Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To List and Trade Shares of SGI U.S. Large Cap Core ETF, 19995-20002 [2023-06897]

Download as PDF Federal Register / Vol. 88, No. 64 / Tuesday, April 4, 2023 / Notices deadline(s) for each request appear in section II. II. Docketed Proceeding(s) 1. Docket No(s).: MC2023–128 and CP2023–131; Filing Title: USPS Request to Add Priority Mail Express, Priority Mail, First-Class Package Service & Parcel Select Contract 110 to Competitive Product List and Notice of Filing Materials Under Seal; Filing Acceptance Date: March 29, 2023; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Kenneth R. Moeller; Comments Due: April 6, 2023. This Notice will be published in the Federal Register. Erica A. Barker, Secretary. BILLING CODE 7710–FW–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–97220; File No. SR– NYSEARCA–2023–27] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To List and Trade Shares of SGI U.S. Large Cap Core ETF March 29, 2023. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 24, 2023, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. ddrumheller on DSK120RN23PROD with NOTICES1 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to list and trade shares of the following under NYSE Arca Rule 8.601–E: SGI U.S. Large Cap Core ETF. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Sep<11>2014 19:41 Apr 03, 2023 Jkt 259001 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange has adopted NYSE Arca Rule 8.601–E for the purpose of permitting the listing and trading, or trading pursuant to unlisted trading privileges (‘‘UTP’’), of Active Proxy Portfolio Shares, which are securities issued by an actively managed open-end investment management company.3 Commentary .01 to Rule 8.601–E [FR Doc. 2023–06933 Filed 4–3–23; 8:45 am] 1 15 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. 3 See Securities Exchange Act Release No. 89185 (June 29, 2020), 85 FR 40328 (July 6, 2020) (SR– NYSEArca–2019–95). Rule 8.601–E(c)(1) provides that ‘‘[t]he term ‘‘Active Proxy Portfolio Share’’ means a security that (a) is issued by a investment company registered under the Investment Company Act of 1940 (‘‘Investment Company’’) organized as an open-end management investment company that invests in a portfolio of securities selected by the Investment Company’s investment adviser consistent with the Investment Company’s investment objectives and policies; (b) is issued in a specified minimum number of shares, or multiples thereof, in return for a deposit by the purchaser of the Proxy Portfolio or Custom Basket, as applicable, and/or cash with a value equal to the next determined net asset value (‘‘NAV’’); (c) when aggregated in the same specified minimum number of Active Proxy Portfolio Shares, or multiples thereof, may be redeemed at a holder’s request in return for the Proxy Portfolio or Custom Basket, as applicable, and/or cash to the holder by the issuer with a value equal to the next determined NAV; and (d) the portfolio holdings for which are disclosed within at least 60 days following the end of every fiscal quarter.’’ Rule 8.601–E(c)(2) provides that ‘‘[t]he term ‘‘Actual Portfolio’’ means the identities and quantities of the securities and other assets held by the Investment Company that shall form the basis for the Investment Company’s calculation of NAV at the end of the business day.’’ Rule 8.601– E(c)(3) provides that ‘‘[t]he term ‘‘Proxy Portfolio’’ means a specified portfolio of securities, other financial instruments and/or cash designed to track closely the daily performance of the Actual Portfolio of a series of Active Proxy Portfolio Shares as provided in the exemptive relief pursuant to the Investment Company Act of 1940 applicable to such series.’’ Rule 8.601–E(c)(4) provides that the term ‘‘Custom Basket’’ means a portfolio of securities that is different from the Proxy Portfolio and is otherwise consistent with the exemptive relief issued pursuant to the Investment Company Act of 1940 applicable to a series of Active Proxy Portfolio Shares. PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 19995 requires the Exchange to file separate proposals under section 19(b) of the Act before listing and trading any series of Active Proxy Portfolio Shares on the Exchange. Therefore, the Exchange is submitting this proposal in order to list and trade shares (‘‘Shares’’) of Active Proxy Portfolio Shares of the SGI U.S. Large Cap Core ETF (the ‘‘Fund’’) under Rule 8.601–E. Key Features of Active Proxy Portfolio Shares While funds issuing Active Proxy Portfolio Shares will be activelymanaged and, to that extent, will be similar to Managed Fund Shares, Active Proxy Portfolio Shares differ from Managed Fund Shares in the following important respects. First, in contrast to Managed Fund Shares, which are actively-managed funds listed and traded under NYSE Arca Rule 8.600–E 4 and for which a ‘‘Disclosed Portfolio’’ is required to be disseminated at least once daily,5 the portfolio for an issue of Active Proxy Portfolio Shares will be publicly disclosed within at least 60 days following the end of every fiscal quarter in accordance with normal disclosure requirements otherwise applicable to open-end management investment companies registered under the Investment Company Act of 1940 (the ‘‘1940 Act’’).6 The composition of 4 The Commission has previously approved listing and trading on the Exchange of a number of issues of Managed Fund Shares under NYSE Arca Rule 8.600–E. See, e.g., Securities Exchange Act Release Nos. 57801 (May 8, 2008), 73 FR 27878 (May 14, 2008) (SR–NYSEArca–2008–31) (order approving Exchange listing and trading of twelve actively-managed funds of the WisdomTree Trust); 60460 (August 7, 2009), 74 FR 41468 (August 17, 2009) (SR–NYSEArca–2009–55) (order approving listing of Dent Tactical ETF); 63076 (October 12, 2010), 75 FR 63874 (October 18, 2010) (SR– NYSEArca–2010–79) (order approving Exchange listing and trading of Cambria Global Tactical ETF); 63802 (January 31, 2011), 76 FR 6503 (February 4, 2011) (SR–NYSEArca–2010–118) (order approving Exchange listing and trading of the SiM Dynamic Allocation Diversified Income ETF and SiM Dynamic Allocation Growth Income ETF). The Commission also has approved a proposed rule change relating to generic listing standards for Managed Fund Shares. See Securities Exchange Act Release No. 78397 (July 22, 2016), 81 FR 49320 (July 27, 2016) (SR–NYSEArca–2015–110) (amending NYSE Arca Equities Rule 8.600 to adopt generic listing standards for Managed Fund Shares). 