Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To List and Trade Shares of the Thrivent Small-Mid Cap ESG ETF Under NYSE Arca Rule 8.601-E, 51706-51713 [2022-18096]
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Federal Register / Vol. 87, No. 162 / Tuesday, August 23, 2022 / Notices
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Docketed Proceeding(s)
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I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3011.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3030, and 39
CFR part 3040, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2022–98 and
CP2022–102; Filing Title: USPS Request
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
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to Add Priority Mail Contract 756 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: August 17, 2022;
Filing Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Christopher C. Mohr Comments Due:
August 25, 2022.
This Notice will be published in the
Federal Register.
Jennie L. Jbara,
Alternate Certifying Officer.
[FR Doc. 2022–18152 Filed 8–22–22; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–95526; File No. SR–
NYSEARCA–2022–51]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To List and Trade Shares
of the Thrivent Small-Mid Cap ESG ETF
Under NYSE Arca Rule 8.601–E
August 17, 2022.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on August
5, 2022, NYSE Arca, Inc. (‘‘NYSE Arca’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the Thrivent Small-Mid
Cap ESG ETF under NYSE Arca Rule
8.601–E. The proposed rule change is
available on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange has adopted NYSE
Arca Rule 8.601–E for the purpose of
permitting the listing and trading, or
trading pursuant to unlisted trading
privileges (‘‘UTP’’), of Active Proxy
Portfolio Shares, which are securities
issued by an actively managed open-end
investment management company.4
Commentary .01 to Rule 8.601–E
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. Therefore, the Exchange is
submitting this proposal in order to list
and trade shares (‘‘Shares’’) as Active
4 See Securities Exchange Act Release No. 89185
(June 29, 2020), 85 FR 40328 (July 6, 2020) (SR–
NYSEArca–2019–95). Rule 8.601–E(c)(1) provides
that ‘‘[t]he term ‘‘Active Proxy Portfolio Share’’
means a security that (a) is issued by a 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 minimum number of shares, or
multiples thereof, in return for a deposit by the
purchaser of the Proxy Portfolio or Custom Basket,
as applicable, 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 or Custom Basket, as
applicable, 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
‘‘[t]he 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 ‘‘[t]he 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.’’ Rule 8.601–E(c)(4) provides that the term
‘‘Custom Basket’’ means a portfolio of securities
that is different from the Proxy Portfolio and is
otherwise consistent with the exemptive relief
issued pursuant to the Investment Company Act of
1940 applicable to a series of Active Proxy Portfolio
Shares.
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Federal Register / Vol. 87, No. 162 / Tuesday, August 23, 2022 / Notices
Proxy Portfolio Shares of the Thrivent
Small-Mid Cap ESG ETF (the ‘‘Fund’’)
under Rule 8.601–E.
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Key Features of Active Proxy Portfolio
Shares
While funds issuing Active Proxy
Portfolio Shares will be activelymanaged and, to that extent, will be
similar to Managed Fund Shares, Active
Proxy Portfolio Shares differ from
Managed Fund Shares in the following
important respects. First, in contrast to
Managed Fund Shares, which are
actively-managed funds listed and
traded under NYSE Arca Rule 8.600–E 5
and for which a ‘‘Disclosed Portfolio’’ is
required to be disseminated at least
once daily,6 the portfolio for an issue of
Active Proxy Portfolio Shares will be
publicly disclosed within at least 60
days following the end of every fiscal
quarter in accordance with normal
disclosure requirements otherwise
applicable to open-end management
investment companies registered under
the Investment Company Act of 1940
(the ‘‘1940 Act’’).7 The composition of
5 The Commission has previously approved
listing and trading on the Exchange of a number of
issues of Managed Fund Shares under NYSE Arca
Rule 8.600–E. See, e.g., Securities Exchange Act
Release Nos. 57801 (May 8, 2008), 73 FR 27878
(May 14, 2008) (SR–NYSEArca–2008–31) (order
approving Exchange listing and trading of twelve
actively-managed funds of the WisdomTree Trust);
60460 (August 7, 2009), 74 FR 41468 (August 17,
2009) (SR–NYSEArca–2009–55) (order approving
listing of Dent Tactical ETF); 63076 (October 12,
2010), 75 FR 63874 (October 18, 2010) (SR–
NYSEArca-2010–79) (order approving Exchange
listing and trading of Cambria Global Tactical ETF);
63802 (January 31, 2011), 76 FR 6503 (February 4,
2011) (SR–NYSEArca–2010–118) (order approving
Exchange listing and trading of the SiM Dynamic
Allocation Diversified Income ETF and SiM
Dynamic Allocation Growth Income ETF). The
Commission also has approved a proposed rule
change relating to generic listing standards for
Managed Fund Shares. See Securities Exchange Act
Release No. 78397 (July 22, 2016), 81 FR 49320
(July 27, 2016) (SR–NYSEArca–2015–110)
(amending NYSE Arca Equities Rule 8.600 to adopt
generic listing standards for Managed Fund Shares).
6 NYSE Arca Rule 8.600–E(c)(2) defines the term
‘‘Disclosed Portfolio’’ as 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. NYSE Arca
Rule 8.600–E(d)(2)(B)(i) requires that the Disclosed
Portfolio will be disseminated at least once daily
and will be made available to all market
participants at the same time.
7 A mutual fund is required to file with the
Commission its complete portfolio schedules for the
second and fourth fiscal quarters on Form N–CSR
under the 1940 Act. Information reported on Form
N–PORT for the third month of a fund’s fiscal
quarter will be made publicly available 60 days
after the end of a fund’s fiscal quarter. 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 series of Active
Proxy Portfolio Shares’ Statement of Additional
Information (‘‘SAI’’), its Shareholder Reports, its
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the portfolio of an issue of Active Proxy
Portfolio Shares would not be available
at commencement of Exchange listing
and trading. Second, in connection with
the creation and redemption of Active
Proxy Portfolio Shares, such creation or
redemption may be exchanged for a
Proxy Portfolio or Custom Basket, as
applicable, and/or cash with a value
equal to the next-determined NAV. A
series of Active Proxy Portfolio Shares
will disclose the Proxy Portfolio on a
daily basis, which, as described above,
is designed to track closely the daily
performance of the Actual Portfolio of a
series of Active Proxy Portfolio Shares,
instead of the actual holdings of the
Investment Company, as provided by a
series of Managed Fund Shares. As set
forth in NYSE Arca Rule 8.601–
E(d)(2)(B)(ii), for Active Proxy Portfolio
Shares using a Custom Basket, each
Business Day,8 before the opening of
trading in the Core Trading Session (as
defined in NYSE Arca Rule 7.34–E (a)),
the Investment Company shall make
publicly available on its website the
composition of any Custom Basket
transacted on the previous Business
Day, except a Custom Basket that differs
from the applicable Proxy Portfolio only
with respect to cash.
The Commission has previously
approved 9 and noticed for immediate
Form N–CSR, filed twice a year, and its Form N–
CEN, filed annually. A series of Active Proxy
Portfolio Shares’ SAI and Shareholder Reports will
be available free upon request from the Investment
Company, and those documents and the Form N–
PORT, Form N–CSR, and Form N–CEN may be
viewed on-screen or downloaded from the
Commission’s website at www.sec.gov.
8 ‘‘Business Day’’ is defined to mean any day that
the Exchange is open, including any day when the
Fund satisfies redemption requests as required by
Section 22(e) of the 1940 Act.
9 See Securities Exchange Act Release Nos. 89185
(June 29, 2020), 85 FR 40328 (July 6, 2020) (SR–
NYSEArca–2019–95) (Notice of Filing of
Amendment No. 6 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified
by Amendment No. 6, to Adopt NYSE Arca Rule
8.601–E to Permit the Listing and Trading of Active
Proxy Portfolio Shares and To List and Trade
Shares of the Natixis U.S. Equity Opportunities ETF
Under Proposed NYSE Arca Rule 8.601–E); 89192
(June 30, 2020), 85 FR 40699 (July 7, 2020) (SR–
NYSEArca–2019–96) (Notice of Filing of
Amendment No. 5 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified
by Amendment No. 5, to List and Trade Two Series
of Active Proxy Portfolio Shares Issued by the
American Century ETF Trust under NYSE Arca
Rule 8.601–E); 89191 (June 30, 2020), 85 FR 40358
(July 6, 2020) (SR–NYSEArca–2019–92) (Notice of
Filing of Amendment No. 3 and Order Granting
Accelerated Approval of a Proposed Rule Change,
as Modified by Amendment No. 3, to List and Trade
Four Series of Active Proxy Portfolio Shares Issued
by T. Rowe Price Exchange-Traded Funds, Inc.
under NYSE Arca Rule 8.601–E); 89438 (July 31,
2020), 85 FR 47821 (August 6, 2020) (SR–
NYSEArca–2020–51) (Order Granting Approval of a
Proposed Rule Change, as Modified by Amendment
No. 2, to List and Trade Shares of Natixis Vaughan
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51707
effectiveness 10 the listing and trading
on the Exchange of series of Active
Proxy Portfolio Shares under NYSE
Arca Rule 8.601–E.
The Shares of the Fund will be issued
by the Thrivent ETF Trust (the ‘‘Trust’’),
which is organized a Massachusetts
Business Trust and registered with the
Commission as an open-end
management investment company.11
Thrivent Asset Management, LLC will
be the investment adviser to the Fund
(the ‘‘Adviser’’). State Street Bank and
Trust Company (‘‘State Street’’) will
serve as the Fund’s transfer agent. State
Street will serve as the Fund’s
custodian. ALPS Distributors, Inc. will
act as the distributor (the ‘‘Distributor’’)
for the Fund.
Commentary .04 to NYSE Arca Rule
8.601–E provides that, if the investment
adviser to the Investment Company
issuing Active Proxy Portfolio Shares is
registered as a broker-dealer or is
affiliated with a broker-dealer, such
investment adviser will erect and
maintain a ‘‘fire wall’’ between the
investment adviser and personnel of the
broker-dealer or broker-dealer affiliate,
as applicable, with respect to access to
information concerning the composition
and/or changes to such Investment
Company’s Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as
applicable. Any person related to the
Nelson Select ETF and Natixis Vaughan Nelson
MidCap ETF under NYSE Arca Rule 8.601–E).
