Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To List and Trade Shares of Alger Weatherbie Enduring Growth ETF, 14419-14427 [2023-04689]

Download as PDF Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices to the requirement that the deficiency not be greater than 5 percent) to post margin in the form of available equity in the margin account or cash or other marginable securities in order to remedy such a deficiency. As a result, TPHs will benefit from a reduction in transaction costs, and to the extent that equity in the margin account is utilized, TPHs will also benefit from a more straightforward process from an operational standpoint with respect to posting required margin. Lastly, the Commission believes that by imposing the requirement to post margin on protected options or warrant positions that equals the greater of the in-the-money amount of the option or warrant, or the amount by which the aggregate current underlying index value exceeds the absolute value of the protection, while also implementing a requirement that the protection be at all times at least 95% of the aggregate current underlying index value, the proposed rule change addresses the risks associated with protected options or warrant positions (e.g., the risk of exercise of a short position when the option or warrant is in-the-money and tracking error), and appropriately protects investors and the public interest. Accordingly, for the foregoing reasons, the Commission finds that this proposed rule change is consistent with the Exchange Act. SECURITIES AND EXCHANGE COMMISSION IV. Conclusion 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. It is therfore ordered, pursuant to Section 19(b)(2) of the Exchange Act,38 that the proposed rule change (SR– CBOE–2022–058) be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.39 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–04683 Filed 3–7–23; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–97029; File No. SR– NYSEARCA–2023–16] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To List and Trade Shares of Alger Weatherbie Enduring Growth ETF March 2, 2023. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 16, 2023, 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 following under Rule 8.900–E (Managed Portfolio Shares): Alger Weatherbie Enduring Growth ETF. 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. lotter on DSK11XQN23PROD with NOTICES1 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose NYSE Arca Rule 8.900–E permits the listing and trading, or trading pursuant to unlisted trading privileges, of 38 15 39 17 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:48 Mar 07, 2023 1 15 2 17 Jkt 259001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00095 Fmt 4703 Sfmt 4703 14419 Managed Portfolio Shares, which are securities issued by an actively managed open-end investment management company.3 Rule 8.900–E(b)(1) requires the Exchange to file separate proposals under Section 19(b) of the Act before listing and trading any series of Managed Portfolio Shares on the Exchange. Therefore, the Exchange is submitting this proposal in order to list and trade Managed Portfolio Shares of the Alger Weatherbie Enduring Growth ETF (the ‘‘Fund’’) under Rule 8.900–E. The Commission has previously approved 4 and noticed for immediate effectiveness 5 rules permitting the listing and trading on the Exchange of Managed Portfolio Shares under NYSE Arca Rule 8.900–E. 3 Rule 8.900–E(c)(1) provides that the term ‘‘Managed Portfolio Share’’ means a security that (a) represents an interest in an investment company registered under the Investment Company Act of 1940 (‘‘Investment Company’’) organized as an open-end management investment company that invests in a portfolio of securities selected by the Investment Company’s investment adviser consistent with the Investment Company’s investment objectives and policies; (b) is issued in a Creation Unit, or multiples thereof, in return for a designated portfolio of instruments (and/or an amount of cash) with a value equal to the next determined net asset value and delivered to the Authorized Participant (as defined in the Investment Company’s Form N–1A filed with the Commission) through a Confidential Account; (c) when aggregated into a Redemption Unit, or multiples thereof, may be redeemed for a designated portfolio of instruments (and/or an amount of cash) with a value equal to the next determined net asset value delivered to the Confidential Account for the benefit of the Authorized Participant; and (d) the portfolio holdings for which are disclosed within at least 60 days following the end of every fiscal quarter. 4 See Securities Exchange Act Release Nos. 89663 (August 25, 2020), 85 FR 53868 (August 31, 2020) (SR–NYSEArca–2020–48) (Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of Gabelli ETFs Under Rule 8.900–E, Managed Portfolio Shares); 90528 (November 30, 2020), 85 FR 78389 (December 4, 2020) (SR–NYSEArca–2020–80) (Order Approving a Proposed Rule Change, as Modified by Amendment No. 2, To List and Trade Shares of Alger Mid Cap 40 ETF and Alger 25 ETF Under Rule 8.900–E); and 90683 (December 16, 2020), 85 FR 83665 (December 22, 2020) (SR– NYSEArca–2020–94) (Order Approving a Proposed Rule Change, as Modified by Amendments No. 1 and No. 2, To List and Trade Shares of the AdvisorShares Q Portfolio Blended Allocation ETF and AdvisorShares Q Dynamic Growth ETF Under NYSE Arca Rule 8.900–E). 5 See Securities Exchange Act Release Nos. 92349 (July 19, 2021), 86 FR 39084 (July 23, 2021) (SR– NYSEArca–2021–54) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to List and Trade Shares of the Cambiar Large Cap ETF, Cambiar Small Cap ETF and Cambiar SMID ETF); and 94569 (March 31, 2022), 87 FR 19990 (April 6, 2022) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to List and Trade Shares of the DoubleLine Shiller CAPE U.S. Equities ETF under Rule 8.900–E (Managed Portfolio Shares)). E:\FR\FM\08MRN1.SGM 08MRN1 14420 Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices The shares of the Fund (the ‘‘Shares’’) will be issued by The Alger ETF Trust (the ‘‘Trust’’), a business trust organized under the laws of the state of Massachusetts and registered with the Commission as an open-end management investment company.6 The investment adviser to the Fund will be Fred Alger Management, LLC (the ‘‘Adviser’’). Fred Alger & Company, LLC (the ‘‘Distributor’’) will serve as the distributor for the Fund’s Shares. All statements and representations made in this filing regarding (a) the description of the portfolio or reference assets, (b) limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange rules shall constitute continued listing requirements for listing the Shares on the Exchange, as provided under Rule 8.900–E(b)(1). Rule 8.900–E(b)(4) provides that, if the investment adviser to the Investment Company issuing Managed Portfolio Shares is registered as a broker-dealer or is affiliated with a broker-dealer, such investment adviser will erect and maintain a ‘‘fire wall’’ between the investment adviser and personnel of the broker-dealer or brokerdealer affiliate, as applicable, with respect to access to information concerning the composition of and/or changes to such Investment Company portfolio and/or the Creation Basket.7 Any person related to the investment adviser or Investment Company who makes decisions pertaining to the Investment Company’s portfolio composition or has access to information regarding the Investment Company’s portfolio composition or changes thereto or the Creation Basket must be subject to procedures designed to prevent the use and dissemination of material non-public information regarding the applicable Investment Company portfolio or changes thereto or the Creation Basket. Rule 8.900–E(b)(4) is similar to Commentary .03(a)(i) and (iii) to Rule 5.2–E(j)(3); however, Commentary .03(a) in connection with the establishment of a ‘‘fire wall’’ between the investment adviser and the broker-dealer reflects the applicable open-end fund’s portfolio, not an underlying benchmark index, as is the case with index-based funds.8 Rule 8.900–E(b)(4) is also similar to Commentary .06 to Rule 8.600–E related to Managed Fund Shares, except that Rule 8.900–E(b)(4) relates to establishment and maintenance of a ‘‘fire wall’’ between the investment adviser and personnel of the broker-dealer or broker-dealer affiliate, as applicable, with respect to an Investment Company’s portfolio and Creation Basket, and not just to the underlying portfolio, as is the case with Managed Fund Shares. The Adviser is not registered as a broker-dealer but is affiliated with a broker-dealer. The Adviser has implemented and will maintain a ‘‘fire wall’’ with respect to such broker-dealer affiliate regarding access to information concerning the composition of and/or changes to the Fund’s portfolio and/or Creation Basket. In the event (a) the Adviser or any sub-adviser becomes registered as a broker-dealer or becomes newly 6 The Trust is registered under the Investment Company Act of 1940 (the ‘‘1940 Act’’). On November 18, 2022, the Trust filed a registration statement on Form N–1A under the Securities Act of 1933 (the ‘‘1933 Act’’) and the 1940 Act for the Fund (File No. 811–23603) (the ‘‘Registration Statement’’). The Commission issued an order granting exemptive relief to the Trust (‘‘Exemptive Order’’) under the 1940 Act on May 19, 2020 (Investment Company Act Release No. 33869). The Exemptive Order was granted in response to the Trust’s application for exemptive relief (the ‘‘Exemptive Application’’) (File No. 812–15117). The description of the operation of the Trust and the Fund herein is based, in part, on the Registration Statement. The Registration Statement was declared effective by the SEC on February 15, 2023. 7 Rule 8.900–E(c)(5) provides that the term ‘‘Creation Basket’’ means, on any given business day, the names and quantities of the specified instruments (and/or an amount of cash) that are required for an AP Representative to deposit inkind on behalf of an Authorized Participant in exchange for a Creation Unit and the names and quantities of the specified instruments (and/or an amount of cash) that will be transferred in-kind to an AP Representative on behalf of an Authorized Participant in exchange for a Redemption Unit, which will be identical and will be transmitted to each AP Representative before the commencement of trading. 8 An investment adviser to an open-end fund is required to be registered under the Investment Advisers Act of 1940 (the ‘‘Advisers Act’’). As a result, the Adviser and its related personnel will be subject to the provisions of Rule 204A–1 under the Advisers Act relating to codes of ethics. This Rule requires investment advisers to adopt a code of ethics that reflects the fiduciary nature of the relationship to clients as well as compliance with other applicable securities laws. Accordingly, procedures designed to prevent the communication and misuse of non-public information by an investment adviser must be consistent with Rule 204A–1 under the Advisers Act. In addition, Rule 206(4)–7 under the Advisers Act makes it unlawful for an investment adviser to provide investment advice to clients unless such investment adviser has (i) adopted and implemented written policies and procedures reasonably designed to prevent violations, by the investment adviser and its supervised persons, of the Advisers Act and the Commission rules adopted thereunder; (ii) implemented, at a minimum, an annual review regarding the adequacy of the policies and procedures established pursuant to subparagraph (i) above and the effectiveness of their implementation; and (iii) designated an individual (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. The Fund will also be required to comply with Exchange rules relating to disclosure, including Rule 5.3–E(i). lotter on DSK11XQN23PROD with NOTICES1 Description of the Fund and the Trust VerDate Sep<11>2014 16:48 Mar 07, 2023 Jkt 259001 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 affiliated with a broker-dealer, or (b) any new adviser or sub-adviser is a registered broker-dealer, or becomes affiliated with a broker-dealer, it will implement and maintain a fire wall with respect to personnel of the broker-dealer or broker-dealer affiliate regarding access to information concerning the composition and/or changes to the portfolio and/or Creation Basket. Any person related to the Adviser or the Trust who makes decisions pertaining to the Fund’s portfolio composition or that has access to information regarding the Fund’s portfolio composition or that has access to information regarding the Fund’s portfolio or changes thereto or the Creation Basket will be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding such portfolio or changes thereto and the Creation Basket. Further, Rule 8.900–E(b)(5) requires that any person or entity, including an AP Representative (as defined below), custodian, Reporting Authority, distributor, or administrator, who has access to non-public information regarding the Investment Company’s portfolio composition or changes thereto or the Creation Basket, must be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the applicable Investment Company portfolio or changes thereto or the Creation Basket. Moreover, if any such person or entity is registered as a broker-dealer or affiliated with a brokerdealer, such person or entity will erect and maintain a ‘‘fire wall’’ between the person or entity and the broker-dealer with respect to access to information concerning the composition and/or changes to such Investment Company portfolio or Creation Basket. Description of the Fund 9 The Fund’s holdings will conform to the permissible investments as set forth in the Exemptive Application and Exemptive Order, and the holdings will be consistent with all requirements in the Exemptive Application and Exemptive Order.10 9 The Exchange represents that, for initial and continued listing, the Fund will be in compliance with Rule 10A–3 under the Act. See 17 CFR 240.10A–3. 10 Pursuant to the Exemptive Order, the only permissible investments for the Fund are the following that trade on a U.S. exchange contemporaneously with Shares of the Fund: exchange-traded funds (‘‘ETFs’’), exchange-traded notes, exchange-listed common stocks, exchangetraded preferred stocks, exchange-traded American Depositary Receipts, exchange-traded real estate investment trusts, exchange-traded commodity pools, exchange-traded metal trusts, exchange- E:\FR\FM\08MRN1.SGM 08MRN1 Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices lotter on DSK11XQN23PROD with NOTICES1 According to the Registration Statement, the Fund’s primary objective is to seek long-term capital appreciation. The Fund will invest primarily in equity securities of mid-cap growth companies.11 Under normal circumstances, 80% of companies in the Fund’s portfolio, based on net assets, will have an environmental, social and governance (‘‘ESG’’) rating, as rated by Sustainalytics, a third-party ESG rating agency. According to the Registration Statement, in effecting its investment strategy, the Adviser will initially employ a fundamental analysis to identify innovative and dynamic companies that demonstrate promising growth potential such as strong earnings growth and sound stock market values. The Adviser will then use Sustainalytics’ ESG ratings to determine whether an identified company is an appropriate investment for the Fund, including determining the impact that the investment would have on the Sustainalytics ESG rating of the Fund’s portfolio on a weighted average basis. In selecting and monitoring investments for the Fund, the Adviser will conduct due diligence on Sustainalytics, review the Sustainalytics ESG ratings of existing and potential portfolio investments, and separately engage with identified companies to determine whether a company’s Sustainalytics ESG rating seems consistent with the company’s practices. As part of the Adviser’s fundamental analysis when considering investing in a company without a Sustainalytics ESG rating, the Adviser will consider the company’s ESG record in addition to the company’s overall growth potential. traded currency trusts, and exchange-traded futures for which the reference asset is one in which the Fund may invest directly, in the case of an index future traded on a U.S. exchange, is based on an index, the components of which are a type of asset in which the Fund could invest directly, as well as cash and cash equivalents (which are short-term U.S. Treasury securities, government money market funds, and repurchase agreements). All of the equity instruments or futures held by the Fund will be traded on an exchange that is a member of the Intermarket Surveillance Group (‘‘ISG’’) or affiliated with a member of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. 11 For purposes of the Fund’s objective, ‘‘mid-cap growth companies’’ are those companies that, at the time of purchase of the securities, primarily have total market capitalization within the range of (i) companies included in the Russell Midcap Growth Index, as reported by the index at the most recent quarter end, or (ii) $1 billion to $25 billion. As of December 31, 2022, the companies in this index ranged from $735.7 million to $ 52.8 billion. Because of the Fund’s long-term approach to investing, it could have a significant portion of its assets invested in securities of issuers that have appreciated beyond the market capitalization thresholds noted. VerDate Sep<11>2014 16:48 Mar 07, 2023 Jkt 259001 The Fund is a non-transparent, actively managed ETF that will not seek to replicate the performance of a specified index. According to the Registration Statement, the Fund will invest in cash (and cash equivalents) when the Fund is unable to find enough attractive longterm investments to meet its investment objective and/or when it is advisable to do so during times of short-term market volatility. During these times, cash (and cash equivalents) will not exceed 15% of the Fund’s assets. Investment Restrictions The Fund’s holdings will be consistent with all requirements described in the Exemptive Application and Exemptive Order.12 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 any securities benchmark index. As noted above, the Fund will not seek to replicate the performance of a specified index. Creations and Redemptions of Shares Creations and redemptions of Shares will take place as described in Rule 8.900–E. Specifically, in connection with the creation and redemption of Creation Units 13 the delivery or receipt of any portfolio securities in-kind will be required to be effected through a separate confidential brokerage account (a ‘‘Confidential Account’’).14 An 12 See note 10, supra. 8.900–E(c)(6) provides that the term ‘‘Creation Unit’’ means a specified minimum number of Managed Portfolio Shares issued by an Investment Company at the request of an Authorized Participant in return for a designated portfolio of instruments and/or cash. Rule 8.900– E(c)(7) provides that the term ‘‘Redemption Unit’’ means a specified minimum number of Managed Portfolio Shares that may be redeemed to an Investment Company at the request of an Authorized Participant in return for a portfolio of instruments and/or cash. For purposes of this filing, the terms ‘‘Creation Unit’’ means either a Creation Unit as defined in Rules 8.900–E(c)(6), or a Redemption Unit as defined in Rule 8.900–E(c)(7). 14 Rule 8.900–E(c)(4) provides that the term ‘‘Confidential Account’’ means an account owned by an Authorized Participant and held with an AP Representative on behalf of the Authorized Participant. The account will be established and governed by contractual agreement between the AP Representative and the Authorized Participant solely for the purposes of creation and redemption, while keeping confidential the Creation Basket constituents of each series of Managed Portfolio Shares, including from the Authorized Participant. The books and records of the Confidential Account will be maintained by the AP Representative on behalf of the Authorized Participant. 