5 NYSE Arca Rule 8.600–E(c)(2) defines the term ‘‘Disclosed Portfolio’’ as the identities and quantities of the securities and other assets held by the Investment Company that will form the basis for the Investment Company’s calculation of net asset value at the end of the business day. NYSE Arca Rule 8.600–E(d)(2)(B)(i) requires that the Disclosed Portfolio will be disseminated at least once daily and will be made available to all market participants at the same time. 6 A mutual fund is required to file with the Commission its complete portfolio schedules for the second and fourth fiscal quarters on Form N–CSR E:\FR\FM\04APN1.SGM Continued 04APN1 19996 Federal Register / Vol. 88, No. 64 / Tuesday, April 4, 2023 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 the portfolio of an issue of Active Proxy Portfolio Shares would not be available at commencement of Exchange listing and trading. Second, in connection with the creation and redemption of Active Proxy Portfolio Shares, such creation or redemption may be exchanged for a Proxy Portfolio or Custom Basket, as applicable, and/or cash with a value equal to the next-determined NAV. A series of Active Proxy Portfolio Shares will disclose the Proxy Portfolio on a daily basis, which, as described above, is designed to track closely the daily performance of the Actual Portfolio of a series of Active Proxy Portfolio Shares, instead of the actual holdings of the Investment Company, as provided by a series of Managed Fund Shares. As set forth in NYSE Arca Rule 8.601– E(d)(2)(B)(ii), for Active Proxy Portfolio Shares using a Custom Basket, each Business Day,7 before the opening of trading in the Core Trading Session (as defined in NYSE Arca Rule 7.34–E(a)), the Investment Company shall make publicly available on its website the composition of any Custom Basket transacted on the previous Business Day, except a Custom Basket that differs from the applicable Proxy Portfolio only with respect to cash. The Commission has previously approved 8 and noticed for immediate under the 1940 Act. Information reported on Form N–PORT for the third month of a fund’s fiscal quarter will be made publicly available 60 days after the end of a fund’s fiscal quarter. Form N– PORT requires reporting of a fund’s complete portfolio holdings on a position-by-position basis on a quarterly basis within 60 days after fiscal quarter end. Investors can obtain a series of Active Proxy Portfolio Shares’ Statement of Additional Information (‘‘SAI’’), its Shareholder Reports, its Form N–CSR, filed twice a year, and its Form N– CEN, filed annually. A series of Active Proxy Portfolio Shares’ SAI and Shareholder Reports will be available free upon request from the Investment Company, and those documents and the Form N– PORT, Form N–CSR, and Form N–CEN may be viewed on-screen or downloaded from the Commission’s website at www.sec.gov. 7 ‘‘Business Day’’ is defined to mean any day that the Exchange is open, including any day when the Fund satisfies redemption requests as required by section 22(e) of the 1940 Act. 8 See Securities Exchange Act Release Nos. 89185 (June 29, 2020), 85 FR 40328 (July 6, 2020) (SR– NYSEArca–2019–95) (Notice of Filing of Amendment No. 6 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 6, to Adopt NYSE Arca Rule 8.601–E to Permit the Listing and Trading of Active Proxy Portfolio Shares and To List and Trade Shares of the Natixis U.S. Equity Opportunities ETF Under Proposed NYSE Arca Rule 8.601–E) (the ‘‘Natixis Order’’); 89192 (June 30, 2020), 85 FR 40699 (July 7, 2020) (SR–NYSEArca–2019–96) (Notice of Filing of Amendment No. 5 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 5, to List and Trade Two Series of Active Proxy Portfolio Shares Issued by the American Century ETF Trust under NYSE Arca Rule 8.601–E); 89191 (June 30, 2020), 85 FR 40358 (July 6, 2020) (SR–NYSEArca– 2019–92) (Notice of Filing of Amendment No. 3 and VerDate Sep<11>2014 19:41 Apr 03, 2023 Jkt 259001 effectiveness 9 the listing and trading on the Exchange of series of Active Proxy Portfolio Shares under NYSE Arca Rule 8.601–E. The Shares of the Fund will be series of The RBB Fund, Inc. (the ‘‘Company’’), a Maryland corporation registered with the Commission as an open-end management investment company.10 Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 3, to List and Trade Four Series of Active Proxy Portfolio Shares Issued by T. Rowe Price Exchange-Traded Funds, Inc. under NYSE Arca Rule 8.601–E); 89438 (July 31, 2020), 85 FR 47821 (August 6, 2020) (SR– NYSEArca–2020–51) (Order Granting Approval of a Proposed Rule Change, as Modified by Amendment No. 2, to List and Trade Shares of Natixis Vaughan Nelson Select ETF and Natixis Vaughan Nelson MidCap ETF under NYSE Arca Rule 8.601–E); 91266 (March 5, 2021), 86 FR 13930 (March 11, 2021) (SR–NYSEArca–2020–104) (Order Approving a Proposed Rule Change, as Modified by Amendment No. 2, To List and Trade Shares of the Stance Equity ESG Large Cap Core ETF Under NYSE Arca Rule 8.601–E) (the ‘‘Stance Order’’). 