10 See Securities Exchange Act Release Nos.
92104 (June 3, 2021), 86 FR 30635 (June 9, 2021)
(NYSEArca–2021–46) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
to List and Trade Shares of the Nuveen Santa
Barbara Dividend Growth ETF, Nuveen Small Cap
Select ETF, and Nuveen Winslow Large-Cap
Growth ESG ETF Under NYSE Arca Rule 8.601–E
(Active Proxy Portfolio Shares); and 92958
(September 13, 2021), 86 FR 51933 (September 17,
2021) (NYSEArca–2021–77) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
To List and Trade Shares of the Nuveen Growth
Opportunities ETF Under NYSE Arca Rule 8.601–
E (Active Proxy Portfolio Shares).
11 The Trust is registered under the 1940 Act. On
August 4, 2022, the Trust filed an amended
registration statement on Form N–1A under the
1940 Act relating to the Fund (File No. 333–261454)
(the ‘‘Registration Statement’’). The Trust 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–
15288), dated February 9, 2022 (the ‘‘Application’’).
See Investment Company Act Release No. 34345
(July 27, 2021). On March 15, 2022, the Commission
issued an order (the ‘‘Exemptive Order’’) under the
1940 Act granting the exemptions requested in the
Application (Investment Company Act Release No.
34534, March 15, 2022). Investments made by the
Fund will comply with the conditions set forth in
the Application and the Exemptive Order. See e.g.,
note 12, infra. The description of the operation of
the Fund herein is based, in part, on the
Registration Statement, the Application and the
Exemptive Order. The Exchange will not commence
trading in Shares of the Fund until the Registration
Statement is effective.
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Federal Register / Vol. 87, No. 162 / Tuesday, August 23, 2022 / Notices
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investment adviser or Investment
Company who makes decisions
pertaining to the Investment Company’s
Actual Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable, or has
access to non-public information
regarding the Investment Company’s
Actual Portfolio, Proxy Portfolio, and/or
the Custom Basket, as applicable, or
changes thereto must be subject to
procedures reasonably designed to
prevent the use and dissemination of
material non-public information
regarding the Actual Portfolio, Proxy
Portfolio, and/or the Custom Basket, as
applicable, or changes thereto.
Commentary .04 is similar to
Commentary .03(a)(i) and (iii) to NYSE
Arca Rule 5.2–E(j)(3); however,
Commentary .04, in connection with the
establishment of a ‘‘fire wall’’ between
the investment adviser and the brokerdealer, reflects the applicable open-end
fund’s portfolio, not an underlying
benchmark index, as is the case with
index-based funds.12 Commentary .04 is
also similar to Commentary .06 to Rule
8.600–E related to Managed Fund
Shares, except that Commentary .04
relates to establishment and
maintenance of a ‘‘fire wall’’ between
the investment adviser and personnel of
the broker-dealer or broker-dealer
affiliate, as applicable, applicable to an
Investment Company’s Actual Portfolio,
Proxy Portfolio, and/or Custom Basket,
as applicable, or changes thereto, and
not just to the underlying portfolio, as
is the case with Managed Fund Shares.
In addition, Commentary .05 to Rule
8.601–E provides that any person or
entity, including a custodian, Reporting
Authority, distributor, or administrator,
who has access to non-public
12 An investment adviser to an open-end fund is
required to be registered under the Investment
Advisers Act of 1940 (the ‘‘Advisers Act’’). As a
result, the Adviser and its related personnel will be
subject to the provisions of Rule 204A–1 under the
Advisers Act relating to codes of ethics. This Rule
requires investment advisers to adopt a code of
ethics that reflects the fiduciary nature of the
relationship to clients as well as compliance with
other applicable securities laws. Accordingly,
procedures designed to prevent the communication
and misuse of non-public information by an
investment adviser must be consistent with Rule
204A–1 under the Advisers Act. In addition, Rule
206(4)–7 under the Advisers Act makes it unlawful
for an investment adviser to provide investment
advice to clients unless such investment adviser has
(i) adopted and implemented written policies and
procedures reasonably designed to prevent
violations, by the investment adviser and its
supervised persons, of the Advisers Act and the
Commission rules adopted thereunder; (ii)
implemented, at a minimum, an annual review
regarding the adequacy of the policies and
procedures established pursuant to subparagraph (i)
above and the effectiveness of their
implementation; and (iii) designated an individual
(who is a supervised person) responsible for
administering the policies and procedures adopted
under subparagraph (i) above.
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information regarding the Investment
Company’s Actual Portfolio, the Proxy
Portfolio, or the Custom Basket, as
applicable, or changes thereto, must be
subject to procedures reasonably
designed to prevent the use and
dissemination of material non-public
information regarding the applicable
Investment Company Actual Portfolio,
the Proxy Portfolio, or the Custom
Basket, as applicable, 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 Investment Company
Actual Portfolio, Proxy Portfolio, or
Custom Basket, as applicable.
The Adviser is not registered as a
broker-dealer but is affiliated with
broker-dealers. The Adviser has
implemented and will maintain a ‘‘fire
wall’’ with respect to such broker-dealer
affiliates regarding access to information
concerning the composition of and/or
changes to the Fund’s Actual Portfolio,
Proxy Portfolio, and/or Custom Basket,
as applicable.
In the event (a) the Adviser becomes
registered as a broker-dealer or becomes
newly affiliated with a broker-dealer, or
(b) any new adviser or sub-adviser is a
registered broker-dealer, or becomes
affiliated with a broker-dealer, it will
implement and maintain a ‘‘fire wall’’
with respect to its relevant personnel or
its broker-dealer affiliate regarding
access to information concerning the
composition and/or changes to the
Fund’s Actual Portfolio, Proxy Portfolio,
and/or Custom Basket, as applicable,
and will be subject to procedures
designed to prevent the use and
dissemination of material non-public
information regarding the Fund’s Actual
Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable, or
changes thereto. Any person related to
the Adviser or the Fund who makes
decisions pertaining to the Fund’s
Actual Portfolio, the Proxy Portfolio, or
Custom Basket, as applicable, or has
access to non-public information
regarding the Fund’s Actual Portfolio,
the Proxy Portfolio, and/or the Custom
Basket, as applicable, 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, the Proxy Portfolio, and/or the
Custom Basket, as applicable, or
changes thereto.
In addition, any person or entity,
including any service provider for the
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Fmt 4703
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Fund, who has access to non-public
information regarding the Fund’s Actual
Portfolio, the Proxy Portfolio, and/or the
Custom Basket, as applicable, 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,
the Proxy Portfolio, and/or the Custom
Basket, as applicable, 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 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 and/or
changes to the Fund’s Actual Portfolio,
Proxy Portfolio, and/or Custom Basket,
as applicable.
Description of the Fund
According to the Registration
Statement, the Fund will generate a
Proxy Portfolio that will be designed to
closely track the daily performance of
the Fund but will not be the Fund’s
Actual Portfolio. The Proxy Portfolio is
comprised of (1) some but not all of the
Fund’s actual holdings and will include
only certain securities that trade on a
national securities exchange
contemporaneously with the Fund’s
Shares, and (2) cash and cash
equivalents. The Fund will publish on
its website the Proxy Portfolio before the
commencement of trading of the Fund’s
Shares on each Business Day. In
addition to the Proxy Portfolio, the
Fund will disclose daily the percentage
weight overlap between the holdings of
the Proxy Portfolio and the Actual
Portfolio that formed the basis for the
Fund’s calculation of NAV at the end of
the prior Business Day (‘‘Proxy
Overlap’’) and the standard deviation
over the past three months of the daily
proxy spread (i.e., the difference, in
percentage terms, between the Proxy
Portfolio per share NAV and that of the
Actual Portfolio) (‘‘Tracking Error’’).
Daily disclosure of the Proxy Portfolio,
the Proxy Overlap, the Tracking Error
and the other related proxy portfolio
information is designed to ensure that
investors can purchase and sell Fund
shares in the secondary market at prices
that are at or close to the underlying
NAV per share of the Fund by enabling
Authorized Participants and other
market participants to accurately assess
the profitability of arbitrage trades in
Shares of the Fund.
The Fund’s holdings will conform to
the permissible investments as set forth
in the Application and Exemptive
Order, and the holdings will be
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Federal Register / Vol. 87, No. 162 / Tuesday, August 23, 2022 / Notices
consistent with all requirements in the
Application and Exemptive Order.13
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.
According to the Registration
Statement, the Fund’s investment
objective is to seek long-term capital
growth. Under normal market
conditions, the Fund will invest at least
80% of its net assets (including the
amount of any borrowings for
investment purposes) in securities of
small and mid-sized companies that are
listed or traded on a national securities
exchange and that the Adviser believes
have sustainable long-term business
models and a demonstrated
commitment to environmental, social
and/or corporate governance (‘‘ESG’’)
policies, practices or outcomes.
Investment Restrictions
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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 limited to and
consistent with permissible holdings as
described in the Application and
Exemptive Order and all requirements
in the Application and Exemptive
Order.14 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
13 Pursuant to the Application and Exemptive
Order, the permissible investments for the Fund
include only the following instruments: ETFs,
Exchange-traded notes, Exchange-traded common
stocks, common stocks listed on a foreign exchange
that trade on such exchange contemporaneously
with the Shares, Exchange-traded preferred stocks,
Exchange-traded American depositary receipts,
Exchange-traded real estate investment trusts,
Exchange-traded commodity pools, Exchangetraded metals trusts, Exchange-traded currency
trusts, and Exchange-traded futures that trade
contemporaneously with the Shares, as well as cash
and cash equivalents (short-term U.S. Treasury
securities, government money market funds, and
repurchase agreements). For purposes of the
application, exchange-traded futures are U.S. listed
futures contracts where the futures 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. All futures contracts that
the Fund may invest in will be traded on a U.S.
futures exchange. For purposes of this footnote
only, ‘‘Exchange’’ means a national securities
exchange as defined in section 2(a)(26) of the Act.
