Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To List and Trade Shares of the SGI Dynamic Tactical ETF Under Nasdaq Rule 5750 (“Proxy Portfolio Shares”), 19687-19693 [2023-06782]
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Federal Register / Vol. 88, No. 63 / Monday, April 3, 2023 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–06781 Filed 3–31–23; 8:45 am]
BILLING CODE 8011–01–P
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97211; File No. SR–
NASDAQ–2023–006]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To List and
Trade Shares of the SGI Dynamic
Tactical ETF Under Nasdaq Rule 5750
(‘‘Proxy Portfolio Shares’’)
March 28, 2023.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 17,
2023, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposed a rule change
relating to the SGI Dynamic Tactical
ETF (the ‘‘Fund’’) of The RBB Fund, Inc.
(the ‘‘Company’’), to list and trade
shares of the Fund under Nasdaq Rule
5750 (‘‘Proxy Portfolio Shares’’). The
shares of the Fund are collectively
referred to herein as the ‘‘Shares.’’
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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
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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The Exchange has adopted Nasdaq
Rule 5750, which governs the listing
and trading of Proxy Portfolio Shares on
the Exchange.3
The Fund is an actively-managed
exchange-traded fund (‘‘ETF’’). The
Shares will be offered by the Company,
which was established as a Maryland
corporation on February 29, 1988.4 The
Company, which is registered with the
Commission as an investment company
under the 1940 Act, has filed a
registration statement on Form N–1A
(‘‘Registration Statement’’) relating to
the Fund with the Commission.5 The
Fund is a series of the Company.
Summit Global Investments, LLC
(‘‘Adviser’’) is the investment adviser to
the Fund. SG Trading Solutions, LLC, is
the sub-adviser (‘‘Sub-Adviser’’) to the
Fund. Quasar Distributors, LLC is the
principal underwriter and distributor of
the Fund’s Shares. U.S. Bank Global
Fund Services acts as the administrator,
transfer agent and provides fund
accounting services to the Fund. U.S.
Bank, N.A. acts as the custodian to the
Fund.
Nasdaq Rule 5750(b)(5) provides that
if the investment adviser to the
Investment Company (as defined herein)
issuing Proxy Portfolio Shares 6 is
3 The Exchange adopted Nasdaq Rule 5750 in
Securities Exchange Act Release No. 89110 (June
22, 2020), 85 FR 38461 (June 26, 2020) (SR–
NASDAQ–2020–032).
4 The Commission has issued an order, upon
which the Company may rely, granting certain
exemptive relief under the Investment Company
Act of 1940 (the ‘‘1940 Act’’). See Investment
Company Act Release No. 34857 (March 15, 2023)
(‘‘Exemptive Order’’). Investments made by the
Fund will comply with the conditions set forth in
the Application and the Exemptive Order. The
description of the operation of the Fund herein is
based, in part, on the Registration Statement and
Exemptive Order. The Exchange will not commence
trading in the Fund’s Proxy Portfolio Shares until
the Registration Statement is effective.
5 The Registration Statement (File No. 811–05518)
is available on the Commission’s website at https://
www.sec.gov/Archives/edgar/data/0000831114/
000139834422007151/fp0074774_485apos.htm.
6 The term ‘‘Proxy Portfolio Share’’ means a
security that: (A) represents an interest in an
investment company registered under the
Investment Company Act of 1940 (‘‘Investment
Company’’) organized as an open-end management
investment company, that invests in a portfolio of
securities selected by the Investment Company’s
investment adviser consistent with the Investment
Company’s investment objectives and policies; (B)
is issued in a specified aggregate minimum number
in return for a deposit of a specified Proxy Basket
or Custom Basket, as applicable, and/or a cash
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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 the Fund
Portfolio,7 the Proxy Basket and/or
Custom Basket, as applicable.8 In
addition, Nasdaq Rule 5750(b)(5) further
requires that changes to the Fund
Portfolio, the Proxy Basket and/or
Custom Basket must be subject to
procedures designed to prevent the use
and dissemination of material
nonpublic information regarding the
Fund Portfolio, and/or the Proxy Basket,
and/or Custom Basket, as applicable, or
changes thereto.9
amount with a value equal to the next determined
net asset value; (C) when aggregated in the same
specified minimum number, may be redeemed at a
holder’s request, which holder will be paid
specified Proxy Basket or Custom Basket, as
applicable, and/or a cash amount with a value equal
to the next determined net asset value; and (D) the
portfolio holdings for which are disclosed within at
least 60 days following the end of every fiscal
quarter.
7 The term ‘‘Fund Portfolio’’ means the identities
and quantities of the securities and other assets
held by the Investment Company that will form the
basis for the Investment Company’s calculation of
net asset value at the end of the business day.
8 The term ‘‘Proxy Basket’’ means the identities
and quantities of the securities and other assets
included in a basket that is designed to closely track
the daily performance of the Fund Portfolio, as
provided in the exemptive relief under the 1940 Act
applicable to a series of Proxy Portfolio Shares. The
website for each series of Proxy Portfolio Shares
shall disclose the following information regarding
the Proxy Basket as required under Rule 5750, to
the extent applicable: (A) Ticker symbol; (B) CUSIP
or other identifier; (C) Description of holding; (D)
Quantity of each security or other asset held; and
(E) Percentage weight of the holding in the
portfolio. For purposes of this proposed rule
change, the term Custom Basket means a portfolio
of securities that is different from the Proxy Basket
and is otherwise consistent with the exemptive
relief issued pursuant to the 1940 Act applicable to
a series of Proxy Portfolio Shares.
9 An investment adviser to an open-end fund is
required to be registered under the Investment
Advisers Act of 1940 (the ‘‘Advisers Act’’). As a
result, the Adviser, Sub-Adviser, and their related
personnel are subject to the provisions of Rule
204A–1 under the Advisers Act relating to codes of
ethics. This Rule requires investment advisers to
adopt a code of ethics that reflects the fiduciary
nature of the relationship to clients as well as
compliance with other applicable securities laws.
Accordingly, procedures designed to prevent the
communication and misuse of non-public
information by an investment adviser must be
consistent with Rule 204A–1 under the Advisers
Act. The Adviser and Sub-Adviser are each not
registered as a broker-dealer and are not affiliated
with broker-dealers. The Adviser and Sub-Adviser
will each implement and maintain a ‘‘fire wall’’
with respect to any future broker-dealer affiliates
regarding access to information concerning the
composition of and/or changes to the Fund
Portfolio, Proxy Portfolio, and/or Custom Basket, as
applicable. In addition, Rule 206(4)–7 under the
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In addition, in accordance with
Nasdaq Rule 5750(b)(6), any person or
entity, including a custodian, Reporting
Authority,10 distributor, or
administrator, who has access to
nonpublic information regarding the
Fund Portfolio, the Proxy Basket or
Custom Basket, as applicable, or
changes thereto, must be subject to
procedures designed to prevent the use
and dissemination of material
nonpublic information regarding the
applicable Fund Portfolio, the Proxy
Basket or Custom Basket, as applicable,
or changes thereto. 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 of and/or
changes to such Fund Portfolio, Proxy
Basket or Custom Basket, as applicable,
or changes thereto.
The issuer represents that with
respect to each Proxy Basket and
Custom Basket: (i) the Proxy Basket will
be publicly disseminated at least once
daily and will be made available to all
market participants at the same time,
and (ii) with respect to each Custom
Basket utilized by a series of Proxy
Portfolio Shares, each business day,
before the opening of trading in the
regular market session, the investment
company shall make publicly available
on its website the composition of any
Custom Basket transacted on the
previous business day, except a Custom
Basket that differs from the applicable
Proxy Basket only with respect to cash.
Advisers Act makes it unlawful for an investment
adviser to provide investment advice to clients
unless such investment adviser has (i) adopted and
implemented written policies and procedures
reasonably designed to prevent violation, by the
investment adviser and its supervised persons, of
the Advisers Act and the Commission rules adopted
thereunder; (ii) implemented, at a minimum, an
annual review regarding the adequacy of the
policies and procedures established pursuant to
subparagraph (i) above and the effectiveness of their
implementation; and (iii) designated an individual
(who is a supervised person) responsible for
administering the policies and procedures adopted
under subparagraph (i) above.
10 The term ‘‘Reporting Authority’’ in respect of
a particular series of Proxy Portfolio Shares means
the Exchange, an institution, or a reporting service
designated by the Exchange or by the exchange that
lists a particular series of Proxy Portfolio Shares (if
the Exchange is trading such series pursuant to
unlisted trading privileges) as the official source for
calculating and reporting information relating to
such series, including, but not limited to, the Proxy
Basket; the Fund Portfolio; Custom Basket; the
amount of any cash distribution to holders of Proxy
Portfolio Shares, net asset value, or other
information relating to the issuance, redemption or
trading of Proxy Portfolio Shares. A series of Proxy
Portfolio Shares may have more than one Reporting
Authority, each having different functions.
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In the event (a) the Adviser or SubAdviser registers as a broker-dealer, or
becomes newly affiliated with a brokerdealer, or (b) any new adviser or subadviser is a registered broker-dealer or
becomes affiliated with a broker-dealer,
it will implement and will maintain a
fire wall with respect to its relevant
personnel and/or such broker-dealer
affiliate, as applicable, regarding access
to information concerning the
composition of and/or changes to the
Fund Portfolio, the Proxy Basket and/or
Custom Basket, as applicable and will
be subject to procedures designed to
prevent the use and dissemination of
material non-public information
regarding the Fund Portfolio, the Proxy
Basket, and/or Custom Basket, as
applicable, or changes thereto.
The Fund intends to qualify each year
as a regulated investment company
under Subchapter M of the Internal
Revenue Code of 1986, as amended.
The Fund’s Principal Investment
Strategies
The investment objective of the Fund
will be to seek to provide long-term
capital appreciation. Under normal
market conditions,11 the Fund will seek
to achieve its investment objective by
utilizing both fundamental analysis and
proprietary quantitative frameworks that
help inform the investment decisionmaking process regarding strategic
investment opportunities.
