Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 2, To List and Trade Shares of the Stance Equity ESG Large Cap Core ETF Under NYSE Arca Rule 8.601-E, 13930-13933 [2021-05029]

Download as PDF 13930 Federal Register / Vol. 86, No. 46 / Thursday, March 11, 2021 / Notices 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–CboeBYX–2021–006 and should be submitted on or before April 1, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–05033 Filed 3–10–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91266; File No. SR– NYSEArca–2020–104] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 2, To List and Trade Shares of the Stance Equity ESG Large Cap Core ETF Under NYSE Arca Rule 8.601–E khammond on DSKJM1Z7X2PROD with NOTICES March 5, 2021. I. Introduction On November 30, 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’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade shares (‘‘Shares’’) of Stance Equity ESG Large Cap Core ETF (‘‘Fund’’) under NYSE Arca Rule 8.601–E (Active Proxy Portfolio Shares). The proposed rule change was published for comment in the Federal Register on December 21, 2020.3 On January 22, 2021, 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 21 17 CFR 200.30–3(a)(12). U.S.C.78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 90665 (Dec. 15, 2020), 85 FR 83129. 4 15 U.S.C. 78s(b)(2). 1 15 VerDate Sep<11>2014 16:53 Mar 10, 2021 Jkt 253001 determine whether to disapprove the proposed rule change.5 On January 22, 2021, the Exchange filed Amendment No. 1 to the proposed rule change, which replaced and superseded the proposed rule change as originally filed.6 On March 4, 2021, the Exchange filed Amendment No. 2 to the proposed rule change, which replaced and superseded the proposed rule change, as modified by Amendment No. 1.7 The Commission has received no comments on the proposed rule change. This order approves the proposed rule change, as modified by Amendment No. 2. II. Summary of the Exchange’s Description of the Proposed Rule Change, as Modified by Amendment No. 2 8 NYSE Arca Rule 8.900–E(b)(1) requires the Exchange to file separate proposals under Section 19(b) of the Act before listing and trading any series of Active Proxy Portfolio Shares on the Exchange; thus, the Exchange submitted this proposal to list and trade the 5 See Securities Exchange Act Release No. 90974, 86 FR 7446 (Jan. 28, 2021). The Commission designated March 21, 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 Amendment No. 1 is available on the Commission’s website at https://www.sec.gov/ comments/sr-nysearca-2020-104/ srnysearca2020104-8276588-228099.pdf. 7 In Amendment No. 2, the Exchange: (1) Updated the status of the application for exemptive relief filed by the Issuer (as defined below); (2) changed the distributor and principal underwriter of the Fund; (3) stated that, in connection with the creation and redemption of Active Proxy Portfolio Shares, such creation or redemption may be exchanged for a Proxy Portfolio (as defined below) and/or cash; (4) represented that the Proxy Portfolio will not include any asset that is ineligible to be in the Actual Portfolio (as defined below) of the Fund; (5) stated that the Fund’s holdings will conform to the permissible investments as set forth in the Exemptive Order (as defined below) and that the holdings will be consistent with all requirements in the Exemptive Order; (6) supplemented its description of the Fund’s investment objective; (7) revised the description of the availability of pricing information; (8) described that a creation unit will generally consist of 5,000 shares; (9) supplemented its description of the disclosures about the Proxy Portfolio that the Fund will publish on its website each business day; (10) stated that the Exchange will obtain a representation from the Issuer that the net asset value per Share of the Fund will be calculated daily and that the net asset value, Portfolio Reference Basket (as defined below), and the Actual Portfolio (as defined below) for the Fund will be made available to all market participants at the same time; and (11) made conforming and technical changes. Because Amendment No. 2 does not materially alter the substance of the proposed rule change, Amendment No. 2 is not subject to notice and comment. Amendment No. 2 is available on the Commission’s website at https:// www.sec.gov/comments/sr-nysearca-2020-104/ srnysearca2020104.htm. 8 Additional information regarding the Fund, the Issuer (as defined below), and the Shares can be found in Amendment No. 2, supra note 7, and Registration Statement, supra note 9. PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 Shares.9 The Shares of the Fund will be issued by The RBB Fund, Inc. (‘‘Issuer’’), a corporation organized under the laws of the State of Maryland and registered with the Commission as an open-end management investment company.10 Red Gate Advisers, LLC (‘‘Adviser’’) will be the investment adviser to the Fund. Stance Capital, LLC and Vident Investment Advisory, LLC will be the sub-advisers (‘‘SubAdvisers’’) for the Fund. U.S. Bank, N.A. will serve as the Fund’s custodian, U.S. Bancorp Fund Services, LLC will serve as the Fund’s transfer agent, and Vigilant Distributors, LLC will act as the distributor and principal underwriter for the Fund. 9 As defined in Rule 8.601–E(c)(1), the term ‘‘Active Proxy Portfolio Share’’ means a security that (a) is issued by 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 specified minimum number of shares, or multiples thereof, in return for a deposit by the purchaser of the Proxy Portfolio and/or cash with a value equal to the next determined net asset value (‘‘NAV’’); (c) when aggregated in the same specified minimum number of Active Proxy Portfolio Shares, or multiples thereof, may be redeemed at a holder’s request in return for the Proxy Portfolio and/or cash to the holder by the issuer with a value equal to the next determined NAV; and (d) the portfolio holdings for which are disclosed within at least 60 days following the end of every fiscal quarter. Rule 8.601–E(c)(2) provides that the term ‘‘Actual Portfolio’’ means the identities and quantities of the securities and other assets held by the Investment Company that shall form the basis for the Investment Company’s calculation of NAV at the end of the business day.’’ Rule 8.601–E(c)(3) provides that the term ‘‘Proxy Portfolio’’ means a specified portfolio of securities, other financial instruments and/or cash designed to track closely the daily performance of the Actual Portfolio of a series of Active Proxy Portfolio Shares as provided in the exemptive relief pursuant to the Investment Company Act of 1940 applicable to such series. 