14 Id.
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securities benchmark index (as defined
in Form N–1A).
Creations and Redemptions of Shares
According to the Registration
Statement, Shares of the Fund may be
acquired or redeemed directly from the
Fund only in specified minimum size
‘‘Creation Units’’ as defined below or
multiples thereof. The Fund will offer
and issue Shares at the applicable NAV
to broker-dealers and other financial
intermediaries who are participants in
the National Securities Clearing
Corporation (‘‘NSCC’’) and who have
signed an Authorized Participant
Agreement with the Distributor (each,
an ‘‘Authorized Participant’’), and
accepted by State Street, only in
aggregations of a specified number of
Shares (‘‘Creation Units’’), in exchange
for a basket of securities and/or
instruments (the ‘‘Deposit Securities’’),
together with a deposit of a specified
cash payment (the ‘‘Cash Component’’).
The NAV of the Fund’s Shares will be
calculated each Business Day as of the
close of regular trading on the Exchange,
ordinarily 4:00 p.m. Eastern Time
(‘‘E.T.’’). A Creation Unit will consist of
at least 10,000 Shares.
In certain circumstances, the Fund
may issue Creation Units solely in
exchange for a specified all-cash
payment (‘‘Cash Deposit’’). Shares of the
Fund are likewise redeemable by the
Fund only in Creation Units, generally
in exchange for a basket of securities
and instruments (‘‘Redemption
Securities’’), together with a Cash
Component. The names and quantities
of the securities and instruments that
constitute the Deposit Securities and
Redemption Securities are generally the
same as the Fund’s Proxy Portfolio,
except to the extent purchases and
redemptions are made entirely or
partially on a cash basis. In addition, the
Fund may determine to use baskets that
differ from the Proxy Portfolio in that
they include instruments that are not in
the Proxy Portfolio, or are included in
the Proxy Portfolio but in different
weightings. As with the offer and sale of
Creation Units, the Fund may, in certain
circumstances, redeem Creation Units in
exchange for a specified all-cash
payment.
In order to initiate a creation order for
a Creation Unit, an Authorized
Participant must submit an irrevocable
order to purchase Shares in proper form
to State Street by the close of regular
trading on the NYSE, typically 4:00 p.m.
E.T. on a Business Day for creation of
Creation Units to be effected based on
the NAV of Shares of the Fund on that
Business Day. The date on which an
order to create Creation Units (or an
PO 00000
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Sfmt 4703
51709
order to redeem Creation Units, as
discussed below) is placed is referred to
as the ‘‘Transmittal Date.’’ Orders must
be transmitted by an Authorized
Participant via the electronic order entry
system, by telephone or other
transmission method acceptable to State
Street and the Distributor pursuant to
procedures set forth in the Authorized
Participant Agreement.
Fund Shares may be redeemed only in
Creation Units at the NAV next
determined after receipt of a redemption
request in proper form and only on a
Business Day. The redemption proceeds
for a Creation Unit will generally consist
of securities represented in the Proxy
Portfolio or a Custom Basket (such
securities, ‘‘Fund Security’’ or ‘‘Fund
Securities’’) plus cash in an amount
equal to the difference between the NAV
of the Creation Unit being redeemed, as
next determined after a receipt of a
request in proper form, and the value of
the Fund Securities, minus any fees.
The Fund may substitute a ‘‘cash-inlieu’’ amount to replace any Fund
Security in certain limited
circumstances. The amount of cash paid
out in such cases will be equivalent to
the value of the instrument listed as a
Fund Security. In the event that the
Fund Securities have a value greater
than the NAV of the Creation Unit, a
compensating cash payment equal to the
difference will be included in the Cash
Component required to be delivered by
an Authorized Participant. In order to
initiate a redemption order for a
Creation Unit to be effected based on the
NAV of Shares of the Fund on that
Business Day, an Authorized Participant
must submit an irrevocable order to
redeem the Creation Unit in proper form
to State Street by the close of regular
trading on the NYSE, typically 4:00 p.m.
E.T. on that Business Day.
Availability of Information
The Fund’s website
(www.thriventfunds.com), which will be
publicly available prior to the public
offering of Shares, will include a form
of the prospectus for the Fund that may
be downloaded. The Fund’s website
will include on a daily basis, per Share
of the Fund, the prior Business Day’s
NAV, the prior Business Day’s ‘‘Closing
Price’’ or ‘‘Bid/Ask Price’’ 15 and a
15 The ‘‘Bid/Ask Price’’ is the midpoint of the
highest bid and lowest offer based upon the
National Best Bid and Offer as of the time of
calculation of the Fund’s NAV. The ‘‘National Best
Bid and Offer’’ is the current national best bid and
national best offer as disseminated by the
Consolidated Quotation System or UTP Plan
Securities Information Processor. The ‘‘Closing
Price’’ of Shares is the official closing price of the
Shares on the Exchange.
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calculation of the premium/discount of
such Closing Price or Bid/Ask Price
against such NAV.16 The Adviser has
represented that the Fund’s website will
also provide: (1) any other information
regarding premiums/discounts as may
be required for other ETFs under Rule
6c–11 under the 1940 Act, as amended,
and (2) any information regarding the
bid/ask spread for the Fund as may be
required for other ETFs under Rule 6c–
11 under the 1940 Act, as amended. The
Fund’s website also will disclose the
information required under Rule 8.601–
E(c)(3).17 The website and information
will be publicly available at no charge.
The identity and quantity of
investments in the Proxy Portfolio for
the Fund will be publicly available on
the Fund’s website before the
commencement of trading in Shares on
each Business Day. The website will
also include information relating to the
Proxy Overlap and the Tracking Error,
as discussed above. With respect to each
Custom Basket utilized by the Fund,
each Business Day, before the opening
of trading in the Core Trading Session
(as defined in NYSE Arca Rule 7.34–E
(a)), the Fund’s website will also
include the composition of any Custom
Basket transacted on the previous
Business Day, except a Custom Basket
that differs from the applicable Proxy
Portfolio only with respect to cash.
Typical mutual fund-style annual,
semi-annual and quarterly disclosures
contained in the Fund’s Commission
filings will be provided on the Fund’s
website on a current basis.18 Thus, the
Fund will publish the portfolio contents
of its Actual Portfolio on a periodic
basis, and no less than 60 days after the
end of every fiscal quarter.
Investors can also obtain the Fund’s
SAI, Shareholder Reports, Form N–CSR,
N–PORT, and Form N–CEN. The
prospectus, SAI, and Shareholder
Reports are available free upon request,
and those documents and the Form N–
CSR, N–PORT, and Form N–CEN may
be viewed on-screen or downloaded
from the Commission’s website. The
Exchange also notes that pursuant to the
16 The ‘‘premium/discount’’ refers to the
premium or discount to the NAV at the end of a
trading day and will be calculated based on the last
Bid/Ask Price or the Closing Price on such trading
day.
17 See note 4, supra. Rule 8.601–E (c)(3) provides
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 note 7, supra.
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Application, the Fund must comply
with Regulation Fair Disclosure, which
prohibits selective disclosure of any
material non-public information.
Information regarding the market
price of Shares and trading volume in
Shares, will be continually available on
a real-time basis throughout the day on
brokers’ computer screens and other
electronic services. The previous day’s
closing price and trading volume
information for the Shares will be
published daily in the financial section
of newspapers.
Quotation and last sale information
for the Shares 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. Quotation and
last sale information for futures
contracts will be available from the
exchanges on which they trade. Intraday
price information for all exchangetraded instruments, which include all
eligible instruments except cash and
cash equivalents, will be available from
the exchanges on which they trade, or
through major market data vendors or
subscription services. Intraday price
information for cash equivalents is
available through major market data
vendors, subscription services and/or
pricing services.
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.19 Trading in Shares of the
Fund will be halted if the circuit breaker
parameters in NYSE Arca Rule 7.12–E
have been reached. Trading also may be
halted because of market conditions or
for reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable. Trading in the Shares will
be subject to NYSE Arca Rule 8.601–
E(d)(2)(D), which sets forth
circumstances under which Shares of
the Fund will be halted.
Specifically, Rule 8.601–E(d)(2)(D)
provides that the Exchange may
consider all relevant factors in
exercising its discretion to halt trading
in a series of Active Proxy Portfolio
Shares. These may include: (a) 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 (b)
whether other unusual conditions or
circumstances detrimental to the
19 See
PO 00000
NYSE Arca Rule 7.12–E.
Frm 00071
Fmt 4703
Sfmt 4703
maintenance of a fair and orderly
market are present. If the Exchange
becomes aware that the NAV, Proxy
Portfolio, or Actual Portfolio with
respect to a series of Active Proxy
Portfolio Shares is not disseminated to
all market participants at the same time,
the Exchange shall halt trading in such
series until such time as the NAV, Proxy
Portfolio, or Actual Portfolio is available
to all market participants at the same
time.
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Shares subject to the Exchange’s
existing rules governing the trading of
equity securities. Shares will trade on
the NYSE Arca Marketplace in all
trading sessions in accordance with
NYSE Arca Rule 7.34–E(a). As provided
in NYSE Arca Rule 7.6–E, the minimum
price variation (‘‘MPV’’) for quoting and
entry of orders in equity securities
traded on the NYSE Arca Marketplace is
$0.01, with the exception of securities
that are priced less than $1.00 for which
the MPV for order entry is $0.0001.
The Shares will conform to the initial
and continued listing criteria under
NYSE Arca Rule 8.601–E. The Exchange
has appropriate rules to facilitate
trading in the Shares during all trading
sessions.
