exchange listing rules specified in this filing shall constitute continued listing requirements for the Shares. A minimum of 100,000 Shares of the Fund will be outstanding at the commencement of trading on the Exchange. The Exchange will obtain a representation from the issuer of the Shares of the Fund that the NAV per share of the Fund will be calculated daily and will be made available to all market participants at the same time. 14 For a list of the current members of ISG, see www.isgportal.com. The Exchange notes that not all components of the Fund may trade on markets that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 8975 The issuer has represented to the Exchange that it will advise the Exchange of any failure by the Fund or Shares to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will surveil for compliance with the continued listing requirements. FINRA conducts certain cross-market surveillances on behalf of the Exchange pursuant to a regulatory services agreement. The Exchange is responsible for FINRA’s performance under this regulatory services agreement. If a Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under the Nasdaq 5800 Series. 2. Statutory Basis Nasdaq believes that the proposal is consistent with Section 6(b) of the Act in general and Section 6(b)(5) of the Act, in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest. The Exchange believes that the particular instruments that may be included in the Fund Portfolio and Proxy Basket do not raise any concerns related to the Proxy Basket being able to closely track the NAV of the Fund because such instruments include only instruments that trade on an exchange contemporaneously with the Shares. In addition, the Fund’s Proxy Basket is designed to reliably and consistently correlate to the performance of the Fund. The Adviser anticipates that the returns between the Fund and its respective Proxy Basket will have a consistent relationship and that the deviation in the returns between the Fund and its Proxy Basket will be sufficiently small such that the Proxy Basket will provide authorized participants, arbitrageurs and other market participants (collectively, ‘‘Market Makers’’) with a reliable hedging vehicle that they can use to effectuate low-risk arbitrage trades in Fund Shares. The Exchange believes that the disclosures provided by the Fund will allow Market Makers to understand the relationship between the performance of the Fund and its Proxy Basket. Market Makers will be able to estimate the value of and hedge positions in the Fund’s Shares, which E:\FR\FM\10FEN1.SGM 10FEN1 8976 Federal Register / Vol. 86, No. 26 / Wednesday, February 10, 2021 / Notices the Exchange believes will facilitate the arbitrage process and help ensure that the Fund’s Shares normally will trade at market prices close to their NAV. The Exchange also believes that competitive market making, where traders are looking to take advantage of differences in bid-ask spread, will aid in keeping spreads tight. The Exchange notes that a significant amount of information about the Fund and its Fund Portfolio is publicly available at all times. Each series will disclose the Proxy Basket, which is designed to closely track the daily performance of the Fund Portfolio, on a daily basis. Intraday pricing information for all constituents of the Proxy Basket that are exchange-traded, which includes all eligible instruments except cash and cash equivalents, will be available on the exchanges on which they are traded and through subscription services. Intraday pricing information for cash equivalents will be available through subscription services and/or pricing services. Each series of Proxy Portfolio Shares will at a minimum publicly disclose the entirety of its portfolio holdings, including the name, identifier, market value and weight of each security and instrument in the portfolio within at least 60 days following the end of every fiscal quarter in a manner consistent with normal disclosure requirements otherwise applicable to open-end investment companies registered under the 1940 Act. The website will include additional quantitative information updated on a daily basis, including, on a per Share basis for the Fund, the prior business day’s NAV and the closing price or bid/ ask price at the time of calculation of such NAV, and a calculation of the premium or discount of the closing price or bid/ask price against such NAV. The website will also disclose any other information regarding premiums and discounts and the bid/ask spread for the Fund as may be required for other ETFs under Rule 6c–11 under the 1940 Act, as amended. On each business day, before the commencement of trading of Shares, the Fund will publish on its website the Proxy Basket and the Guardrail Amount for that day. The Exchange represents that the Shares of the Fund will continue to comply with all other proposed requirements applicable to Proxy Portfolio Shares, including the dissemination of key information such as the Proxy Basket, disclosure of the Fund Portfolio quarterly, and NAV, suspension of trading or removal, trading halts, surveillance, minimum price variation for quoting and order VerDate Sep<11>2014 18:53 Feb 09, 2021 Jkt 253001 entry, an information circular informing members of the special characteristics and risks associated with trading in the series of Proxy Portfolio Shares, and firewalls as set forth in the proposed Exchange rules applicable to Proxy Portfolio Shares and the orders approving such rules. Moreover, U.S.listed equity securities held by the Fund will trade on markets that are a member of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.15 All statements and representations made in this filing regarding the description of the portfolio or reference assets, limitations on portfolio holdings or reference assets, dissemination and availability of reference asset (as applicable), or the applicability of Exchange listing rules specified in this filing shall constitute continued listing requirements for the Shares. The issuer has represented to the Exchange that it will advise the Exchange of any failure by the Fund or Shares to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will surveil for compliance with the continued listing requirements. A minimum of 100,000 Shares of the Fund will be outstanding at the commencement of trading on the Exchange. The Exchange will obtain a representation from the issuer of the Shares of the Fund that the NAV per share of the Fund will be calculated daily and will be made available to all market participants at the same time. FINRA conducts certain cross-market surveillances on behalf of the Exchange pursuant to a regulatory services agreement. The Exchange is responsible for FINRA’s performance under this regulatory services agreement. If a Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under the Nasdaq 5800 Series. 