10 The Issuer is registered under the 1940 Act. On November 23, 2020, the Issuer filed a registration statement on Form N–1A under the Securities Act of 1933 (15 U.S.C. 77a), and under the 1940 Act relating to the Fund (File Nos. 033–20827 and 811– 05518) (‘‘Registration Statement’’). The Issuer filed an Application for an Order under Section 6(c) of the 1940 Act for exemptions from various provisions of the 1940 Act and rules thereunder (File No. 812–15165), dated September 28, 2020 (‘‘Application’’). The Issuer filed an amended Application on December 10, 2020, and a second amended Application on January 15, 2021. On February 26, 2021, the Commission issued an order (‘‘Exemptive Order’’) under the 1940 Act granting the exemptions requested in the Application (Investment Company Act Release No. 34215, February 26, 2021). The Exchange states that investments made by the Fund will comply with the conditions set forth in the Application and the Exemptive Order. According to the Exchange, the description of the operation of the Fund in the proposal is based, in part, on the Registration Statement and the Application. E:\FR\FM\11MRN1.SGM 11MRN1 Federal Register / Vol. 86, No. 46 / Thursday, March 11, 2021 / Notices A. Description of the Fund The Exchange states that the Fund’s holdings will conform to the permissible investments as set forth in the Application and Exemptive Order, and the holdings will be consistent with all requirements in the Application and Exemptive Order.11 According to the Exchange, the Fund’s investment objective is to seek long-term capital appreciation. The Exchange states that the Fund will invest, under normal circumstances, at least 80% of the value of its net assets (plus the amount of any borrowings for investment purposes) in exchangetraded equity securities of U.S. large capitalization issuers that meet environmental, social, and governance standards, as determined by Stance Capital, LLC. B. Investment Restrictions khammond on DSKJM1Z7X2PROD with NOTICES The Exchange states that the Shares of the Fund will conform to the initial and continued listing criteria under Rule 8.601–E. The Fund’s holdings will be consistent with all requirements in the Application and Exemptive Order. According to the Exchange, the Fund’s investments, including derivatives, will be consistent with its investment objective and will not be used to enhance leverage (although certain derivatives and other investments may result in leverage). That is, the Fund’s investments will not be used to seek performance that is the multiple or inverse multiple (e.g., 2X or ¥3X) of the Fund’s primary broad-based securities benchmark index (as defined in Form N–1A).12 11 Pursuant to the Application and Exemptive Order, the permissible investments for the Fund include only the following instruments: ETFs traded on a U.S. exchange, exchange-traded notes (‘‘ETNs’’) traded on a U.S. exchange, U.S. exchangetraded common stocks, U.S. exchange-traded preferred stocks, U.S. exchange-traded American Depositary Receipts (‘‘ADRs’’), U.S. exchangetraded real estate investment trusts, U.S. exchangetraded commodity pools, U.S. exchange-traded metals trusts, U.S. exchange-traded currency trusts, and U.S. exchange-traded futures; common stocks listed on a foreign exchange that trade on such exchange contemporaneously with the Fund’s Shares; exchange-traded futures that are traded on a U.S. futures exchange contemporaneously with the Fund’s Shares; and cash and cash equivalents (which are short-term U.S. Treasury securities, government money market funds, and repurchase agreements). According to the Exchange, the Fund will not borrow for investment purposes, hold short positions, or purchase any securities that are illiquid investments at the time of purchase. 12 The Fund’s broad-based securities benchmark index will be identified in a future amendment to its Registration Statement following the Fund’s first full calendar year of performance. VerDate Sep<11>2014 16:53 Mar 10, 2021 Jkt 253001 III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 2, is consistent with the Act and rules and regulations thereunder applicable to a national securities exchange.13 In particular, the Commission finds that the proposed rule change, as modified by Amendment No. 2, is consistent with Section 6(b)(5) of the Act,14 which requires, among other things, that the Exchange’s rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission believes that the proposal is reasonably designed to promote fair disclosure of information that may be necessary to price the Shares appropriately and to prevent trading in the Shares when a reasonable degree of certain pricing transparency cannot be assured. As such, the Commission believes the proposal is reasonably designed to maintain a fair and orderly market for trading the Shares. The Commission also finds that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the Act, which sets forth Congress’s finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for, and transactions in, securities. Specifically, the Commission notes that the Exchange, prior to commencement of trading in the Shares, will obtain a representation from the Issuer that the NAV per Share will be calculated daily and that the NAV, Portfolio Reference Basket,15 and Actual Portfolio for the Fund will be made available to all market participants at the same time.16 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. The Exchange states 13 In approving this proposed rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 14 15 U.S.C. 78f(b)(5). 15 The Exchange states that the ‘‘Portfolio Reference Basket’’ is the Proxy Portfolio for purposes of Rule 8.601–E(c)(3). See Amendment No. 2, supra note 7, at n. 9. 16 See NYSE Arca Rule 8.601–E(d)(1)(B). PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 13931 that quotation and last sale information for the Shares and U.S. exchange-traded instruments (excluding futures contracts) will be available via the Consolidated Tape Association (‘‘CTA’’) high-speed line, from the exchanges on which such securities trade, or through major market data vendors or subscription services. Intraday pricing information for all exchange-traded instruments, which includes all eligible instruments except cash and cash equivalents, will be available on the exchanges on which they trade or through major market data vendors or subscription services. Intraday pricing information for cash equivalents is available through major market data vendors, subscription services, and/or pricing services. The Fund’s website will include additional information updated on a daily basis, including, on a per Share basis for the Fund, the prior business day’s NAV, 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 the Guardrail Amount,17 which is the maximum deviation between the weightings of the specific securities in the Portfolio Reference Basket and the weightings of those specific securities in the Actual Portfolio, and 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. The identity and quantity of investments in the Portfolio Reference Basket will be publicly available on the Fund’s website