A minimum of 100,000 Shares for the
Fund will be outstanding at the
commencement of trading on the
Exchange. In addition, pursuant to Rule
8.601–E(d)(1)(B), the Exchange, prior to
commencement of trading in the Shares,
will obtain a representation from the
Trust that the NAV per Share of the
Fund will be calculated daily, that the
NAV, Proxy Portfolio, and the Actual
Portfolio for the Fund will be made
publicly available to all market
participants at the same time, and the
Trust and any person acting on behalf
of the Trust will comply with
Regulation Fair Disclosure under the
Securities Exchange Act of 1934,
including with respect to any Custom
Basket.
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 the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
will continue to monitor Exchange
members for compliance with such
requirements.
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Surveillance
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, which are designed to detect
violations of Exchange rules and
applicable federal securities laws.20 The
Exchange represents that these
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 surveillances referred to above
generally focus on detecting securities
trading outside their normal patterns,
which could be indicative of
manipulative or other violative activity.
When such situations are detected,
surveillance analysis follows and
investigations are opened, where
appropriate, to review the behavior of
all relevant parties for all relevant
trading violations.
The Exchange or FINRA, on behalf of
the Exchange, or both, will
communicate as needed regarding
trading in the Shares and underlying
exchange-traded instruments with other
markets and other entities that are
members of the ISG, and the Exchange
or FINRA, on behalf of the Exchange, or
both, may obtain trading information
regarding trading such securities and
underlying exchange-traded instruments
from such markets and other entities. In
addition, the Exchange may obtain
information regarding trading in such
securities and underlying exchangetraded instruments from markets and
other entities that are members of ISG or
with which the Exchange has in place
a comprehensive surveillance sharing
agreement.21
The Adviser will make available daily
to FINRA and the Exchange the Actual
Portfolio of the Fund, upon request, in
order to facilitate the performance of the
surveillances referred to above.
In addition, the Exchange also has a
general policy prohibiting the
distribution of material, non-public
information by its employees.
Commentary .03 to NYSE Arca Rule
8.601–E provides that the Exchange will
implement and maintain written
surveillance procedures for Active
20 FINRA conducts 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.
21 For a list of the current members of ISG, see
www.isgportal.org.
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Jkt 256001
Proxy Portfolio Shares. As part of these
surveillance procedures, the Investment
Company’s investment adviser will,
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 each
series of Active Proxy Portfolio Shares.
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 Active
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 Active Proxy Portfolio Shares.
The Exchange will utilize its existing
procedures to monitor issuer
compliance with the requirements of
Rule 8.601–E. For example, the
Exchange will continue to use intraday
alerts that will notify Exchange
personnel of trading activity throughout
the day that may indicate that unusual
conditions or circumstances are present
that could be detrimental to the
maintenance of a fair and orderly
market. The Exchange will require from
the issuer of a series of Active Proxy
Portfolio Shares, upon initial listing and
periodically thereafter, a representation
that it is in compliance with Rule
8.601–E. The Exchange notes that
Commentary .01 to Rule 8.601–E
requires an issuer of Active Proxy
Portfolio Shares to notify the Exchange
of any failure to comply with the
continued listing requirements of Rule
8.601–E. In addition, the Exchange will
require the issuer to represent that it
will notify the Exchange of any failure
to comply with the terms of applicable
exemptive and no-action relief. As part
of its surveillance procedures, the
Exchange will rely on the foregoing
procedures to become aware of any noncompliance with the requirements of
Rule 8.601–E.
With respect to the Fund, all
statements and representations made in
this filing regarding (a) the description
of the portfolio or reference asset, (b)
limitations on portfolio holdings or
reference assets, or (c) the applicability
of Exchange listing rules specified in
this rule filing shall constitute
continued listing requirements for
listing the Shares on the Exchange. The
Exchange will obtain a representation
from the Trust, prior to commencement
of trading in the Shares of the Fund, 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
PO 00000
Frm 00072
Fmt 4703
Sfmt 4703
51711
Section 19(g)(1) of the Act, the Exchange
will monitor for compliance with the
continued listing requirements. If the
Fund is not in compliance with the
applicable listing requirements, the
Exchange will commence delisting
procedures under NYSE Arca Rule 5.5–
E(m).
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,22 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,23 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.24
With respect to the proposed listing
and trading of Shares of the Fund, the
Exchange believes that the proposed
rule change is designed to prevent
fraudulent and manipulative acts and
practices in that the Shares will be
listed and traded on the Exchange
pursuant to the initial and continued
listing criteria in NYSE Arca Rule
8.601–E.
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.25
The Exchange or FINRA, on behalf of
the Exchange, or both, will
communicate as needed regarding
trading in the Shares and underlying
exchange-traded instruments with other
markets and other entities that are
members of the ISG, and the Exchange
or FINRA, on behalf of the Exchange, or
both, may obtain trading information
regarding trading in the Shares and
underlying exchange-traded instruments
from such markets and other entities. In
addition, the Exchange may obtain
information regarding trading in the
Shares and underlying exchange-traded
instruments from markets and other
entities that are members of ISG or with
which the Exchange has in place a
comprehensive surveillance sharing
agreement. 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
22 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
24 The Exchange represents that, for initial and
continued listing, the Fund will be in compliance
with Rule 10A–3 under the Act, as provided by
NYSE Arca Rule 5.3–E.
25 See note 15 [sic], supra.
23 15
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a comprehensive surveillance sharing
agreement.
The daily dissemination of the
identity and quantity of Proxy Portfolio
component investments, together with
the right of Authorized Participants to
create and redeem each day at the NAV,
will be sufficient for market participants
to value and trade Shares in a manner
that will not lead to significant
deviations between the Shares’ Bid/Ask
Price and NAV.
The Fund’s investments, including
derivatives, will be consistent with its
investment objective and 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).
The proposed rule change is designed
to promote just and equitable principles
of trade and to protect investors and the
public interest in that the Exchange will
obtain a representation from the Trust
that the NAV per Share of the Fund will
be calculated daily and that the NAV,
Proxy Portfolio, Actual Portfolio, and/or
Custom Basket, as applicable, for the
Fund will be made available to all
market participants at the same time.
Investors can obtain the Fund’s SAI,
shareholder reports, and its Form N–
CSR, Form N–PORT, and Form N–CEN.
The Fund’s SAI and shareholder reports
will be available free upon request from
the Fund, and those documents and the
Form N–CSR, Form N–PORT, and Form
N–CEN may be viewed on-screen or
downloaded from the Commission’s
website.
Commentary .03 to NYSE Arca Rule
8.601–E provides that the Exchange will
implement and maintain written
surveillance procedures for Active
Proxy Portfolio Shares. As part of these
surveillance procedures, the Investment
Company’s investment adviser will,
upon request by the Exchange or
FINRA, on behalf of the Exchange, make
available to the Exchange or FINRA the
daily portfolio holdings of each series of
Active Proxy Portfolio Shares. 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 Active
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 Active Proxy Portfolio Shares. With
respect to the Fund, the Adviser will
make available daily to FINRA and the
Exchange the portfolio holdings of the
Fund upon request in order to facilitate
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18:53 Aug 22, 2022
Jkt 256001
the performance of the surveillances
referred to above.
The Exchange will utilize its existing
procedures to monitor compliance with
the requirements of Rule 8.601–E. For
example, the Exchange will continue to
use intraday alerts that will notify
Exchange personnel of trading activity
throughout the day that may indicate
that unusual conditions or
circumstances are present that could be
detrimental to the maintenance of a fair
and orderly market. The Exchange will
require from the Trust, upon initial
listing and periodically thereafter, a
representation that it is in compliance
with Rule 8.601–E. The Exchange notes
that Commentary .01 to Rule 8.601–E
requires the issuer of the Shares to
notify the Exchange of any failure to
comply with the continued listing
requirements of Rule 8.601–E. In
addition, the Exchange will require the
issuer to represent that it will notify the
Exchange of any failure to comply with
the terms of applicable exemptive and
no-action relief. The Exchange will rely
on the foregoing procedures to become
aware of any non-compliance with the
requirements of Rule 8.601–E.
In addition, with respect to the Fund,
a large amount of information will be
publicly available regarding the Fund
and the Shares, thereby promoting
market transparency.
Quotation and last sale information
for the Shares and U.S. exchange-traded
instruments (excluding futures
contracts) will be available via the CTA
high-speed line, from the exchanges on
which such securities trade, or through
major market data vendors or
subscription services. Quotation and
last sale information for futures
contracts will be available from the
exchanges on which they trade. Intraday
price information for all exchangetraded instruments, which include all
eligible instruments except cash and
cash equivalents, will be available from
the exchanges on which they trade, or
through major market data vendors or
subscription services. Intraday price
information for cash equivalents is
available through major market data
vendors, subscription services and/or
pricing services.
The website for the Fund will include
a form of the prospectus that may be
downloaded, and additional data
relating to NAV and other applicable
quantitative information, updated on a
daily basis. Trading in Shares of the
Fund will be halted if the circuit breaker
parameters in NYSE Arca Rule 7.12–E
have been reached or because of market
conditions or for reasons that, in the
view of the Exchange, make trading in
the Shares inadvisable. Trading in the
PO 00000
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Fmt 4703
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Shares will be subject to NYSE Arca
Rule 8.601–E(d)(2)(D), which sets forth
circumstances under which Shares of
the Fund will be halted. In addition, as
noted above, investors will have ready
access to the Proxy Portfolio and
quotation and last sale information for
the Shares. The identity and quantity of
investments in the Proxy Portfolio will
be publicly available on the Fund’s
website before the commencement of
trading in Shares on each Business Day.
The Shares will conform to the initial
and continued listing criteria under
Rule 8.601–E.26
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.27
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.
The proposed rule change is designed
to perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest in that
it will facilitate the listing and trading
of an additional type of activelymanaged exchange-traded product that
will enhance competition among market
participants, to the benefit of investors
and the marketplace. The Exchange will
obtain a representation from the
Adviser, prior to commencement of
trading in the Shares of the Fund, 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 Act, the Exchange
will monitor for compliance with the
continued listing requirements. If the
Fund is not in compliance with the
applicable listing requirements, the
Exchange will commence delisting
procedures under NYSE Arca Rule 5.5–
E(m).