Under the terms of the Exemptive
Order,12 the Fund’s investments are
limited to the following: ETFs traded on
a U.S. exchange, exchange-traded notes
traded on a U.S. exchange, U.S.
exchange-traded common stocks, U.S.
exchange-traded preferred stocks, U.S.
exchange-traded American Depositary
Receipts, U.S. exchange-traded real
estate investment trusts, U.S. exchangetraded commodity pools, U.S. exchangetraded metals trusts, U.S. exchangetraded currency trusts, and common
stocks listed on a foreign exchange that
trade on such exchange
contemporaneously with the Fund’s
Shares, exchange-traded futures that are
traded on a U.S. futures exchange
11 The term ‘‘normal market conditions’’ as used
herein, is defined in Nasdaq Rule 5750(c)(4). On a
temporary basis, including for defensive purposes,
during the initial invest-up period and during
periods of high cash inflows or outflows, the Fund
may depart from its principal investment strategies;
for example, it may hold a higher than normal
proportion of its assets in cash. During such
periods, the Fund may not be able to achieve its
investment objective. The Fund may adopt a
defensive strategy when the Adviser or Sub-Adviser
believes securities in which the Fund normally
invests have elevated risks due to political or
economic factors and in other extraordinary
circumstances.
12 See supra note 4.
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contemporaneously with the Fund’s
Shares; and cash and cash equivalents
(which are short-term U.S. Treasury
securities, government money market
funds, and repurchase agreements). The
Fund will not borrow for investment
purposes, hold short positions, or
purchase any securities that are illiquid
investments at the time of purchase.
The Fund’s holdings will conform to
the permissible investments as set forth
in the Registration Statement and
Exemptive Order and the holdings will
be consistent with all requirements in
the Registration Statement and
Exemptive Order. Any foreign common
stocks held by the Fund will be traded
on an exchange that is a member of the
Intermarket Surveillance Group (‘‘ISG’’)
or with which the Exchange has in place
a comprehensive surveillance sharing
agreement. The Fund’s investments,
including derivatives, will be consistent
with its investment objective and will
not be used to enhance leverage
(although certain derivatives and other
investments may result in leverage).
That is, the Fund’s investments will not
be used to seek performance that is the
multiple or inverse multiple (e.g., 2X or
–3X) of the Fund’s primary broad-based
securities benchmark index (as defined
in Form N–1A).
Surveillance
The Exchange represents that trading
in the Proxy Portfolio Shares will be
subject to the existing trading
surveillances, administered by the
Exchange, as well as cross-market
surveillances administered by Financial
Industry Regulatory Authority
(‘‘FINRA’’), on behalf of the Exchange,
which are designed to detect violations
of Exchange rules and applicable federal
securities laws. The Exchange
represents that these surveillance
procedures are adequate to properly
monitor the trading of Proxy Portfolio
Shares on the Exchange during all
trading sessions and to deter and detect
violations of Exchange rules and the
applicable federal securities laws.
Trading of Proxy Portfolio Shares on the
Exchange will be subject to the
Exchange’s surveillance procedures for
derivative products. The Fund’s
investments, including derivatives, will
be consistent with its investment
objective and will not be used to
enhance leverage (although certain
derivatives and other investments may
result in leverage).
The Exchange prior to the
commencement of trading will require
the issuer of each series of Proxy
Portfolio Shares listed on the Exchange
to represent to the Exchange that it will
advise the Exchange of any failure by
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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. In addition, the Exchange
will require the issuer to represent that
it will notify the Exchange of any failure
to comply with the terms of applicable
exemptive and no-action relief. If the
Fund is not in compliance with the
applicable listing requirements, the
Exchange will commence delisting
procedures under the Nasdaq 5800
Series. In addition, the Exchange also
has a general policy prohibiting the
distribution of material, non-public
information by its employees.
The Adviser will upon request make
available to the Exchange and/or
FINRA, on behalf of the Exchange, the
daily Fund Portfolio of each series of
Proxy Portfolio Shares. The Exchange
believes that this is appropriate because
it will provide the Exchange and/or
FINRA, on behalf of the Exchange, with
access to the daily Fund Portfolio of any
series of Proxy Portfolio Shares upon
request on an as needed basis. The
Exchange believes that the ability to
access the information on an as needed
basis will provide it and/or FINRA with
sufficient information to perform the
necessary regulatory functions
associated with listing and trading
series of Proxy Portfolio Shares on the
Exchange, including the ability to
monitor compliance with the initial and
continued listing requirements as well
as the ability to surveil for manipulation
of the Shares.
Trading Halts
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares of
the Fund.13 Nasdaq will halt trading in
the Shares under the conditions
specified in Nasdaq Rules 4120 and
4121, including the trading pauses
under Nasdaq Rules 4120(a)(11) and
(12). Trading in Shares of the Fund will
be halted if the circuit breaker
parameters in Equity 4, Rule 4121 have
been reached.
Trading may be halted because of
market conditions or for reasons that, in
the view of the Exchange, make trading
in the Proxy Portfolio Shares
inadvisable. These may include: (1) the
extent to which trading is not occurring
in the securities and/or the financial
instruments composing the Proxy
Basket or Fund Portfolio; or (2) whether
other unusual conditions or
circumstances detrimental to the
13 See
Nasdaq Rules 4120 and 4121.
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maintenance of a fair and orderly
market are present. Trading in the Proxy
Portfolio Shares also will be subject to
Rule 5750(d)(2)(D), which sets forth
circumstances under which a series of
Proxy Portfolio Shares may be halted.
Trading Rules
Nasdaq deems the Shares to be equity
securities, thus rendering trading in the
Shares subject to Nasdaq’s existing rules
governing the trading of equity
securities. Nasdaq will allow trading in
the Shares from 4:00 a.m. until 8:00
p.m., Eastern Time in accordance with
Equity 2, Section 8. The Exchange has
appropriate rules to facilitate
transactions in the Shares during all
trading sessions. As provided in Nasdaq
Rule 5750(b)(3), the minimum price
variation for quoting and entry of orders
in Proxy Portfolio Shares traded on the
Exchange is $0.01. A ‘‘Creation Unit’’
will consist of at least 5,000 Shares.
With respect to Proxy Portfolio
Shares, all of the Exchange member
obligations relating to product
description and prospectus delivery
requirements will continue to apply in
accordance with Exchange rules and
federal securities laws, and the
Exchange and FINRA will continue to
monitor Exchange members for
compliance with such requirements.
Availability of Information
The Fund’s website (www.sgiam.com)
will include a form of the prospectus for
the Fund that may be downloaded. The
Exchange notes that a significant
amount of information about the Fund
and its Fund Portfolio is publicly
available at all times and the website
and information will be publicly
available at no charge. The Fund will
disclose the Proxy Basket, which is
designed to closely track the daily
performance of the Fund Portfolio, on a
daily basis on the Fund’s website
(www.sgiam.com). With respect to each
Custom Basket, each business day,
before the opening of trading in the
regular market session, the Investment
Company shall make publicly available
on its website the composition of any
Custom Basket transacted on the
previous business day, except a Custom
Basket that differs from the applicable
Proxy Basket only with respect to cash.
Intraday pricing information for all
constituents of the Proxy Basket that are
exchange-traded, which includes all
eligible instruments except cash and
cash equivalents, will be available on
the exchanges on which they are traded
and through subscription services.
Intraday pricing information for cash
equivalents will be available through
subscription services and/or pricing
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19689
services. Each series of Proxy Portfolio
Shares will at a minimum publicly
disclose the entirety of its portfolio
holdings, including the name, identifier,
market value and weight of each
security and instrument in the portfolio
within at least 60 days following the
end of every fiscal quarter in a manner
consistent with normal disclosure
requirements otherwise applicable to
open-end investment companies
registered under the 1940 Act.
The website will include additional
quantitative information updated on a
daily basis, including, on a per Share
basis for the Fund, the prior business
day’s NAV and the closing price or bid/
ask price at the time of calculation of
such NAV, and a calculation of the
premium or discount of the closing
price or bid/ask price against such NAV.
The website will also disclose any other
information regarding premiums and
discounts and the bid/ask spread for the
Fund as may be required for other ETFs
under Rule 6c–11 under the 1940 Act,
as amended. On each business day,
before the commencement of trading of
Shares, the Fund will publish on its
website the Proxy Basket and the
‘‘Guardrail Amount’’ (see description
below) for that day.
Form N–PORT requires reporting of a
fund’s complete portfolio holdings on a
position-by-position basis on a quarterly
basis within 60 days after fiscal quarter
end. Investors can obtain a fund’s
Statement of Additional Information, its
Shareholder Reports, its Form N–CSR,
filed twice a year, and its Form N–CEN,
filed annually. A fund’s SAI and
Shareholder Reports are available for
free upon request from the Investment
Company, and those documents and the
Form N–PORT, Form N–CSR, and Form
N–CEN may be viewed on-screen or
downloaded from the Commission’s
website at www.sec.gov. The Exchange
also notes that the Exemptive Order
provides that the issuer of the Fund will
comply with Regulation Fair Disclosure.
Information regarding market price and
trading volume of the Shares will be
continually available on a real-time
basis throughout the day on brokers’
computer screens and other electronic
services. Information regarding the
previous day’s closing price and trading
volume information for the Shares will
be published daily in the financial
section of newspapers.