before the commencement of trading in Shares on each Business Day and the Fund’s website will disclose the information required under Rule 8.601–E(c)(3).18 The website and information will be publicly available at no charge. The Commission also notes that the Exchange’s rules regarding trading halts help to ensure the maintenance of fair and orderly markets for the Shares. Specifically, pursuant to its rules, the Exchange may consider all relevant factors in exercising its discretion to halt trading in the Shares and will halt trading in the Shares under the conditions specified in NYSE Arca Rule 17 See Amendment No. 2, supra note 7, at 9. Rule 8.601–E(c)(3), which requires that the website for each series of Active Proxy Portfolio Shares shall disclose the information regarding the Proxy Portfolio as provided in the exemptive relief pursuant to the 1940 Act applicable to such series, including the following, to the extent applicable: (i) Ticker symbol; (ii) CUSIP or other identifier; (iii) description of holding; (iv) quantity of each security or other asset held; and (v) percentage weighting of the holding in the portfolio. 18 See E:\FR\FM\11MRN1.SGM 11MRN1 khammond on DSKJM1Z7X2PROD with NOTICES 13932 Federal Register / Vol. 86, No. 46 / Thursday, March 11, 2021 / Notices 7.12–E. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable, including (1) the extent to which trading is not occurring in the securities and/or the financial instruments composing the Proxy Portfolio and/or Actual Portfolio; or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present.19 Trading in the Shares also will be subject to NYSE Arca Rule 8.601–E(d)(2)(D), which sets forth additional circumstances under which trading in the Shares will be halted. The Commission also believes that the proposal is reasonably designed to help prevent fraudulent and manipulative acts and practices. Specifically, the Exchange provides that: • The Adviser is not registered as a broker-dealer but is affiliated with a broker-dealer and has implemented and will maintain a ‘‘fire wall’’ with respect to such broker-dealer affiliate regarding access to information concerning the composition of and/or changes to the Fund’s Actual Portfolio and/or Proxy Portfolio. The Sub-Advisers are not registered as broker-dealers and are not affiliated with a broker-dealer; • Any person related to the Adviser, Sub-Adviser(s), or the Fund who makes decisions pertaining to the Fund’s Actual Portfolio or Proxy Portfolio or who has access to non-public information regarding the Fund’s Actual Portfolio and/or the Proxy Portfolio or changes thereto are subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the Fund’s Actual Portfolio and/or the Proxy Portfolio or changes thereto; • In the event (a) the Adviser or SubAdviser(s) becomes registered as a broker-dealer or becomes newly affiliated with a broker-dealer or (b) any new adviser or sub-adviser is a registered broker-dealer, or becomes affiliated with a broker-dealer, it will implement and maintain a fire wall with respect to its relevant personnel or its broker-dealer affiliate regarding access to information concerning the composition of and/or changes to the Fund’s Actual Portfolio and/or Proxy Portfolio, and will be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the Fund’s Actual Portfolio and/or Proxy Portfolio or changes thereto; and 19 See NYSE Arca Rule 8.601–E(d)(2)(D)(i). VerDate Sep<11>2014 16:53 Mar 10, 2021 Jkt 253001 • Any person or entity, including any service provider for the Fund, who has access to non-public information regarding the Fund’s Actual Portfolio or the Proxy Portfolio or changes thereto will be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the Fund’s Actual Portfolio and/or the Proxy Portfolio or changes thereto, and if any such person or entity is registered as a broker-dealer or affiliated with a broker-dealer, such person or entity has erected and will maintain a ‘‘fire wall’’ between the person or entity and the broker-dealer with respect to access to information concerning the composition of and/or changes to the Fund’s Actual Portfolio and/or Proxy Portfolio. Finally, the Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by the Exchange, as well as cross-market surveillances administered by FINRA on behalf of the Exchange,20 and that these surveillance procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and federal securities laws applicable to trading on the Exchange. The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. In support of this proposal, the Exchange represents also that: 21 (1) The Shares will conform to the initial and continued listing criteria under NYSE Arca Rule 8.601–E. (2) A minimum of 100,000 Shares for the Fund will be outstanding at the commencement of trading on the Exchange. (3) The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed, and may obtain information, regarding trading in the Shares and underlying exchange-traded instruments with other markets and other entities that are members of the Intermarket Surveillance Group (‘‘ISG’’). In addition, the Exchange may obtain information regarding trading in the Shares and exchange-traded instruments from markets and other entities with which the Exchange has in place a comprehensive surveillance sharing agreement. Any foreign common stocks held by the Fund will be traded on an exchange that is a member of the ISG or with which the Exchange has in 20 See NYSE Arca Rule 8.601–E, Commentary .03, which requires, as part of the surveillance procedures for Active Proxy Portfolio Shares, the Fund’s investment adviser to, upon request by the Exchange or FINRA, on behalf of the Exchange, make available to the Exchange or FINRA the daily Actual Portfolio holdings of the Fund. 21 See Amendment No. 2, supra note 7. PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 place a comprehensive surveillance sharing agreement. (4) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. (5) For initial and continued listing, the Fund will be in compliance with Rule 10A– 3 under the Act.22 (6) The Fund’s holdings will conform to the permissible investments as set forth in the Application and Exemptive Order and the holdings will be consistent with all requirements set forth in the Application and Exemptive Order. The Fund’s investments, including derivatives, will be consistent with its investment objective and will not be used to enhance leverage (although certain derivatives and other investments may result in leverage). The Fund’s investments will include common stocks listed on a foreign exchange that trade on such exchange contemporaneously with the Shares and exchange-traded futures that are traded on a U.S. futures exchange contemporaneously with the Shares. (7) With respect to Active Proxy Portfolio Shares, all of the Exchange member obligations relating to product description and prospectus delivery requirements will continue