As noted above, the Exchange has in
place surveillance procedures relating to
trading in the Shares and may obtain
information via ISG from other
exchanges that are members of ISG or
with which the Exchange has entered
into a comprehensive surveillance
sharing agreement. In addition, as noted
above, investors will have ready access
to information regarding quotation and
last sale information for the Shares.
26 See
27 See
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note 4, supra.
note 15 [sic], supra.
23AUN1
Federal Register / Vol. 87, No. 162 / Tuesday, August 23, 2022 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes the proposed rule
change would permit listing and trading
of an additional actively-managed ETF
that has characteristics different from
existing actively-managed and index
ETFs and would introduce additional
competition among various ETF
products to the benefit of investors.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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 28 and Rule 19b–
4(f)(6) thereunder.29
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act normally does not become operative
for 30 days after the date of its filing.
However, Rule 19b–4(f)(6)(iii) 30 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 requested
that the Commission waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange notes that the
Commission has approved and noticed
for immediate effectiveness proposed
rule changes to permit listing and
trading on the Exchange of Active Proxy
Portfolio Shares similar to the Fund.31
The proposed listing rule for the Fund
28 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.
30 17 CFR 240.19b–4(f)(6)(iii).
31 See supra notes 9 and 10.
lotter on DSK11XQN23PROD with NOTICES1
29 17
VerDate Sep<11>2014
18:53 Aug 22, 2022
Jkt 256001
raises no novel legal or regulatory
issues. Thus, the Commission believes
that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest.
Accordingly, the Commission hereby
waives the 30-day operative delay and
designates the proposed rule change
operative upon filing.32
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEARCA–2022–51 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to: Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEARCA–2022–51. 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
32 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
PO 00000
Frm 00074
Fmt 4703
Sfmt 4703
51713
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSEARCA–2022–51 and
should be submitted on or before
September 13, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022–18096 Filed 8–22–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–95530; File No. SR–CBOE–
2022–042]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Facility
Fees Section in the Fees Schedule in
Connection With the Exchange’s New
Trading Floor
August 17, 2022.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’),2 and Rule 19b–4 thereunder,3
notice is hereby given that on August 5,
2022, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘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
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
its Facility Fees section in the Fees
Schedule in connection with the
33 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
E:\FR\FM\23AUN1.SGM
23AUN1
]]>Agencies
[Federal Register Volume 87, Number 162 (Tuesday, August 23, 2022)]
[Notices]
[Pages 51706-51713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18096]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95526; File No. SR-NYSEARCA-2022-51]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To List and Trade
Shares of the Thrivent Small-Mid Cap ESG ETF Under NYSE Arca Rule
8.601-E
August 17, 2022.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on August 5, 2022, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade shares of the Thrivent
Small-Mid Cap ESG ETF under NYSE Arca Rule 8.601-E. The proposed rule
change is available on the Exchange's website at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange has adopted NYSE Arca Rule 8.601-E for the purpose of
permitting the listing and trading, or trading pursuant to unlisted
trading privileges (``UTP''), of Active Proxy Portfolio Shares, which
are securities issued by an actively managed open-end investment
management company.\4\ Commentary .01 to Rule 8.601-E 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. Therefore, the Exchange is submitting this proposal in
order to list and trade shares (``Shares'') as Active
[[Page 51707]]
Proxy Portfolio Shares of the Thrivent Small-Mid Cap ESG ETF (the
``Fund'') under Rule 8.601-E.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 89185 (June 29,
2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95). Rule 8.601-
E(c)(1) provides that ``[t]he term ``Active Proxy Portfolio Share''
means a security that (a) is issued by a 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 minimum number of shares, or multiples thereof, in return
for a deposit by the purchaser of the Proxy Portfolio or Custom
Basket, as applicable, 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 or Custom Basket, as applicable, 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 ``[t]he 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 ``[t]he 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.''
Rule 8.601-E(c)(4) provides that the term ``Custom Basket'' means a
portfolio of securities that is different from the Proxy Portfolio
and is otherwise consistent with the exemptive relief issued
pursuant to the Investment Company Act of 1940 applicable to a
series of Active Proxy Portfolio Shares.
---------------------------------------------------------------------------
Key Features of Active Proxy Portfolio Shares
While funds issuing Active Proxy Portfolio Shares will be actively-
managed and, to that extent, will be similar to Managed Fund Shares,
Active Proxy Portfolio Shares differ from Managed Fund Shares in the
following important respects. First, in contrast to Managed Fund
Shares, which are actively-managed funds listed and traded under NYSE
Arca Rule 8.600-E \5\ and for which a ``Disclosed Portfolio'' is
required to be disseminated at least once daily,\6\ the portfolio for
an issue of Active Proxy Portfolio Shares will be publicly disclosed
within at least 60 days following the end of every fiscal quarter in
accordance with normal disclosure requirements otherwise applicable to
open-end management investment companies registered under the
Investment Company Act of 1940 (the ``1940 Act'').\7\ The composition
of the portfolio of an issue of Active Proxy Portfolio Shares would not
be available at commencement of Exchange listing and trading. Second,
in connection with the creation and redemption of Active Proxy
Portfolio Shares, such creation or redemption may be exchanged for a
Proxy Portfolio or Custom Basket, as applicable, and/or cash with a
value equal to the next-determined NAV. A series of Active Proxy
Portfolio Shares will disclose the Proxy Portfolio on a daily basis,
which, as described above, is designed to track closely the daily
performance of the Actual Portfolio of a series of Active Proxy
Portfolio Shares, instead of the actual holdings of the Investment
Company, as provided by a series of Managed Fund Shares. As set forth
in NYSE Arca Rule 8.601-E(d)(2)(B)(ii), for Active Proxy Portfolio
Shares using a Custom Basket, each Business Day,\8\ before the opening
of trading in the Core Trading Session (as defined in NYSE Arca Rule
7.34-E (a)), the Investment Company shall make publicly available on
its website the composition of any Custom Basket transacted on the
previous Business Day, except a Custom Basket that differs from the
applicable Proxy Portfolio only with respect to cash.
---------------------------------------------------------------------------
\5\ The Commission has previously approved listing and trading
on the Exchange of a number of issues of Managed Fund Shares under
NYSE Arca Rule 8.600-E. See, e.g., Securities Exchange Act Release
Nos. 57801 (May 8, 2008), 73 FR 27878 (May 14, 2008) (SR-NYSEArca-
2008-31) (order approving Exchange listing and trading of twelve
actively-managed funds of the WisdomTree Trust); 60460 (August 7,
2009), 74 FR 41468 (August 17, 2009) (SR-NYSEArca-2009-55) (order
approving listing of Dent Tactical ETF); 63076 (October 12, 2010),
75 FR 63874 (October 18, 2010) (SR-NYSEArca-2010-79) (order
approving Exchange listing and trading of Cambria Global Tactical
ETF); 63802 (January 31, 2011), 76 FR 6503 (February 4, 2011) (SR-
NYSEArca-2010-118) (order approving Exchange listing and trading of
the SiM Dynamic Allocation Diversified Income ETF and SiM Dynamic
Allocation Growth Income ETF). The Commission also has approved a
proposed rule change relating to generic listing standards for
Managed Fund Shares. See Securities Exchange Act Release No. 78397
(July 22, 2016), 81 FR 49320 (July 27, 2016) (SR-NYSEArca-2015-110)
(amending NYSE Arca Equities Rule 8.600 to adopt generic listing
standards for Managed Fund Shares).
\6\ NYSE Arca Rule 8.600-E(c)(2) defines the term ``Disclosed
Portfolio'' as 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. NYSE Arca Rule 8.600-E(d)(2)(B)(i) requires
that the Disclosed Portfolio will be disseminated at least once
daily and will be made available to all market participants at the
same time.
\7\ A mutual fund is required to file with the Commission its
complete portfolio schedules for the second and fourth fiscal
quarters on Form N-CSR under the 1940 Act. Information reported on
Form N-PORT for the third month of a fund's fiscal quarter will be
made publicly available 60 days after the end of a fund's fiscal
quarter. 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 series of Active Proxy Portfolio Shares' Statement of Additional
Information (``SAI''), its Shareholder Reports, its Form N-CSR,
filed twice a year, and its Form N-CEN, filed annually. A series of
Active Proxy Portfolio Shares' SAI and Shareholder Reports will be
available free upon request from the Investment Company, and those
documents and the Form N-PORT, Form N-CSR, and Form N-CEN may be
viewed on-screen or downloaded from the Commission's website at
www.sec.gov.
\8\ ``Business Day'' is defined to mean any day that the
Exchange is open, including any day when the Fund satisfies
redemption requests as required by Section 22(e) of the 1940 Act.
---------------------------------------------------------------------------
The Commission has previously approved \9\ and noticed for
immediate effectiveness \10\ the listing and trading on the Exchange of
series of Active Proxy Portfolio Shares under NYSE Arca Rule 8.601-E.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release Nos. 89185 (June 29,
2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95) (Notice of
Filing of Amendment No. 6 and Order Granting Accelerated Approval of
a Proposed Rule Change, as Modified by Amendment No. 6, to Adopt
NYSE Arca Rule 8.601-E to Permit the Listing and Trading of Active
Proxy Portfolio Shares and To List and Trade Shares of the Natixis
U.S. Equity Opportunities ETF Under Proposed NYSE Arca Rule 8.601-
E); 89192 (June 30, 2020), 85 FR 40699 (July 7, 2020) (SR-NYSEArca-
2019-96) (Notice of Filing of Amendment No. 5 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment No. 5, to List and Trade Two Series of Active Proxy
Portfolio Shares Issued by the American Century ETF Trust under NYSE
Arca Rule 8.601-E); 89191 (June 30, 2020), 85 FR 40358 (July 6,
2020) (SR-NYSEArca-2019-92) (Notice of Filing of Amendment No. 3 and
Order Granting Accelerated Approval of a Proposed Rule Change, as
Modified by Amendment No. 3, to List and Trade Four Series of Active
Proxy Portfolio Shares Issued by T. Rowe Price Exchange-Traded
Funds, Inc. under NYSE Arca Rule 8.601-E); 89438 (July 31, 2020), 85
FR 47821 (August 6, 2020) (SR-NYSEArca-2020-51) (Order Granting
Approval of a Proposed Rule Change, as Modified by Amendment No. 2,
to List and Trade Shares of Natixis Vaughan Nelson Select ETF and
Natixis Vaughan Nelson MidCap ETF under NYSE Arca Rule 8.601-E).