9 See Securities Exchange Act Release Nos. 92104 (June 3, 2021), 86 FR 30635 (June 9, 2021) (NYSEArca–2021–46) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to List and Trade Shares of the Nuveen Santa Barbara Dividend Growth ETF, Nuveen Small Cap Select ETF, and Nuveen Winslow Large-Cap Growth ESG ETF Under NYSE Arca Rule 8.601–E (Active Proxy Portfolio Shares); 92958 (September 13, 2021), 86 FR 51933 (September 17, 2021) (NYSEArca–2021–77) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To List and Trade Shares of the Nuveen Growth Opportunities ETF Under NYSE Arca Rule 8.601– E (Active Proxy Portfolio Shares); 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); 94486 (March 22, 2022), 87 FR 17351 (March 28, 2022) (SR–NYSEArca–2022–14) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to List and Trade Shares of the Columbia Seligman Semiconductor and Technology ETF Under NYSE Arca Rule 8.601 (Active Proxy Portfolio Shares); 94908 (May 13, 2022), 87 FR 30524 (May 19, 2022) (SR–NYSEArca– 2022–28) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to List and Trade Shares of the Principal Real Estate Active Opportunities ETF Under NYSE Arca Rule 8.601 (Active Proxy Portfolio Shares)); 94902 (May 12, 2022), 87 FR 30286 (May 18, 2022) (SR–NYSEArca– 2022–29) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to List and Trade Shares of the IQ Winslow Large Cap Growth ETF and IQ Winslow Focused Large Cap Growth ETF Under NYSE Arca Rule 8.601–E (Active Proxy Portfolio Shares)). 10 The Company is registered under the 1940 Act. On April 8, 2022, the Company filed a registration statement on Form N–1A under the 1940 Act relating to the Fund (File No. 811–05518) (the ‘‘Registration Statement’’). The Company filed a third amended application for an order under section 6(c) of the 1940 Act for exemptions from various provisions of the 1940 Act and rules thereunder on September 26, 2022 (File No. 812– 15352). See Investment Company Act Release No. 34835 (February 17, 2023) (the ‘‘Application’’). On March 15, 2023, the Commission issued an order under the 1940 Act granting the exemptions requested in the Application (Investment Company Act Release Nos. 34858 (March 15, 2023)) (the ‘‘Exemptive Order’’). Investments made by the Fund PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 Summit Global Investments, LLC will be the investment adviser to the Fund (the ‘‘Adviser’’). U.S. Bank, N.A. will serve as the Fund’s custodian (the ‘‘Custodian’’). Quasar Distributors, LLC will act as the distributor (the ‘‘Distributor’’) for the Fund. Commentary .04 to NYSE Arca Rule 8.601–E provides that, if the investment adviser to the Investment Company issuing Active Proxy Portfolio Shares is registered as a broker-dealer or is affiliated with a broker-dealer, such investment adviser will erect and maintain a ‘‘fire wall’’ between the investment adviser and personnel of the broker-dealer or broker-dealer affiliate, as applicable, with respect to access to information concerning the composition and/or changes to such Investment Company’s Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable. Any person related to the investment adviser or Investment Company who makes decisions pertaining to the Investment Company’s Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable, or has access to non-public information regarding the Investment Company’s Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable, or changes thereto must be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable, or changes thereto. Commentary .04 is similar to Commentary .03(a)(i) and (iii) to NYSE Arca Rule 5.2–E(j)(3); however, Commentary .04, in connection with the establishment of a ‘‘fire wall’’ between the investment adviser and the brokerdealer, reflects the applicable open-end fund’s portfolio, not an underlying benchmark index, as is the case with index-based funds.11 Commentary .04 is 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, Application, and Exemptive Order. The Exchange will not commence trading in Shares of the Fund until the Registration Statement is effective. 11 An investment adviser to an open-end fund is required to be registered under the Investment Advisers Act of 1940 (the ‘‘Advisers Act’’). As a result, the Adviser and its related personnel will be subject to the provisions of Rule 204A–1 under the Advisers Act relating to codes of ethics. This Rule requires investment advisers to adopt a code of ethics that reflects the fiduciary nature of the relationship to clients as well as compliance with other applicable securities laws. Accordingly, procedures designed to prevent the communication and misuse of non-public information by an investment adviser must be consistent with Rule 204A–1 under the Advisers Act. In addition, Rule 206(4)–7 under the Advisers Act makes it unlawful for an investment adviser to provide investment E:\FR\FM\04APN1.SGM 04APN1 Federal Register / Vol. 88, No. 64 / Tuesday, April 4, 2023 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 also similar to Commentary .06 to Rule 8.600–E related to Managed Fund Shares, except that Commentary .04 relates to establishment and maintenance of a ‘‘fire wall’’ between the investment adviser and personnel of the broker-dealer or broker-dealer affiliate, as applicable, applicable to an Investment Company’s Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable, or changes thereto, and not just to the underlying portfolio, as is the case with Managed Fund Shares. In addition, Commentary .05 to Rule 8.601–E provides that any person or entity, including a custodian, Reporting Authority, distributor, or administrator, who has access to non-public information regarding the Investment Company’s Actual Portfolio, Proxy Portfolio, or Custom Basket, as applicable, or changes thereto, must be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the