to apply in accordance with Exchange rules and federal securities laws, and the Exchange and FINRA will continue to monitor Exchange members for compliance with such requirements. The Exchange also represents that all statements and representations made in the filing regarding: (1) The description of the portfolios or reference assets; (2) limitations on portfolio holdings or reference assets; or (3) the applicability of Exchange listing rules specified in the filing constitute continued listing requirements for listing the Shares on the Exchange. In addition, the Exchange represents that the Exchange will obtain a representation from the Adviser, prior to commencement of trading in the Shares, that the Adviser 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 Act, the Exchange will monitor 23 for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will 22 See 17 CFR 240.10A–3. Commission notes that certain proposals for the listing and trading of exchange-traded products include a representation that the exchange will ‘‘surveil’’ for compliance with the continued listing requirements. See, e.g., Securities Exchange Act Release No. 77499 (April 1, 2016), 81 FR 20428, 20432 (April 7, 2016) (SR–BATS–2016–04). In the context of this representation, it is the Commission’s view that ‘‘monitor’’ and ‘‘surveil’’ both mean ongoing oversight of compliance with the continued listing requirements. Therefore, the Commission does not view ‘‘monitor’’ as a more or less stringent obligation than ‘‘surveil’’ with respect to the continued listing requirements. 23 The E:\FR\FM\11MRN1.SGM 11MRN1 Federal Register / Vol. 86, No. 46 / Thursday, March 11, 2021 / Notices commence delisting procedures under NYSE Arca Rule 5.5–E(m). For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendments No. 2, is consistent with Section 6(b)(5) of the Act 24 and Section 11A(a)(1)(C)(iii) of the Act 25 and the rules and regulations thereunder applicable to a national securities exchange. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act 26 that the proposed rule change (SR–NYSEArca– 2020–104), as modified by Amendment No. 2, be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–05029 Filed 3–10–21; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–91271; File No. SR– CboeEDGA–2021–007] Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.11 (Routing to Away Trading Centers), as Well as Its Fee Schedule, To Delete References to the INET and RDOX Routing Options and To Delete All References to the C–LNK Routing and Connectivity Option From Its Fee Schedule March 5, 2021. khammond on DSKJM1Z7X2PROD with NOTICES 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 March 1, 2021, Cboe EDGA Exchange, Inc. (‘‘Exchange’’ or ‘‘EDGA’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The 25 15 U.S.C. 78f(b)(5). U.S.C. 78k–1(a)(1)(C)(iii). 26 Id. 27 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 1 15 VerDate Sep<11>2014 16:53 Mar 10, 2021 Jkt 253001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) proposes to amend Rules [sic] 11.11 (Routing to Away Trading Centers), as well as its Fee Schedule, to delete references to the INET and RDOX routing options. Additionally, the Exchange proposes to delete all references to the C–LNK routing and connectivity option from the Exchange’s Fee Schedule. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ equities/regulation/rule_filings/edga/), at the Exchange’s Office of the Secretary, 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 SECURITIES AND EXCHANGE COMMISSION 24 15 Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 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 Exchange proposes to amend paragraphs (4) and (6) under Exchange Rule 11.11(g) and 11.11(a) to delete all references to the INET and RDOX routing options. The Exchange also proposes to delete all references to the INET routing option from the EDGA Fee Schedule, as provided in fee codes 2 and L. Additionally, the Exchange proposes to delete the C–LNK routing and connectivity option from the Fee Schedule. The Exchange intends to implement the proposed rule changes on March 1, 2021. Exchange Rule 11.11(g) provides for various routing options available on the Exchange. Specifically, Rule 11.11(g)(4) provides for the INET routing option, under which an order checks the PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 13933 System 5 for available shares and then is sent to Nasdaq. If shares remain unexecuted after routing, they are posted on the Nasdaq book, unless otherwise instructed by the User.6 Similarly, Exchange Rule 11.11(g)(6) provides for the RDOX routing option, under which an order checks the System for available shares and then is sent to the NYSE and can be re-routed by the NYSE. If shares remain unexecuted after routing, they are posted on the NYSE book, unless otherwise instructed by the User. The Exchange has determined because few Users select the INET or RDOX routing options, the current demand does not warrant the infrastructure and ongoing maintenance expenses required to support the product. Therefore, the Exchange now proposes to delete INET and RDOX as a routing option as provided by Rule 11.11(g)(4) and (6), respectively. Given the proposed changes described above, the Exchange also proposes to amend Rules 11.11(a) and 11.11(g)(14) to eliminate any reference to the INET and RDOX routing strategies. Specifically, Rule 11.11(a) provides that unless a User selects the Post to Away, RDOT, RDOX, or INET routing option, an order that includes a Short Sale instruction when a Short Sale Circuit Breaker pursuant to Rule 201 of Regulation SHO is in effect is not eligible for routing by the Exchange. Alternatively, Rule 11.11(g)(14) provides for the Post to Away routing option, which routes the remainder of a routed order to and posts such order on the order book of a destination on the System routing table 7 as specified by the User, and lists the specific routing options for which the Post to Away routing option may be combined. Both INET and RDOX are listed under Rule 11.11(g)(14) as routing options that may be combined with the Post to Away routing option. Based on the proposal to eliminate INET and RDOX from Exchange Rules, the Exchange is proposing to eliminating [sic] all such 5 The term ‘‘System’’ shall mean the electronic communications and trading facility designated by the Board through which securities orders of Users are consolidated for ranking, execution and, when applicable, routing away. See Exchange Rule 1.5(cc). 6 The term ‘‘User’’ shall mean any Member or Sponsored Participant who is authorized to obtain access to the System pursuant to Rule 11.3. See Exchange Rule 1.5(ee). 7 The Exchange reserves the right to maintain a different System routing table for different routing options and to modify the System routing table at any time without notice. See Exchange Rule 11.11(g). E:\FR\FM\11MRN1.SGM 11MRN1