\10\ See Securities Exchange Act Release Nos. 92104 (June 3,
2021), 86 FR 30635 (June 9, 2021) (NYSEArca-2021-46) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to List
and Trade Shares of the Nuveen Santa Barbara Dividend Growth ETF,
Nuveen Small Cap Select ETF, and Nuveen Winslow Large-Cap Growth ESG
ETF Under NYSE Arca Rule 8.601-E (Active Proxy Portfolio Shares);
and 92958 (September 13, 2021), 86 FR 51933 (September 17, 2021)
(NYSEArca-2021-77) (Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To List and Trade Shares of the Nuveen Growth
Opportunities ETF Under NYSE Arca Rule 8.601-E (Active Proxy
Portfolio Shares).
---------------------------------------------------------------------------
The Shares of the Fund will be issued by the Thrivent ETF Trust
(the ``Trust''), which is organized a Massachusetts Business Trust and
registered with the Commission as an open-end management investment
company.\11\ Thrivent Asset Management, LLC will be the investment
adviser to the Fund (the ``Adviser''). State Street Bank and Trust
Company (``State Street'') will serve as the Fund's transfer agent.
State Street will serve as the Fund's custodian. ALPS Distributors,
Inc. will act as the distributor (the ``Distributor'') for the Fund.
---------------------------------------------------------------------------
\11\ The Trust is registered under the 1940 Act. On August 4,
2022, the Trust filed an amended registration statement on Form N-1A
under the 1940 Act relating to the Fund (File No. 333-261454) (the
``Registration Statement''). The Trust 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-
15288), dated February 9, 2022 (the ``Application''). See Investment
Company Act Release No. 34345 (July 27, 2021). On March 15, 2022,
the Commission issued an order (the ``Exemptive Order'') under the
1940 Act granting the exemptions requested in the Application
(Investment Company Act Release No. 34534, March 15, 2022).
Investments made by the Fund will comply with the conditions set
forth in the Application and the Exemptive Order. See e.g., note 12,
infra. The description of the operation of the Fund herein is based,
in part, on the Registration Statement, the Application and the
Exemptive Order. The Exchange will not commence trading in Shares of
the Fund until the Registration Statement is effective.
---------------------------------------------------------------------------
Commentary .04 to NYSE Arca Rule 8.601-E provides that, if the
investment adviser to the Investment Company issuing Active Proxy
Portfolio Shares is registered as a broker-dealer or is affiliated with
a broker-dealer, such investment adviser will erect and maintain a
``fire wall'' between the investment adviser and personnel of the
broker-dealer or broker-dealer affiliate, as applicable, with respect
to access to information concerning the composition and/or changes to
such Investment Company's Actual Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable. Any person related to the
[[Page 51708]]
investment adviser or Investment Company who makes decisions pertaining
to the Investment Company's Actual Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable, or has access to non-public information
regarding the Investment Company's Actual Portfolio, Proxy Portfolio,
and/or the Custom Basket, as applicable, or changes thereto must be
subject to procedures reasonably designed to prevent the use and
dissemination of material non-public information regarding the Actual
Portfolio, Proxy Portfolio, and/or the Custom Basket, as applicable, or
changes thereto. Commentary .04 is similar to Commentary .03(a)(i) and
(iii) to NYSE Arca Rule 5.2-E(j)(3); however, Commentary .04, in
connection with the establishment of a ``fire wall'' between the
investment adviser and the broker-dealer, reflects the applicable open-
end fund's portfolio, not an underlying benchmark index, as is the case
with index-based funds.\12\ Commentary .04 is also similar to
Commentary .06 to Rule 8.600-E related to Managed Fund Shares, except
that Commentary .04 relates to establishment and maintenance of a
``fire wall'' between the investment adviser and personnel of the
broker-dealer or broker-dealer affiliate, as applicable, applicable to
an Investment Company's Actual Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable, or changes thereto, and not just to the
underlying portfolio, as is the case with Managed Fund Shares.
---------------------------------------------------------------------------
\12\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Adviser and its related personnel will be
subject to the provisions of Rule 204A-1 under the Advisers Act
relating to codes of ethics. This Rule requires investment advisers
to adopt a code of ethics that reflects the fiduciary nature of the
relationship to clients as well as compliance with other applicable
securities laws. Accordingly, procedures designed to prevent the
communication and misuse of non-public information by an investment
adviser must be consistent with Rule 204A-1 under the Advisers Act.
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful
for an investment adviser to provide investment advice to clients
unless such investment adviser has (i) adopted and implemented
written policies and procedures reasonably designed to prevent
violations, by the investment adviser and its supervised persons, of
the Advisers Act and the Commission rules adopted thereunder; (ii)
implemented, at a minimum, an annual review regarding the adequacy
of the policies and procedures established pursuant to subparagraph
(i) above and the effectiveness of their implementation; and (iii)
designated an individual (who is a supervised person) responsible
for administering the policies and procedures adopted under
subparagraph (i) above.
---------------------------------------------------------------------------
In addition, Commentary .05 to Rule 8.601-E provides that any
person or entity, including a custodian, Reporting Authority,
distributor, or administrator, who has access to non-public information
regarding the Investment Company's Actual Portfolio, the Proxy
Portfolio, or the Custom Basket, as applicable, or changes thereto,
must be subject to procedures reasonably designed to prevent the use
and dissemination of material non-public information regarding the
applicable Investment Company Actual Portfolio, the Proxy Portfolio, or
the Custom Basket, as applicable, 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 Investment Company Actual Portfolio, Proxy Portfolio,
or Custom Basket, as applicable.
The Adviser is not registered as a broker-dealer but is affiliated
with broker-dealers. The Adviser has implemented and will maintain a
``fire wall'' with respect to such broker-dealer affiliates regarding
access to information concerning the composition of and/or changes to
the Fund's Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as
applicable.
In the event (a) the Adviser becomes registered as a broker-dealer
or becomes newly affiliated with a broker-dealer, or (b) any new
adviser or sub-adviser is a registered broker-dealer, or becomes
affiliated with a broker-dealer, it will implement and maintain a
``fire wall'' with respect to its relevant personnel or its broker-
dealer affiliate regarding access to information concerning the
composition and/or changes to the Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable, and will be subject to
procedures designed to prevent the use and dissemination of material
non-public information regarding the Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable, or changes thereto. Any
person related to the Adviser or the Fund who makes decisions
pertaining to the Fund's Actual Portfolio, the Proxy Portfolio, or
Custom Basket, as applicable, or has access to non-public information
regarding the Fund's Actual Portfolio, the Proxy Portfolio, and/or the
Custom Basket, as applicable, 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,
the Proxy Portfolio, and/or the Custom Basket, as applicable, or
changes thereto.
In addition, any person or entity, including any service provider
for the Fund, who has access to non-public information regarding the
Fund's Actual Portfolio, the Proxy Portfolio, and/or the Custom Basket,
as applicable, 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, the Proxy
Portfolio, and/or the Custom Basket, as applicable, 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 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 and/or changes to the Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable.
Description of the Fund
According to the Registration Statement, the Fund will generate a
Proxy Portfolio that will be designed to closely track the daily
performance of the Fund but will not be the Fund's Actual Portfolio.
The Proxy Portfolio is comprised of (1) some but not all of the Fund's
actual holdings and will include only certain securities that trade on
a national securities exchange contemporaneously with the Fund's
Shares, and (2) cash and cash equivalents. The Fund will publish on its
website the Proxy Portfolio before the commencement of trading of the
Fund's Shares on each Business Day. In addition to the Proxy Portfolio,
the Fund will disclose daily the percentage weight overlap between the
holdings of the Proxy Portfolio and the Actual Portfolio that formed
the basis for the Fund's calculation of NAV at the end of the prior
Business Day (``Proxy Overlap'') and the standard deviation over the
past three months of the daily proxy spread (i.e., the difference, in
percentage terms, between the Proxy Portfolio per share NAV and that of
the Actual Portfolio) (``Tracking Error''). Daily disclosure of the
Proxy Portfolio, the Proxy Overlap, the Tracking Error and the other
related proxy portfolio information is designed to ensure that
investors can purchase and sell Fund shares in the secondary market at
prices that are at or close to the underlying NAV per share of the Fund
by enabling Authorized Participants and other market participants to
accurately assess the profitability of arbitrage trades in Shares of
the Fund.
The Fund's holdings will conform to the permissible investments as
set forth in the Application and Exemptive Order, and the holdings will
be
[[Page 51709]]
consistent with all requirements in the Application and Exemptive
Order.\13\ 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.
---------------------------------------------------------------------------
\13\ Pursuant to the Application and Exemptive Order, the
permissible investments for the Fund include only the following
instruments: ETFs, Exchange-traded notes, Exchange-traded common
stocks, common stocks listed on a foreign exchange that trade on
such exchange contemporaneously with the Shares, Exchange-traded
preferred stocks, Exchange-traded American depositary receipts,
Exchange-traded real estate investment trusts, Exchange-traded
commodity pools, Exchange-traded metals trusts, Exchange-traded
currency trusts, and Exchange-traded futures that trade
contemporaneously with the Shares, as well as cash and cash
equivalents (short-term U.S. Treasury securities, government money
market funds, and repurchase agreements). For purposes of the
application, exchange-traded futures are U.S. listed futures
contracts where the futures 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. All futures contracts that the Fund may invest
in will be traded on a U.S. futures exchange. For purposes of this
footnote only, ``Exchange'' means a national securities exchange as
defined in section 2(a)(26) of the Act.