13 Rule PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 14421 Authorized Participant (‘‘AP’’), as defined in the applicable Form N–1A filed with the Commission, will sign an agreement with an AP Representative 15 establishing the Confidential Account for the benefit of the AP. AP Representatives will be broker-dealers. An AP must be a participant in the Continuous Net Settlement System of the National Securities Clearing Corporation (‘‘NSCC’’) or a participant in the Depository Trust Company (‘‘DTC’’) and must have executed an authorized participant agreement (‘‘Participant Agreement’’) with the Distributor with respect to the creation and redemption of Creation Units and formed a Confidential Account for its benefit in accordance with the terms of the Participant Agreement. For purposes of creations or redemptions, all transactions will be effected through the respective AP’s Confidential Account, for the benefit of the AP, without disclosing the identity of such securities to the AP. Each business day, the Fund’s custodian will transmit the composition of the Fund’s Creation Basket (as described below) to each AP Representative. This information will permit an AP that has established a Confidential Account with an AP Representative to transact in the underlying securities of the Creation Basket through their AP Representatives, enabling them to engage in in-kind creation or redemption activity without knowing the identity or weighting of those securities. Fund Shares will be issued and redeemed in Creation Units of 12,500 Shares. The size of a Creation Unit is subject to change. The Fund will offer and redeem Creation Units on a continuous basis at the net asset value (‘‘NAV’’) per Share next determined after receipt of an order in proper form. The Fund’s NAV per Share will be determined as of the closing time of the regular trading session on the Exchange (ordinarily, 4:00 p.m. E.T.) on each day that the Exchange is open. In order to keep costs low and permit the Fund to be as fully invested as possible, Shares will be purchased and redeemed in Creation Units and generally on an in-kind basis. The Fund will issue Creation Units principally in 15 Rule 8.900–E(c)(3) provides that the term ‘‘AP Representative’’ means an unaffiliated brokerdealer, with which an Authorized Participant has signed an agreement to establish a Confidential Account for the benefit of such Authorized Participant, that will deliver or receive, on behalf of the Authorized Participant, all consideration to or from the Investment Company in a creation or redemption. An AP Representative will not be permitted to disclose the Creation Basket to any person, including the Authorized Participants. E:\FR\FM\08MRN1.SGM 08MRN1 14422 Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices lotter on DSK11XQN23PROD with NOTICES1 exchange for (i) the in-kind deposit of a designated portfolio of securities (the ‘‘Deposit Securities’’), which for each Creation Unit will constitute a substantial replication, or a representation, of the securities included in the Fund’s portfolio, and (ii) if applicable, an amount of cash (the ‘‘Cash Component’’). Together, the Deposit Securities and the Cash Component, if applicable, constitute the ‘‘Fund Deposit.’’ The Deposit Securities and the securities that will be delivered in an in-kind transfer in a redemption (the ‘‘Fund Securities’’) will generally be identical, but may not be so under certain circumstances. The Cash Component is an amount equal to the difference between the NAV of the Shares of the Fund (per Creation Unit) and the market value of the Deposit Securities. The Cash Component serves the function of compensating for any differences between the NAV per Creation Unit and the market value of the Deposit Securities. On each business day, prior to the opening of business on the Exchange (ordinarily, 9:30 a.m. E.T.), the custodian will make available through NSCC the list of the company names and the required number of shares of each Deposit Security, as applicable, and Cash Component, as applicable, to be included in the current Fund Deposit (based on information at the end of the previous business day) for the Fund. The Deposit Securities, as applicable, and Cash Component, as applicable, announced are applicable to purchases of Creation Units until the nextannounced composition of the Fund Deposit. When full or partial cash purchases of Creation Units are available or specified for the Fund, they will be effected in essentially the same manner as in-kind purchases thereof. On any given business day, the names and quantities of the instruments that constitute the Deposit Securities and the names and quantities of the instruments that constitute the Fund Securities will be identical to and will correspond pro rata to the positions in the Fund’s portfolio (including cash positions), and these instruments may be referred to, in the case of either a purchase or a redemption, as the ‘‘Creation Basket.’’ Placement of Purchase Orders The Fund will issue Shares through the Distributor on a continuous basis at NAV. The Exchange represents that the issuance of Shares will operate in a manner substantially similar to that of other ETFs. The Fund will issue Shares only at the NAV per Share next determined after an order in proper form is received. VerDate Sep<11>2014 16:48 Mar 07, 2023 Jkt 259001 A creation transaction generally begins when an AP enters into an irrevocable creation order with the Fund and delivers to the AP Representative the cash necessary to purchase the designated portfolio of securities that constitute the Creation Basket in the Confidential Account. The AP Representative then purchases and delivers the designated portfolio of securities to the Fund’s custodian, and the Fund then instructs the custodian to exchange such portfolio of securities for a specified number of Shares in volumes of Creation Units. The AP Representative will seek to assemble the shares of the Creation Basket in a manner that will not reveal its composition. The Distributor will furnish acknowledgements to those placing such orders that the orders have been accepted, but the Distributor may reject any order which is not submitted in proper form, as described in the Fund’s prospectus or Statement of Additional Information (‘‘SAI’’). The NAV of the Fund is expected to be determined once each business day as of the close of the regular trading session on the Exchange (ordinarily, 4:00 p.m. E.T.). An AP must submit an irrevocable purchase order by the time set forth in the Participant Agreement and/or applicable order form, on any business day in order to receive that business day’s NAV. On days when the Exchange closes or is anticipated to close earlier than normal, the Fund may require purchase orders to be placed earlier in the day. The date on which an order to purchase (or redeem, as further described below) Creation Units is received and accepted is referred to as the ‘‘Order Placement Date.’’ Purchases of Shares will be settled inkind and/or in cash for an amount equal to the applicable NAV per Share purchased plus applicable transaction fees.16 The Fund may permit full or partial cash purchases of Creation Units of the Fund under the circumstances described above. When full or partial cash purchases of Creation Units are available or specified for the Fund, they will be effected in essentially the same manner as in-kind purchases thereof. In the case of a full or partial cash purchase, the AP, through the AP Representative, must pay the cash equivalent of the Deposit Securities it would otherwise provide through an inkind purchase, plus the same Cash 16 To the extent that the Fund allows creations or redemptions to be conducted in cash, such transactions will be effected in the same manner for all APs transacting in cash. PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 Component required to be paid in connection with an in-kind purchase. Authorized Participant Redemption The Shares may be redeemed to the Fund in Creation Unit size or multiples thereof as described below. Redemption orders of Creation Units must be placed by or through an AP. Creation Units of the Fund will be redeemable at their NAV per Share next determined after receipt of a redemption request in proper form. Orders to redeem Creation Units must be submitted in proper form prior to the time as set forth in the Participant Agreement. Each business day, prior to the opening of trading on the Exchange (currently 9:30 a.m., Eastern time), the custodian will transmit to each AP Representative the identity and the required number of each Fund Security and, as applicable and under the circumstances described below, the cash value of the Fund Securities that will be applicable to redemption requests for that day, and the amount of the Cash Redemption Amount (as defined below, if any). A redemption transaction generally begins when an AP enters into an irrevocable redemption order with the Fund. The Fund then instructs the custodian to deliver a designated portfolio of securities that constitute the Creation Basket to the appropriate AP Representative’s Confidential Account in exchange for the Fund Shares in volumes of Creation Units being redeemed. Orders to redeem Creation Units must submitted in proper form prior to the time as set forth in the Participant Agreement. Redemption proceeds for a Creation Unit are paid in-kind, in cash, or combination thereof, as determined by the Trust. With respect to in-kind redemptions of the Fund, redemption proceeds for a Creation Unit will consist of Fund Securities, as announced by the custodian on the business day of the request for redemption received in proper form plus cash in an amount equal to the difference between the NAV of the Shares of the Fund being redeemed, as next determined after a receipt of a request in proper form, and the value of Fund Securities (the ‘‘Cash Redemption Amount’’), less any fixed redemption transaction fee as set forth below and any applicable additional variable charge as set forth below. In the event that the Fund’s securities have a value greater than the NAV of the Shares of the Fund, the Cash Redemption Amount equal to the differential is required to be made by the AP to the Fund. The Participant Agreement signed by each AP will require establishment of a Confidential E:\FR\FM\08MRN1.SGM 08MRN1 Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices Account to receive distributions of securities in-kind upon redemption. Each AP will be required to open a Confidential Account with an AP Representative in order to facilitate orderly processing of redemptions. lotter on DSK11XQN23PROD with NOTICES1 Net Asset Value The NAV will be calculated for the Shares of the Fund on each business day. The Fund’s NAV is determined as of the close of regular trading on the New York Stock Exchange, normally 4:00 p.m., E.T. The NAV of the Fund’s Shares is determined by adding the total value of its assets, subtracting its liabilities and then dividing the result by the number of Shares outstanding. The assets of the Fund are generally are valued each day at the last quoted sales price on each security’s primary exchange or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded, or, in the absence of reported sales, at the most recent bid price. If market prices are not readily available or the Fund thinks that they are unreliable, or when the value of a security has been materially affected by events occurring after the relevant market closes, the Fund will price those securities at fair value as determined in good faith using methods approved by the Fund’s Board. More information about the valuation of the Fund’s holdings can be found in the SAI. Information regarding the Fund’s NAV and how often Shares of the Fund traded at a price above (i.e., at a premium) or below (i.e., at a discount) the Fund’s NAV will be available on the Fund’s website (www.alger.com). Availability of Information The Fund’s website, www.alger.com, will include the prospectus for the Fund that may be downloaded. The Fund’s website will include additional quantitative information updated on a daily basis, including the prior business day’s NAV, market closing price or midpoint of the bid/ask spread at the time of calculation of such NAV (the ‘‘Bid/ Ask Price’’),17 and a calculation of the premium and discount of the market closing price or Bid/Ask Price against the NAV. The website and information will be publicly available at no charge. Form N–PORT requires reporting of the Fund’s complete portfolio holdings on a position-by-position basis on a 17 The Bid/Ask Price of the Fund’s Shares is determined using the mid-point between the current national best bid and offer at the time of calculation of the Fund’s NAV. The records relating to Bid/Ask Prices will be retained by the Fund or their service providers. VerDate Sep<11>2014 16:48 Mar 07, 2023 Jkt 259001 quarterly basis within 60 days after fiscal quarter end. Investors can obtain the Fund’s SAI, its shareholder reports, its Form N–CSR, filed twice a year, and its Form N–CEN, filed annually. The Fund’s SAI and shareholder reports are available free upon request from the Fund, and those documents and the Form N–PORT, Form N–CSR, and Form N–CEN may be viewed onscreen or downloaded from the Commission’s website at www.sec.gov. Information regarding market price and trading volume of the Shares will be continually available to market participants on a real-time basis throughout the day on brokers’ computer screens and other electronic services. Information regarding the previous day’s closing price and trading volume information for the Shares will be published daily in the financial section of newspapers. Quotation and last sale information for the Shares will be available via the Consolidated Tape Association (‘‘CTA’’) high-speed line. In addition, the Verified Intraday Indicative Value (‘‘VIIV’’), as defined in Rule 8.900–E(c)(2),18 will be widely disseminated by the Reporting Authority 19 and/or one or more major market data vendors in one second intervals during the Exchange’s Core Trading Session. Dissemination of the VIIV With respect to trading of the Shares, the ability of market participants to buy and sell Shares at prices near the VIIV is dependent upon their assessment that the VIIV is a reliable, indicative realtime value for the Fund’s underlying holdings. Market participants are expected to accept the VIIV as a reliable, indicative real-time value because (1) the VIIV will be calculated and disseminated based on the Fund’s actual portfolio holdings, (2) the securities in 18 Rule 8.900–E(c)(2) provides that the term ‘‘Verified Intraday Indicative Value’’ is the indicative value of a Managed Portfolio Share based on all of the holdings of a series of Managed Portfolio Shares as of the close of business on the prior business day and, for corporate actions, based on the applicable holdings as of the opening of business on the current business day, priced and disseminated in one second intervals during the Core Trading Session by the Reporting Authority. 19 Rule 8.900–E(c)(8) provides that the term ‘‘Reporting Authority’’ in respect of a particular series of Managed Portfolio Shares means the Exchange, an institution, or a reporting service designated by the Exchange or by the exchange that lists a particular series of Managed Portfolio Shares (if the Exchange is trading such series pursuant to unlisted trading privileges), as the official source for calculating and reporting information relating to such series, including, but not limited to, the NAV, the VIIV, or other information relating to the issuance, redemption, or trading of Managed Portfolio Shares. A series of Managed Portfolio Shares may have more than one Reporting Authority, each having different functions. PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 14423 which the Fund plans to invest are generally highly liquid and actively traded and trade at the same time as the Fund and therefore generally have accurate real time pricing available, and (3) market participants will have a daily opportunity to evaluate whether the VIIV at or near the close of trading is indeed predictive of the actual NAV. The VIIV will be widely disseminated by the Reporting Authority and/or by one or more major market data vendors in one second intervals during the Core Trading Session and will be disseminated to all market participants at the same time. The VIIV is based on the current market value of the securities in the Fund’s portfolio that day. The methodology for calculating the Fund’s VIIV will be available on the Fund’s website. The VIIV is intended to provide investors and other market participants with a highly correlated per Share value of the underlying portfolio that can be compared to the current market price. Therefore, under normal circumstances the VIIV would be effectively a near real time approximation of the Fund’s NAV, which will be computed only once a day, and is available free of charge from one or more market data vendors. 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.20 Trading in Shares of the Fund will be halted if the circuit breaker parameters in Rule 7.12–E have been reached. Trading also may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. Trading in the Shares will be subject to Rule 8.900–E(d)(2)(C), which sets forth circumstances under which Shares of the Fund will be halted. Specifically, Rule 8.900–E(d)(2)(C)(i) provides that the Exchange may consider all relevant factors in exercising its discretion to halt trading in a series of Managed Portfolio Shares. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the series of Managed Portfolio Shares inadvisable. These may include: (a) the extent to which trading is not occurring in the securities and/or the financial instruments composing the portfolio; or (b) whether other unusual conditions or circumstances detrimental 20 See E:\FR\FM\08MRN1.SGM Rule 7.12–E. 08MRN1 14424 Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices to the maintenance of a fair and orderly market are present.21 Rule 8.900–E(d)(2)(C)(ii) provides that, if the Exchange becomes aware that: (i) the VIIV of a series of Managed Portfolio Shares is not being calculated or disseminated in one second intervals, as required; (ii) the NAV with respect to a series of Managed Portfolio Shares is not disseminated to all market participants at the same time; (iii) the holdings of a series of Managed Portfolio Shares are not made available on at least a quarterly basis as required under the 1940 Act; or (iv) such holdings are not made available to all market participants at the same time (except as otherwise permitted under the currently applicable exemptive order or no-action relief granted by the Commission or Commission staff to the Investment Company with respect to the series of Managed Portfolio Shares), it will halt trading in such series until such time as the VIIV, the NAV, or the holdings are available, as required. lotter on DSK11XQN23PROD with NOTICES1 Trading Rules The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. Shares will trade on the Exchange in all trading sessions in accordance with Rule 7.34–E(a). As provided in Rule 7.6–E, the minimum price variation (‘‘MPV’’) for quoting and entry of orders in equity securities traded on the NYSE Arca Marketplace is $0.01, with the exception of securities that are priced less than $1.00, for which the MPV for order entry is $0.0001. A minimum of 50,000 Shares of the Fund will be outstanding at the commencement of trading on the Exchange. The Shares will conform to the initial and continued listing criteria under Rule 8.900–E, as well as all terms in the Exemptive Order. The Exchange will obtain a representation from the issuer 21 The Exemptive Application provides that the Investment Company or their agent will request that the Exchange halt trading in the applicable series of Managed Portfolio Shares where: (i) the intraday indicative values calculated by the calculation engines differ by more than 25 basis points for 60 seconds in connection with pricing of the VIIV; or (ii) holdings representing 10% or more of a series of Managed Portfolio Shares’ portfolio have become subject to a trading halt or otherwise do not have readily available market quotations. Any such requests will be one of many factors considered in order to determine whether to halt trading in a series of Managed Portfolio Shares and the Exchange retains sole discretion in determining whether trading should be halted. As provided in the Exemptive Application, each series of Managed Portfolio Shares would employ a pricing verification agent to continuously compare two intraday indicative values during regular trading hours in order to ensure the accuracy of the VIIV. VerDate Sep<11>2014 16:48 Mar 07, 2023 Jkt 259001 of the Shares of the Fund that the NAV per Share of the Fund will be calculated daily and will be made available to all market participants at the same time. Surveillance The Exchange believes that its surveillance procedures are adequate to properly monitor the trading of Shares on the Exchange during all trading sessions and to deter and detect violations of Exchange rules and the applicable federal securities laws. Trading of Shares through the Exchange will be subject to the Exchange’s surveillance procedures for derivative products. As part of these surveillance procedures and consistent with Rule 8.900–E(b)(3) and 8.900–E(d)(2)(B), the Adviser will upon request make available to the Exchange and/or the Financial Industry Regulatory Authority (‘‘FINRA’’), on behalf of the Exchange, the daily portfolio holdings of the Fund. The issuer of the Shares of the Fund will be required to represent to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will surveil for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under Exchange Rule 5.5–E(m). FINRA, on behalf of the Exchange, or the regulatory staff of the Exchange, or both, will communicate as needed regarding trading in the Shares and certain exchange-traded instruments with other markets and other entities that are members of the Intermarket Surveillance Group (‘‘ISG’’), and FINRA, on behalf of the Exchange, or the regulatory staff of the Exchange, or both, may obtain trading information regarding trading such securities from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and certain exchange-traded instruments from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 Section 6(b) of the Act,22 in general, and furthers the objectives of Section 6(b)(5) of the Act,23 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes that this proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Fund would meet each of the rules relating to listing and trading of Managed Portfolio Shares. To the extent that the Fund is not in compliance with such rules, the Exchange would either prevent the Fund from listing and trading on the Exchange or commence delisting procedures under Rule 8.900–E(d)(2)(B). Specifically, the Exchange would consider the suspension of trading, and commence delisting proceedings under Rule 8.900–E(d)(2)(B), of the Fund under any of the following circumstances: (a) if, following the initial twelve-month period after commencement of trading on the Exchange, there are fewer than 50 beneficial holders of the Fund; (b) if the Exchange has halted trading in the Fund because the VIIV is interrupted pursuant to Rule 8.900–E(d)(2)(C)(ii) and such interruption persists past the trading day in which it occurred or is no longer available; (c) if the Exchange has halted trading in the Fund because the net asset value with respect to such Fund is not disseminated to all market participants at the same time, the holdings of such Fund are not made available on at least a quarterly basis as required under the 1940 Act, or such holdings are not made available to all market participants at the same time pursuant to Rule 8.900–E(d)(2)(C)(ii) and such issue persists past the trading day in which it occurred; (d) if the Exchange has halted trading in Shares of the Fund pursuant to Rule 8.900– E(d)(2)(C)(i) and such issue persists past the trading day in which it occurred; (e) if the Fund has failed to file any filings required by the Commission or if the Exchange is aware that the Fund is not in compliance with the conditions of any currently applicable exemptive order or no-action relief granted by the Commission or Commission staff with respect to the Fund; (f) if any of the continued listing requirements set forth in Rule 8.900–E are not continuously maintained; (g) if any of the statements 22 15 23 15 E:\FR\FM\08MRN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(5). 08MRN1 lotter on DSK11XQN23PROD with NOTICES1 Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices of representations regarding (a) the description of the portfolio, (b) limitations on portfolio holdings, or (c) the applicability of Exchange listing rules as specified herein to permit the listing and trading of the Fund, are not continuously maintained; or (h) if such other event shall occur or condition exists which, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. As discussed above, the Adviser is not registered as a broker-dealer but is affiliated with a broker-dealer and has implemented and will maintain a ‘‘fire wall’’ with respect to such affiliate broker-dealer regarding access to information concerning the composition and/or changes to the Fund’s portfolio and Creation Basket. In the event that (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, the Adviser will implement and maintain a fire wall with respect to personnel of the broker-dealer or broker-dealer affiliate regarding access to information concerning the composition and/or changes to the portfolio and/or Creation Basket. Any person related to the Adviser or the Trust who makes decisions pertaining to the Fund’s portfolio composition or that has access to information regarding the Fund’s portfolio or changes thereto or the Creation Basket will be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding such portfolio or changes thereto and the Creation Basket. In addition, Rule 8.900–E(b)(5) requires that any person or entity, including an AP Representative, custodian, Reporting Authority, distributor, or administrator, who has access to non-public information regarding the Investment Company’s portfolio composition or changes thereto or the Creation Basket, must be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the applicable Investment Company portfolio or changes thereto or the Creation Basket. Moreover, if any such person or entity is registered as a brokerdealer or affiliated with a broker-dealer, such person or entity will erect and maintain a ‘‘fire wall’’ between the person or entity and the broker-dealer with respect to access to information concerning the composition and/or changes to such Investment Company portfolio or Creation Basket. Any person or entity who has access to information VerDate Sep<11>2014 16:48 Mar 07, 2023 Jkt 259001 regarding the Fund’s portfolio composition or changes thereto or the Creation Basket will be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the portfolio or changes thereto or the Creation Basket. The Exchange further believes that Rule 8.900–E is designed to prevent fraudulent and manipulative acts and practices related to the listing and trading of Shares of the Fund because it provides meaningful requirements about both the data that will be made publicly available about the Shares, as well as the information that will only be available to certain parties and the controls on such information. Specifically, the Exchange believes that the requirements related to information protection set forth in Rule 8.900– E(b)(5) will act as a safeguard against misuse and improper dissemination of information related to the Fund’s portfolio composition, the Creation Basket, or changes thereto. The requirement that any person or entity implement procedures to prevent the use and dissemination of material nonpublic information regarding the portfolio or Creation Basket will act to prevent any individual or entity from sharing such information externally and the internal ‘‘fire wall’’ requirements applicable where an entity is a registered broker-dealer or affiliated with a broker-dealer will act to make sure that no entity will be able to misuse the data for their own purposes. Accordingly, the Exchange believes that this proposal is designed to prevent fraudulent and manipulative acts and practices. The Exchange further believes that the proposal is designed to prevent fraudulent and manipulative acts and practices related to the listing and trading of Shares of the Fund and to promote just and equitable principles of trade and to protect investors and the public interest because the Exchange would halt trading under certain circumstances under which trading in the Shares of the Fund may be inadvisable. Specifically, trading in the Shares will be subject to Rule 8.900– E(d)(2)(C)(i), which provides that the Exchange may consider all relevant factors in exercising its discretion to halt trading in the Fund. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the series of Managed Portfolio Shares inadvisable. These may include: (a) the extent to which trading is not occurring in the securities and/or the financial instruments composing the portfolio; or PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 14425 (b) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present.24 Additionally, trading in the Shares will be subject to Rule 8.900–E(d)(2)(C)(ii), which provides that the Exchange would halt trading where the Exchange becomes aware that: (a) the VIIV of a series of Managed Portfolio Shares is not being calculated or disseminated in one second intervals, as required; (b) the NAV with respect to a series of Managed Portfolio Shares is not disseminated to all market participants at the same time; (c) the holdings of a series of Managed Portfolio Shares are not made available on at least a quarterly basis as required under the 1940 Act; or (d) such holdings are not made available to all market participants at the same time (except as otherwise permitted under the currently applicable exemptive order or no-action relief granted by the Commission or Commission staff to the Investment Company with respect to the series of Managed Portfolio Shares). The Exchange would halt trading in such Shares until such time as the VIIV, the NAV, or the holdings are available, as required. With respect to the proposed listing and trading of Shares of the 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 Rule 8.900–E.25 The Fund’s holdings will conform to the permissible investments as set forth in the Exemptive Application and Exemptive Order.26 As noted above, FINRA, on behalf of the Exchange, or the regulatory staff of the Exchange, or both, will communicate as needed regarding trading in the Shares and the underlying exchange-traded instruments with other markets and other entities that are members of the ISG, and FINRA, on behalf of the Exchange, or the regulatory staff of the Exchange, or both, may obtain trading information regarding trading such instruments from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and the underlying exchangetraded instruments from markets and other entities that are members of ISG or with which the Exchange has in place 24 See note 21, supra. Exchange represents that, for initial and continued listing, the Fund will be in compliance with Rule 10A–3 under the Act. See 17 CFR 240.10A–3. 26 See note 10, supra. 25 The E:\FR\FM\08MRN1.SGM 08MRN1 lotter on DSK11XQN23PROD with NOTICES1 14426 Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices a comprehensive surveillance sharing agreement. With respect to trading of Shares of the Fund, the ability of market participants to buy and sell Shares at prices near the VIIV is dependent upon their assessment that the VIIV is a reliable, indicative real-time value for the Fund’s underlying holdings. Market participants are expected to accept the VIIV as a reliable, indicative real-time value because (1) the VIIV will be calculated and disseminated based on the Fund’s actual portfolio holdings, (2) the securities in which the Fund plans to invest are generally highly liquid and actively traded and trade at the same time as the Fund and therefore generally have accurate real time pricing available, and (3) market participants will have a daily opportunity to evaluate whether the VIIV at or near the close of trading is indeed predictive of the actual NAV. The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange will obtain a representation that the NAV per Share of the Fund will be calculated daily and that the NAV will be made available to all market participants at the same time. Investors can also obtain the Fund’s SAI, its shareholder reports, its Form N–CSR (filed twice a year), and its Form N–CEN (filed annually). The Fund’s SAI and shareholder reports will be available free upon request from the Fund, and those documents and the Form N–PORT, Form N–CSR, and Form N–CEN may be viewed on-screen or downloaded from the Commission’s website at www.sec.gov. In addition, a large amount of information will be publicly available regarding the Fund and the Shares, thereby promoting market transparency. Quotation and last sale information for the Shares will be available via the CTA high-speed line. Information regarding the VIIV will be widely disseminated in one second intervals throughout the Core Trading Session by the Reporting Authority and/ or one or more major market data vendors. The website for the Fund will include a prospectus for the Fund that may be downloaded, and additional data relating to NAV and other applicable quantitative information, updated on a daily basis. Moreover, prior to the commencement of trading, the Exchange will inform its members in an Information Bulletin of the special characteristics and risks associated with trading the Shares. In addition, as noted above, investors will have ready access to the VIIV, and quotation and last sale information for the Shares. The Shares will conform to VerDate Sep<11>2014 16:48 Mar 07, 2023 Jkt 259001 the initial and continued listing criteria under Rule 8.900–E. 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 any securities benchmark index. The Exchange also believes that the proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of actively-managed exchange-traded products that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement. In addition, as noted above, investors will have ready access to information regarding the VIIV and quotation and last sale information for the Shares. For the above reasons, the Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes the proposed rule change would permit the listing and trading of an additional activelymanaged exchange-traded product, thereby promoting competition among exchange-traded products to the benefit of investors and the marketplace. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 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)(iii) of the Act 27 and subparagraph (f)(6) of Rule 19b–4 thereunder.28 A proposed rule change filed under Rule 19b–4(f)(6) 29 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),30 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay to allow the Exchange to implement the proposal as soon as possible. The Exchange notes that the Commission has previously issued a notice of filing for immediate effectiveness of a proposed rule change relating to proposed listing on the Exchange of other funds similar to other issues of Managed Portfolio Shares.31 The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest because the proposal does not raise any new or novel issues. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposal 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. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, 27 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires the Exchange 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. 29 17 CFR 240.19b–4(f)(6). 30 17 CFR 240.19b–4(f)(6)(iii). 31 See, note 5, supra. 32 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 28 17 E:\FR\FM\08MRN1.SGM 08MRN1 Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments [FR Doc. 2023–04689 Filed 3–7–23; 8:45 am] • 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–2023–16 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. lotter on DSK11XQN23PROD with NOTICES1 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.33 Sherry R. Haywood, Assistant Secretary. All submissions should refer to File Number SR–NYSEARCA–2023–16. 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–2023–16 and should be submitted on or before March 29, 2023. 16:48 Mar 07, 2023 Jkt 259001 the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–97028; File No. SR–MEMX– 2023–05] Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange’s Fee Schedule March 2, 2023. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 28, 2023, MEMX LLC (‘‘MEMX’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing with the Commission a proposed rule change to amend the Exchange’s fee schedule applicable to Members 3 (the ‘‘Fee Schedule’’) pursuant to Exchange Rules 15.1(a) and (c). The Exchange proposes to implement the changes to the Fee Schedule pursuant to this proposal on March 1, 2023. The text of the proposed rule change is provided in Exhibit 5. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of 33 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Exchange Rule 1.5(p). 1 15 VerDate Sep<11>2014 14427 PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 1. Purpose The purpose of the proposed rule change is to amend the Fee Schedule to: (i) reduce the base rebate for executions of orders in securities priced at or above $1.00 per share that add displayed liquidity to the Exchange (such orders, ‘‘Added Displayed Volume’’); (ii) reduce the base rebate for executions of Retail Orders 4 in securities priced at or above $1.00 per share that add displayed liquidity to the Exchange (such orders, ‘‘Added Displayed Retail Volume’’); (iii) reduce the base rebates for executions of orders in securities priced at or above $1.00 per share that add non-displayed liquidity to the Exchange (such orders, ‘‘Added Non-Displayed Volume’’); (iv) modify the Liquidity Provision Tiers; (v) modify the required criteria under NBBO Setter/Joiner Tier 1; (vi) modify the Non-Display Add Tiers; (vii) modify Liquidity Removal Tier 1 and adopt a new Liquidity Removal Tier 2; (viii) modify the required criteria under the Sub-Dollar Rebate Tier; and (ix) eliminate the special pricing for executions of Pegged Orders 5 with a Midpoint Peg 6 instruction (such orders, ‘‘Midpoint Peg Orders’’) and a time-inforce (‘‘TIF’’) instruction of IOC 7 or FOK 8 that execute at the midpoint of the national best bid and offer (‘‘NBBO’’) and remove liquidity from the Exchange upon entry (such orders, ‘‘Midpoint Peg IOC/FOK Orders’’). The Exchange first notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. More specifically, the Exchange is only one of 16 registered equities exchanges, as well as a number of alternative trading systems and other off-exchange venues, to which market participants may direct their order flow. Based on publicly 4 A ‘‘Retail Order’’ means an agency or riskless principal order that meets the criteria of FINRA Rule 5320.03 that originates from a natural person and is submitted to the Exchange by a Retail Member Organization (‘‘RMO’’), provided that no change is made to the terms of the order with respect to price or side of market and the order does not originate from a trading algorithm or any other computerized methodology. See Exchange Rule 11.21(a). 5 See Exchange Rule 11.6(h). 6 See Exchange Rule 11.6(h)(2). 7 See Exchange Rule 11.6(o)(1). 8 See Exchange Rule 11.6(o)(3). E:\FR\FM\08MRN1.SGM 08MRN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 88, Number 45 (Wednesday, March 8, 2023)]
[Notices]
[Pages 14419-14427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04689]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97029; File No. SR-NYSEARCA-2023-16]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To List and Trade 
Shares of Alger Weatherbie Enduring Growth ETF