Agencies

[Federal Register Volume 86, Number 46 (Thursday, March 11, 2021)]
[Notices]
[Pages 13930-13933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05029]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91266; File No. SR-NYSEArca-2020-104]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a 
Proposed Rule Change, as Modified by Amendment No. 2, To List and Trade 
Shares of the Stance Equity ESG Large Cap Core ETF Under NYSE Arca Rule 
8.601-E

March 5, 2021.

I. Introduction

    On November 30, 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'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to list and trade shares (``Shares'') of Stance 
Equity ESG Large Cap Core ETF (``Fund'') under NYSE Arca Rule 8.601-E 
(Active Proxy Portfolio Shares). The proposed rule change was published 
for comment in the Federal Register on December 21, 2020.\3\
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 90665 (Dec. 15, 
2020), 85 FR 83129.
---------------------------------------------------------------------------

    On January 22, 2021, 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\ On January 22, 2021, the Exchange filed Amendment No. 1 to 
the proposed rule change, which replaced and superseded the proposed 
rule change as originally filed.\6\ On March 4, 2021, the Exchange 
filed Amendment No. 2 to the proposed rule change, which replaced and 
superseded the proposed rule change, as modified by Amendment No. 1.\7\ 
The Commission has received no comments on the proposed rule change. 
This order approves the proposed rule change, as modified by Amendment 
No. 2.
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    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 90974, 86 FR 7446 
(Jan. 28, 2021). The Commission designated March 21, 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\ Amendment No. 1 is available on the Commission's website at 
https://www.sec.gov/comments/sr-nysearca-2020-104/srnysearca2020104-8276588-228099.pdf.
    \7\ In Amendment No. 2, the Exchange: (1) Updated the status of 
the application for exemptive relief filed by the Issuer (as defined 
below); (2) changed the distributor and principal underwriter of the 
Fund; (3) stated that, in connection with the creation and 
redemption of Active Proxy Portfolio Shares, such creation or 
redemption may be exchanged for a Proxy Portfolio (as defined below) 
and/or cash; (4) represented that the Proxy Portfolio will not 
include any asset that is ineligible to be in the Actual Portfolio 
(as defined below) of the Fund; (5) stated that the Fund's holdings 
will conform to the permissible investments as set forth in the 
Exemptive Order (as defined below) and that the holdings will be 
consistent with all requirements in the Exemptive Order; (6) 
supplemented its description of the Fund's investment objective; (7) 
revised the description of the availability of pricing information; 
(8) described that a creation unit will generally consist of 5,000 
shares; (9) supplemented its description of the disclosures about 
the Proxy Portfolio that the Fund will publish on its website each 
business day; (10) stated that the Exchange will obtain a 
representation from the Issuer that the net asset value per Share of 
the Fund will be calculated daily and that the net asset value, 
Portfolio Reference Basket (as defined below), and the Actual 
Portfolio (as defined below) for the Fund will be made available to 
all market participants at the same time; and (11) made conforming 
and technical changes. Because Amendment No. 2 does not materially 
alter the substance of the proposed rule change, Amendment No. 2 is 
not subject to notice and comment. Amendment No. 2 is available on 
the Commission's website at https://www.sec.gov/comments/sr-nysearca-2020-104/srnysearca2020104.htm.
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II. Summary of the Exchange's Description of the Proposed Rule Change, 
as Modified by Amendment No. 2 \8\
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    \8\ Additional information regarding the Fund, the Issuer (as 
defined below), and the Shares can be found in Amendment No. 2, 
supra note 7, and Registration Statement, supra note 9.
---------------------------------------------------------------------------