applicable Investment Company Actual Portfolio, Proxy Portfolio, 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 and/or changes to such Investment Company Actual Portfolio, Proxy Portfolio, or Custom Basket, as applicable. The Adviser is not registered as a broker-dealer but is affiliated with a broker-dealer. The Adviser has implemented and will maintain a ‘‘fire wall’’ with respect to such broker-dealer affiliate regarding access to information concerning the composition of and/or changes to the Fund’s Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable. In the event (a) the Adviser becomes registered as a broker-dealer or becomes newly affiliated with a broker-dealer, or (b) any new adviser or sub-adviser is a registered broker-dealer, or becomes affiliated with a broker-dealer, it will advice to clients unless such investment adviser has (i) adopted and implemented written policies and procedures reasonably designed to prevent violations, by the investment adviser and its supervised persons, of the Advisers Act and the Commission rules adopted thereunder; (ii) implemented, at a minimum, an annual review regarding the adequacy of the policies and procedures established pursuant to subparagraph (i) above and the effectiveness of their implementation; and (iii) designated an individual (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. VerDate Sep<11>2014 19:41 Apr 03, 2023 Jkt 259001 implement and maintain a ‘‘fire wall’’ with respect to its relevant personnel or its broker-dealer affiliate regarding access to information concerning the composition and/or changes to the Fund’s Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable, and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding the Fund’s Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable, or changes thereto. Any person related to the Adviser or the Fund who makes decisions pertaining to the Fund’s Actual Portfolio, Proxy Portfolio, or Custom Basket, as applicable, or has access to non-public information regarding the Fund’s Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable, or changes thereto are subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the Fund’s Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable or changes thereto. In addition, any person or entity, including any service provider for the Fund, who has access to non-public information regarding the Fund’s Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable, or changes thereto, will be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the Fund’s Actual Portfolio, Proxy Portfolio, and/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 has erected and will maintain a ‘‘fire wall’’ between the person or entity and the broker-dealer with respect to access to information concerning the composition and/or changes to the Fund’s Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable. Description of the Fund According to the Registration Statement, the Adviser will identify a Proxy Portfolio for the Fund that is designed to recreate the daily performance of the Fund’s Actual Portfolio and will only include securities and investments in which the Fund may invest. While the Fund’s Proxy Portfolio and Actual Portfolio will hold some of the same securities, the Proxy Portfolio and Actual Portfolio may not include identical securities. The composition of the Proxy Portfolio will be published on the PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 19997 Fund’s website (www.sgiam.com) each Business Day before the commencement of trading of the Fund’s Shares. The Fund’s website will include the following information for each portfolio holding in the Proxy Portfolio: (1) ticker symbol; (2) CUSIP or other identifier; (3) description of holding; (4) quantity of each security or other asset held; and (5) percentage weight of the holding in the Proxy Portfolio. The Proxy Portfolio will be reconstituted daily, and the Adviser will not make intra-day changes to the Proxy Portfolio except to correct errors in the published Proxy Portfolio. The Fund will, at the end of each trading day, calculate the percentage weight overlap between its Proxy Portfolio and Actual Portfolio (the ‘‘Proxy Overlap’’) and the standard deviation over the past three months of the daily proxy spread (i.e., the difference, in percentage terms, between the Proxy Portfolio per share NAV and that of the Actual Portfolio at the end of the trading day) (the ‘‘Tracking Error’’) and publish such information on its website before the opening of trading each Business Day. The Fund’s holdings will conform to the permissible investments as set forth in the Application and Exemptive Order, and the holdings will be consistent with all requirements in the Application and Exemptive Order.12 Any foreign common stocks held by the Fund will be traded on an exchange that is a member of the Intermarket Surveillance Group (‘‘ISG’’) or with which the Exchange has in place a comprehensive surveillance sharing agreement. According to the Registration Statement, the Fund’s investment objective is long-term capital 12 Pursuant to the Application and Exemptive Order, the permissible investments for the Fund include only the following instruments: ETFs traded on a U.S. exchange; exchange-traded notes (‘‘ETNs’’) traded on a U.S. exchange; U.S. exchangetraded common stocks; common stocks listed on a foreign exchange that trade on such exchange contemporaneously with the Shares (‘‘foreign common stocks’’) in the Exchange’s Core Trading Session (normally, 9:30 a.m. to 4:00 p.m. Eastern time (‘‘E.T.’’)); U.S. exchange-traded preferred stocks; U.S. exchange-traded American Depositary Receipts (‘‘ADRs’’); U.S. exchange-traded real estate investment trusts; U.S. exchange-traded commodity pools; U.S. exchange-traded metals