March 2, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on February 16, 2023, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade shares of the following 
under Rule 8.900-E (Managed Portfolio Shares): Alger Weatherbie 
Enduring Growth ETF. 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
    NYSE Arca Rule 8.900-E permits the listing and trading, or trading 
pursuant to unlisted trading privileges, of Managed Portfolio Shares, 
which are securities issued by an actively managed open-end investment 
management company.\3\ Rule 8.900-E(b)(1) requires the Exchange to file 
separate proposals under Section 19(b) of the Act before listing and 
trading any series of Managed Portfolio Shares on the Exchange. 
Therefore, the Exchange is submitting this proposal in order to list 
and trade Managed Portfolio Shares of the Alger Weatherbie Enduring 
Growth ETF (the ``Fund'') under Rule 8.900-E.
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    \3\ Rule 8.900-E(c)(1) provides that the term ``Managed 
Portfolio Share'' means a security that (a) represents an interest 
in an investment company registered under the Investment Company Act 
of 1940 (``Investment Company'') organized as an open-end management 
investment company that invests in a portfolio of securities 
selected by the Investment Company's investment adviser consistent 
with the Investment Company's investment objectives and policies; 
(b) is issued in a Creation Unit, or multiples thereof, in return 
for a designated portfolio of instruments (and/or an amount of cash) 
with a value equal to the next determined net asset value and 
delivered to the Authorized Participant (as defined in the 
Investment Company's Form N-1A filed with the Commission) through a 
Confidential Account; (c) when aggregated into a Redemption Unit, or 
multiples thereof, may be redeemed for a designated portfolio of 
instruments (and/or an amount of cash) with a value equal to the 
next determined net asset value delivered to the Confidential 
Account for the benefit of the Authorized Participant; and (d) the 
portfolio holdings for which are disclosed within at least 60 days 
following the end of every fiscal quarter.
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    The Commission has previously approved \4\ and noticed for 
immediate effectiveness \5\ rules permitting the listing and trading on 
the Exchange of Managed Portfolio Shares under NYSE Arca Rule 8.900-E.
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    \4\ See Securities Exchange Act Release Nos. 89663 (August 25, 
2020), 85 FR 53868 (August 31, 2020) (SR-NYSEArca-2020-48) (Order 
Approving a Proposed Rule Change, as Modified by Amendment No. 1, To 
List and Trade Shares of Gabelli ETFs Under Rule 8.900-E, Managed 
Portfolio Shares); 90528 (November 30, 2020), 85 FR 78389 (December 
4, 2020) (SR-NYSEArca-2020-80) (Order Approving a Proposed Rule 
Change, as Modified by Amendment No. 2, To List and Trade Shares of 
Alger Mid Cap 40 ETF and Alger 25 ETF Under Rule 8.900-E); and 90683 
(December 16, 2020), 85 FR 83665 (December 22, 2020) (SR-NYSEArca-
2020-94) (Order Approving a Proposed Rule Change, as Modified by 
Amendments No. 1 and No. 2, To List and Trade Shares of the 
AdvisorShares Q Portfolio Blended Allocation ETF and AdvisorShares Q 
Dynamic Growth ETF Under NYSE Arca Rule 8.900-E).
    \5\ See Securities Exchange Act Release Nos. 92349 (July 19, 
2021), 86 FR 39084 (July 23, 2021) (SR-NYSEArca-2021-54) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to List 
and Trade Shares of the Cambiar Large Cap ETF, Cambiar Small Cap ETF 
and Cambiar SMID ETF); and 94569 (March 31, 2022), 87 FR 19990 
(April 6, 2022) (Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change to List and Trade Shares of the DoubleLine 
Shiller CAPE U.S. Equities ETF under Rule 8.900-E (Managed Portfolio 
Shares)).