    NYSE Arca Rule 8.900-E(b)(1) requires the Exchange to file separate 
proposals under Section 19(b) of the Act before listing and trading any 
series of Active Proxy Portfolio Shares on the Exchange; thus, the 
Exchange submitted this proposal to list and trade the Shares.\9\ The 
Shares of the Fund will be issued by The RBB Fund, Inc. (``Issuer''), a 
corporation organized under the laws of the State of Maryland and 
registered with the Commission as an open-end management investment 
company.\10\ Red Gate Advisers, LLC (``Adviser'') will be the 
investment adviser to the Fund. Stance Capital, LLC and Vident 
Investment Advisory, LLC will be the sub-advisers (``Sub-Advisers'') 
for the Fund. U.S. Bank, N.A. will serve as the Fund's custodian, U.S. 
Bancorp Fund Services, LLC will serve as the Fund's transfer agent, and 
Vigilant Distributors, LLC will act as the distributor and principal 
underwriter for the Fund.
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    \9\ As defined in Rule 8.601-E(c)(1), the term ``Active Proxy 
Portfolio Share'' means a security that (a) is issued by 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 specified minimum number of shares, or 
multiples thereof, in return for a deposit by the purchaser of the 
Proxy Portfolio and/or cash with a value equal to the next 
determined net asset value (``NAV''); (c) when aggregated in the 
same specified minimum number of Active Proxy Portfolio Shares, or 
multiples thereof, may be redeemed at a holder's request in return 
for the Proxy Portfolio and/or cash to the holder by the issuer with 
a value equal to the next determined NAV; and (d) the portfolio 
holdings for which are disclosed within at least 60 days following 
the end of every fiscal quarter. Rule 8.601-E(c)(2) provides that 
the term ``Actual Portfolio'' means the identities and quantities of 
the securities and other assets held by the Investment Company that 
shall form the basis for the Investment Company's calculation of NAV 
at the end of the business day.'' Rule 8.601-E(c)(3) provides that 
the term ``Proxy Portfolio'' means a specified portfolio of 
securities, other financial instruments and/or cash designed to 
track closely the daily performance of the Actual Portfolio of a 
series of Active Proxy Portfolio Shares as provided in the exemptive 
relief pursuant to the Investment Company Act of 1940 applicable to 
such series.
    \10\ The Issuer is registered under the 1940 Act. On November 
23, 2020, the Issuer filed a registration statement on Form N-1A 
under the Securities Act of 1933 (15 U.S.C. 77a), and under the 1940 
Act relating to the Fund (File Nos. 033-20827 and 811-05518) 
(``Registration Statement''). The Issuer filed an Application for an 
Order under Section 6(c) of the 1940 Act for exemptions from various 
provisions of the 1940 Act and rules thereunder (File No. 812-
15165), dated September 28, 2020 (``Application''). The Issuer filed 
an amended Application on December 10, 2020, and a second amended 
Application on January 15, 2021. On February 26, 2021, the 
Commission issued an order (``Exemptive Order'') under the 1940 Act 
granting the exemptions requested in the Application (Investment 
Company Act Release No. 34215, February 26, 2021). The Exchange 
states that investments made by the Fund will comply with the 
conditions set forth in the Application and the Exemptive Order. 
According to the Exchange, the description of the operation of the 
Fund in the proposal is based, in part, on the Registration 
Statement and the Application.

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[[Page 13931]]

A. Description of the Fund

    The Exchange states that the Fund's holdings will conform to the 
permissible investments as set forth in the Application and Exemptive 
Order, and the holdings will be consistent with all requirements in the 
Application and Exemptive Order.\11\
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    \11\ Pursuant to the Application and Exemptive Order, the 
permissible investments for the Fund include only the following 
instruments: ETFs traded on a U.S. exchange, exchange-traded notes 
(``ETNs'') traded on a U.S. exchange, U.S. exchange-traded common 
stocks, U.S. exchange-traded preferred stocks, U.S. exchange-traded 
American Depositary Receipts (``ADRs''), U.S. exchange-traded real 
estate investment trusts, U.S. exchange-traded commodity pools, U.S. 
exchange-traded metals trusts, U.S. exchange-traded currency trusts, 
and U.S. exchange-traded futures; common stocks listed on a foreign 
exchange that trade on such exchange contemporaneously with the 
Fund's Shares; exchange-traded futures that are traded on a U.S. 
futures exchange contemporaneously with the Fund's Shares; and cash 
and cash equivalents (which are short-term U.S. Treasury securities, 
government money market funds, and repurchase agreements). According 
to the Exchange, the Fund will not borrow for investment purposes, 
hold short positions, or purchase any securities that are illiquid 
investments at the time of purchase.
---------------------------------------------------------------------------

    According to the Exchange, the Fund's investment objective is to 
seek long-term capital appreciation. The Exchange states that the Fund 
will invest, under normal circumstances, at least 80% of the value of 
its net assets (plus the amount of any borrowings for investment 
purposes) in exchange-traded equity securities of U.S. large 
capitalization issuers that meet environmental, social, and governance 
standards, as determined by Stance Capital, LLC.

B. Investment Restrictions

    The Exchange states that the Shares of the Fund will conform to the 
initial and continued listing criteria under Rule 8.601-E. The Fund's 
holdings will be consistent with all requirements in the Application 
and Exemptive Order. According to the Exchange, the Fund's investments, 
including derivatives, will be consistent with its investment objective 
and will not be used to enhance leverage (although certain derivatives 
and other investments may result in leverage). That is, the Fund's 
investments will not be used to seek performance that is the multiple 
or inverse multiple (e.g., 2X or -3X) of the Fund's primary broad-based 
securities benchmark index (as defined in Form N-1A).\12\
---------------------------------------------------------------------------