Proxy Basket and Custom Baskets
Pursuant to the Exemptive Order, the
Fund is permitted to use Custom
Baskets. For the Fund, the Proxy Basket
will consist of all of the Fund portfolio
holdings but will be weighted
differently, subject to a minimum
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weightings overlap of 90% with the
Fund Portfolio at the beginning of each
business day. Intraday pricing
information for all constituents of the
Proxy Basket that are exchange-traded,
which includes all eligible instruments
except cash and cash equivalents, will
be available on the exchanges on which
they are traded and through
subscription services. Intraday pricing
information for cash equivalents will be
available through subscription services
and/or pricing services. The Exchange
notes that the Fund’s net asset value
(‘‘NAV’’) will form the basis for
creations and redemptions for the Fund
and creations and redemptions will
work in a manner substantively
identical to that of series of Managed
Fund Shares.14 The Adviser expects that
the Shares of the Fund will generally be
created and redeemed in-kind, with
limited exceptions. The names and
quantities of the instruments that
constitute the basket of securities for
creations and redemptions will be the
same as the Fund’s Proxy Basket, except
to the extent purchases and redemptions
are made entirely or in part on a cash
basis. In addition, in accordance with
the Exemptive Order, the Fund may
determine to use Custom Baskets that
differ from the Proxy Portfolio in that
they include instruments that are not in
the Proxy Portfolio, or are included in
the Proxy Portfolio but in different
weightings. In the event that the value
of the Proxy Basket is not the same as
the Fund’s NAV, the creation and
redemption baskets will consist of the
securities included in the Proxy Basket
plus or minus an amount of cash equal
to the difference between the NAV and
the value of the Proxy Basket.
Nasdaq Rule 5750(c)(6) defines
‘‘Custom Basket’’ for the purposes of
Nasdaq Rule 5750 as a portfolio of
securities that is different from the
Proxy Basket and is otherwise
consistent with the exemptive relief
issued pursuant to the 1940 Act
applicable to a series of Proxy Portfolio
Shares.
The Proxy Basket will be constructed
utilizing a proprietary algorithmic
process that will be applied to the Fund
Portfolio on a daily basis. The Proxy
Basket holdings (including the identity
and quantity of investments in the
Proxy Basket) will be publicly available
on the Fund’s website before the
commencement of trading in Fund
Shares on each business day, although
the weightings of such holdings in the
Proxy Basket will differ from the Fund
Portfolio. The Proxy Basket will have a
minimum overlap of 90% with the Fund
14 See
Nasdaq Rule 5735.
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Portfolio at the beginning of each
business day, with the precise
percentage of aggregate overlap in
weightings from 90% to 100% to be
randomly generated each day (the
overlap and tracking error will be
available on the Fund’s website before
the commencement of trading in Proxy
Portfolio Shares on each business day
and discussed further below).
In addition to the disclosure of the
Proxy Basket, the Fund will also publish
the Guardrail Amount on its website on
each business day before the
commencement of trading in the Proxy
Portfolio Shares on the Exchange. The
Guardrail Amount is the maximum
deviation between the weightings of the
specific instruments and cash positions
in the Proxy Basket from the weightings
of those specific instruments and cash
positions in the Fund Portfolio. The
Guardrail Amount is intended to ensure
that no individual security in the Proxy
Basket will be overweighted or
underweighted by more than the
publicly disclosed percentage when
compared to the actual weighting of
each security within the Fund Portfolio
as of the beginning of each business day.
The Adviser expects the performance of
the Proxy Basket and the Fund Portfolio
to be closely aligned in light of the
construction of the Proxy Basket, and
does not expect the ‘‘Tracking Error’’ to
exceed 1% (available on the Fund’s
website before the commencement of
trading in Proxy Portfolio Shares on
each business day). ‘‘Tracking Error’’ is
defined to mean the standard deviation
over the past three months of the daily
difference, in percentage terms, between
the Proxy Basket per Share NAV and
that of the Fund at the end of the
business day.
The Fund will also disclose the
entirety of its Fund Portfolio, including
the name, identifier, market value and
weight of each security and instrument
in the portfolio, no less than 60 days
following the end of every fiscal quarter.
Additional Information
The Exchange represents that the
Shares will conform to the initial and
continued listing criteria under Nasdaq
Rule 5750, including the dissemination
of key information such as the Proxy
Basket, the Custom Basket, the Fund
Portfolio, and NAV, suspension of
trading or removal, trading halts,
surveillance, minimum price variation
for quoting and order entry, an
information circular informing members
of the special characteristics and risks
associated with trading in the series of
Proxy Portfolio Shares, and firewalls as
set forth in the proposed Exchange rules
applicable to Proxy Portfolio Shares.
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
Price information for the exchangelisted instruments held by the Fund,
including both U.S. and non-U.S. listed
equity securities and U.S. exchangelisted futures will be available through
major market data vendors or securities
exchanges listing and trading such
securities. Moreover, U.S.-listed equity
securities held by the Fund will trade
on markets that are a member of ISG or
with which the Exchange has in place
a comprehensive surveillance sharing
agreement.15 Any foreign common
stocks held by the Fund will be traded
on an exchange that is a member of ISG
or with which the Exchange has in place
a comprehensive surveillance sharing
agreement. All futures contracts that the
Fund may invest in will be traded on a
U.S. futures exchange. The Exchange or
FINRA, on behalf of the Exchange, or
both, will communicate as needed
regarding trading in the Shares and
underlying exchange-traded instruments
with other markets and other entities
that are members of ISG, and the
Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading
information regarding trading such
instruments from such markets and
other entities. In addition, the Exchange
may obtain information regarding
trading in the Shares and underlying
exchange-traded instruments from
markets and other entities that are
members of ISG or with which the
Exchange has in place a comprehensive
surveillance sharing agreement.
All statements and representations
made in this filing regarding the
description of the portfolio or reference
assets, limitations on portfolio holdings
or reference assets, dissemination and
availability of reference assets (as
applicable) such as the Fund Portfolio
and the Proxy Basket, the Custom
Basket, and the applicability of
Exchange listing rules specified in this
filing shall constitute continued listing
requirements for the Shares. A
minimum of 100,000 Shares of the Fund
will be outstanding at the
commencement of trading on the
Exchange. In addition, pursuant to
Nasdaq Rule 5750(d)(1)(B), the
Exchange prior to the commencement of
trading in the Proxy Portfolio Shares,
will obtain a representation from the
issuer of the Shares of the Fund that (i)
the NAV per share for the Fund will be
calculated daily, (ii) each of the
following will be made available to all
market participants at the same time
15 For a list of the current members of ISG, see
www.isgportal.com. The Exchange notes that not all
components of the Fund may trade on markets that
are members of ISG or with which the Exchange has
in place a comprehensive surveillance sharing
agreement.
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Federal Register / Vol. 88, No. 63 / Monday, April 3, 2023 / Notices
when disclosed: the NAV, the Proxy
Basket, and the Fund Portfolio, and (iii)
the issuer and any person acting on
behalf of the series of Proxy Portfolio
Shares will comply with Regulation Fair
Disclosure under the Act,16 including
with respect to any Custom Basket.
The issuer has represented to the
Exchange that it will advise the
Exchange of any failure by the Fund or
Shares to comply with the continued
listing requirements, and, pursuant to
its obligations under Section 19(g)(1) of
the Act, the Exchange will surveil for
compliance with the continued listing
requirements. FINRA conducts certain
cross-market surveillances on behalf of
the Exchange pursuant to a regulatory
services agreement. The Exchange is
responsible for FINRA’s performance
under this regulatory services
agreement. If a Fund is not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
the Nasdaq 5800 Series.
2. Statutory Basis
lotter on DSK11XQN23PROD with NOTICES1
Nasdaq believes that the proposal is
consistent with Section 6(b) of the Act
in general and Section 6(b)(5) of the Act,
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, and to remove
impediments to and perfect the
mechanism of a free and open market
and, in general, to protect investors and
the public interest.
The Fund’s holdings will conform to
the permissible investments as set forth
in the Registration Statement and
Exemptive Order and the holdings will
be consistent with all requirements in
the Registration Statement and
Exemptive Order. The Fund’s
investments, including derivatives, will
be consistent with its investment
objective and will not be used to
enhance leverage (although certain
derivatives and other investments may
result in leverage). That is, the Fund’s
investments will not be used to seek
performance that is the multiple or
inverse multiple (e.g., 2X or –3X) of the
Fund’s primary broad-based securities
16 17 CFR 243.100–243.103. Regulation Fair
Disclosure provides that whenever an issuer, or any
person acting on its behalf, discloses material
nonpublic information regarding that issuer or its
securities to certain individuals or entities—
generally, securities market professionals, such as
stock analysts, or holders of the issuer’s securities
who may well trade on the basis of the
information—the issuer must make public
disclosure of that information.
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17:14 Mar 31, 2023
Jkt 259001
benchmark index (as defined in Form
N–1A).
The Exchange believes that the
particular instruments that may be
included in the Fund Portfolio and the
Proxy Basket or Custom Basket do not
raise any concerns related to the Proxy
Basket or Custom Basket being able to
closely track the NAV of the Fund
because such instruments include only
instruments that trade on an exchange
contemporaneously with the Shares. In
addition, the Fund’s Proxy Basket or
Custom Basket is designed to reliably
and consistently correlate to the
performance of the Fund.
The Adviser anticipates that the
returns between the Fund and its
respective Proxy Basket or Custom
Basket will have a consistent
relationship and that the deviation in
the returns between the Fund and its
Proxy Basket or Custom Basket will be
sufficiently small such that the Proxy
Basket or Custom Basket will provide
authorized participants, arbitrageurs
and other market participants
(collectively, ‘‘Market Makers’’) with a
reliable hedging vehicle that they can
use to effectuate low-risk arbitrage
trades in Fund Shares. The Exchange
believes that the disclosures provided
by the Fund will allow Market Makers
to understand the relationship between
the performance of the Fund and its
Proxy Basket or Custom Basket. Market
Makers will be able to estimate the
value of and hedge positions in the
Fund’s Shares, which the Exchange
believes will facilitate the arbitrage
process and help ensure that the Fund’s
Shares normally will trade at market
prices close to their NAV. The Exchange
also believes that competitive market
making, where traders are looking to
take advantage of differences in bid-ask
spread, will aid in keeping spreads
tight.
The Exchange notes that a significant
amount of information about the Fund
and its Fund Portfolio is publicly
available at all times. The Fund will
disclose the Proxy Basket, which is
designed to closely track the daily
performance of the Fund Portfolio, on a
daily basis and will be available on the
Fund’s website before the
commencement of trading in Proxy
Portfolio Shares on each business day.