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[[Page 14420]]

Description of the Fund and the Trust
    The shares of the Fund (the ``Shares'') will be issued by The Alger 
ETF Trust (the ``Trust''), a business trust organized under the laws of 
the state of Massachusetts and registered with the Commission as an 
open-end management investment company.\6\ The investment adviser to 
the Fund will be Fred Alger Management, LLC (the ``Adviser''). Fred 
Alger & Company, LLC (the ``Distributor'') will serve as the 
distributor for the Fund's Shares. All statements and representations 
made in this filing regarding (a) the description of the portfolio or 
reference assets, (b) limitations on portfolio holdings or reference 
assets, or (c) the applicability of Exchange rules shall constitute 
continued listing requirements for listing the Shares on the Exchange, 
as provided under Rule 8.900-E(b)(1).
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    \6\ The Trust is registered under the Investment Company Act of 
1940 (the ``1940 Act''). On November 18, 2022, the Trust filed a 
registration statement on Form N-1A under the Securities Act of 1933 
(the ``1933 Act'') and the 1940 Act for the Fund (File No. 811-
23603) (the ``Registration Statement''). The Commission issued an 
order granting exemptive relief to the Trust (``Exemptive Order'') 
under the 1940 Act on May 19, 2020 (Investment Company Act Release 
No. 33869). The Exemptive Order was granted in response to the 
Trust's application for exemptive relief (the ``Exemptive 
Application'') (File No. 812-15117). The description of the 
operation of the Trust and the Fund herein is based, in part, on the 
Registration Statement. The Registration Statement was declared 
effective by the SEC on February 15, 2023.
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    Rule 8.900-E(b)(4) provides that, if the investment adviser to the 
Investment Company issuing Managed Portfolio Shares is registered as a 
broker-dealer or is affiliated with a broker-dealer, such investment 
adviser will erect and maintain a ``fire wall'' between the investment 
adviser and personnel of the broker-dealer or broker-dealer affiliate, 
as applicable, with respect to access to information concerning the 
composition of and/or changes to such Investment Company portfolio and/
or the Creation Basket.\7\ Any person related to the investment adviser 
or Investment Company who makes decisions pertaining to the Investment 
Company's portfolio composition or has access to information regarding 
the Investment Company's portfolio composition or changes thereto or 
the Creation Basket must be subject to procedures designed to prevent 
the use and dissemination of material non-public information regarding 
the applicable Investment Company portfolio or changes thereto or the 
Creation Basket.
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    \7\ Rule 8.900-E(c)(5) provides that the term ``Creation 
Basket'' means, on any given business day, the names and quantities 
of the specified instruments (and/or an amount of cash) that are 
required for an AP Representative to deposit in-kind on behalf of an 
Authorized Participant in exchange for a Creation Unit and the names 
and quantities of the specified instruments (and/or an amount of 
cash) that will be transferred in-kind to an AP Representative on 
behalf of an Authorized Participant in exchange for a Redemption 
Unit, which will be identical and will be transmitted to each AP 
Representative before the commencement of trading.
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    Rule 8.900-E(b)(4) is similar to Commentary .03(a)(i) and (iii) to 
Rule 5.2-E(j)(3); however, Commentary .03(a) in connection with the 
establishment of a ``fire wall'' between the investment adviser and the 
broker-dealer reflects the applicable open-end fund's portfolio, not an 
underlying benchmark index, as is the case with index-based funds.\8\ 
Rule 8.900-E(b)(4) is also similar to Commentary .06 to Rule 8.600-E 
related to Managed Fund Shares, except that Rule 8.900-E(b)(4) relates 
to establishment and maintenance of a ``fire wall'' between the 
investment adviser and personnel of the broker-dealer or broker-dealer 
affiliate, as applicable, with respect to an Investment Company's 
portfolio and Creation Basket, and not just to the underlying 
portfolio, as is the case with Managed Fund Shares. The Adviser is not 
registered as a broker-dealer but is affiliated with a broker-dealer. 
The Adviser has implemented and will maintain a ``fire wall'' with 
respect to such broker-dealer affiliate regarding access to information 
concerning the composition of and/or changes to the Fund's portfolio 
and/or Creation Basket.
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    \8\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). As a result, the Adviser and its related personnel will be 
subject to the provisions of Rule 204A-1 under the Advisers Act 
relating to codes of ethics. This Rule requires investment advisers 
to adopt a code of ethics that reflects the fiduciary nature of the 
relationship to clients as well as compliance with other applicable 
securities laws. Accordingly, procedures designed to prevent the 
communication and misuse of non-public information by an investment 
adviser must be consistent with Rule 204A-1 under the Advisers Act. 
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful 
for an investment adviser to provide investment advice to clients 
unless such investment adviser has (i) adopted and implemented 
written policies and procedures reasonably designed to prevent 
violations, by the investment adviser and its supervised persons, of 
the Advisers Act and the Commission rules adopted thereunder; (ii) 
implemented, at a minimum, an annual review regarding the adequacy 
of the policies and procedures established pursuant to subparagraph 
(i) above and the effectiveness of their implementation; and (iii) 
designated an individual (who is a supervised person) responsible 
for administering the policies and procedures adopted under 
subparagraph (i) above. The Fund will also be required to comply 
with Exchange rules relating to disclosure, including Rule 5.3-E(i).
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    In the event (a) the Adviser or any sub-adviser becomes registered 
as a broker-dealer or becomes newly affiliated with a broker-dealer, or 
(b) any new adviser or sub-adviser is a registered broker-dealer, or 
becomes affiliated with a broker-dealer, it will implement and maintain 
a fire wall with respect to personnel of the broker-dealer or broker-
dealer affiliate regarding access to information concerning the 
composition and/or changes to the portfolio and/or Creation Basket. Any 
person related to the Adviser or the Trust who makes decisions 
pertaining to the Fund's portfolio composition or that has access to 
information regarding the Fund's portfolio composition or that has 
access to information regarding the Fund's portfolio or changes thereto 
or the Creation Basket will be subject to procedures designed to 
prevent the use and dissemination of material non-public information 
regarding such portfolio or changes thereto and the Creation Basket.
    Further, Rule 8.900-E(b)(5) requires that any person or entity, 
including an AP Representative (as defined below), custodian, Reporting 
Authority, distributor, or administrator, who has access to non-public 
information regarding the Investment Company's portfolio composition or 
changes thereto or the Creation Basket, must be subject to procedures 
reasonably designed to prevent the use and dissemination of material 
non-public information regarding the applicable Investment Company 
portfolio or changes thereto or the Creation Basket. Moreover, if any 
such person or entity is registered as a broker-dealer or affiliated 
with a broker-dealer, such person or entity will erect and maintain a 
``fire wall'' between the person or entity and the broker-dealer with 
respect to access to information concerning the composition and/or 
changes to such Investment Company portfolio or Creation Basket.
Description of the Fund \9\
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    \9\ The Exchange represents that, for initial and continued 
listing, the Fund will be in compliance with Rule 10A-3 under the 
Act. See 17 CFR 240.10A-3.
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    The Fund's holdings will conform to the permissible investments as 
set forth in the Exemptive Application and Exemptive Order, and the 
holdings will be consistent with all requirements in the Exemptive 
Application and Exemptive Order.\10\
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    \10\ Pursuant to the Exemptive Order, the only permissible 
investments for the Fund are the following that trade on a U.S. 
exchange contemporaneously with Shares of the Fund: exchange-traded 
funds (``ETFs''), exchange-traded notes, exchange-listed common 
stocks, exchange-traded preferred stocks, exchange-traded American 
Depositary Receipts, exchange-traded real estate investment trusts, 
exchange-traded commodity pools, exchange-traded metal trusts, 
exchange-traded currency trusts, and exchange-traded futures for 
which the reference asset is one in which the Fund may invest 
directly, in the case of an index future traded on a U.S. exchange, 
is based on an index, the components of which are a type of asset in 
which the Fund could invest directly, as well as cash and cash 
equivalents (which are short-term U.S. Treasury securities, 
government money market funds, and repurchase agreements). All of 
the equity instruments or futures held by the Fund will be traded on 
an exchange that is a member of the Intermarket Surveillance Group 
(``ISG'') or affiliated with a member of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing 
agreement.