trusts; U.S. exchange-traded currency trusts; and U.S. exchange-traded futures that trade contemporaneously with the Fund’s Shares. In addition, the Fund may hold cash and cash equivalents (short-term U.S. Treasury securities, government money market funds, and repurchase agreements). Pursuant to the Application and Exemptive Order, the Fund will not hold short positions or invest in derivatives other than U.S. exchange-traded futures, will not borrow for investment purposes, and will not purchase any securities that are illiquid investments at the time of purchase. E:\FR\FM\04APN1.SGM 04APN1 19998 Federal Register / Vol. 88, No. 64 / Tuesday, April 4, 2023 / Notices appreciation. The Fund will, under normal circumstances, invest at least 80% of its assets in securities of companies within the Russell 1000 Index and S&P 500 Index. The Fund’s investments will generally consist of primarily of common stocks, but may also include preferred stocks, warrants to acquire common stock, and securities convertible into common stock. The Adviser will seek to achieve the Fund’s investment objective by investing in stocks that the Adviser believes exhibit less volatile price patterns, strengthening business metrics (e.g., earnings, debt, return on assets, competition, customers, industry), and quantitative factors such as earnings variability, leverage, and volatility. ddrumheller on DSK120RN23PROD with NOTICES1 Investment Restrictions The Shares of the Fund will conform to the initial and continued listing criteria under Rule 8.601–E. The Fund’s holdings will be limited to and consistent with permissible holdings as described in the Application and Exemptive Order and all requirements in the Application and Exemptive Order.13 The Fund’s investments, including derivatives, will be consistent with its investment objectives and will not be used to enhance leverage (although certain derivatives and other investments may result in leverage). That is, the Fund’s investments will not be used to seek performance that is the multiple or inverse multiple (e.g., 2X or –3X) of the Fund’s primary broad-based securities benchmark index (as defined in Form N–1A).14 Purchases and Redemptions According to the Registration Statement, the Company will issue and sell Shares of the Fund only in specified minimum size ‘‘Creation Units’’ on a continuous basis through the Distributor at their NAV next determined after receipt of an order, on any Business Day, in proper form. The NAV of the Fund’s Shares will be calculated each Business Day as of the close of regular trading on the Exchange, ordinarily 4:00 p.m. E.T. A Creation Unit will generally consist of at least 25,000 Shares. According to the Registration Statement, Shares of the Fund will be purchased and redeemed in Creation Units. Creation Units will generally be purchased in-kind through the deposit of a designated portfolio of securities (the ‘‘Deposit Securities’’), which will 13 See id. 14 The Fund’s broad-based securities benchmark index will be identified in a future amendment to its Registration Statement following the Fund’s first full calendar year of performance. VerDate Sep<11>2014 19:41 Apr 03, 2023 Jkt 259001 typically replicate the Proxy Portfolio, plus the ‘‘Cash Component,’’ which is an amount equal to the difference between the NAV of the Fund’s shares (per Creation Unit) and the market value of the Deposit Securities or ‘‘Deposit Cash’’ (as defined below), as applicable. The Cash Component serves the function of compensating for any differences between the NAV per Creation Unit and the market value of the Deposit Securities or Deposit Cash, as applicable. The Deposit Cash is a ‘‘cash in lieu’’ amount that the Company may permit or require to be added to the Cash Component to replace any Deposit Security. Together, the Deposit Securities or Deposit Cash, as applicable, and the Cash Component constitute the ‘‘Fund Deposit.’’ The names and quantities of the instruments that constitute the Deposit Securities will be the same as the Proxy Portfolio, except to the extent that the Fund requires purchases and redemptions to be made entirely or in part on a cash basis. Creation Units will typically be redeemed in exchange for ‘‘Fund Securities’’ (which may not be identical to the Deposit Securities) and a ‘‘Cash Redemption Amount,’’ which represents the difference between the NAV of the Shares being redeemed and the value of the Fund Securities. Creation Units of the Fund may be purchased and/or redeemed entirely or partially for cash in the Company’s discretion. When full or partial cash purchases or redemptions of Creation Units are available or specified for the Fund, they will be effected in essentially the same manner as in-kind purchases or redemptions thereof.15 The identity and number of shares of the Deposit Securities or the amount of Deposit Cash, as applicable, required for a Fund Deposit may change from time to time. The Fund, through the National Securities Clearing Corporation (the ‘‘NSCC’’), will make available on each Business Day, immediately prior to the opening of business on the Exchange, the list of the names and the required number of shares of each Deposit Security or the required amount of Deposit Cash, as applicable, to be included in the Fund Deposit. The published Fund Deposit will apply until such time as the next-announced composition of the Deposit Securities is made available, and there will be no intra-day changes except to correct errors in the published Fund Deposit. 