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. Rather, the Exchange notes that the proposed rule change will facilitate the listing of a new type of actively-managed exchangetraded product, thus enhancing competition among both market 15 Id. PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 participants and listing venues, 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 either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 16 and Rule 19b– 4(f)(6) thereunder.17 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 18 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 19 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay. The proposed rule change is substantially similar to previous proposals on which the Commission has granted waiver of the operative delay,20 does not raise any novel regulatory issues, and the Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the operative delay and designates the proposal as operative upon filing.21 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may 16 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 18 17 CFR 240.19b–4(f)(6). 19 17 CFR 240.19b–4(f)(6)(iii). 20 See Securities Exchange Act Releases No. 90684 (Dec. 16, 2020), 85 FR 83637 (Dec. 22, 2020) (File No. SR–CboeBZX–2020–091) and 90686 (Dec. 16, 2020), 85 FR 83657 (Dec. 22, 2020) (File No. SR– CboeBZX–2020–090). 21 For purposes only of waiving the 30-day operative delay, the Commission also has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 17 17 E:\FR\FM\10FEN1.SGM 10FEN1 Federal Register / Vol. 86, No. 26 / Wednesday, February 10, 2021 / Notices temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NASDAQ–2021–005 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–NASDAQ–2021–005. 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 VerDate Sep<11>2014 18:53 Feb 09, 2021 Jkt 253001 submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NASDAQ–2021–005, and should be submitted on or before March 3, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–02711 Filed 2–9–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91071; File No. SBSDR– 2020–01] Security-Based Swap Data Repositories; DTCC Data Repository (U.S.), LLC; Notice of Filing of Application for Registration as a Security-Based Swap Data Repository February 5, 2021. I. Introduction On December 22, 2020, DTCC Data Repository (U.S.), LLC (‘‘DDR’’) filed with the Securities and Exchange Commission (‘‘Commission’’) an application on Form SDR to register as a security-based swap data repository (‘‘SDR’’) pursuant to Section 13(n)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) and 17 CFR 240.13n– 1 (‘‘Rule 13n–1’’) thereunder,1 and as a securities information processor (‘‘SIP’’) under Section 11A(b) of the Exchange Act.2 DDR intends to operate as a registered SDR for security-based swap (‘‘SBS’’) transactions in the equity, credit, and interest rate derivatives asset classes.3 The Commission is publishing this notice to solicit comments from interested persons regarding DDR’s 22 17 CFR 200.30–3(a)(12). U.S.C. 78m(n)(1); 17 CFR 240.13n–1. A copy of DDR’s application on Form SDR and nonconfidential exhibits thereto are available for public viewing on the Commission’s website. In 2016, DDR submitted a prior application for registration as an SDR. See Release No. 34–78216 (June 30, 2016), 81 FR 44379 (July 7, 2016); Release No. 34–81302 (Aug. 3, 2017), 82 FR 37276 (Aug. 9, 2017). DDR withdrew this prior application in 2018. See Letter from Chris Childs, Managing Director, DDR, Mar. 27, 2018, https://www.sec.gov/divisions/marketreg/ sdr/dtcc-sdr-application-withdrawal-letter032718.pdf. 2 15 U.S.C. 78k–1(b). 3 DDR has included the interest rate asset class in its application based on feedback from potential users of its SDR services. The potential users have identified certain types of transactions that will be reported through DDR’s infrastructure for interest rate derivatives as falling within the Exchange Act definition of an SBS transaction. 1 15 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 8977 application,4 and the Commission will consider any comments it receives in making its determination whether to approve DDR’s application for registration as an SDR and as a SIP. II. Background A. SDR Registration, Duties, and Core Principles Section 13(n) of the Exchange Act makes it unlawful for any person, unless registered with the Commission, directly or indirectly, to make use of the mails or any means or instrumentality of interstate commerce to perform the functions of an SDR.5 To be registered and maintain registration, an SDR must comply with certain requirements and core principles described in Section 13(n), as well as any requirements that the Commission may impose by rule or regulation.6 In 2015, the Commission adopted 17 CFR 240.13n–1 to 13n–12 under the Exchange Act to establish Form SDR, the procedures for registration as an SDR, and the duties and core principles applicable to an SDR (‘‘SDR Rules’’).7 The Commission provided a temporary exemption from compliance with the SDR Rules and also extended exemptions from the provisions of the Dodd-Frank Act set forth in a Commission order providing temporary exemptions and other temporary relief from compliance with certain provisions of the Exchange Act concerning security-based swaps, and these temporary exemptions expired in 2017.8 The Commission also has adopted 17 CFR 242.900 to 909 under the Exchange Act (collectively, ‘‘Regulation SBSR’’), which governs regulatory reporting and public dissemination of security-based swap transactions.9 Among other things, Regulation SBSR requires each registered SDR to register with the Commission as a SIP,10 and the Form SDR constitutes an application for 4 The descriptions set forth in this notice regarding the structure and operations of DDR have been derived, excerpted, or summarized from DDR’s application on Form SDR. 5 15 U.S.C. 78m(n). 6 Id. 7 See Release No. 34–74246 (Feb. 11, 2015), 80 FR 14438, 14438 (Mar. 19, 2015) (‘‘SDR Adopting Release’’). In 2016, the Commission subsequently amended 17 CFR 240. 13n–4 to address third-party regulatory access to SBS data obtained by an SDR. See Release No. 34–78716 (Aug. 29, 2016), 81 FR 60585 (Sep. 2, 2016). 8 See Release No. 34–80359 (Mar. 31, 2017), 82 FR 16867 (Apr. 6, 2017). 9 Release No. 34–74244 (Feb. 11, 2015), 80 FR 14563 (Mar. 19, 2015); Release No. 34–78321 (July 14, 2016), 81 FR 53546 (Aug. 12, 2016). Regulation SBSR and the SDR Rules are referred to collectively as the ‘‘SBS Reporting Rules.’’ 10 See 17 CFR 242.909. E:\FR\FM\10FEN1.SGM 10FEN1