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[[Page 14421]]

    According to the Registration Statement, the Fund's primary 
objective is to seek long-term capital appreciation. The Fund will 
invest primarily in equity securities of mid-cap growth companies.\11\ 
Under normal circumstances, 80% of companies in the Fund's portfolio, 
based on net assets, will have an environmental, social and governance 
(``ESG'') rating, as rated by Sustainalytics, a third-party ESG rating 
agency.
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    \11\ For purposes of the Fund's objective, ``mid-cap growth 
companies'' are those companies that, at the time of purchase of the 
securities, primarily have total market capitalization within the 
range of (i) companies included in the Russell Midcap Growth Index, 
as reported by the index at the most recent quarter end, or (ii) $1 
billion to $25 billion. As of December 31, 2022, the companies in 
this index ranged from $735.7 million to $ 52.8 billion. Because of 
the Fund's long-term approach to investing, it could have a 
significant portion of its assets invested in securities of issuers 
that have appreciated beyond the market capitalization thresholds 
noted.
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    According to the Registration Statement, in effecting its 
investment strategy, the Adviser will initially employ a fundamental 
analysis to identify innovative and dynamic companies that demonstrate 
promising growth potential such as strong earnings growth and sound 
stock market values. The Adviser will then use Sustainalytics' ESG 
ratings to determine whether an identified company is an appropriate 
investment for the Fund, including determining the impact that the 
investment would have on the Sustainalytics ESG rating of the Fund's 
portfolio on a weighted average basis. In selecting and monitoring 
investments for the Fund, the Adviser will conduct due diligence on 
Sustainalytics, review the Sustainalytics ESG ratings of existing and 
potential portfolio investments, and separately engage with identified 
companies to determine whether a company's Sustainalytics ESG rating 
seems consistent with the company's practices. As part of the Adviser's 
fundamental analysis when considering investing in a company without a 
Sustainalytics ESG rating, the Adviser will consider the company's ESG 
record in addition to the company's overall growth potential.
    The Fund is a non-transparent, actively managed ETF that will not 
seek to replicate the performance of a specified index.
    According to the Registration Statement, the Fund will invest in 
cash (and cash equivalents) when the Fund is unable to find enough 
attractive long-term investments to meet its investment objective and/
or when it is advisable to do so during times of short-term market 
volatility. During these times, cash (and cash equivalents) will not 
exceed 15% of the Fund's assets.
Investment Restrictions
    The Fund's holdings will be consistent with all requirements 
described in the Exemptive Application and Exemptive Order.\12\
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    \12\ See note 10, supra.
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    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 any securities benchmark index. As noted above, the Fund will not 
seek to replicate the performance of a specified index.
Creations and Redemptions of Shares
    Creations and redemptions of Shares will take place as described in 
Rule 8.900-E. Specifically, in connection with the creation and 
redemption of Creation Units \13\ the delivery or receipt of any 
portfolio securities in-kind will be required to be effected through a 
separate confidential brokerage account (a ``Confidential 
Account'').\14\ An Authorized Participant (``AP''), as defined in the 
applicable Form N-1A filed with the Commission, will sign an agreement 
with an AP Representative \15\ establishing the Confidential Account 
for the benefit of the AP. AP Representatives will be broker-dealers. 
An AP must be a participant in the Continuous Net Settlement System of 
the National Securities Clearing Corporation (``NSCC'') or a 
participant in the Depository Trust Company (``DTC'') and must have 
executed an authorized participant agreement (``Participant 
Agreement'') with the Distributor with respect to the creation and 
redemption of Creation Units and formed a Confidential Account for its 
benefit in accordance with the terms of the Participant Agreement. For 
purposes of creations or redemptions, all transactions will be effected 
through the respective AP's Confidential Account, for the benefit of 
the AP, without disclosing the identity of such securities to the AP.
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    \13\ Rule 8.900-E(c)(6) provides that the term ``Creation Unit'' 
means a specified minimum number of Managed Portfolio Shares issued 
by an Investment Company at the request of an Authorized Participant 
in return for a designated portfolio of instruments and/or cash. 
Rule 8.900-E(c)(7) provides that the term ``Redemption Unit'' means 
a specified minimum number of Managed Portfolio Shares that may be 
redeemed to an Investment Company at the request of an Authorized 
Participant in return for a portfolio of instruments and/or cash. 
For purposes of this filing, the terms ``Creation Unit'' means 
either a Creation Unit as defined in Rules 8.900-E(c)(6), or a 
Redemption Unit as defined in Rule 8.900-E(c)(7).
    \14\ Rule 8.900-E(c)(4) provides that the term ``Confidential 
Account'' means an account owned by an Authorized Participant and 
held with an AP Representative on behalf of the Authorized 
Participant. The account will be established and governed by 
contractual agreement between the AP Representative and the 
Authorized Participant solely for the purposes of creation and 
redemption, while keeping confidential the Creation Basket 
constituents of each series of Managed Portfolio Shares, including 
from the Authorized Participant. The books and records of the 
Confidential Account will be maintained by the AP Representative on 
behalf of the Authorized Participant.
    \15\ Rule 8.900-E(c)(3) provides that the term ``AP 
Representative'' means an unaffiliated broker-dealer, with which an 
Authorized Participant has signed an agreement to establish a 
Confidential Account for the benefit of such Authorized Participant, 
that will deliver or receive, on behalf of the Authorized 
Participant, all consideration to or from the Investment Company in 
a creation or redemption. An AP Representative will not be permitted 
to disclose the Creation Basket to any person, including the 
Authorized Participants.
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    Each business day, the Fund's custodian will transmit the 
composition of the Fund's Creation Basket (as described below) to each 
AP Representative. This information will permit an AP that has 
established a Confidential Account with an AP Representative to 
transact in the underlying securities of the Creation Basket through 
their AP Representatives, enabling them to engage in in-kind creation 
or redemption activity without knowing the identity or weighting of 
those securities. Fund Shares will be issued and redeemed in Creation 
Units of 12,500 Shares. The size of a Creation Unit is subject to 
change. The Fund will offer and redeem Creation Units on a continuous 
basis at the net asset value (``NAV'') per Share next determined after 
receipt of an order in proper form. The Fund's NAV per Share will be 
determined as of the closing time of the regular trading session on the 
Exchange (ordinarily, 4:00 p.m. E.T.) on each day that the Exchange is 
open.
    In order to keep costs low and permit the Fund to be as fully 
invested as possible, Shares will be purchased and redeemed in Creation 
Units and generally on an in-kind basis. The Fund will issue Creation 
Units principally in

[[Page 14422]]

exchange for (i) the in-kind deposit of a designated portfolio of 
securities (the ``Deposit Securities''), which for each Creation Unit 
will constitute a substantial replication, or a representation, of the 
securities included in the Fund's portfolio, and (ii) if applicable, an 
amount of cash (the ``Cash Component''). Together, the Deposit 
Securities and the Cash Component, if applicable, constitute the ``Fund 
Deposit.'' The Deposit Securities and the securities that will be 
delivered in an in-kind transfer in a redemption (the ``Fund 
Securities'') will generally be identical, but may not be so under 
certain circumstances. The Cash Component is an amount equal to the 
difference between the NAV of the Shares of the Fund (per Creation 
Unit) and the market value of the Deposit Securities. The Cash 
Component serves the function of compensating for any differences 
between the NAV per Creation Unit and the market value of the Deposit 
Securities.
    On each business day, prior to the opening of business on the 
Exchange (ordinarily, 9:30 a.m. E.T.), the custodian will make 
available through NSCC the list of the company names and the required 
number of shares of each Deposit Security, as applicable, and Cash 
Component, as applicable, to be included in the current Fund Deposit 
(based on information at the end of the previous business day) for the 
Fund. The Deposit Securities, as applicable, and Cash Component, as 
applicable, announced are applicable to purchases of Creation Units 
until the next-announced composition of the Fund Deposit. When full or 
partial cash purchases of Creation Units are available or specified for 
the Fund, they will be effected in essentially the same manner as in-
kind purchases thereof.
    On any given business day, the names and quantities of the 
instruments that constitute the Deposit Securities and the names and 
quantities of the instruments that constitute the Fund Securities will 
be identical to and will correspond pro rata to the positions in the 
Fund's portfolio (including cash positions), and these instruments may 
be referred to, in the case of either a purchase or a redemption, as 
the ``Creation Basket.''
Placement of Purchase Orders
    The Fund will issue Shares through the Distributor on a continuous 
basis at NAV. The Exchange represents that the issuance of Shares will 
operate in a manner substantially similar to that of other ETFs. The 
Fund will issue Shares only at the NAV per Share next determined after 
an order in proper form is received.
    A creation transaction generally begins when an AP enters into an 
irrevocable creation order with the Fund and delivers to the AP 
Representative the cash necessary to purchase the designated portfolio 
of securities that constitute the Creation Basket in the Confidential 
Account. The AP Representative then purchases and delivers the 
designated portfolio of securities to the Fund's custodian, and the 
Fund then instructs the custodian to exchange such portfolio of 
securities for a specified number of Shares in volumes of Creation 
Units. The AP Representative will seek to assemble the shares of the 
Creation Basket in a manner that will not reveal its composition. The 
Distributor will furnish acknowledgements to those placing such orders 
that the orders have been accepted, but the Distributor may reject any 
order which is not submitted in proper form, as described in the Fund's 
prospectus or Statement of Additional Information (``SAI'').
    The NAV of the Fund is expected to be determined once each business 
day as of the close of the regular trading session on the Exchange 
(ordinarily, 4:00 p.m. E.T.). An AP must submit an irrevocable purchase 
order by the time set forth in the Participant Agreement and/or 
applicable order form, on any business day in order to receive that 
business day's NAV. On days when the Exchange closes or is anticipated 
to close earlier than normal, the Fund may require purchase orders to 
be placed earlier in the day. The date on which an order to purchase 
(or redeem, as further described below) Creation Units is received and 
accepted is referred to as the ``Order Placement Date.''
    Purchases of Shares will be settled in-kind and/or in cash for an 
amount equal to the applicable NAV per Share purchased plus applicable 
transaction fees.\16\ The Fund may permit full or partial cash 
purchases of Creation Units of the Fund under the circumstances 
described above. When full or partial cash purchases of Creation Units 
are available or specified for the Fund, they will be effected in 
essentially the same manner as in-kind purchases thereof. In the case 
of a full or partial cash purchase, the AP, through the AP 
Representative, must pay the cash equivalent of the Deposit Securities 
it would otherwise provide through an in-kind purchase, plus the same 
Cash Component required to be paid in connection with an in-kind 
purchase.
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    \16\ To the extent that the Fund allows creations or redemptions 
to be conducted in cash, such transactions will be effected in the 
same manner for all APs transacting in cash.
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Authorized Participant Redemption
    The Shares may be redeemed to the Fund in Creation Unit size or 
multiples thereof as described below. Redemption orders of Creation 
Units must be placed by or through an AP. Creation Units of the Fund 
will be redeemable at their NAV per Share next determined after receipt 
of a redemption request in proper form. Orders to redeem Creation Units 
must be submitted in proper form prior to the time as set forth in the 
Participant Agreement.
    Each business day, prior to the opening of trading on the Exchange 
(currently 9:30 a.m., Eastern time), the custodian will transmit to 
each AP Representative the identity and the required number of each 
Fund Security and, as applicable and under the circumstances described 
below, the cash value of the Fund Securities that will be applicable to 
redemption requests for that day, and the amount of the Cash Redemption 
Amount (as defined below, if any). A redemption transaction generally 
begins when an AP enters into an irrevocable redemption order with the 
Fund. The Fund then instructs the custodian to deliver a designated 
portfolio of securities that constitute the Creation Basket to the 
appropriate AP Representative's Confidential Account in exchange for 
the Fund Shares in volumes of Creation Units being redeemed. Orders to 
redeem Creation Units must submitted in proper form prior to the time 
as set forth in the Participant Agreement.
    Redemption proceeds for a Creation Unit are paid in-kind, in cash, 
or combination thereof, as determined by the Trust. With respect to in-
kind redemptions of the Fund, redemption proceeds for a Creation Unit 
will consist of Fund Securities, as announced by the custodian on the 
business day of the request for redemption received in proper form plus 
cash in an amount equal to the difference between the NAV of the Shares 
of the Fund being redeemed, as next determined after a receipt of a 
request in proper form, and the value of Fund Securities (the ``Cash 
Redemption Amount''), less any fixed redemption transaction fee as set 
forth below and any applicable additional variable charge as set forth 
below. In the event that the Fund's securities have a value greater 
than the NAV of the Shares of the Fund, the Cash Redemption Amount 
equal to the differential is required to be made by the AP to the Fund. 
The Participant Agreement signed by each AP will require establishment 
of a Confidential