    \12\ The Fund's broad-based securities benchmark index will be 
identified in a future amendment to its Registration Statement 
following the Fund's first full calendar year of performance.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as modified by Amendment No. 2, is consistent with the Act and 
rules and regulations thereunder applicable to a national securities 
exchange.\13\ In particular, the Commission finds that the proposed 
rule change, as modified by Amendment No. 2, is consistent with Section 
6(b)(5) of the Act,\14\ which requires, among other things, that the 
Exchange's rules be designed to prevent fraudulent and manipulative 
acts and practices, to promote just and equitable principles of trade, 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general, to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \13\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the proposal is reasonably designed to 
promote fair disclosure of information that may be necessary to price 
the Shares appropriately and to prevent trading in the Shares when a 
reasonable degree of certain pricing transparency cannot be assured. As 
such, the Commission believes the proposal is reasonably designed to 
maintain a fair and orderly market for trading the Shares. The 
Commission also finds that the proposal is consistent with Section 
11A(a)(1)(C)(iii) of the Act, which sets forth Congress's finding that 
it is in the public interest and appropriate for the protection of 
investors and the maintenance of fair and orderly markets to assure the 
availability to brokers, dealers, and investors of information with 
respect to quotations for, and transactions in, securities.
    Specifically, the Commission notes that the Exchange, prior to 
commencement of trading in the Shares, will obtain a representation 
from the Issuer that the NAV per Share will be calculated daily and 
that the NAV, Portfolio Reference Basket,\15\ and Actual Portfolio for 
the Fund will be made available to all market participants at the same 
time.\16\ 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. The 
Exchange states that quotation and last sale information for the Shares 
and U.S. exchange-traded instruments (excluding futures contracts) will 
be available via the Consolidated Tape Association (``CTA'') high-speed 
line, from the exchanges on which such securities trade, or through 
major market data vendors or subscription services. Intraday pricing 
information for all exchange-traded instruments, which includes all 
eligible instruments except cash and cash equivalents, will be 
available on the exchanges on which they trade or through major market 
data vendors or subscription services. Intraday pricing information for 
cash equivalents is available through major market data vendors, 
subscription services, and/or pricing services. The Fund's website will 
include additional information updated on a daily basis, including, on 
a per Share basis for the Fund, the prior business day's NAV, 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 the 
Guardrail Amount,\17\ which is the maximum deviation between the 
weightings of the specific securities in the Portfolio Reference Basket 
and the weightings of those specific securities in the Actual 
Portfolio, and 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. The identity and quantity of 
investments in the Portfolio Reference Basket will be publicly 
available on the Fund's website before the commencement of trading in 
Shares on each Business Day and the Fund's website will disclose the 
information required under Rule 8.601-E(c)(3).\18\ The website and 
information will be publicly available at no charge.
---------------------------------------------------------------------------

    \15\ The Exchange states that the ``Portfolio Reference Basket'' 
is the Proxy Portfolio for purposes of Rule 8.601-E(c)(3). See 
Amendment No. 2, supra note 7, at n. 9.
    \16\ See NYSE Arca Rule 8.601-E(d)(1)(B).
    \17\ See Amendment No. 2, supra note 7, at 9.
    \18\ See Rule 8.601-E(c)(3), which requires that the website for 
each series of Active Proxy Portfolio Shares shall disclose the 
information regarding the Proxy Portfolio as provided in the 
exemptive relief pursuant to the 1940 Act applicable to such series, 
including the following, to the extent applicable: (i) Ticker 
symbol; (ii) CUSIP or other identifier; (iii) description of 
holding; (iv) quantity of each security or other asset held; and (v) 
percentage weighting of the holding in the portfolio.
---------------------------------------------------------------------------

    The Commission also notes that the Exchange's rules regarding 
trading halts help to ensure the maintenance of fair and orderly 
markets for the Shares. Specifically, pursuant to its rules, the 
Exchange may consider all relevant factors in exercising its discretion 
to halt trading in the Shares and will halt trading in the Shares under 
the conditions specified in NYSE Arca Rule

[[Page 13932]]

7.12-E. Trading may be halted because of market conditions or for 
reasons that, in the view of the Exchange, make trading in the Shares 
inadvisable, including (1) the extent to which trading is not occurring 
in the securities and/or the financial instruments composing the Proxy 
Portfolio and/or Actual Portfolio; or (2) whether other unusual 
conditions or circumstances detrimental to the maintenance of a fair 
and orderly market are present.\19\ Trading in the Shares also will be 
subject to NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth additional 
circumstances under which trading in the Shares will be halted.
---------------------------------------------------------------------------

    \19\ See NYSE Arca Rule 8.601-E(d)(2)(D)(i).
---------------------------------------------------------------------------

    The Commission also believes that the proposal is reasonably 
designed to help prevent fraudulent and manipulative acts and 
practices. Specifically, the Exchange provides that:
     The Adviser is not registered as a broker-dealer but is 
affiliated with a broker-dealer and has implemented and will maintain a 
``fire wall'' with respect to such broker-dealer affiliate regarding 
access to information concerning the composition of and/or changes to 
the Fund's Actual Portfolio and/or Proxy Portfolio. The Sub-Advisers 
are not registered as broker-dealers and are not affiliated with a 
broker-dealer;
     Any person related to the Adviser, Sub-Adviser(s), or the 
Fund who makes decisions pertaining to the Fund's Actual Portfolio or 
Proxy Portfolio or who has access to non-public information regarding 
the Fund's Actual Portfolio and/or the Proxy Portfolio or changes 
thereto are subject to procedures reasonably designed to prevent the 
use and dissemination of material non-public information regarding the 
Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto;
     In the event (a) the Adviser or Sub-Adviser(s) becomes 
registered as a broker-dealer or becomes newly affiliated with a 
broker-dealer or (b) any new adviser or sub-adviser is a registered 
broker-dealer, or becomes affiliated with a broker-dealer, it will 
implement and maintain a fire wall with respect to its relevant 
personnel or its broker-dealer affiliate regarding access to 
information concerning the composition of and/or changes to the Fund's 
Actual Portfolio and/or Proxy Portfolio, and will be subject to 
procedures designed to prevent the use and dissemination of material 
non-public information regarding the Fund's Actual Portfolio and/or 
Proxy Portfolio or changes thereto; and
     Any person or entity, including any service provider for 
the Fund, who has access to non-public information regarding the Fund's 
Actual Portfolio or the Proxy Portfolio or changes thereto will be 
subject to procedures reasonably designed to prevent the use and 
dissemination of material non-public information regarding the Fund's 
Actual Portfolio and/or the Proxy Portfolio or changes thereto, and if 
any such person or entity is registered as a broker-dealer or 
affiliated with a broker-dealer, such person or entity has erected and 
will maintain a ``fire wall'' between the person or entity and the 
broker-dealer with respect to access to information concerning the 
composition of and/or changes to the Fund's Actual Portfolio and/or 
Proxy Portfolio.
    Finally, the Exchange represents that trading in the Shares will be 
subject to the existing trading surveillances, administered by the 
Exchange, as well as cross-market surveillances administered by FINRA 
on behalf of the Exchange,\20\ and that these surveillance procedures 
are adequate to properly monitor Exchange trading of the Shares in all 
trading sessions and to deter and detect violations of Exchange rules 
and federal securities laws applicable to trading on the Exchange.
---------------------------------------------------------------------------