Agencies

[Federal Register Volume 86, Number 26 (Wednesday, February 10, 2021)]
[Notices]
[Pages 8972-8977]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02711]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91062; File No. SR-NASDAQ-2021-005]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the ALPS Active REIT ETF of ALPS ETF Trust To List and 
Trade Shares of the Fund Under Nasdaq Rule 5750

February 4, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 25, 2021, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``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.
---------------------------------------------------------------------------

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

    The Exchange proposes a rule change relating to the ALPS Active 
REIT ETF (the ``Fund'') of ALPS ETF Trust (the ``Trust''), to list and 
trade shares of the Fund under Nasdaq Rule 5750 (``Proxy Portfolio 
Shares''). The shares of the Fund are collectively referred to herein 
as the ``Shares.''
    (b) Not applicable. [sic]
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 Exchange 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 these 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 aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Commission has approved the listing and trading of Proxy 
Portfolio Shares under Nasdaq Rule 5750, which governs the listing and 
trading of Proxy Portfolio Shares on the Exchange.\3\
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    \3\ The Commission approved Nasdaq Rule 5750 in Securities 
Exchange Act Release No. 89110 (June 22, 2020), 85 FR 38461 (June 
26, 2020) (SR-NASDAQ-2020-032).
---------------------------------------------------------------------------

    The Fund is an actively-managed exchange-traded fund (``ETF''). The 
Shares are offered by the Trust, which was established as a Delaware 
statutory trust on September 13, 2007.\4\ The Trust, which is 
registered with the Commission as an investment company under the 
Investment Company Act of 1940 (the ``1940 Act''), has filed a 
registration statement on Form N-1A (``Registration Statement'') 
relating to the Fund with the Commission.\5\ The Fund is a series of 
the Trust. ALPS Advisors, Inc. (``Adviser'') is the investment adviser 
to the Fund. ALPS Portfolio Solutions Distributor, Inc. is the 
principal underwriter and distributor of the Fund's Shares. ALPS Fund 
Services, Inc. acts as the administrator and provides fund