With respect to each Custom Basket,
each business day, before the opening of
trading in the regular market session,
the Investment Company shall make
publicly available on its website the
composition of any Custom Basket
transacted on the previous business day,
except a Custom Basket that differs from
the applicable Proxy Basket only with
respect to cash. Intraday pricing
PO 00000
Frm 00087
Fmt 4703
Sfmt 4703
19691
information for all constituents of the
Proxy Basket that are exchange-traded,
which includes all eligible instruments
except cash and cash equivalents, will
be available on the exchanges on which
they are traded and through
subscription services. Intraday pricing
information for cash equivalents will be
available through subscription services
and/or pricing services. The issuer of
the Proxy Portfolio Shares will at a
minimum publicly disclose the entirety
of its portfolio holdings,17 including the
name, identifier, market value and
weight of each security and instrument
in the portfolio within at least 60 days
following the end of every fiscal quarter
in a manner consistent with normal
disclosure requirements otherwise
applicable to open-end investment
companies registered under the 1940
Act.
The Fund’s website will include
additional quantitative information
updated on a daily basis, 18 including,
on a per Share basis for the Fund, the
prior business day’s NAV and the
closing price or bid/ask price at the time
of calculation of such NAV, and a
calculation of the premium or discount
of the closing price or bid/ask price
against such NAV. The website will also
disclose any other information regarding
premiums and discounts and the bid/
ask spread for the Fund as may be
required for other ETFs under Rule 6c–
11 under the 1940 Act, as amended. On
each business day, before the
commencement of trading of Shares, the
Fund will publish on its website the
Proxy Basket and the Guardrail Amount
for that day.
The Exchange represents that the
Shares of the Fund will continue to
comply with all other proposed
requirements applicable to Proxy
Portfolio Shares, including the
dissemination of key information such
as the Proxy Basket, the Custom Basket,
disclosure of the Fund Portfolio
quarterly, and NAV, suspension of
trading or removal, trading halts,
surveillance, minimum price variation
for quoting and order entry, an
information circular informing members
of the special characteristics and risks
associated with trading in the series of
Proxy Portfolio Shares, and firewalls as
set forth in the proposed Exchange rules
applicable to Proxy Portfolio Shares and
the orders approving such rules.
Moreover, U.S.-listed equity securities,
exchange-traded futures that are traded
on a U.S. futures exchange, and nonU.S. listed equity securities held by the
17 This information will be made available on the
Fund’s website at www.sgiam.com.
18 Id.
E:\FR\FM\03APN1.SGM
03APN1
lotter on DSK11XQN23PROD with NOTICES1
19692
Federal Register / Vol. 88, No. 63 / Monday, April 3, 2023 / Notices
Fund will trade on markets that are a
member of ISG or with which the
Exchange has in place a comprehensive
surveillance sharing agreement.19
The daily dissemination of the
identity and quantity of Proxy Portfolio
component investments, together with
the right of Authorized Participants to
create and redeem each day at the NAV,
will be sufficient for market participants
to value and trade Shares in a manner
that will not lead to significant
deviations between the Shares’ Closing
Price or Bid/Ask Price and NAV.
All statements and representations
made in this filing regarding the
description of the portfolio or reference
assets, limitations on portfolio holdings
or reference assets, dissemination and
availability of reference asset (as
applicable), and the applicability of
Exchange listing rules specified in this
filing shall constitute continued listing
requirements for the Shares. The issuer
has represented to the Exchange that it
will advise the Exchange of any failure
by the Fund or Shares to comply with
the continued listing requirements, and,
pursuant to its obligations under
Section 19(g)(1) of the Act, the Exchange
will surveil for compliance with the
continued listing requirements. A
minimum of 100,000 Shares of the Fund
will be outstanding at the
commencement of trading on the
Exchange. The Exchange will obtain a
representation from the issuer of the
Shares of the Fund that (i) the NAV per
share for the Fund will be calculated
daily, (ii) each of the following will be
made available to all market
participants at the same time when
disclosed: the NAV, the Proxy Basket,
and the Fund Portfolio, and (iii) the
issuer and any person acting on behalf
of the series of Proxy Portfolio Shares
will comply with Regulation Fair
Disclosure under the Act,20 including
with respect to any Custom Basket.
FINRA conducts certain cross-market
surveillances on behalf of the Exchange
pursuant to a regulatory services
agreement. The Exchange is responsible
for FINRA’s performance under this
regulatory services agreement. If a Fund
is not in compliance with the applicable
listing requirements, the Exchange will
commence delisting procedures under
the Nasdaq 5800 Series.
For the above reasons, the Exchange
believes that the proposed rule change
is consistent with the requirements of
Section 6(b)(5) of the Act.
19 Supra
20 See
note 15.
supra note 16.
VerDate Sep<11>2014
17:14 Mar 31, 2023
Jkt 259001
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Rather, the
Exchange notes that the proposed rule
change will facilitate the listing of a new
type of actively-managed exchangetraded product, thus enhancing
competition among both market
participants and listing venues, to the
benefit of investors and the marketplace.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 21 and
subparagraph (f)(6) of Rule 19b–4
thereunder.22
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act normally does not become operative
for 30 days after the date of its filing.
However, Rule 19b–4(f)(6)(iii) 23 permits
the Commission to designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Commission has noticed for
immediate effectiveness proposed rule
changes to permit listing and trading of
Proxy Portfolio Shares on the Exchange
and Active Proxy Portfolio Shares
(which securities are substantively
similar to Proxy Portfolio Shares but
listed on another exchange) of
21 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.
23 17 CFR 240.19b–4(f)(6)(iii).
22 17
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
numerous funds.24 The proposed listing
rule for the Fund raises no novel legal
or regulatory issues. Thus, the
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest. Accordingly, the
Commission hereby waives the 30-day
operative delay and designates the
proposed rule change operative upon
filing.25
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2023–006 on the subject line.
Paper Comments
• Send paper comments in triplicate
to: Secretary, Securities and Exchange
24 See e.g., Securities Exchange Act Release No.
95082 (Feb 4, 2021), 88 FR 8972 (Feb. 10, 2021)
(SR–NASDAQ–2021–005) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
Relating to the ALPS Active REIT ETF of ALPS ETF
Trust To List and Trade Shares of the Fund Under
Nasdaq Rule 5750) (Proxy Portfolio Shares);
Securities Exchange Act Release Nos. 92104 (June
3, 2021), 86 FR 30635 (June 9, 2021) (SR–
NYSEArca–2021–46) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
to List and Trade Shares of the Nuveen Santa
Barbara Dividend Growth ETF, Nuveen Small Cap
Select ETF, and Nuveen Winslow Large-Cap
Growth ESG ETF Under NYSE Arca Rule 8.601–E
(Active Proxy Portfolio Shares)); 92958 (September
13, 2021), 86 FR 51933 (September 17, 2021) (SR–
NYSEArca–2021–77) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
To List and Trade Shares of the Nuveen Growth
Opportunities ETF Under NYSE Arca Rule 8.601–
E (Active Proxy Portfolio Shares)); and 93264
(October 6, 2021), 86 FR 56989 (October 13, 2021)
(SR–NYSEArca–2021–84) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
To List and Trade Shares of the Schwab Ariel ESG
ETF Under NYSE Arca Rule 8.601–E (Active Proxy
Portfolio Shares)).
25 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
E:\FR\FM\03APN1.SGM
03APN1
Federal Register / Vol. 88, No. 63 / Monday, April 3, 2023 / Notices
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2023–006. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NASDAQ–2023–006 and
should be submitted on or before April
24, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–06782 Filed 3–31–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
lotter on DSK11XQN23PROD with NOTICES1
[Release No. 34–97212; File No. 4–698]
Joint Industry Plan; Notice of
Withdrawal of Proposed Amendment
to the National Market System Plan
Governing the Consolidated Audit
Trail, as Modified by Partial
Amendment Nos. 1 and 2
March 28, 2023.
On May 13, 2022, the Operating
Committee for Consolidated Audit Trail,
26 17
CFR 200.30–3(a)(12), (59).
VerDate Sep<11>2014
17:14 Mar 31, 2023
Jkt 259001
LLC (‘‘CAT LLC’’), on behalf of the
Participants 1 to the National Market
System Plan Governing the
Consolidated Audit Trail (‘‘CAT NMS
Plan’’),2 filed with the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to Section 11A of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’),3 and Rule 608 of
Regulation NMS thereunder,4 a
proposed amendment to the CAT NMS
Plan (‘‘Proposed Amendment’’) to
implement a revised funding model
(‘‘Executed Share Model’’) for the
consolidated audit trail (‘‘CAT’’) and to
establish a fee schedule for Participant
CAT fees in accordance with the
Executed Share Model. The Proposed
Amendment was published for
comment in the Federal Register on
June 1, 2022.5
On August 30, 2022, the Commission
instituted proceedings pursuant to Rule
608(b)(2)(i) of Regulation NMS,6 to
determine whether to disapprove the
Proposed Amendment or to approve the
Proposed Amendment with any changes
or subject to any conditions the
Commission deems necessary or
appropriate after considering public
comment.7 On November 15, 2022, CAT
LLC submitted a letter to propose a
1 The Participants are: BOX Exchange LLC, Cboe
BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe
EDGA Exchange, Inc., Cboe EDGX Exchange, Inc.,
Cboe C2 Exchange, Inc., Cboe Exchange, Inc.,
Financial Industry Regulatory Authority, Inc.,
Investors Exchange LLC, Long-Term Stock
Exchange, Inc., MEMX LLC, Miami International
Securities Exchange, LLC, MIAX Emerald, LLC,
MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq
GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC,
Nasdaq PHLX LLC, The Nasdaq Stock Market LLC,
New York Stock Exchange LLC, NYSE American
LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and
NYSE National, Inc. (collectively, the
‘‘Participants’’).