15 The Adviser represents that, to the extent the Company effects the creation or redemption of Shares in cash on any given day, such transactions will be effected in the same manner for all Authorized Participants (as defined below) placing trades with the Fund on that day. PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 The Fund Deposit will be published each Business Day regardless of whether the Fund decides to issue or redeem Creation Units entirely or in part on a cash basis. The identity of the Fund Securities that will be applicable to redemption requests received in proper form on a Business Day will also be made available prior to the opening of business on the Exchange on each Business Day. All orders to purchase or redeem Creation Units must be placed with the Distributor by or through an Authorized Participant, who may engage in creation or redemption transactions directly with the Fund.16 Orders to purchase or redeem Creation Units will be accepted until the ‘‘Cut-Off Time,’’ generally 4:00 p.m. E.T. The date on which an order to purchase or redeem Creation Units is placed is referred to as the ‘‘Order Placement Date.’’ All Creation Unit orders must be received by the Distributor no later than the Cut-Off Time in order to receive the NAV determined on the Order Placement Date. When the Exchange closes earlier than normal, the Fund may require orders for Creation Units to be placed earlier in the Business Day. Availability of Information The Fund’s website (www.sgiam.com), which will be publicly available prior to the public offering of Shares, will include a form of the prospectus for the Fund that may be downloaded. The Fund’s website will include on a daily basis, per Share for the Fund: (1) the prior Business Day’s NAV; (2) the prior Business Day’s ‘‘Closing Price’’ or ‘‘Bid/Ask Price’’; 17 and (3) a calculation of the premium/ discount of such Closing Price or Bid/ Ask Price against such NAV.18 The Adviser has represented that the Fund’s website will also provide: (1) any other information regarding premiums/ discounts as may be required for other ETFs under Rule 6c–11 under the 1940 Act, as amended, and (2) any 16 According to the Registration Statement, an ‘‘Authorized Participant’’ is (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the NSCC or (ii) a DTC Participant. 17 The ‘‘Bid/Ask Price’’ is the midpoint of the highest bid and lowest offer based upon the National Best Bid and Offer as of the time of calculation of the Fund’s NAV. The ‘‘National Best Bid and Offer’’ is the current national best bid and national best offer as disseminated by the Consolidated Quotation System or UTP Plan Securities Information Processor. The ‘‘Closing Price’’ of Shares is the official closing price of the Shares on the Exchange. 18 The ‘‘premium/discount’’ refers to the premium or discount to the NAV at the end of a trading day and will be calculated based on the last Bid/Ask Price on a given trading day. E:\FR\FM\04APN1.SGM 04APN1 Federal Register / Vol. 88, No. 64 / Tuesday, April 4, 2023 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 information regarding the bid/ask spread for the Fund as may be required for other ETFs under Rule 6c–11 under the 1940 Act, as amended. The Fund’s website also will disclose the information required under Rule 8.601– E(c)(3).19 The website and information will be publicly available at no charge. The identity and quantity of investments in the Proxy Portfolio for the Fund will be publicly available on the Fund’s website before the commencement of trading in Shares on each Business Day. The website will also include information relating to the Proxy Overlap and Tracking Error, as discussed above. With respect to each Custom Basket utilized by the Fund, each Business Day, before the opening of trading in the Core Trading Session (as defined in NYSE Arca Rule 7.34– E(a)), the Fund’s website will also include the composition of any Custom Basket transacted on the previous business day, except a Custom Basket that differs from the Proxy Portfolio only with respect to cash. Typical mutual fund-style annual, semi-annual and quarterly disclosures contained in the Fund’s Commission filings will be provided on the Fund’s website on a current basis.20 Thus, the Fund will publish the portfolio contents of its Actual Portfolio on a periodic basis, and no less than 60 days after the end of every fiscal quarter. Investors can also obtain the Fund’s SAI, Shareholder Reports, Form N–CSR, N–PORT, and Form N–CEN. The prospectus, SAI, and Shareholder Reports are available free upon request, and those documents and the Form N– CSR, N–PORT, and Form N–CEN may be viewed on-screen or downloaded from the Commission’s website. The Exchange also notes that pursuant to the Application, the Fund must comply with Regulation Fair Disclosure, which prohibits selective disclosure of any material non-public information. Information regarding the market price of Shares and trading volume in Shares, will be continually available on a real-time basis throughout the day on brokers’ computer screens and other electronic services. The previous day’s closing price and trading volume information for the Shares will be 19 See note 3, supra. Rule 8.601–E(c)(3) provides that the website for each series of Active Proxy Portfolio Shares shall disclose the information regarding the Proxy Portfolio as provided in the exemptive relief pursuant to the 1940 Act applicable to such series, including the following, to the extent applicable: (i) Ticker symbol; (ii) CUSIP or other identifier; (iii) Description of holding; (iv) Quantity of each security or other asset held; and (v) Percentage weighting of the holding in the portfolio. 