[[Page 14423]]

Account to receive distributions of securities in-kind upon redemption. 
Each AP will be required to open a Confidential Account with an AP 
Representative in order to facilitate orderly processing of 
redemptions.
Net Asset Value
    The NAV will be calculated for the Shares of the Fund on each 
business day. The Fund's NAV is determined as of the close of regular 
trading on the New York Stock Exchange, normally 4:00 p.m., E.T. The 
NAV of the Fund's Shares is determined by adding the total value of its 
assets, subtracting its liabilities and then dividing the result by the 
number of Shares outstanding.
    The assets of the Fund are generally are valued each day at the 
last quoted sales price on each security's primary exchange or official 
closing price as reported by an independent pricing service on the 
primary market or exchange on which they are traded, or, in the absence 
of reported sales, at the most recent bid price. If market prices are 
not readily available or the Fund thinks that they are unreliable, or 
when the value of a security has been materially affected by events 
occurring after the relevant market closes, the Fund will price those 
securities at fair value as determined in good faith using methods 
approved by the Fund's Board.
    More information about the valuation of the Fund's holdings can be 
found in the SAI.
    Information regarding the Fund's NAV and how often Shares of the 
Fund traded at a price above (i.e., at a premium) or below (i.e., at a 
discount) the Fund's NAV will be available on the Fund's website 
(www.alger.com).
Availability of Information
    The Fund's website, www.alger.com, will include the prospectus for 
the Fund that may be downloaded. The Fund's website will include 
additional quantitative information updated on a daily basis, including 
the prior business day's NAV, market closing price or mid-point of the 
bid/ask spread at the time of calculation of such NAV (the ``Bid/Ask 
Price''),\17\ and a calculation of the premium and discount of the 
market closing price or Bid/Ask Price against the NAV. The website and 
information will be publicly available at no charge.
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    \17\ The Bid/Ask Price of the Fund's Shares is determined using 
the mid-point between the current national best bid and offer at the 
time of calculation of the Fund's NAV. The records relating to Bid/
Ask Prices will be retained by the Fund or their service providers.
---------------------------------------------------------------------------

    Form N-PORT requires reporting of the 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 the Fund's SAI, its 
shareholder reports, its Form N-CSR, filed twice a year, and its Form 
N-CEN, filed annually. The Fund's SAI and shareholder reports are 
available free upon request from the Fund, and those documents and the 
Form N-PORT, Form N-CSR, and Form N-CEN may be viewed onscreen or 
downloaded from the Commission's website at www.sec.gov.
    Information regarding market price and trading volume of the Shares 
will be continually available to market participants on a real-time 
basis throughout the day on brokers' computer screens and other 
electronic services. Information regarding the previous day's closing 
price and trading volume information for the Shares will be published 
daily in the financial section of newspapers. Quotation and last sale 
information for the Shares will be available via the Consolidated Tape 
Association (``CTA'') high-speed line. In addition, the Verified 
Intraday Indicative Value (``VIIV''), as defined in Rule 8.900-
E(c)(2),\18\ will be widely disseminated by the Reporting Authority 
\19\ and/or one or more major market data vendors in one second 
intervals during the Exchange's Core Trading Session.
---------------------------------------------------------------------------

    \18\ Rule 8.900-E(c)(2) provides that the term ``Verified 
Intraday Indicative Value'' is the indicative value of a Managed 
Portfolio Share based on all of the holdings of a series of Managed 
Portfolio Shares as of the close of business on the prior business 
day and, for corporate actions, based on the applicable holdings as 
of the opening of business on the current business day, priced and 
disseminated in one second intervals during the Core Trading Session 
by the Reporting Authority.
    \19\ Rule 8.900-E(c)(8) provides that the term ``Reporting 
Authority'' in respect of a particular series of Managed Portfolio 
Shares means the Exchange, an institution, or a reporting service 
designated by the Exchange or by the exchange that lists a 
particular series of Managed Portfolio Shares (if the Exchange is 
trading such series pursuant to unlisted trading privileges), as the 
official source for calculating and reporting information relating 
to such series, including, but not limited to, the NAV, the VIIV, or 
other information relating to the issuance, redemption, or trading 
of Managed Portfolio Shares. A series of Managed Portfolio Shares 
may have more than one Reporting Authority, each having different 
functions.
---------------------------------------------------------------------------

Dissemination of the VIIV
    With respect to trading of the Shares, the ability of market 
participants to buy and sell Shares at prices near the VIIV is 
dependent upon their assessment that the VIIV is a reliable, indicative 
real-time value for the Fund's underlying holdings. Market participants 
are expected to accept the VIIV as a reliable, indicative real-time 
value because (1) the VIIV will be calculated and disseminated based on 
the Fund's actual portfolio holdings, (2) the securities in which the 
Fund plans to invest are generally highly liquid and actively traded 
and trade at the same time as the Fund and therefore generally have 
accurate real time pricing available, and (3) market participants will 
have a daily opportunity to evaluate whether the VIIV at or near the 
close of trading is indeed predictive of the actual NAV.
    The VIIV will be widely disseminated by the Reporting Authority 
and/or by one or more major market data vendors in one second intervals 
during the Core Trading Session and will be disseminated to all market 
participants at the same time. The VIIV is based on the current market 
value of the securities in the Fund's portfolio that day. The 
methodology for calculating the Fund's VIIV will be available on the 
Fund's website. The VIIV is intended to provide investors and other 
market participants with a highly correlated per Share value of the 
underlying portfolio that can be compared to the current market price. 
Therefore, under normal circumstances the VIIV would be effectively a 
near real time approximation of the Fund's NAV, which will be computed 
only once a day, and is available free of charge from one or more 
market data vendors.
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.\20\ Trading in Shares of the Fund 
will be halted if the circuit breaker parameters in Rule 7.12-E have 
been reached. Trading also may be halted because of market conditions 
or for reasons that, in the view of the Exchange, make trading in the 
Shares inadvisable. Trading in the Shares will be subject to Rule 
8.900-E(d)(2)(C), which sets forth circumstances under which Shares of 
the Fund will be halted.
---------------------------------------------------------------------------

    \20\ See Rule 7.12-E.
---------------------------------------------------------------------------

    Specifically, Rule 8.900-E(d)(2)(C)(i) provides that the Exchange 
may consider all relevant factors in exercising its discretion to halt 
trading in a series of Managed Portfolio Shares. Trading may be halted 
because of market conditions or for reasons that, in the view of the 
Exchange, make trading in the series of Managed Portfolio Shares 
inadvisable. These may include: (a) the extent to which trading is not 
occurring in the securities and/or the financial instruments composing 
the portfolio; or (b) whether other unusual conditions or circumstances 
detrimental

[[Page 14424]]

to the maintenance of a fair and orderly market are present.\21\
---------------------------------------------------------------------------

    \21\ The Exemptive Application provides that the Investment 
Company or their agent will request that the Exchange halt trading 
in the applicable series of Managed Portfolio Shares where: (i) the 
intraday indicative values calculated by the calculation engines 
differ by more than 25 basis points for 60 seconds in connection 
with pricing of the VIIV; or (ii) holdings representing 10% or more 
of a series of Managed Portfolio Shares' portfolio have become 
subject to a trading halt or otherwise do not have readily available 
market quotations. Any such requests will be one of many factors 
considered in order to determine whether to halt trading in a series 
of Managed Portfolio Shares and the Exchange retains sole discretion 
in determining whether trading should be halted. As provided in the 
Exemptive Application, each series of Managed Portfolio Shares would 
employ a pricing verification agent to continuously compare two 
intraday indicative values during regular trading hours in order to 
ensure the accuracy of the VIIV.
---------------------------------------------------------------------------

    Rule 8.900-E(d)(2)(C)(ii) provides that, if the Exchange becomes 
aware that: (i) the VIIV of a series of Managed Portfolio Shares is not 
being calculated or disseminated in one second intervals, as required; 
(ii) the NAV with respect to a series of Managed Portfolio Shares is 
not disseminated to all market participants at the same time; (iii) the 
holdings of a series of Managed Portfolio Shares are not made available 
on at least a quarterly basis as required under the 1940 Act; or (iv) 
such holdings are not made available to all market participants at the 
same time (except as otherwise permitted under the currently applicable 
exemptive order or no-action relief granted by the Commission or 
Commission staff to the Investment Company with respect to the series 
of Managed Portfolio Shares), it will halt trading in such series until 
such time as the VIIV, the NAV, or the holdings are available, as 
required.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the Exchange in all trading sessions in accordance with Rule 7.34-E(a). 
As provided in Rule 7.6-E, the minimum price variation (``MPV'') for 
quoting and entry of orders in equity securities traded on the NYSE 
Arca Marketplace is $0.01, with the exception of securities that are 
priced less than $1.00, for which the MPV for order entry is $0.0001. A 
minimum of 50,000 Shares of the Fund will be outstanding at the 
commencement of trading on the Exchange.
    The Shares will conform to the initial and continued listing 
criteria under Rule 8.900-E, as well as all terms in the Exemptive 
Order. The Exchange will obtain a representation from the issuer of the 
Shares of the Fund that the NAV per Share of the Fund will be 
calculated daily and will be made available to all market participants 
at the same time.
Surveillance
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of Shares on the Exchange during all 
trading sessions and to deter and detect violations of Exchange rules 
and the applicable federal securities laws. Trading of Shares through 
the Exchange will be subject to the Exchange's surveillance procedures 
for derivative products. As part of these surveillance procedures and 
consistent with Rule 8.900-E(b)(3) and 8.900-E(d)(2)(B), the Adviser 
will upon request make available to the Exchange and/or the Financial 
Industry Regulatory Authority (``FINRA''), on behalf of the Exchange, 
the daily portfolio holdings of the Fund. The issuer of the Shares of 
the Fund will be required to represent to the Exchange that it will 
advise the Exchange of any failure by the Fund to comply with the 
continued listing requirements, and, pursuant to its obligations under 
Section 19(g)(1) of the Act, the Exchange will surveil for compliance 
with the continued listing requirements. If the Fund is not in 
compliance with the applicable listing requirements, the Exchange will 
commence delisting procedures under Exchange Rule 5.5-E(m).
    FINRA, on behalf of the Exchange, or the regulatory staff of the 
Exchange, or both, will communicate as needed regarding trading in the 
Shares and certain exchange-traded instruments with other markets and 
other entities that are members of the Intermarket Surveillance Group 
(``ISG''), and FINRA, on behalf of the Exchange, or the regulatory 
staff of the Exchange, or both, may obtain trading information 
regarding trading such securities from such markets and other entities. 
In addition, the Exchange may obtain information regarding trading in 
the Shares and certain exchange-traded instruments from markets and 
other entities that are members of ISG or with which the Exchange has 
in place a comprehensive surveillance sharing agreement.
    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\22\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\23\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78f(b).
    \23\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that this proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the Fund 
would meet each of the rules relating to listing and trading of Managed 
Portfolio Shares. To the extent that the Fund is not in compliance with 
such rules, the Exchange would either prevent the Fund from listing and 
trading on the Exchange or commence delisting procedures under Rule 
8.900-E(d)(2)(B). Specifically, the Exchange would consider the 
suspension of trading, and commence delisting proceedings under Rule 
8.900-E(d)(2)(B), of the Fund under any of the following circumstances: 
(a) if, following the initial twelve-month period after commencement of 
trading on the Exchange, there are fewer than 50 beneficial holders of 
the Fund; (b) if the Exchange has halted trading in the Fund because 
the VIIV is interrupted pursuant to Rule 8.900-E(d)(2)(C)(ii) and such 
interruption persists past the trading day in which it occurred or is 
no longer available; (c) if the Exchange has halted trading in the Fund 
because the net asset value with respect to such Fund is not 
disseminated to all market participants at the same time, the holdings 
of such Fund are not made available on at least a quarterly basis as 
required under the 1940 Act, or such holdings are not made available to 
all market participants at the same time pursuant to Rule 8.900-
E(d)(2)(C)(ii) and such issue persists past the trading day in which it 
occurred; (d) if the Exchange has halted trading in Shares of the Fund 
pursuant to Rule 8.900-E(d)(2)(C)(i) and such issue persists past the 
trading day in which it occurred; (e) if the Fund has failed to file 
any filings required by the Commission or if the Exchange is aware that 
the Fund is not in compliance with the conditions of any currently 
applicable exemptive order or no-action relief granted by the 
Commission or Commission staff with respect to the Fund; (f) if any of 
the continued listing requirements set forth in Rule 8.900-E are not 
continuously maintained; (g) if any of the statements