2 The CAT NMS Plan is a national market system
plan approved by the Commission pursuant to
Section 11A of the Exchange Act and the rules and
regulations thereunder. See Securities Exchange Act
Release No. 79318 (Nov. 15, 2016), 81 FR 84696
(Nov. 23, 2016). The CAT NMS Plan functions as
the limited liability company agreement of the
jointly owned limited liability company formed
under Delaware state law through which the
Participants conduct the activities of the CAT
(‘‘Company’’). On August 29, 2019, the Participants
replaced the CAT NMS Plan in its entirety with the
limited liability company agreement of a new
limited liability company named Consolidated
Audit Trail, LLC, which became the Company. The
latest version of the CAT NMS Plan is available at
https://catnmsplan.com/about-cat/cat-nms-plan.
3 15 U.S.C. 78k–1.
4 17 CFR 242.608.
5 See Securities Exchange Act Release No. 94984
(May 25, 2022), 87 FR 33226 (June 1, 2022)
(‘‘Notice’’).
6 17 CFR 242.608(b)(2)(i).
7 See Securities Exchange Act Release No. 95634
(Aug. 30, 2022), 87 FR 54558 (Sept. 6, 2022)
(‘‘OIP’’). Comments received in response to the OIP
and the Notice can be found on the Commission’s
website at https://www.sec.gov/comments/4-698/4698-a.htm.
PO 00000
Frm 00089
Fmt 4703
Sfmt 9990
19693
partial amendment of the Proposed
Amendment (‘‘Partial Amendment No.
1’’) and to respond to the Commission’s
solicitation of comments in the OIP and
comments received on the OIP.8 On
November 23, 2022, pursuant to Rule
608(b)(2)(i) of Regulation NMS,9 the
Commission extended the period within
which to conclude proceedings
regarding the Proposed Amendment to
240 days from the date of publication of
the Notice.10 Notice of the filing of
Partial Amendment No. 1 was published
for comment in the Federal Register on
December 2, 2022.11
On January 20, 2023, the Commission
extended the period within which to
conclude proceedings regarding the
Proposed Amendment to 300 days from
the date of publication of the Notice.12
On February 15, 2023, CAT LLC
submitted a letter to propose an
additional partial amendment to the
Proposed Amendment (‘‘Partial
Amendment No. 2’’) and to respond to
issues discussed in the comments on
Partial Amendment No. 1.13 The
Commission is publishing this notice to
reflect that on March 1, 2023, prior to
the end of the 300-day period provided
for in Exchange Act Rule 608(b)(2)(ii),14
the Participants withdrew the Proposed
Amendment, as modified by Partial
Amendment Nos. 1 and 2.15
By the Commission.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–06784 Filed 3–31–23; 8:45 am]
BILLING CODE 8011–01–P
8 See Letter from Michael Simon, Chair, CAT
NMS Plan Operating Committee, to Vanessa
Countryman, Secretary, Commission (Nov. 15,
2022).
9 See 17 CFR 242.608(b)(2)(i).
10 See Securities Exchange Act Release No. 96382
(Nov. 23, 2022), 87 FR 73366 (Nov. 29, 2022).
11 See Securities Exchange Act Release No. 96394
(Nov. 28, 2022), 87 FR 74183 (Dec. 2, 2022).
Comments received in response to Partial
Amendment No. 1 can be found on the
Commission’s website at https://www.sec.gov/
comments/4-698/4-698-a.htm.
12 See Securities Exchange Act Release No. 96725
(Jan. 20, 2023), 88 FR 5059 (Jan. 26, 2023).
13 See Letter from Michael Simon, Chair
Emeritus, CAT NMS Plan Operating Committee, to
Vanessa Countryman, Secretary, Commission (Feb.
15, 2023), available at https://www.sec.gov/
comments/4-698/4-698-a.htm. Because CAT LLC
withdrew the Proposed Amendment, as modified
by Partial Amendment Nos. 1 and 2, before the
Commission’s 15-day deadline in Rule 608(b)(1)(ii)
of Regulation NMS to send notice of the filing of
a proposed amendment to any national market
system plan to the Federal Register, the
Commission did not publish notice of the filing of
Partial Amendment No. 2. See 17 CFR
242.608(b)(1)(ii).
14 17 CFR 242.608(b)(2)(ii).
15 See Letter from Brandon Becker, Chair, CAT
NMS Plan Operating Committee, to Vanessa
Countryman, Secretary, Commission (Mar. 1, 2023).
E:\FR\FM\03APN1.SGM
03APN1
]]>Agencies
[Federal Register Volume 88, Number 63 (Monday, April 3, 2023)]
[Notices]
[Pages 19687-19693]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06782]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97211; File No. SR-NASDAQ-2023-006]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To List and Trade Shares of the SGI Dynamic Tactical ETF Under Nasdaq
Rule 5750 (``Proxy Portfolio Shares'')
March 28, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 17, 2023, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposed a rule change relating to the SGI Dynamic
Tactical ETF (the ``Fund'') of The RBB Fund, Inc. (the ``Company''), to
list and trade shares of the Fund under Nasdaq Rule 5750 (``Proxy
Portfolio Shares''). The shares of the Fund are collectively referred
to herein as the ``Shares.''
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange has adopted Nasdaq Rule 5750, which governs the
listing and trading of Proxy Portfolio Shares on the Exchange.\3\
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\3\ The Exchange adopted Nasdaq Rule 5750 in Securities Exchange
Act Release No. 89110 (June 22, 2020), 85 FR 38461 (June 26, 2020)
(SR-NASDAQ-2020-032).
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The Fund is an actively-managed exchange-traded fund (``ETF''). The
Shares will be offered by the Company, which was established as a
Maryland corporation on February 29, 1988.\4\ The Company, which is
registered with the Commission as an investment company under the 1940
Act, has filed a registration statement on Form N-1A (``Registration
Statement'') relating to the Fund with the Commission.\5\ The Fund is a
series of the Company. Summit Global Investments, LLC (``Adviser'') is
the investment adviser to the Fund. SG Trading Solutions, LLC, is the
sub-adviser (``Sub-Adviser'') to the Fund. Quasar Distributors, LLC is
the principal underwriter and distributor of the Fund's Shares. U.S.
Bank Global Fund Services acts as the administrator, transfer agent and
provides fund accounting services to the Fund. U.S. Bank, N.A. acts as
the custodian to the Fund.
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\4\ The Commission has issued an order, upon which the Company
may rely, granting certain exemptive relief under the Investment
Company Act of 1940 (the ``1940 Act''). See Investment Company Act
Release No. 34857 (March 15, 2023) (``Exemptive Order'').
Investments made by the Fund will comply with the conditions set
forth in the Application and the Exemptive Order. The description of
the operation of the Fund herein is based, in part, on the
Registration Statement and Exemptive Order. The Exchange will not
commence trading in the Fund's Proxy Portfolio Shares until the
Registration Statement is effective.
\5\ The Registration Statement (File No. 811-05518) is available
on the Commission's website at https://www.sec.gov/Archives/edgar/data/0000831114/000139834422007151/fp0074774_485apos.htm.
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Nasdaq Rule 5750(b)(5) provides that if the investment adviser to
the Investment Company (as defined herein) issuing Proxy Portfolio
Shares \6\ is registered as a broker-dealer or is affiliated with a
broker-dealer, such investment adviser will erect and maintain a ``fire
wall'' between the investment adviser and personnel of the broker-
dealer or broker-dealer affiliate, as applicable, with respect to
access to information concerning the composition of and/or changes to
the Fund Portfolio,\7\ the Proxy Basket and/or Custom Basket, as
applicable.\8\ In addition, Nasdaq Rule 5750(b)(5) further requires
that changes to the Fund Portfolio, the Proxy Basket and/or Custom
Basket must be subject to procedures designed to prevent the use and
dissemination of material nonpublic information regarding the Fund
Portfolio, and/or the Proxy Basket, and/or Custom Basket, as
applicable, or changes thereto.\9\
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\6\ The term ``Proxy Portfolio Share'' means a security that:
(A) represents an interest in an investment company registered under
the Investment Company Act of 1940 (``Investment Company'')
organized as an open-end management investment company, that invests
in a portfolio of securities selected by the Investment Company's
investment adviser consistent with the Investment Company's
investment objectives and policies; (B) is issued in a specified
aggregate minimum number in return for a deposit of a specified
Proxy Basket or Custom Basket, as applicable, and/or a cash amount
with a value equal to the next determined net asset value; (C) when
aggregated in the same specified minimum number, may be redeemed at
a holder's request, which holder will be paid specified Proxy Basket
or Custom Basket, as applicable, and/or a cash amount with a value
equal to the next determined net asset value; and (D) the portfolio
holdings for which are disclosed within at least 60 days following
the end of every fiscal quarter.
\7\ The term ``Fund Portfolio'' means the identities and
quantities of the securities and other assets held by the Investment
Company that will form the basis for the Investment Company's
calculation of net asset value at the end of the business day.
\8\ The term ``Proxy Basket'' means the identities and
quantities of the securities and other assets included in a basket
that is designed to closely track the daily performance of the Fund
Portfolio, as provided in the exemptive relief under the 1940 Act
applicable to a series of Proxy Portfolio Shares. The website for
each series of Proxy Portfolio Shares shall disclose the following
information regarding the Proxy Basket as required under Rule 5750,
to the extent applicable: (A) Ticker symbol; (B) CUSIP or other
identifier; (C) Description of holding; (D) Quantity of each
security or other asset held; and (E) Percentage weight of the
holding in the portfolio. For purposes of this proposed rule change,
the term Custom Basket means a portfolio of securities that is
different from the Proxy Basket and is otherwise consistent with the
exemptive relief issued pursuant to the 1940 Act applicable to a
series of Proxy Portfolio Shares.