[[Page 8973]]

accounting services to the Fund. State Street Bank and Trust Company 
acts as the custodian and transfer agent to the Fund.
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    \4\ The Commission has issued an order, upon which the Trust may 
rely, granting certain exemptive relief under the 1940 Act. See 
Investment Company Act Release No. 34181 (Jan. 21, 2021) 
(``Exemptive Order'').
    \5\ The Registration Statement is available on the Commission's 
website at https://www.sec.gov/Archives/edgar/data/1414040/000139834420019856/fp0058104_485apos.htm.
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    Nasdaq Rule 5750(b)(5) provides that if the investment adviser to 
the investment company issuing Proxy Portfolio Shares \6\ 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 and/or changes to the Fund Portfolio \7\ 
and/or the Proxy Basket.\8\ In addition, Nasdaq Rule 5750(b)(5) further 
requires that any person related to the investment adviser or 
Investment Company who makes decisions pertaining to the Investment 
Company's Fund Portfolio and/or the Proxy Basket or has access to 
nonpublic information regarding the Fund Portfolio and/or Proxy Basket 
or changes thereto must be subject to procedures designed to prevent 
the use and dissemination of material non-public information regarding 
the Fund Portfolio or the Proxy Basket or changes thereto.\9\
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    \6\ The term ``Proxy 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 specified 
aggregate minimum number in return for a deposit of a specified 
Proxy Basket and/or a cash amount with a value equal to the next 
determined net asset value; (C) when aggregated in the same 
specified minimum number, may be redeemed at a holder's request, 
which holder will be paid specified Proxy Basket and/or a cash 
amount with a value equal to the next determined net asset value; 
and (D) the portfolio holdings for which are disclosed within at 
least 60 days following the end of every fiscal quarter.
    \7\ The term ``Fund Portfolio'' means the identities and 
quantities of the securities and other assets held by the Investment 
Company that will form the basis for the Investment Company's 
calculation of net asset value at the end of the business day.
    \8\ The term ``Proxy Basket'' means the identities and 
quantities of the securities and other assets included in a basket 
that is designed to closely track the daily performance of the Fund 
Portfolio, as provided in the exemptive relief under the 1940 Act 
applicable to a series of Proxy Portfolio Shares. The website for 
each series of Proxy Portfolio Shares shall disclose the following 
information regarding the Proxy Basket as required under Rule 5750, 
to the extent applicable:
    (A) Ticker symbol;
    (B) CUSIP or other identifier;
    (C) Description of holding;
    (D) Quantity of each security or other asset held; and
    (E) Percentage weight of the holding in the portfolio.
    \9\ 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 are 
subject to the provisions of Rule 204A-1 under the Advisers Act 
relating to codes of ethics. This Rule requires investment advisers 
to adopt a code of ethics that reflects the fiduciary nature of the 
relationship to clients as well as compliance with other applicable 
securities laws. Accordingly, procedures designed to prevent the 
communication and misuse of non-public information by an investment 
adviser must be consistent with Rule 204A-1 under the Advisers Act. 
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful 
for an investment adviser to provide investment advice to clients 
unless such investment adviser has (i) adopted and implemented 
written policies and procedures reasonably designed to prevent 
violation, by the investment adviser and its supervised persons, of 
the Advisers Act and the Commission rules adopted thereunder; (ii) 
implemented, at a minimum, an annual review regarding the adequacy 
of the policies and procedures established pursuant to subparagraph 
(i) above and the effectiveness of their implementation; and (iii) 
designated an individual (who is a supervised person) responsible 
for administering the policies and procedures adopted under 
subparagraph (i) above.
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    In addition, any person or entity, including a custodian, Reporting 
Authority,\10\ distributor, or administrator, who has access to 
nonpublic information regarding the Fund Portfolio or the Proxy Basket 
or changes thereto, must be subject to procedures designed to prevent 
the use and dissemination of material nonpublic information regarding 
the applicable Fund Portfolio or the Proxy Basket or changes thereto. 
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 Fund Portfolio or Proxy Basket.
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    \10\ The term ``Reporting Authority'' in respect of a particular 
series of Proxy 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 Proxy 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 Proxy Basket; the Fund Portfolio; the amount of any cash 
distribution to holders of Proxy Portfolio Shares, net asset value, 
or other information relating to the issuance, redemption or trading 
of Proxy Portfolio Shares. A series of Proxy Portfolio Shares may 
have more than one Reporting Authority, each having different 
functions.
---------------------------------------------------------------------------

    In the event (a) the Adviser or any sub-adviser registers 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 another broker-dealer, it will implement and will 
maintain a fire wall with respect to its relevant personnel and/or such 
broker-dealer affiliate, as applicable, regarding access to information 
concerning the composition and/or changes to the Fund's Portfolio and/
or the Proxy Basket and will be subject to procedures designed to 
prevent the use and dissemination of material non-public information 
regarding the Fund's Portfolio and/or the Proxy Basket.
    The Fund intends to qualify each year as a regulated investment 
company under Subchapter M of the Internal Revenue Code of 1986, as 
amended.
The Fund's Principal Investment Strategies
    The investment objective of the Fund will be to seek total return 
through dividends and capital appreciation. Under normal market 
conditions,\11\ the Fund will seek to achieve its investment objective 
by investing at least 80% of its net assets in exchange-traded equity 
securities of real estate investment trusts.
---------------------------------------------------------------------------