    \20\ See NYSE Arca Rule 8.601-E, Commentary .03, which requires, 
as part of the surveillance procedures for Active Proxy Portfolio 
Shares, the Fund's investment adviser to, upon request by the 
Exchange or FINRA, on behalf of the Exchange, make available to the 
Exchange or FINRA the daily Actual Portfolio holdings of the Fund.
---------------------------------------------------------------------------

    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities.
    In support of this proposal, the Exchange represents also that: 
\21\
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    \21\ See Amendment No. 2, supra note 7.

    (1) The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Rule 8.601-E.
    (2) A minimum of 100,000 Shares for the Fund will be outstanding 
at the commencement of trading on the Exchange.
    (3) The Exchange or FINRA, on behalf of the Exchange, or both, 
will communicate as needed, and may obtain information, regarding 
trading in the Shares and underlying exchange-traded instruments 
with other markets and other entities that are members of the 
Intermarket Surveillance Group (``ISG''). In addition, the Exchange 
may obtain information regarding trading in the Shares and exchange-
traded instruments from markets and other entities with which the 
Exchange has in place a comprehensive surveillance sharing 
agreement. Any foreign common stocks held by the Fund will be traded 
on an exchange that is a member of the ISG or with which the 
Exchange has in place a comprehensive surveillance sharing 
agreement.
    (4) The Exchange has appropriate rules to facilitate 
transactions in the Shares during all trading sessions.
    (5) For initial and continued listing, the Fund will be in 
compliance with Rule 10A-3 under the Act.\22\
---------------------------------------------------------------------------

    \22\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

    (6) The Fund's holdings will conform to the permissible 
investments as set forth in the Application and Exemptive Order and 
the holdings will be consistent with all requirements set forth in 
the Application and Exemptive Order. The Fund's investments, 
including derivatives, will be consistent with its investment 
objective and will not be used to enhance leverage (although certain 
derivatives and other investments may result in leverage). The 
Fund's investments will include common stocks listed on a foreign 
exchange that trade on such exchange contemporaneously with the 
Shares and exchange-traded futures that are traded on a U.S. futures 
exchange contemporaneously with the Shares.
    (7) With respect to Active Proxy Portfolio Shares, all of the 
Exchange member obligations relating to product description and 
prospectus delivery requirements will continue to apply in 
accordance with Exchange rules and federal securities laws, and the 
Exchange and FINRA will continue to monitor Exchange members for 
compliance with such requirements.

    The Exchange also represents that all statements and 
representations made in the filing regarding: (1) The description of 
the portfolios or reference assets; (2) limitations on portfolio 
holdings or reference assets; or (3) the applicability of Exchange 
listing rules specified in the filing constitute continued listing 
requirements for listing the Shares on the Exchange. In addition, the 
Exchange represents that the Exchange will obtain a representation from 
the Adviser, prior to commencement of trading in the Shares, that the 
Adviser 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 Act, the Exchange will 
monitor \23\ for compliance with the continued listing requirements. If 
the Fund is not in compliance with the applicable listing requirements, 
the Exchange will

[[Page 13933]]

commence delisting procedures under NYSE Arca Rule 5.5-E(m).
---------------------------------------------------------------------------

    \23\ The Commission notes that certain proposals for the listing 
and trading of exchange-traded products include a representation 
that the exchange will ``surveil'' for compliance with the continued 
listing requirements. See, e.g., Securities Exchange Act Release No. 
77499 (April 1, 2016), 81 FR 20428, 20432 (April 7, 2016) (SR-BATS-
2016-04). In the context of this representation, it is the 
Commission's view that ``monitor'' and ``surveil'' both mean ongoing 
oversight of compliance with the continued listing requirements. 
Therefore, the Commission does not view ``monitor'' as a more or 
less stringent obligation than ``surveil'' with respect to the 
continued listing requirements.
---------------------------------------------------------------------------

    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendments No. 2, is consistent with 
Section 6(b)(5) of the Act \24\ and Section 11A(a)(1)(C)(iii) of the 
Act \25\ and the rules and regulations thereunder applicable to a 
national securities exchange.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b)(5).
    \25\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\26\ that the proposed rule change (SR-NYSEArca-2020-104), as modified 
by Amendment No. 2, be, and it hereby is, approved.
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    \26\ Id.
    \27\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-05029 Filed 3-10-21; 8:45 am]
BILLING CODE 8011-01-P
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