\9\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Adviser, Sub-Adviser, and their related
personnel are subject to the provisions of Rule 204A-1 under the
Advisers Act relating to codes of ethics. This Rule requires
investment advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as well as
compliance with other applicable securities laws. Accordingly,
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with
Rule 204A-1 under the Advisers Act. The Adviser and Sub-Adviser are
each not registered as a broker-dealer and are not affiliated with
broker-dealers. The Adviser and Sub-Adviser will each implement and
maintain a ``fire wall'' with respect to any future broker-dealer
affiliates regarding access to information concerning the
composition of and/or changes to the Fund Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable. In addition, Rule
206(4)-7 under the Advisers Act makes it unlawful for an investment
adviser to provide investment advice to clients unless such
investment adviser has (i) adopted and implemented written policies
and procedures reasonably designed to prevent violation, by the
investment adviser and its supervised persons, of the Advisers Act
and the Commission rules adopted thereunder; (ii) implemented, at a
minimum, an annual review regarding the adequacy of the policies and
procedures established pursuant to subparagraph (i) above and the
effectiveness of their implementation; and (iii) designated an
individual (who is a supervised person) responsible for
administering the policies and procedures adopted under subparagraph
(i) above.
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[[Page 19688]]
In addition, in accordance with Nasdaq Rule 5750(b)(6), any person
or entity, including a custodian, Reporting Authority,\10\ distributor,
or administrator, who has access to nonpublic information regarding the
Fund Portfolio, the Proxy Basket or Custom Basket, as applicable, or
changes thereto, must be subject to procedures designed to prevent the
use and dissemination of material nonpublic information regarding the
applicable Fund Portfolio, the Proxy Basket or Custom Basket, as
applicable, or changes thereto. Moreover, if any such person or entity
is registered as a broker-dealer or affiliated with a broker-dealer,
such person or entity will erect and maintain a ``fire wall'' between
the person or entity and the broker-dealer with respect to access to
information concerning the composition of and/or changes to such Fund
Portfolio, Proxy Basket or Custom Basket, as applicable, or changes
thereto.
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\10\ The term ``Reporting Authority'' in respect of a particular
series of Proxy Portfolio Shares means the Exchange, an institution,
or a reporting service designated by the Exchange or by the exchange
that lists a particular series of Proxy Portfolio Shares (if the
Exchange is trading such series pursuant to unlisted trading
privileges) as the official source for calculating and reporting
information relating to such series, including, but not limited to,
the Proxy Basket; the Fund Portfolio; Custom Basket; the amount of
any cash distribution to holders of Proxy Portfolio Shares, net
asset value, or other information relating to the issuance,
redemption or trading of Proxy Portfolio Shares. A series of Proxy
Portfolio Shares may have more than one Reporting Authority, each
having different functions.
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The issuer represents that with respect to each Proxy Basket and
Custom Basket: (i) the Proxy Basket will be publicly disseminated at
least once daily and will be made available to all market participants
at the same time, and (ii) with respect to each Custom Basket utilized
by a series of Proxy Portfolio Shares, each business day, before the
opening of trading in the regular market session, the investment
company shall make publicly available on its website the composition of
any Custom Basket transacted on the previous business day, except a
Custom Basket that differs from the applicable Proxy Basket only with
respect to cash.
In the event (a) the Adviser or Sub-Adviser registers as a broker-
dealer, or becomes newly affiliated with a broker-dealer, or (b) any
new adviser or sub-adviser is a registered broker-dealer or becomes
affiliated with a broker-dealer, it will implement and will maintain a
fire wall with respect to its relevant personnel and/or such broker-
dealer affiliate, as applicable, regarding access to information
concerning the composition of and/or changes to the Fund Portfolio, the
Proxy Basket and/or Custom Basket, as applicable and will be subject to
procedures designed to prevent the use and dissemination of material
non-public information regarding the Fund Portfolio, the Proxy Basket,
and/or Custom Basket, as applicable, or changes thereto.
The Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as
amended.
The Fund's Principal Investment Strategies
The investment objective of the Fund will be to seek to provide
long-term capital appreciation. Under normal market conditions,\11\ the
Fund will seek to achieve its investment objective by utilizing both
fundamental analysis and proprietary quantitative frameworks that help
inform the investment decision-making process regarding strategic
investment opportunities.
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\11\ The term ``normal market conditions'' as used herein, is
defined in Nasdaq Rule 5750(c)(4). On a temporary basis, including
for defensive purposes, during the initial invest-up period and
during periods of high cash inflows or outflows, the Fund may depart
from its principal investment strategies; for example, it may hold a
higher than normal proportion of its assets in cash. During such
periods, the Fund may not be able to achieve its investment
objective. The Fund may adopt a defensive strategy when the Adviser
or Sub-Adviser believes securities in which the Fund normally
invests have elevated risks due to political or economic factors and
in other extraordinary circumstances.
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Under the terms of the Exemptive Order,\12\ the Fund's investments
are limited to the following: ETFs traded on a U.S. exchange, exchange-
traded notes traded on a U.S. exchange, U.S. exchange-traded common
stocks, U.S. exchange-traded preferred stocks, U.S. exchange-traded
American Depositary Receipts, U.S. exchange-traded real estate
investment trusts, U.S. exchange-traded commodity pools, U.S. exchange-
traded metals trusts, U.S. exchange-traded currency trusts, and common
stocks listed on a foreign exchange that trade on such exchange
contemporaneously with the Fund's Shares, exchange-traded futures that
are traded on a U.S. futures exchange contemporaneously with the Fund's
Shares; and cash and cash equivalents (which are short-term U.S.
Treasury securities, government money market funds, and repurchase
agreements). The Fund will not borrow for investment purposes, hold
short positions, or purchase any securities that are illiquid
investments at the time of purchase.
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\12\ See supra note 4.
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The Fund's holdings will conform to the permissible investments as
set forth in the Registration Statement and Exemptive Order and the
holdings will be consistent with all requirements in the Registration
Statement and Exemptive Order. Any foreign common stocks held by the
Fund will be traded on an exchange that is a member of the Intermarket
Surveillance Group (``ISG'') or with which the Exchange has in place a
comprehensive surveillance sharing agreement. The Fund's investments,
including derivatives, will be consistent with its investment objective
and will not be used to enhance leverage (although certain derivatives
and other investments may result in leverage). That is, the Fund's
investments will not be used to seek performance that is the multiple
or inverse multiple (e.g., 2X or -3X) of the Fund's primary broad-based
securities benchmark index (as defined in Form N-1A).
Surveillance
The Exchange represents that trading in the Proxy Portfolio Shares
will be subject to the existing trading surveillances, administered by
the Exchange, as well as cross-market surveillances administered by
Financial Industry Regulatory Authority (``FINRA''), on behalf of the
Exchange, which are designed to detect violations of Exchange rules and
applicable federal securities laws. The Exchange represents that these
surveillance procedures are adequate to properly monitor the trading of
Proxy Portfolio Shares on the Exchange during all trading sessions and
to deter and detect violations of Exchange rules and the applicable
federal securities laws. Trading of Proxy Portfolio Shares on the
Exchange will be subject to the Exchange's surveillance procedures for
derivative products. The Fund's investments, including derivatives,
will be consistent with its investment objective and will not be used
to enhance leverage (although certain derivatives and other investments
may result in leverage).
The Exchange prior to the commencement of trading will require the
issuer of each series of Proxy Portfolio Shares listed on the Exchange
to represent to the Exchange that it will advise the Exchange of any
failure by
[[Page 19689]]
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. In addition, the Exchange will require the issuer to
represent that it will notify the Exchange of any failure to comply
with the terms of applicable exemptive and no-action relief. If the
Fund is not in compliance with the applicable listing requirements, the
Exchange will commence delisting procedures under the Nasdaq 5800
Series. In addition, the Exchange also has a general policy prohibiting
the distribution of material, non-public information by its employees.
The Adviser will upon request make available to the Exchange and/or
FINRA, on behalf of the Exchange, the daily Fund Portfolio of each
series of Proxy Portfolio Shares. The Exchange believes that this is
appropriate because it will provide the Exchange and/or FINRA, on
behalf of the Exchange, with access to the daily Fund Portfolio of any
series of Proxy Portfolio Shares upon request on an as needed basis.
The Exchange believes that the ability to access the information on an
as needed basis will provide it and/or FINRA with sufficient
information to perform the necessary regulatory functions associated
with listing and trading series of Proxy Portfolio Shares on the
Exchange, including the ability to monitor compliance with the initial
and continued listing requirements as well as the ability to surveil
for manipulation of the Shares.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund.\13\ Nasdaq will halt trading in the
Shares under the conditions specified in Nasdaq Rules 4120 and 4121,
including the trading pauses under Nasdaq Rules 4120(a)(11) and (12).
Trading in Shares of the Fund will be halted if the circuit breaker
parameters in Equity 4, Rule 4121 have been reached.
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\13\ See Nasdaq Rules 4120 and 4121.
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Trading may be halted because of market conditions or for reasons
that, in the view of the Exchange, make trading in the Proxy Portfolio
Shares inadvisable. These may include: (1) the extent to which trading
is not occurring in the securities and/or the financial instruments
composing the Proxy Basket or Fund Portfolio; or (2) whether other
unusual conditions or circumstances detrimental to the maintenance of a
fair and orderly market are present. Trading in the Proxy Portfolio
Shares also will be subject to Rule 5750(d)(2)(D), which sets forth
circumstances under which a series of Proxy Portfolio Shares may be
halted.
Trading Rules
Nasdaq deems the Shares to be equity securities, thus rendering
trading in the Shares subject to Nasdaq's existing rules governing the
trading of equity securities. Nasdaq will allow trading in the Shares
from 4:00 a.m. until 8:00 p.m., Eastern Time in accordance with Equity
2, Section 8. The Exchange has appropriate rules to facilitate
transactions in the Shares during all trading sessions. As provided in
Nasdaq Rule 5750(b)(3), the minimum price variation for quoting and
entry of orders in Proxy Portfolio Shares traded on the Exchange is
$0.01. A ``Creation Unit'' will consist of at least 5,000 Shares.