20 See note 6, supra. VerDate Sep<11>2014 19:41 Apr 03, 2023 Jkt 259001 published daily in the financial section of newspapers. Quotation and last sale information for the Shares and U.S. exchange-traded instruments (excluding futures contracts) will be available via the Consolidated Tape Association (‘‘CTA’’) high-speed line, from the exchanges on which such securities trade, or through major market data vendors or subscription services. Quotation and last sale information for futures contracts will be available from the exchanges on which they trade. Intraday price information for all exchangetraded instruments, which include all eligible instruments except cash and cash equivalents, will be available from the exchanges on which they trade, or through major market data vendors or subscription services. Intraday price information for cash equivalents is available through major market data vendors, subscription services and/or pricing services. Trading Halts With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Fund.21 Trading in Shares of the Fund will be halted if the circuit breaker parameters in NYSE Arca Rule 7.12–E have been reached. Trading also may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. Trading in the Shares will be subject to NYSE Arca Rule 8.601– E(d)(2)(D), which sets forth circumstances under which Shares of the Fund will be halted. Specifically, Rule 8.601–E(d)(2)(D) provides that the Exchange may consider all relevant factors in exercising its discretion to halt trading in a series of Active Proxy Portfolio Shares. These may include: (a) the extent to which trading is not occurring in the securities and/or the financial instruments composing the Proxy Portfolio and/or Actual Portfolio; or (b) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. If the Exchange becomes aware that the NAV, Proxy Portfolio, or Actual Portfolio with respect to a series of Active Proxy Portfolio Shares is not disseminated to all market participants at the same time, the Exchange shall halt trading in such series until such time as the NAV, Proxy Portfolio, or Actual Portfolio is available to all market participants at the same time. 21 See PO 00000 NYSE Arca Rule 7.12–E. Frm 00097 Fmt 4703 Sfmt 4703 19999 Trading Rules The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. Shares will trade on the NYSE Arca Marketplace in all trading sessions in accordance with NYSE Arca Rule 7.34–E(a). As provided in NYSE Arca Rule 7.6–E, the minimum price variation (‘‘MPV’’) for quoting and entry of orders in equity securities traded on the NYSE Arca Marketplace is $0.01, with the exception of securities that are priced less than $1.00 for which the MPV for order entry is $0.0001. The Shares will conform to the initial and continued listing criteria under NYSE Arca Rule 8.601–E. The Exchange has appropriate rules to facilitate trading in the Shares during all trading sessions. A minimum of 100,000 Shares for the Fund will be outstanding at the commencement of trading on the Exchange. In addition, pursuant to Rule 8.601–E(d)(1)(B), the Exchange, prior to commencement of trading in the Shares, will obtain a representation from the Company that (i) the NAV per Share of the Fund will be calculated daily, (ii) the NAV, Proxy Portfolio, and the Actual Portfolio for the Fund will be made publicly available to all market participants at the same time, and (iii) the Company and any person acting on behalf of the Company will comply with Regulation Fair Disclosure under the Act, including with respect to any Custom Basket. With respect to Active Proxy Portfolio Shares, all of the Exchange member obligations relating to product description and prospectus delivery requirements will continue to apply in accordance with Exchange rules and federal securities laws, and the Exchange and the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) will continue to monitor Exchange members for compliance with such requirements. Surveillance The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by the Exchange, as well as cross-market surveillances administered by FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.22 The 22 FINRA conducts cross-market surveillances on behalf of the Exchange pursuant to a regulatory services agreement. The Exchange is responsible for FINRA’s performance under this regulatory services agreement. E:\FR\FM\04APN1.SGM 04APN1 ddrumheller on DSK120RN23PROD with NOTICES1 20000 Federal Register / Vol. 88, No. 64 / Tuesday, April 4, 2023 / Notices Exchange represents that these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and federal securities laws applicable to trading on the Exchange. The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations. The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares and underlying exchange-traded instruments with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading such securities and underlying exchange-traded instruments from such markets and other entities. In addition, the Exchange may obtain information regarding trading in such securities and underlying exchangetraded instruments from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.23 The Adviser will make available daily to FINRA and the Exchange the Actual Portfolio of the Fund, upon request, as necessary to assist with the performance of the surveillances and investigations referred to above. In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees. Commentary .03 to NYSE Arca Rule 8.601–E provides that the Exchange will implement and maintain written surveillance procedures applicable to Active Proxy Portfolio Shares. As part of these surveillance procedures, the Investment Company’s investment adviser will, upon request by the Exchange or FINRA, on behalf of the Exchange, make available to the Exchange or FINRA the daily Actual Portfolio holdings of each series of Active Proxy Portfolio Shares. The Exchange believes that the ability to access the information on an as needed basis will provide it with sufficient information to perform the necessary regulatory functions associated with 23 For a list of the current members of ISG, see www.isgportal.org. VerDate Sep<11>2014 19:41 Apr 03, 2023 Jkt 259001 listing and trading series of Active