---------------------------------------------------------------------------
According to the Registration Statement, the Fund's investment
objective is to seek long-term capital growth. Under normal market
conditions, the Fund will invest at least 80% of its net assets
(including the amount of any borrowings for investment purposes) in
securities of small and mid-sized companies that are listed or traded
on a national securities exchange and that the Adviser believes have
sustainable long-term business models and a demonstrated commitment to
environmental, social and/or corporate governance (``ESG'') policies,
practices or outcomes.
Investment Restrictions
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
limited to and consistent with permissible holdings as described in the
Application and Exemptive Order and all requirements in the Application
and Exemptive Order.\14\ 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).
---------------------------------------------------------------------------
\14\ Id.
---------------------------------------------------------------------------
Creations and Redemptions of Shares
According to the Registration Statement, Shares of the Fund may be
acquired or redeemed directly from the Fund only in specified minimum
size ``Creation Units'' as defined below or multiples thereof. The Fund
will offer and issue Shares at the applicable NAV to broker-dealers and
other financial intermediaries who are participants in the National
Securities Clearing Corporation (``NSCC'') and who have signed an
Authorized Participant Agreement with the Distributor (each, an
``Authorized Participant''), and accepted by State Street, only in
aggregations of a specified number of Shares (``Creation Units''), in
exchange for a basket of securities and/or instruments (the ``Deposit
Securities''), together with a deposit of a specified cash payment (the
``Cash Component''). The NAV of the Fund's Shares will be calculated
each Business Day as of the close of regular trading on the Exchange,
ordinarily 4:00 p.m. Eastern Time (``E.T.''). A Creation Unit will
consist of at least 10,000 Shares.
In certain circumstances, the Fund may issue Creation Units solely
in exchange for a specified all-cash payment (``Cash Deposit''). Shares
of the Fund are likewise redeemable by the Fund only in Creation Units,
generally in exchange for a basket of securities and instruments
(``Redemption Securities''), together with a Cash Component. The names
and quantities of the securities and instruments that constitute the
Deposit Securities and Redemption Securities are generally the same as
the Fund's Proxy Portfolio, except to the extent purchases and
redemptions are made entirely or partially on a cash basis. In
addition, the Fund may determine to use baskets that differ from the
Proxy Portfolio in that they include instruments that are not in the
Proxy Portfolio, or are included in the Proxy Portfolio but in
different weightings. As with the offer and sale of Creation Units, the
Fund may, in certain circumstances, redeem Creation Units in exchange
for a specified all-cash payment.
In order to initiate a creation order for a Creation Unit, an
Authorized Participant must submit an irrevocable order to purchase
Shares in proper form to State Street by the close of regular trading
on the NYSE, typically 4:00 p.m. E.T. on a Business Day for creation of
Creation Units to be effected based on the NAV of Shares of the Fund on
that Business Day. The date on which an order to create Creation Units
(or an order to redeem Creation Units, as discussed below) is placed is
referred to as the ``Transmittal Date.'' Orders must be transmitted by
an Authorized Participant via the electronic order entry system, by
telephone or other transmission method acceptable to State Street and
the Distributor pursuant to procedures set forth in the Authorized
Participant Agreement.
Fund Shares may be redeemed only in Creation Units at the NAV next
determined after receipt of a redemption request in proper form and
only on a Business Day. The redemption proceeds for a Creation Unit
will generally consist of securities represented in the Proxy Portfolio
or a Custom Basket (such securities, ``Fund Security'' or ``Fund
Securities'') plus cash in an amount equal to the difference between
the NAV of the Creation Unit being redeemed, as next determined after a
receipt of a request in proper form, and the value of the Fund
Securities, minus any fees. The Fund may substitute a ``cash-in-lieu''
amount to replace any Fund Security in certain limited circumstances.
The amount of cash paid out in such cases will be equivalent to the
value of the instrument listed as a Fund Security. In the event that
the Fund Securities have a value greater than the NAV of the Creation
Unit, a compensating cash payment equal to the difference will be
included in the Cash Component required to be delivered by an
Authorized Participant. In order to initiate a redemption order for a
Creation Unit to be effected based on the NAV of Shares of the Fund on
that Business Day, an Authorized Participant must submit an irrevocable
order to redeem the Creation Unit in proper form to State Street by the
close of regular trading on the NYSE, typically 4:00 p.m. E.T. on that
Business Day.
Availability of Information
The Fund's website (www.thriventfunds.com), which will be publicly
available prior to the public offering of Shares, will include a form
of the prospectus for the Fund that may be downloaded. The Fund's
website will include on a daily basis, per Share of the Fund, the prior
Business Day's NAV, the prior Business Day's ``Closing Price'' or
``Bid/Ask Price'' \15\ and a
[[Page 51710]]
calculation of the premium/discount of such Closing Price or Bid/Ask
Price against such NAV.\16\ The Adviser has represented that the Fund's
website will also provide: (1) any other information regarding
premiums/discounts as may be required for other ETFs under Rule 6c-11
under the 1940 Act, as amended, and (2) any information regarding the
bid/ask spread for the Fund as may be required for other ETFs under
Rule 6c-11 under the 1940 Act, as amended. The Fund's website also will
disclose the information required under Rule 8.601-E(c)(3).\17\ The
website and information will be publicly available at no charge.
---------------------------------------------------------------------------
\15\ The ``Bid/Ask Price'' is the midpoint of the highest bid
and lowest offer based upon the National Best Bid and Offer as of
the time of calculation of the Fund's NAV. The ``National Best Bid
and Offer'' is the current national best bid and national best offer
as disseminated by the Consolidated Quotation System or UTP Plan
Securities Information Processor. The ``Closing Price'' of Shares is
the official closing price of the Shares on the Exchange.
\16\ The ``premium/discount'' refers to the premium or discount
to the NAV at the end of a trading day and will be calculated based
on the last Bid/Ask Price or the Closing Price on such trading day.
\17\ See note 4, supra. Rule 8.601-E (c)(3) provides 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 identity and quantity of investments in the Proxy Portfolio for
the Fund will be publicly available on the Fund's website before the
commencement of trading in Shares on each Business Day. The website
will also include information relating to the Proxy Overlap and the
Tracking Error, as discussed above. With respect to each Custom Basket
utilized by the Fund, each Business Day, before the opening of trading
in the Core Trading Session (as defined in NYSE Arca Rule 7.34-E (a)),
the Fund's website will also include the composition of any Custom
Basket transacted on the previous Business Day, except a Custom Basket
that differs from the applicable Proxy Portfolio only with respect to
cash.
Typical mutual fund-style annual, semi-annual and quarterly
disclosures contained in the Fund's Commission filings will be provided
on the Fund's website on a current basis.\18\ Thus, the Fund will
publish the portfolio contents of its Actual Portfolio on a periodic
basis, and no less than 60 days after the end of every fiscal quarter.
---------------------------------------------------------------------------
\18\ See note 7, supra.
---------------------------------------------------------------------------
Investors can also obtain the Fund's SAI, Shareholder Reports, Form
N-CSR, N-PORT, and Form N-CEN. The prospectus, SAI, and Shareholder
Reports are available free upon request, and those documents and the
Form N-CSR, N-PORT, and Form N-CEN may be viewed on-screen or
downloaded from the Commission's website. The Exchange also notes that
pursuant to the Application, the Fund must comply with Regulation Fair
Disclosure, which prohibits selective disclosure of any material non-
public information.
Information regarding the market price of Shares and trading volume
in Shares, will be continually available on a real-time basis
throughout the day on brokers' computer screens and other electronic
services. The previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers.
Quotation and last sale information for the Shares 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. Quotation and last
sale information for futures contracts will be available from the
exchanges on which they trade. Intraday price information for all
exchange-traded instruments, which include all eligible instruments
except cash and cash equivalents, will be available from the exchanges
on which they trade, or through major market data vendors or
subscription services. Intraday price information for cash equivalents
is available through major market data vendors, subscription services
and/or pricing services.
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.\19\ Trading in Shares of the Fund
will be halted if the circuit breaker parameters in NYSE Arca Rule
7.12-E have been reached. Trading also may be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. Trading in the Shares will be
subject to NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth
circumstances under which Shares of the Fund will be halted.
---------------------------------------------------------------------------
\19\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------
Specifically, Rule 8.601-E(d)(2)(D) provides that the Exchange may
consider all relevant factors in exercising its discretion to halt
trading in a series of Active Proxy Portfolio Shares. These may
include: (a) 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 (b) whether other unusual
conditions or circumstances detrimental to the maintenance of a fair
and orderly market are present. If the Exchange becomes aware that the
NAV, Proxy Portfolio, or Actual Portfolio with respect to a series of
Active Proxy Portfolio Shares is not disseminated to all market
participants at the same time, the Exchange shall halt trading in such
series until such time as the NAV, Proxy Portfolio, or Actual Portfolio
is available to all market participants at the same time.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace in all trading sessions in accordance with
NYSE Arca Rule 7.34-E(a). As provided in NYSE Arca Rule 7.6-E, the
minimum price variation (``MPV'') for quoting and entry of orders in
equity securities traded on the NYSE Arca Marketplace is $0.01, with
the exception of securities that are priced less than $1.00 for which
the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing
criteria under NYSE Arca Rule 8.601-E. The Exchange has appropriate
rules to facilitate trading in the Shares during all trading sessions.
A minimum of 100,000 Shares for the Fund will be outstanding at the
commencement of trading on the Exchange. In addition, pursuant to Rule
8.601-E(d)(1)(B), the Exchange, prior to commencement of trading in the
Shares, will obtain a representation from the Trust that the NAV per
Share of the Fund will be calculated daily, that the NAV, Proxy
Portfolio, and the Actual Portfolio for the Fund will be made publicly
available to all market participants at the same time, and the Trust
and any person acting on behalf of the Trust will comply with
Regulation Fair Disclosure under the Securities Exchange Act of 1934,
including with respect to any Custom Basket.