    \11\ The term ``normal market conditions'' as used herein, is 
defined in Nasdaq Rule 5750(c)(4). On a temporary basis, including 
for defensive purposes, during the initial invest-up period and 
during periods of high cash inflows or outflows, the Fund may depart 
from its principal investment strategies; for example, it may hold a 
higher than normal proportion of its assets in cash. During such 
periods, the Fund may not be able to achieve its investment 
objective. The Fund may adopt a defensive strategy when the Adviser 
or any sub-adviser believes securities in which such Fund normally 
invests have elevated risks due to political or economic factors and 
in other extraordinary circumstances.
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    Under the terms of the Exemptive Order,\12\ the Fund's investments 
are limited to the following: ETFs, exchange-traded notes, exchange 
listed common stocks (excluding ``penny stocks'' as defined in Rule 
3a51-1 under the Act), exchange-traded preferred stocks, exchange-
traded American Depositary Receipts (ADRs), exchange-traded real estate 
investment trusts, exchange-traded commodity pools, exchange-traded 
metals trusts, and exchange-traded currency trusts, in each case that 
are traded on a U.S. securities exchange contemporaneously with the 
Fund Shares; exchange-traded futures that trade contemporaneously with 
the Fund Shares that are U.S. listed futures contracts where the future 
contract's reference asset is an asset that the Fund could invest in 
directly, or in the case of an index future, is based on an index of a 
type of asset that the Fund could invest in directly; common stocks 
listed on a foreign exchange that trade on such exchange 
contemporaneously with the Fund Shares; and cash and cash equivalents 
(which are short-term U.S. Treasury securities, government money market 
funds, and repurchase agreements). The Fund's holdings will conform to 
the permissible investments

[[Page 8974]]

as set forth in the Exemptive Order and the holdings will be consistent 
with all requirements in the Exemptive Order. Any foreign common stocks 
held by the Fund will be traded on an exchange that is a member of the 
Intermarket Surveillance Group (``ISG'') or with which the Exchange has 
in place a comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    \12\ See supra note 4.
---------------------------------------------------------------------------