With respect to Proxy Portfolio Shares, all of the Exchange member
obligations relating to product description and prospectus delivery
requirements will continue to apply in accordance with Exchange rules
and federal securities laws, and the Exchange and FINRA will continue
to monitor Exchange members for compliance with such requirements.
Availability of Information
The Fund's website (www.sgiam.com) will include a form of the
prospectus for the Fund that may be downloaded. The Exchange notes that
a significant amount of information about the Fund and its Fund
Portfolio is publicly available at all times and the website and
information will be publicly available at no charge. The Fund will
disclose the Proxy Basket, which is designed to closely track the daily
performance of the Fund Portfolio, on a daily basis on the Fund's
website (www.sgiam.com). With respect to each Custom Basket, each
business day, before the opening of trading in the regular market
session, the Investment Company shall make publicly available on its
website the composition of any Custom Basket transacted on the previous
business day, except a Custom Basket that differs from the applicable
Proxy Basket only with respect to cash. Intraday pricing information
for all constituents of the Proxy Basket that are exchange-traded,
which includes all eligible instruments except cash and cash
equivalents, will be available on the exchanges on which they are
traded and through subscription services. Intraday pricing information
for cash equivalents will be available through subscription services
and/or pricing services. Each series of Proxy Portfolio Shares will at
a minimum publicly disclose the entirety of its portfolio holdings,
including the name, identifier, market value and weight of each
security and instrument in the portfolio within at least 60 days
following the end of every fiscal quarter in a manner consistent with
normal disclosure requirements otherwise applicable to open-end
investment companies registered under the 1940 Act.
The website will include additional quantitative information
updated on a daily basis, including, on a per Share basis for the Fund,
the prior business day's NAV and the closing price or bid/ask price at
the time of calculation of such NAV, and a calculation of the premium
or discount of the closing price or bid/ask price against such NAV. The
website will also disclose any other information regarding premiums and
discounts and the bid/ask spread for the Fund as may be required for
other ETFs under Rule 6c-11 under the 1940 Act, as amended. On each
business day, before the commencement of trading of Shares, the Fund
will publish on its website the Proxy Basket and the ``Guardrail
Amount'' (see description below) for that day.
Form N-PORT requires reporting of a fund's complete portfolio
holdings on a position-by-position basis on a quarterly basis within 60
days after fiscal quarter end. Investors can obtain a fund's Statement
of Additional Information, its Shareholder Reports, its Form N-CSR,
filed twice a year, and its Form N-CEN, filed annually. A fund's SAI
and Shareholder Reports are available for free upon request from the
Investment Company, and those documents and the Form N-PORT, Form N-
CSR, and Form N-CEN may be viewed on-screen or downloaded from the
Commission's website at www.sec.gov. The Exchange also notes that the
Exemptive Order provides that the issuer of the Fund will comply with
Regulation Fair Disclosure. Information regarding market price and
trading volume of the Shares will be continually available on a real-
time basis throughout the day on brokers' computer screens and other
electronic services. Information regarding the previous day's closing
price and trading volume information for the Shares will be published
daily in the financial section of newspapers.
Proxy Basket and Custom Baskets
Pursuant to the Exemptive Order, the Fund is permitted to use
Custom Baskets. For the Fund, the Proxy Basket will consist of all of
the Fund portfolio holdings but will be weighted differently, subject
to a minimum
[[Page 19690]]
weightings overlap of 90% with the Fund Portfolio at the beginning of
each business day. Intraday pricing information for all constituents of
the Proxy Basket that are exchange-traded, which includes all eligible
instruments except cash and cash equivalents, will be available on the
exchanges on which they are traded and through subscription services.
Intraday pricing information for cash equivalents will be available
through subscription services and/or pricing services. The Exchange
notes that the Fund's net asset value (``NAV'') will form the basis for
creations and redemptions for the Fund and creations and redemptions
will work in a manner substantively identical to that of series of
Managed Fund Shares.\14\ The Adviser expects that the Shares of the
Fund will generally be created and redeemed in-kind, with limited
exceptions. The names and quantities of the instruments that constitute
the basket of securities for creations and redemptions will be the same
as the Fund's Proxy Basket, except to the extent purchases and
redemptions are made entirely or in part on a cash basis. In addition,
in accordance with the Exemptive Order, the Fund may determine to use
Custom Baskets that differ from the Proxy Portfolio in that they
include instruments that are not in the Proxy Portfolio, or are
included in the Proxy Portfolio but in different weightings. In the
event that the value of the Proxy Basket is not the same as the Fund's
NAV, the creation and redemption baskets will consist of the securities
included in the Proxy Basket plus or minus an amount of cash equal to
the difference between the NAV and the value of the Proxy Basket.
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\14\ See Nasdaq Rule 5735.
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Nasdaq Rule 5750(c)(6) defines ``Custom Basket'' for the purposes
of Nasdaq Rule 5750 as a portfolio of securities that is different from
the Proxy Basket and is otherwise consistent with the exemptive relief
issued pursuant to the 1940 Act applicable to a series of Proxy
Portfolio Shares.
The Proxy Basket will be constructed utilizing a proprietary
algorithmic process that will be applied to the Fund Portfolio on a
daily basis. The Proxy Basket holdings (including the identity and
quantity of investments in the Proxy Basket) will be publicly available
on the Fund's website before the commencement of trading in Fund Shares
on each business day, although the weightings of such holdings in the
Proxy Basket will differ from the Fund Portfolio. The Proxy Basket will
have a minimum overlap of 90% with the Fund Portfolio at the beginning
of each business day, with the precise percentage of aggregate overlap
in weightings from 90% to 100% to be randomly generated each day (the
overlap and tracking error will be available on the Fund's website
before the commencement of trading in Proxy Portfolio Shares on each
business day and discussed further below).
In addition to the disclosure of the Proxy Basket, the Fund will
also publish the Guardrail Amount on its website on each business day
before the commencement of trading in the Proxy Portfolio Shares on the
Exchange. The Guardrail Amount is the maximum deviation between the
weightings of the specific instruments and cash positions in the Proxy
Basket from the weightings of those specific instruments and cash
positions in the Fund Portfolio. The Guardrail Amount is intended to
ensure that no individual security in the Proxy Basket will be
overweighted or underweighted by more than the publicly disclosed
percentage when compared to the actual weighting of each security
within the Fund Portfolio as of the beginning of each business day. The
Adviser expects the performance of the Proxy Basket and the Fund
Portfolio to be closely aligned in light of the construction of the
Proxy Basket, and does not expect the ``Tracking Error'' to exceed 1%
(available on the Fund's website before the commencement of trading in
Proxy Portfolio Shares on each business day). ``Tracking Error'' is
defined to mean the standard deviation over the past three months of
the daily difference, in percentage terms, between the Proxy Basket per
Share NAV and that of the Fund at the end of the business day.
The Fund will also disclose the entirety of its Fund Portfolio,
including the name, identifier, market value and weight of each
security and instrument in the portfolio, no less than 60 days
following the end of every fiscal quarter.
Additional Information
The Exchange represents that the Shares will conform to the initial
and continued listing criteria under Nasdaq Rule 5750, including the
dissemination of key information such as the Proxy Basket, the Custom
Basket, the Fund Portfolio, and NAV, suspension of trading or removal,
trading halts, surveillance, minimum price variation for quoting and
order entry, an information circular informing members of the special
characteristics and risks associated with trading in the series of
Proxy Portfolio Shares, and firewalls as set forth in the proposed
Exchange rules applicable to Proxy Portfolio Shares.
Price information for the exchange-listed instruments held by the
Fund, including both U.S. and non-U.S. listed equity securities and
U.S. exchange-listed futures will be available through major market
data vendors or securities exchanges listing and trading such
securities. Moreover, U.S.-listed equity securities held by the Fund
will trade on markets that are a member of ISG or with which the
Exchange has in place a comprehensive surveillance sharing
agreement.\15\ Any foreign common stocks held by the Fund will be
traded on an exchange that is a member of ISG or with which the
Exchange has in place a comprehensive surveillance sharing agreement.
All futures contracts that the Fund may invest in will be traded on a
U.S. futures exchange. The Exchange or FINRA, on behalf of the
Exchange, or both, will communicate as needed regarding trading in the
Shares and underlying exchange-traded instruments with other markets
and other entities that are members of ISG, and the Exchange or FINRA,
on behalf of the Exchange, or both, may obtain trading information
regarding trading such instruments from such markets and other
entities. In addition, the Exchange may obtain information regarding
trading in the Shares and underlying exchange-traded instruments from
markets and other entities that are members of ISG or with which the
Exchange has in place a comprehensive surveillance sharing agreement.
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\15\ For a list of the current members of ISG, see
www.isgportal.com. The Exchange notes that not all components of the
Fund may trade on markets that are members of ISG or with which the
Exchange has in place a comprehensive surveillance sharing
agreement.
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All statements and representations made in this filing regarding
the description of the portfolio or reference assets, limitations on
portfolio holdings or reference assets, dissemination and availability
of reference assets (as applicable) such as the Fund Portfolio and the
Proxy Basket, the Custom Basket, and the applicability of Exchange
listing rules specified in this filing shall constitute continued
listing requirements for the Shares. A minimum of 100,000 Shares of the
Fund will be outstanding at the commencement of trading on the
Exchange. In addition, pursuant to Nasdaq Rule 5750(d)(1)(B), the
Exchange prior to the commencement of trading in the Proxy Portfolio
Shares, will obtain a representation from the issuer of the Shares of
the Fund that (i) the NAV per share for the Fund will be calculated
daily, (ii) each of the following will be made available to all market
participants at the same time
[[Page 19691]]
when disclosed: the NAV, the Proxy Basket, and the Fund Portfolio, and
(iii) the issuer and any person acting on behalf of the series of Proxy
Portfolio Shares will comply with Regulation Fair Disclosure under the
Act,\16\ including with respect to any Custom Basket.