[[Page 14425]]

of representations regarding (a) the description of the portfolio, (b) 
limitations on portfolio holdings, or (c) the applicability of Exchange 
listing rules as specified herein to permit the listing and trading of 
the Fund, are not continuously maintained; or (h) if such other event 
shall occur or condition exists which, in the opinion of the Exchange, 
makes further dealings on the Exchange inadvisable.
    As discussed above, the Adviser is not registered as a broker-
dealer but is affiliated with a broker-dealer and has implemented and 
will maintain a ``fire wall'' with respect to such affiliate broker-
dealer regarding access to information concerning the composition and/
or changes to the Fund's portfolio and Creation Basket. In the event 
that (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, the Adviser will implement and maintain a fire wall with 
respect to personnel of the broker-dealer or broker-dealer affiliate 
regarding access to information concerning the composition and/or 
changes to the portfolio and/or Creation Basket. Any person related to 
the Adviser or the Trust who makes decisions pertaining to the Fund's 
portfolio composition or that has access to information regarding the 
Fund's portfolio or changes thereto or the Creation Basket will be 
subject to procedures designed to prevent the use and dissemination of 
material non-public information regarding such portfolio or changes 
thereto and the Creation Basket.
    In addition, Rule 8.900-E(b)(5) requires that any person or entity, 
including an AP Representative, custodian, Reporting Authority, 
distributor, or administrator, who has access to non-public information 
regarding the Investment Company's portfolio composition or changes 
thereto or the Creation Basket, must be subject to procedures designed 
to prevent the use and dissemination of material non-public information 
regarding the applicable Investment Company portfolio or changes 
thereto or the Creation Basket. Moreover, if any such person or entity 
is registered as a broker-dealer or affiliated with a broker-dealer, 
such person or entity will erect and maintain a ``fire wall'' between 
the person or entity and the broker-dealer with respect to access to 
information concerning the composition and/or changes to such 
Investment Company portfolio or Creation Basket. Any person or entity 
who has access to information regarding the Fund's portfolio 
composition or changes thereto or the Creation Basket will be subject 
to procedures designed to prevent the use and dissemination of material 
nonpublic information regarding the portfolio or changes thereto or the 
Creation Basket.
    The Exchange further believes that Rule 8.900-E is designed to 
prevent fraudulent and manipulative acts and practices related to the 
listing and trading of Shares of the Fund because it provides 
meaningful requirements about both the data that will be made publicly 
available about the Shares, as well as the information that will only 
be available to certain parties and the controls on such information. 
Specifically, the Exchange believes that the requirements related to 
information protection set forth in Rule 8.900-E(b)(5) will act as a 
safeguard against misuse and improper dissemination of information 
related to the Fund's portfolio composition, the Creation Basket, or 
changes thereto. The requirement that any person or entity implement 
procedures to prevent the use and dissemination of material non-public 
information regarding the portfolio or Creation Basket will act to 
prevent any individual or entity from sharing such information 
externally and the internal ``fire wall'' requirements applicable where 
an entity is a registered broker-dealer or affiliated with a broker-
dealer will act to make sure that no entity will be able to misuse the 
data for their own purposes. Accordingly, the Exchange believes that 
this proposal is designed to prevent fraudulent and manipulative acts 
and practices.
    The Exchange further believes that the proposal is designed to 
prevent fraudulent and manipulative acts and practices related to the 
listing and trading of Shares of the Fund and to promote just and 
equitable principles of trade and to protect investors and the public 
interest because the Exchange would halt trading under certain 
circumstances under which trading in the Shares of the Fund may be 
inadvisable. Specifically, trading in the Shares will be subject to 
Rule 8.900-E(d)(2)(C)(i), which provides that the Exchange may consider 
all relevant factors in exercising its discretion to halt trading in 
the Fund. Trading may be halted because of market conditions or for 
reasons that, in the view of the Exchange, make trading in the series 
of Managed Portfolio Shares inadvisable. These may include: (a) the 
extent to which trading is not occurring in the securities and/or the 
financial instruments composing the portfolio; or (b) whether other 
unusual conditions or circumstances detrimental to the maintenance of a 
fair and orderly market are present.\24\ Additionally, trading in the 
Shares will be subject to Rule 8.900-E(d)(2)(C)(ii), which provides 
that the Exchange would halt trading where the Exchange becomes aware 
that: (a) the VIIV of a series of Managed Portfolio Shares is not being 
calculated or disseminated in one second intervals, as required; (b) 
the NAV with respect to a series of Managed Portfolio Shares is not 
disseminated to all market participants at the same time; (c) the 
holdings of a series of Managed Portfolio Shares are not made available 
on at least a quarterly basis as required under the 1940 Act; or (d) 
such holdings are not made available to all market participants at the 
same time (except as otherwise permitted under the currently applicable 
exemptive order or no-action relief granted by the Commission or 
Commission staff to the Investment Company with respect to the series 
of Managed Portfolio Shares). The Exchange would halt trading in such 
Shares until such time as the VIIV, the NAV, or the holdings are 
available, as required.
---------------------------------------------------------------------------

    \24\ See note 21, supra.
---------------------------------------------------------------------------

    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 Rule 8.900-E.\25\ The Fund's 
holdings will conform to the permissible investments as set forth in 
the Exemptive Application and Exemptive Order.\26\ As noted above, 
FINRA, on behalf of the Exchange, or the regulatory staff of the 
Exchange, or both, will communicate as needed regarding trading in the 
Shares and the underlying exchange-traded instruments with other 
markets and other entities that are members of the ISG, and FINRA, on 
behalf of the Exchange, or the regulatory staff of the Exchange, or 
both, may obtain trading information regarding trading such instruments 
from such markets and other entities. In addition, the Exchange may 
obtain information regarding trading in the Shares and the underlying 
exchange-traded instruments from markets and other entities that are 
members of ISG or with which the Exchange has in place

[[Page 14426]]

a comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    \25\ The Exchange represents that, for initial and continued 
listing, the Fund will be in compliance with Rule 10A-3 under the 
Act. See 17 CFR 240.10A-3.
    \26\ See note 10, supra.
---------------------------------------------------------------------------

    With respect to trading of Shares of the Fund, the ability of 
market participants to buy and sell Shares at prices near the VIIV is 
dependent upon their assessment that the VIIV is a reliable, indicative 
real-time value for the Fund's underlying holdings. Market participants 
are expected to accept the VIIV as a reliable, indicative real-time 
value because (1) the VIIV will be calculated and disseminated based on 
the Fund's actual portfolio holdings, (2) the securities in which the 
Fund plans to invest are generally highly liquid and actively traded 
and trade at the same time as the Fund and therefore generally have 
accurate real time pricing available, and (3) market participants will 
have a daily opportunity to evaluate whether the VIIV at or near the 
close of trading is indeed predictive of the actual NAV.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that the Exchange will obtain a representation that the NAV per Share 
of the Fund will be calculated daily and that the NAV will be made 
available to all market participants at the same time. Investors can 
also obtain the Fund's SAI, its shareholder reports, its Form N-CSR 
(filed twice a year), and its Form N-CEN (filed annually). The Fund's 
SAI and shareholder reports will be available free upon request from 
the Fund, and those documents and the Form N-PORT, Form N-CSR, and Form 
N-CEN may be viewed on-screen or downloaded from the Commission's 
website at www.sec.gov. In addition, a large amount of information will 
be publicly available regarding the Fund and the Shares, thereby 
promoting market transparency. Quotation and last sale information for 
the Shares will be available via the CTA high-speed line. Information 
regarding the VIIV will be widely disseminated in one second intervals 
throughout the Core Trading Session by the Reporting Authority and/or 
one or more major market data vendors. The website for the Fund will 
include a prospectus for the Fund that may be downloaded, and 
additional data relating to NAV and other applicable quantitative 
information, updated on a daily basis. Moreover, prior to the 
commencement of trading, the Exchange will inform its members in an 
Information Bulletin of the special characteristics and risks 
associated with trading the Shares.
    In addition, as noted above, investors will have ready access to 
the VIIV, and quotation and last sale information for the Shares. The 
Shares will conform to the initial and continued listing criteria under 
Rule 8.900-E. 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 any securities benchmark index.
    The Exchange also believes that the proposed rule change is 
designed to perfect the mechanism of a free and open market and, in 
general, to protect investors and the public interest in that it will 
facilitate the listing and trading of actively-managed exchange-traded 
products that will enhance competition among market participants, to 
the benefit of investors and the marketplace. As noted above, the 
Exchange has in place surveillance procedures relating to trading in 
the Shares and may obtain information via ISG from other exchanges that 
are members of ISG or with which the Exchange has entered into a 
comprehensive surveillance sharing agreement. In addition, as noted 
above, investors will have ready access to information regarding the 
VIIV and quotation and last sale information for the Shares.
    For the above reasons, the Exchange believes that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes the 
proposed rule change would permit the listing and trading of an 
additional actively-managed exchange-traded product, thereby promoting 
competition among exchange-traded products to the benefit of investors 
and the marketplace.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    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)(iii) of the Act \27\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\28\
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \28\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange 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 under Rule 19b-4(f)(6) \29\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\30\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay to allow the 
Exchange to implement the proposal as soon as possible. The Exchange 
notes that the Commission has previously issued a notice of filing for 
immediate effectiveness of a proposed rule change relating to proposed 
listing on the Exchange of other funds similar to other issues of 
Managed Portfolio Shares.\31\ The Commission believes that waiver of 
the 30-day operative delay is consistent with the protection of 
investors and the public interest because the proposal does not raise 
any new or novel issues. Accordingly, the Commission hereby waives the 
30-day operative delay and designates the proposal operative upon 
filing.\32\
---------------------------------------------------------------------------

    \29\ 17 CFR 240.19b-4(f)(6).
    \30\ 17 CFR 240.19b-4(f)(6)(iii).
    \31\ See, note 5, supra.
    \32\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing,

[[Page 14427]]

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-2023-16 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-2023-16. 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-2023-16 and 
should be submitted on or before March 29, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
---------------------------------------------------------------------------

    \33\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-04689 Filed 3-7-23; 8:45 am]
BILLING CODE 8011-01-P

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