Surveillance
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of Proxy Portfolio 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 Proxy Portfolio Shares on the Exchange will be subject to the 
Exchange's surveillance procedures for derivative products. The 
Exchange will require the issuer of each series of Proxy Portfolio 
Shares listed on the Exchange to represent to the Exchange that it will 
advise the Exchange of any failure by the Fund to comply with the 
continued listing requirements, and, pursuant to its obligations under 
Section 19(g)(1) of the Exchange Act, the Exchange will surveil for 
compliance with the continued listing requirements. If the Fund is not 
in compliance with the applicable listing requirements, the Exchange 
will commence delisting procedures under the Nasdaq 5800 Series. In 
addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
    The Adviser will upon request make available to the Exchange and/or 
Financial Industry Regulatory Authority (``FINRA''), on behalf of the 
Exchange, the daily Fund Portfolio of each series of Proxy Portfolio 
Shares. The Exchange believes that this is appropriate because it will 
provide the Exchange or FINRA, on behalf of the Exchange, with access 
to the daily Fund Portfolio of any series of Proxy Portfolio Shares 
upon request on an as needed basis. The Exchange believes that the 
ability to access the information on an as needed basis will provide it 
with sufficient information to perform the necessary regulatory 
functions associated with listing and trading series of Proxy Portfolio 
Shares on the Exchange, including the ability to monitor compliance 
with the initial and continued listing requirements as well as the 
ability to surveil for manipulation of the Shares.
Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of the Fund. Nasdaq will halt trading in the 
Shares under the conditions specified in Nasdaq Rules 4120 and 4121, 
including the trading pauses under Nasdaq Rules 4120(a)(11) and (12).
    Trading may be halted because of market conditions or for reasons 
that, in the view of the Exchange, make trading in the Proxy Portfolio 
Shares inadvisable. These may include: (1) The extent to which trading 
is not occurring in the securities and/or the financial instruments 
composing the Proxy Basket or Fund Portfolio; or (2) whether other 
unusual conditions or circumstances detrimental to the maintenance of a 
fair and orderly market are present. Trading in the Proxy Portfolio 
Shares also will be subject to Rule 5750(d)(2)(D), which sets forth 
circumstances under which a series of Proxy Portfolio Shares may be 
halted.
Trading Rules
    Nasdaq deems the Shares to be equity securities, thus rendering 
trading in the Shares subject to Nasdaq's existing rules governing the 
trading of equity securities. Nasdaq will allow trading in the Shares 
from 4:00 a.m. until 8:00 p.m., Eastern Time. The Exchange has 
appropriate rules to facilitate transactions in the Shares during all 
trading sessions. As provided in Nasdaq Rule 5750(b)(3), the minimum 
price variation for quoting and entry of orders in Proxy Portfolio 
Shares traded on the Exchange is $0.01.
Availability of Information
    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 Statement 
of Additional Information, 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 are available for 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 on-screen or downloaded from the 
Commission's website at www.sec.gov. The Exchange also notes that the 
Exemptive Order provides that an issuer will comply with Regulation 
Fair Disclosure, which prohibits selective disclosure of any material 
non-public information, which otherwise does not apply to issuers of 
Proxy Portfolio Shares. 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.
Proxy Basket for the Proposed Fund
    For the Fund, the Proxy Basket will consist of all of the Fund's 
portfolio holdings but will be weighted differently, subject to a 
minimum weightings overlap of 90% with the Fund's Portfolio at the 
beginning of each business day. Intraday pricing information for all 
constituents of the Proxy Basket that are exchange-traded, which 
includes all eligible instruments except cash and cash equivalents, 
will be available on the exchanges on which they are traded and through 
subscription services. Intraday pricing information for cash 
equivalents will be available through subscription services and/or 
pricing services. The Exchange notes that the Fund's net asset value 
(``NAV'') will form the basis for creations and redemptions for the 
Fund and creations and redemptions will work in a manner substantively 
identical to that of series of Managed Fund Shares.\13\ The Adviser 
expects that the Shares of the Fund will generally be created and 
redeemed in-kind, with limited exceptions. The names and quantities of 
the instruments that constitute the basket of securities for creations 
and redemptions will be the same as the Fund's Proxy Basket, except to 
the extent purchases and redemptions are made entirely or in part on a 
cash basis. In the event that the value of the Proxy Basket is not the 
same as the Fund's NAV, the creation and redemption baskets will 
consist of the securities included in the Proxy Basket plus or minus an 
amount of cash equal to the difference between the NAV and the value of 
the Proxy Basket, as further described below.
---------------------------------------------------------------------------

    \13\ See Nasdaq Rule 5735.
---------------------------------------------------------------------------

    The Proxy Basket will be constructed utilizing a proprietary 
algorithmic process that will be applied to the Fund Portfolio on a 
daily basis. The Proxy Basket will be publicly available on the Fund 
website before the commencement of trading in Fund Shares on each 
business day. The Proxy Basket will contain all of the names of the 
securities in the Fund Portfolio, and only the securities that are in 
the Fund Portfolio (and also could contain cash to represent the Fund 
Portfolio's holdings of cash). The Proxy Basket will have a minimum 
overlap of 90% with the Fund Portfolio at the beginning of each 
business day, with the precise

[[Page 8975]]