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\16\ 17 CFR 243.100-243.103. Regulation Fair Disclosure provides
that whenever an issuer, or any person acting on its behalf,
discloses material nonpublic information regarding that issuer or
its securities to certain individuals or entities--generally,
securities market professionals, such as stock analysts, or holders
of the issuer's securities who may well trade on the basis of the
information--the issuer must make public disclosure of that
information.
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The issuer has represented to the Exchange that it will advise the
Exchange of any failure by the Fund or Shares to comply with the
continued listing requirements, and, pursuant to its obligations under
Section 19(g)(1) of the Act, the Exchange will surveil for compliance
with the continued listing requirements. FINRA conducts certain cross-
market surveillances on behalf of the Exchange pursuant to a regulatory
services agreement. The Exchange is responsible for FINRA's performance
under this regulatory services agreement. If a Fund is not in
compliance with the applicable listing requirements, the Exchange will
commence delisting procedures under the Nasdaq 5800 Series.
2. Statutory Basis
Nasdaq believes that the proposal is consistent with Section 6(b)
of the Act in general and Section 6(b)(5) of the Act, in particular, in
that it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to remove impediments to and perfect
the mechanism of a free and open market and, in general, to protect
investors and the public interest.
The Fund's holdings will conform to the permissible investments as
set forth in the Registration Statement and Exemptive Order and the
holdings will be consistent with all requirements in the Registration
Statement and Exemptive Order. The Fund's investments, including
derivatives, will be consistent with its investment objective and will
not be used to enhance leverage (although certain derivatives and other
investments may result in leverage). That is, the Fund's investments
will not be used to seek performance that is the multiple or inverse
multiple (e.g., 2X or -3X) of the Fund's primary broad-based securities
benchmark index (as defined in Form N-1A).
The Exchange believes that the particular instruments that may be
included in the Fund Portfolio and the Proxy Basket or Custom Basket do
not raise any concerns related to the Proxy Basket or Custom Basket
being able to closely track the NAV of the Fund because such
instruments include only instruments that trade on an exchange
contemporaneously with the Shares. In addition, the Fund's Proxy Basket
or Custom Basket is designed to reliably and consistently correlate to
the performance of the Fund.
The Adviser anticipates that the returns between the Fund and its
respective Proxy Basket or Custom Basket will have a consistent
relationship and that the deviation in the returns between the Fund and
its Proxy Basket or Custom Basket will be sufficiently small such that
the Proxy Basket or Custom Basket will provide authorized participants,
arbitrageurs and other market participants (collectively, ``Market
Makers'') with a reliable hedging vehicle that they can use to
effectuate low-risk arbitrage trades in Fund Shares. The Exchange
believes that the disclosures provided by the Fund will allow Market
Makers to understand the relationship between the performance of the
Fund and its Proxy Basket or Custom Basket. Market Makers will be able
to estimate the value of and hedge positions in the Fund's Shares,
which the Exchange believes will facilitate the arbitrage process and
help ensure that the Fund's Shares normally will trade at market prices
close to their NAV. The Exchange also believes that competitive market
making, where traders are looking to take advantage of differences in
bid-ask spread, will aid in keeping spreads tight.
The Exchange notes that a significant amount of information about
the Fund and its Fund Portfolio is publicly available at all times. The
Fund will disclose the Proxy Basket, which is designed to closely track
the daily performance of the Fund Portfolio, on a daily basis and will
be available on the Fund's website before the commencement of trading
in Proxy Portfolio Shares on each business day. With respect to each
Custom Basket, each business day, before the opening of trading in the
regular market session, the Investment Company shall make publicly
available on its website the composition of any Custom Basket
transacted on the previous business day, except a Custom Basket that
differs from the applicable Proxy Basket only with respect to cash.
Intraday pricing information for all constituents of the Proxy Basket
that are exchange-traded, which includes all eligible instruments
except cash and cash equivalents, will be available on the exchanges on
which they are traded and through subscription services. Intraday
pricing information for cash equivalents will be available through
subscription services and/or pricing services. The issuer of the Proxy
Portfolio Shares will at a minimum publicly disclose the entirety of
its portfolio holdings,\17\ including the name, identifier, market
value and weight of each security and instrument in the portfolio
within at least 60 days following the end of every fiscal quarter in a
manner consistent with normal disclosure requirements otherwise
applicable to open-end investment companies registered under the 1940
Act.
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\17\ This information will be made available on the Fund's
website at www.sgiam.com.
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The Fund's website will include additional quantitative information
updated on a daily basis,\18\ including, on a per Share basis for the
Fund, the prior business day's NAV and the closing price or bid/ask
price at the time of calculation of such NAV, and a calculation of the
premium or discount of the closing price or bid/ask price against such
NAV. The website will also disclose any other information regarding
premiums and discounts and the bid/ask spread for the Fund as may be
required for other ETFs under Rule 6c-11 under the 1940 Act, as
amended. On each business day, before the commencement of trading of
Shares, the Fund will publish on its website the Proxy Basket and the
Guardrail Amount for that day.
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\18\ Id.
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The Exchange represents that the Shares of the Fund will continue
to comply with all other proposed requirements applicable to Proxy
Portfolio Shares, including the dissemination of key information such
as the Proxy Basket, the Custom Basket, disclosure of the Fund
Portfolio quarterly, and NAV, suspension of trading or removal, trading
halts, surveillance, minimum price variation for quoting and order
entry, an information circular informing members of the special
characteristics and risks associated with trading in the series of
Proxy Portfolio Shares, and firewalls as set forth in the proposed
Exchange rules applicable to Proxy Portfolio Shares and the orders
approving such rules. Moreover, U.S.-listed equity securities,
exchange-traded futures that are traded on a U.S. futures exchange, and
non-U.S. listed equity securities held by the
[[Page 19692]]
Fund will trade on markets that are a member of ISG or with which the
Exchange has in place a comprehensive surveillance sharing
agreement.\19\
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\19\ Supra note 15.
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The daily dissemination of the identity and quantity of Proxy
Portfolio component investments, together with the right of Authorized
Participants to create and redeem each day at the NAV, will be
sufficient for market participants to value and trade Shares in a
manner that will not lead to significant deviations between the Shares'
Closing Price or Bid/Ask Price and NAV.
All statements and representations made in this filing regarding
the description of the portfolio or reference assets, limitations on
portfolio holdings or reference assets, dissemination and availability
of reference asset (as applicable), and the applicability of Exchange
listing rules specified in this filing shall constitute continued
listing requirements for the Shares. The issuer has represented to the
Exchange that it will advise the Exchange of any failure by the Fund or
Shares to comply with the continued listing requirements, and, pursuant
to its obligations under Section 19(g)(1) of the Act, the Exchange will
surveil for compliance with the continued listing requirements. A
minimum of 100,000 Shares of the Fund will be outstanding at the
commencement of trading on the Exchange. The Exchange will obtain a
representation from the issuer of the Shares of the Fund that (i) the
NAV per share for the Fund will be calculated daily, (ii) each of the
following will be made available to all market participants at the same
time when disclosed: the NAV, the Proxy Basket, and the Fund Portfolio,
and (iii) the issuer and any person acting on behalf of the series of
Proxy Portfolio Shares will comply with Regulation Fair Disclosure
under the Act,\20\ including with respect to any Custom Basket.
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\20\ See supra note 16.
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FINRA conducts certain cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange is
responsible for FINRA's performance under this regulatory services
agreement. If a Fund is not in compliance with the applicable listing
requirements, the Exchange will commence delisting procedures under the
Nasdaq 5800 Series.
For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Rather, the Exchange notes
that the proposed rule change will facilitate the listing of a new type
of actively-managed exchange-traded product, thus enhancing competition
among both market participants and listing venues, to the benefit of
investors and the marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \21\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\22\
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\21\ 15 U.S.C. 78s(b)(3)(A)(iii).
\22\ 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.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \23\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The
Commission has noticed for immediate effectiveness proposed rule
changes to permit listing and trading of Proxy Portfolio Shares on the
Exchange and Active Proxy Portfolio Shares (which securities are
substantively similar to Proxy Portfolio Shares but listed on another
exchange) of numerous funds.\24\ The proposed listing rule for the Fund
raises no novel legal or regulatory issues. Thus, the Commission
believes that waiver of the 30-day operative delay is consistent with
the protection of investors and the public interest. Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposed rule change operative upon filing.\25\
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\23\ 17 CFR 240.19b-4(f)(6)(iii).
\24\ See e.g., Securities Exchange Act Release No. 95082 (Feb 4,
2021), 88 FR 8972 (Feb. 10, 2021) (SR-NASDAQ-2021-005) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating
to the ALPS Active REIT ETF of ALPS ETF Trust To List and Trade
Shares of the Fund Under Nasdaq Rule 5750) (Proxy Portfolio Shares);
Securities Exchange Act Release Nos. 92104 (June 3, 2021), 86 FR
30635 (June 9, 2021) (SR-NYSEArca-2021-46) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change to List and Trade
Shares of the Nuveen Santa Barbara Dividend Growth ETF, Nuveen Small
Cap Select ETF, and Nuveen Winslow Large-Cap Growth ESG ETF Under
NYSE Arca Rule 8.601-E (Active Proxy Portfolio Shares)); 92958
(September 13, 2021), 86 FR 51933 (September 17, 2021) (SR-NYSEArca-
2021-77) (Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To List and Trade Shares of the Nuveen Growth
Opportunities ETF Under NYSE Arca Rule 8.601-E (Active Proxy
Portfolio Shares)); and 93264 (October 6, 2021), 86 FR 56989
(October 13, 2021) (SR-NYSEArca-2021-84) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To List and Trade
Shares of the Schwab Ariel ESG ETF Under NYSE Arca Rule 8.601-E
(Active Proxy Portfolio Shares)).
\25\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NASDAQ-2023-006 on the subject line.
Paper Comments
Send paper comments in triplicate to: Secretary,
Securities and Exchange
[[Page 19693]]
Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2023-006. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2023-006 and should be submitted
on or before April 24, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-06782 Filed 3-31-23; 8:45 am]
BILLING CODE 8011-01-P