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 the
Financial Industry Regulatory Authority, Inc. (``FINRA'') will continue
to monitor Exchange members for compliance with such requirements.
[[Page 51711]]
Surveillance
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, which are designed to detect violations of Exchange rules
and applicable federal securities laws.\20\ The Exchange represents
that these 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\ FINRA conducts 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.
---------------------------------------------------------------------------
The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and underlying
exchange-traded instruments with other markets and other entities that
are members of the ISG, and the Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading information regarding trading
such securities and underlying exchange-traded instruments from such
markets and other entities. In addition, the Exchange may obtain
information regarding trading in such securities and underlying
exchange-traded instruments from markets and other entities that are
members of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.\21\
---------------------------------------------------------------------------
\21\ For a list of the current members of ISG, see
www.isgportal.org.
---------------------------------------------------------------------------
The Adviser will make available daily to FINRA and the Exchange the
Actual Portfolio of the Fund, upon request, in order to facilitate the
performance of the surveillances referred to above.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Commentary .03 to NYSE Arca Rule 8.601-E provides that the Exchange
will implement and maintain written surveillance procedures for Active
Proxy Portfolio Shares. As part of these surveillance procedures, the
Investment Company's investment adviser will, 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 each series of
Active Proxy Portfolio Shares. 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 Active 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 Active Proxy Portfolio Shares.
The Exchange will utilize its existing procedures to monitor issuer
compliance with the requirements of Rule 8.601-E. For example, the
Exchange will continue to use intraday alerts that will notify Exchange
personnel of trading activity throughout the day that may indicate that
unusual conditions or circumstances are present that could be
detrimental to the maintenance of a fair and orderly market. The
Exchange will require from the issuer of a series of Active Proxy
Portfolio Shares, upon initial listing and periodically thereafter, a
representation that it is in compliance with Rule 8.601-E. The Exchange
notes that Commentary .01 to Rule 8.601-E requires an issuer of Active
Proxy Portfolio Shares to notify the Exchange of any failure to comply
with the continued listing requirements of Rule 8.601-E. In addition,
the Exchange will require the issuer to represent that it will notify
the Exchange of any failure to comply with the terms of applicable
exemptive and no-action relief. As part of its surveillance procedures,
the Exchange will rely on the foregoing procedures to become aware of
any non-compliance with the requirements of Rule 8.601-E.
With respect to the Fund, all statements and representations made
in this filing regarding (a) the description of the portfolio or
reference asset, (b) limitations on portfolio holdings or reference
assets, or (c) the applicability of Exchange listing rules specified in
this rule filing shall constitute continued listing requirements for
listing the Shares on the Exchange. The Exchange will obtain a
representation from the Trust, prior to commencement of trading in the
Shares of the Fund, 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 Act, the
Exchange will monitor for compliance with the continued listing
requirements. If the Fund is not in compliance with the applicable
listing requirements, the Exchange will commence delisting procedures
under NYSE Arca Rule 5.5-E(m).
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\22\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\23\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest.\24\
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78f(b).
\23\ 15 U.S.C. 78f(b)(5).
\24\ The Exchange represents that, for initial and continued
listing, the Fund will be in compliance with Rule 10A-3 under the
Act, as provided by NYSE Arca Rule 5.3-E.
---------------------------------------------------------------------------
With respect to the proposed listing and trading of Shares of the
Fund, the Exchange believes that the proposed rule change is designed
to prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Rule 8.601-E.
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.\25\
---------------------------------------------------------------------------
\25\ See note 15 [sic], supra.
---------------------------------------------------------------------------
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and underlying
exchange-traded instruments with other markets and other entities that
are members of the ISG, and the Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading information regarding trading in
the Shares and underlying exchange-traded instruments from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Shares and underlying exchange-traded
instruments from markets and other entities that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement. 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
[[Page 51712]]
a comprehensive surveillance sharing agreement.
The daily dissemination of the identity and quantity of Proxy
Portfolio component investments, together with the right of Authorized
Participants to create and redeem each day at the NAV, will be
sufficient for market participants to value and trade Shares in a
manner that will not lead to significant deviations between the Shares'
Bid/Ask Price and NAV.
The Fund's investments, including derivatives, will be consistent
with its investment objective and 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).
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation from the Trust that the
NAV per Share of the Fund will be calculated daily and that the NAV,
Proxy Portfolio, Actual Portfolio, and/or Custom Basket, as applicable,
for the Fund will be made available to all market participants at the
same time. Investors can obtain the Fund's SAI, shareholder reports,
and its Form N-CSR, Form N-PORT, and Form N-CEN. The Fund's SAI and
shareholder reports will be available free upon request from the Fund,
and those documents and the Form N-CSR, Form N-PORT, and Form N-CEN may
be viewed on-screen or downloaded from the Commission's website.
Commentary .03 to NYSE Arca Rule 8.601-E provides that the Exchange
will implement and maintain written surveillance procedures for Active
Proxy Portfolio Shares. As part of these surveillance procedures, the
Investment Company's investment adviser will, upon request by the
Exchange or FINRA, on behalf of the Exchange, make available to the
Exchange or FINRA the daily portfolio holdings of each series of Active
Proxy Portfolio Shares. 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 Active 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 Active Proxy Portfolio Shares.
With respect to the Fund, the Adviser will make available daily to
FINRA and the Exchange the portfolio holdings of the Fund upon request
in order to facilitate the performance of the surveillances referred to
above.
The Exchange will utilize its existing procedures to monitor
compliance with the requirements of Rule 8.601-E. For example, the
Exchange will continue to use intraday alerts that will notify Exchange
personnel of trading activity throughout the day that may indicate that
unusual conditions or circumstances are present that could be
detrimental to the maintenance of a fair and orderly market. The
Exchange will require from the Trust, upon initial listing and
periodically thereafter, a representation that it is in compliance with
Rule 8.601-E. The Exchange notes that Commentary .01 to Rule 8.601-E
requires the issuer of the Shares to notify the Exchange of any failure
to comply with the continued listing requirements of Rule 8.601-E. In
addition, the Exchange will require the issuer to represent that it
will notify the Exchange of any failure to comply with the terms of
applicable exemptive and no-action relief. The Exchange will rely on
the foregoing procedures to become aware of any non-compliance with the
requirements of Rule 8.601-E.
In addition, with respect to the Fund, a large amount of
information will be publicly available regarding the Fund and the
Shares, thereby promoting market transparency.
Quotation and last sale information for the Shares and U.S.
exchange-traded instruments (excluding futures contracts) will be
available via the CTA high-speed line, from the exchanges on which such
securities trade, or through major market data vendors or subscription
services. Quotation and last sale information for futures contracts
will be available from the exchanges on which they trade. Intraday
price information for all exchange-traded instruments, which include
all eligible instruments except cash and cash equivalents, will be
available from the exchanges on which they trade, or through major
market data vendors or subscription services. Intraday price
information for cash equivalents is available through major market data
vendors, subscription services and/or pricing services.
The website for the Fund will include a form of the prospectus that
may be downloaded, and additional data relating to NAV and other
applicable quantitative information, updated on a daily basis. Trading
in Shares of the Fund will be halted if the circuit breaker parameters
in NYSE Arca Rule 7.12-E have been reached or because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. Trading in the Shares will be
subject to NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth
circumstances under which Shares of the Fund will be halted. In
addition, as noted above, investors will have ready access to the Proxy
Portfolio and quotation and last sale information for the Shares. The
identity and quantity of investments in the Proxy Portfolio will be
publicly available on the Fund's website before the commencement of
trading in Shares on each Business Day. The Shares will conform to the
initial and continued listing criteria under Rule 8.601-E.\26\
---------------------------------------------------------------------------
\26\ See note 4, supra.
---------------------------------------------------------------------------
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.\27\ 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.
---------------------------------------------------------------------------
\27\ See note 15 [sic], supra.
---------------------------------------------------------------------------
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of actively-managed exchange-traded product that
will enhance competition among market participants, to the benefit of
investors and the marketplace. The Exchange will obtain a
representation from the Adviser, prior to commencement of trading in
the Shares of the Fund, 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 Act, the
Exchange will monitor for compliance with the continued listing
requirements. If the Fund is not in compliance with the applicable
listing requirements, the Exchange will commence delisting procedures
under NYSE Arca Rule 5.5-E(m).
As noted above, the Exchange has in place surveillance procedures
relating to trading in the Shares and may obtain information via ISG
from other exchanges that are members of ISG or with which the Exchange
has entered into a comprehensive surveillance sharing agreement. In
addition, as noted above, investors will have ready access to
information regarding quotation and last sale information for the
Shares.
[[Page 51713]]
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes the
proposed rule change would permit listing and trading of an additional
actively-managed ETF that has characteristics different from existing
actively-managed and index ETFs and would introduce additional
competition among various ETF products to the benefit of investors.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 \28\ and Rule 19b-
4(f)(6) thereunder.\29\
---------------------------------------------------------------------------
\28\ 15 U.S.C. 78s(b)(3)(A).
\29\ 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 normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \30\ 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
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The Exchange
notes that the Commission has approved and noticed for immediate
effectiveness proposed rule changes to permit listing and trading on
the Exchange of Active Proxy Portfolio Shares similar to the Fund.\31\
The proposed listing rule for the Fund raises no novel legal or
regulatory issues. Thus, the Commission believes that waiver of the 30-
day operative delay is consistent with the protection of investors and
the public interest. Accordingly, the Commission hereby waives the 30-
day operative delay and designates the proposed rule change operative
upon filing.\32\
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\30\ 17 CFR 240.19b-4(f)(6)(iii).
\31\ See supra notes 9 and 10.
\32\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEARCA-2022-51 on the subject line.
Paper Comments
Send paper comments in triplicate to: Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number SR-NYSEARCA-2022-51. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEARCA-2022-51 and should be submitted
on or before September 13, 2022.
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\33\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-18096 Filed 8-22-22; 8:45 am]
BILLING CODE 8011-01-P