percentage of aggregate overlap in weightings from 90% to 100% to be 
randomly generated each day.
    In addition to the disclosure of the Proxy Basket, the Fund will 
also publish the ``Guardrail Amount'' on its website on each business 
day before the commencement of trading in Shares on the Exchange. The 
Guardrail Amount is the maximum deviation between the weightings of the 
specific securities and cash positions in the Proxy Basket from the 
weightings of those specific securities and cash positions in the Fund 
Portfolio. The Guardrail Amount is intended to ensure that no 
individual security in the Proxy Basket will be overweighted or 
underweighted by more than the publicly disclosed percentage when 
compared to the actual weighting of each security within the Fund 
Portfolio as of the beginning of each business day. The Adviser expects 
the performance of the Proxy Basket and the Fund Portfolio to be 
closely aligned in light of the construction of the Proxy Basket, and 
does not expect the ``Tracking Error'' to exceed 1%. ``Tracking Error'' 
is defined to mean the standard deviation over the past three months of 
the daily difference, in percentage terms, between the Proxy Basket per 
Share NAV and that of the Fund at the end of the business day.
    The Fund will also disclose the entirety of its portfolio holdings, 
including the name, identifier, market value and weight of each 
security and instrument in the portfolio, at a minimum within at least 
60 days following the end of every fiscal quarter. As described above, 
the Exchange notes that the concept of the Proxy Basket employed under 
this structure is designed to provide investors with the traditional 
benefits of ETFs while protecting the Fund from the potential for front 
running or free riding of portfolio transactions, which could adversely 
impact the performance of the Fund.
Additional Information
    The Exchange represents that the Shares of the Fund will continue 
to comply with all other proposed requirements applicable to Proxy 
Portfolio Shares, including the dissemination of key information such 
as the Proxy Basket, the Fund Portfolio, and NAV, suspension of trading 
or removal, trading halts, surveillance, minimum price variation for 
quoting and order entry, an information circular informing members of 
the special characteristics and risks associated with trading in the 
series of Proxy Portfolio Shares, and firewalls as set forth in the 
proposed Exchange rules applicable to Proxy Portfolio Shares.
    Price information for the exchange-listed instruments held by the 
Fund, including both U.S. and non-U.S. listed equity securities and 
U.S. exchange-listed futures will be available through major market 
data vendors or securities exchanges listing and trading such 
securities. Moreover, U.S.-listed equity securities held by the Fund 
will trade on markets that are a member of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing 
agreement.\14\ Any foreign common stocks held by the Fund will be 
traded on an exchange that is a member of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement. 
All futures contracts that the Fund may invest in will be traded on a 
U.S. futures exchange. The Exchange or FINRA, on behalf of the 
Exchange, or both, will communicate as needed regarding trading in the 
Shares, underlying U.S. exchange-listed equity securities, and U.S. 
exchange-listed futures with other markets and other entities that are 
members of ISG, and the Exchange or FINRA, on behalf 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, 
underlying equity securities, and U.S. exchange-listed futures from 
markets and other entities that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    \14\ For a list of the current members of ISG, see 
www.isgportal.com. The Exchange notes that not all components of the 
Fund may trade on markets that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing 
agreement.
---------------------------------------------------------------------------

    All statements and representations made in this filing regarding 
the description of the portfolio or reference assets, limitations on 
portfolio holdings or reference assets, dissemination and availability 
of reference assets (as applicable) such as the Fund Portfolio and 
Proxy Basket, or the applicability of Exchange listing rules specified 
in this filing shall constitute continued listing requirements for the 
Shares. A minimum of 100,000 Shares of the Fund will be outstanding at 
the commencement of trading on the Exchange. The Exchange will obtain a 
representation from the issuer of the Shares of the Fund that the NAV 
per share of the Fund will be calculated daily and will be made 
available to all market participants at the same time.
    The issuer has represented to the Exchange that it will advise the 
Exchange of any failure by the Fund or Shares to comply with the 
continued listing requirements, and, pursuant to its obligations under 
Section 19(g)(1) of the Act, the Exchange will surveil for compliance 
with the continued listing requirements. FINRA conducts certain cross-
market surveillances on behalf of the Exchange pursuant to a regulatory 
services agreement. The Exchange is responsible for FINRA's performance 
under this regulatory services agreement. If a Fund is not in 
compliance with the applicable listing requirements, the Exchange will 
commence delisting procedures under the Nasdaq 5800 Series.
2. Statutory Basis
    Nasdaq believes that the proposal is consistent with Section 6(b) 
of the Act in general and Section 6(b)(5) of the Act, in particular, in 
that it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanism of a free and open market and, in general, to protect 
investors and the public interest.
    The Exchange believes that the particular instruments that may be 
included in the Fund Portfolio and Proxy Basket do not raise any 
concerns related to the Proxy Basket being able to closely track the 
NAV of the Fund because such instruments include only instruments that 
trade on an exchange contemporaneously with the Shares. In addition, 
the Fund's Proxy Basket is designed to reliably and consistently 
correlate to the performance of the Fund.
    The Adviser anticipates that the returns between the Fund and its 
respective Proxy Basket will have a consistent relationship and that 
the deviation in the returns between the Fund and its Proxy Basket will 
be sufficiently small such that the Proxy Basket will provide 
authorized participants, arbitrageurs and other market participants 
(collectively, ``Market Makers'') with a reliable hedging vehicle that 
they can use to effectuate low-risk arbitrage trades in Fund Shares. 
The Exchange believes that the disclosures provided by the Fund will 
allow Market Makers to understand the relationship between the 
performance of the Fund and its Proxy Basket. Market Makers will be 
able to estimate the value of and hedge positions in the Fund's Shares, 
which

[[Page 8976]]

the Exchange believes will facilitate the arbitrage process and help 
ensure that the Fund's Shares normally will trade at market prices 
close to their NAV. The Exchange also believes that competitive market 
making, where traders are looking to take advantage of differences in 
bid-ask spread, will aid in keeping spreads tight.
    The Exchange notes that a significant amount of information about 
the Fund and its Fund Portfolio is publicly available at all times. 
Each series will disclose the Proxy Basket, which is designed to 
closely track the daily performance of the Fund Portfolio, on a daily 
basis. Intraday pricing information for all constituents of the Proxy 
Basket that are exchange-traded, which includes all eligible 
instruments except cash and cash equivalents, will be available on the 
exchanges on which they are traded and through subscription services. 
Intraday pricing information for cash equivalents will be available 
through subscription services and/or pricing services. Each series of 
Proxy Portfolio Shares will at a minimum publicly disclose the entirety 
of its portfolio holdings, including the name, identifier, market value 
and weight of each security and instrument in the portfolio within at 
least 60 days following the end of every fiscal quarter in a manner 
consistent with normal disclosure requirements otherwise applicable to 
open-end investment companies registered under the 1940 Act.
    The website will include additional quantitative information 
updated on a daily basis, including, on a per Share basis for the Fund, 
the prior business day's NAV and the closing price or bid/ask price at 
the time of calculation of such NAV, and a calculation of the premium 
or discount of the closing price or bid/ask price against such NAV. The 
website will also disclose any other information regarding premiums and 
discounts and the bid/ask spread for the Fund as may be required for 
other ETFs under Rule 6c-11 under the 1940 Act, as amended. On each 
business day, before the commencement of trading of Shares, the Fund 
will publish on its website the Proxy Basket and the Guardrail Amount 
for that day.
    The Exchange represents that the Shares of the Fund will continue 
to comply with all other proposed requirements applicable to Proxy 
Portfolio Shares, including the dissemination of key information such 
as the Proxy Basket, disclosure of the Fund Portfolio quarterly, and 
NAV, suspension of trading or removal, trading halts, surveillance, 
minimum price variation for quoting and order entry, an information 
circular informing members of the special characteristics and risks 
associated with trading in the series of Proxy Portfolio Shares, and 
firewalls as set forth in the proposed Exchange rules applicable to 
Proxy Portfolio Shares and the orders approving such rules. Moreover, 
U.S.-listed equity securities held by the Fund will trade on markets 
that are a member of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.\15\
---------------------------------------------------------------------------

    \15\ Id.
---------------------------------------------------------------------------

    All statements and representations made in this filing regarding 
the description of the portfolio or reference assets, limitations on 
portfolio holdings or reference assets, dissemination and availability 
of reference asset (as applicable), or the applicability of Exchange 
listing rules specified in this filing shall constitute continued 
listing requirements for the Shares. The issuer has represented to the 
Exchange that it will advise the Exchange of any failure by the Fund or 
Shares to comply with the continued listing requirements, and, pursuant 
to its obligations under Section 19(g)(1) of the Act, the Exchange will 
surveil for compliance with the continued listing requirements. A 
minimum of 100,000 Shares of the Fund will be outstanding at the 
commencement of trading on the Exchange. The Exchange will obtain a 
representation from the issuer of the Shares of the Fund that the NAV 
per share of the Fund will be calculated daily and will be made 
available to all market participants at the same time.
    FINRA conducts certain cross-market surveillances on behalf of the 
Exchange pursuant to a regulatory services agreement. The Exchange is 
responsible for FINRA's performance under this regulatory services 
agreement. If a Fund is not in compliance with the applicable listing 
requirements, the Exchange will commence delisting procedures under the 
Nasdaq 5800 Series.
    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. Rather, the Exchange notes 
that the proposed rule change will facilitate the listing of a new type 
of actively-managed exchange-traded product, thus enhancing competition 
among both market participants and listing venues, 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 either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \18\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \19\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay. The 
proposed rule change is substantially similar to previous proposals on 
which the Commission has granted waiver of the operative delay,\20\ 
does not raise any novel regulatory issues, and the Commission believes 
that waiver of the 30-day operative delay is consistent with the 
protection of investors and the public interest. Therefore, the 
Commission hereby waives the operative delay and designates the 
proposal as operative upon filing.\21\
---------------------------------------------------------------------------

    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ See Securities Exchange Act Releases No. 90684 (Dec. 16, 
2020), 85 FR 83637 (Dec. 22, 2020) (File No. SR-CboeBZX-2020-091) 
and 90686 (Dec. 16, 2020), 85 FR 83657 (Dec. 22, 2020) (File No. SR-
CboeBZX-2020-090).
    \21\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may

[[Page 8977]]

temporarily suspend such rule change if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule change should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2021-005 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-NASDAQ-2021-005. 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-NASDAQ-2021-005, and should be submitted 
on or before March 3, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-02711 Filed 2-9-21; 8:45 am]
BILLING CODE 8011-01-P
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