Proxy Portfolio Shares on the Exchange, including the ability to monitor compliance with the initial and continued listing requirements as well as the ability to surveil for manipulation of Active Proxy Portfolio Shares. The Exchange will utilize its existing procedures to monitor issuer compliance with the requirements of Rule 8.601–E. For example, the Exchange will continue to use intraday alerts that will notify Exchange personnel of trading activity throughout the day that may indicate that unusual conditions or circumstances are present that could be detrimental to the maintenance of a fair and orderly market. The Exchange will require from the issuer of a series of Active Proxy Portfolio Shares, upon initial listing and periodically thereafter, a representation that it is in compliance with Rule 8.601–E. The Exchange notes that Commentary .01 to Rule 8.601–E requires an issuer of Active Proxy Portfolio Shares to notify the Exchange of any failure to comply with the continued listing requirements of Rule 8.601–E. In addition, the Exchange will require issuers to represent that they will notify the Exchange of any failure to comply with the terms of applicable exemptive and no-action relief. As part of its surveillance procedures, the Exchange will rely on the foregoing procedures to become aware of any noncompliance with the requirements of Rule 8.601–E. With respect to the Fund, all statements and representations made in this filing regarding (a) the description of the portfolio, (b) limitations on portfolio holdings, or (c) the applicability of Exchange listing rules specified in this rule filing shall constitute continued listing requirements for listing the Shares on the Exchange. The Exchange will obtain a representation from the Company, prior to commencement of trading in the Shares of the Fund, that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Rule 5.5–E(m). 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 section 6(b) of the Act,24 in general, and furthers the objectives of section 6(b)(5) of the Act,25 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest.26 With respect to the proposed listing and trading of Shares of the Fund, the Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Rule 8.601–E. The Fund’s holdings will conform to the permissible investments as set forth in the Application and Exemptive Order, and the holdings will be consistent with all requirements in the Application and Exemptive Order.27 The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares and underlying exchange-traded instruments with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in the Shares and underlying exchange-traded instruments from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and underlying exchange-traded instruments from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. Any foreign common stocks held by the Fund will be traded on an exchange that is a member of the ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. The daily dissemination of the identity and quantity of Proxy Portfolio component investments, together with the right of Authorized Participants to create and redeem each day at the NAV, will be sufficient for market participants to value and trade Shares in a manner that will not lead to significant deviations between the Shares’ Closing Price or Bid/Ask Price and NAV. 24 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 26 The Exchange represents that, for initial and continued listing, the Fund will be in compliance with Rule 10A–3 under the Act, as provided by NYSE Arca Rule 5.3–E. 27 See note 13, supra. 25 15 E:\FR\FM\04APN1.SGM 04APN1 ddrumheller on DSK120RN23PROD with NOTICES1 Federal Register / Vol. 88, No. 64 / Tuesday, April 4, 2023 / Notices 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 proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange will obtain a representation from the Company that the NAV per Share of the Fund will be calculated daily and that the NAV, Proxy Portfolio, and Actual Portfolio for the Fund will be made available to all market participants at the same time. Investors can obtain the Fund’s SAI, shareholder reports, and its Form N–CSR, Form N–PORT, and Form N–CEN. The Fund’s SAI and shareholder reports will be available free upon request from the Fund, and those documents and the Form N–CSR, Form N–PORT, and Form N–CEN may be viewed on-screen or downloaded from the Commission’s website. Commentary .03 to NYSE Arca Rule 8.601–E provides that the Exchange will implement and maintain written surveillance procedures applicable to Active Proxy Portfolio Shares. As part of these surveillance procedures, the Investment Company’s investment adviser will, upon request by the Exchange or FINRA, on behalf of the Exchange, make available to the Exchange or FINRA the daily portfolio holdings of each series of Active Proxy Portfolio Shares. The Exchange believes that the ability to access the information on an as needed basis will provide it with sufficient information to perform the necessary regulatory functions associated with listing and trading series of Active Proxy Portfolio Shares on the Exchange, including the ability to monitor compliance with the initial and continued listing requirements as well as the ability to surveil for manipulation of Active Proxy Portfolio Shares. With respect to the Fund, the Adviser will make available daily to FINRA and the Exchange the portfolio holdings of the Fund upon request as necessary to facilitate the performance of the surveillances and investigations referred to above. The Exchange will utilize its existing procedures to monitor compliance with the requirements of Rule 8.601–E. For example, the Exchange will continue to use intraday alerts that will notify Exchange personnel of trading activity VerDate Sep<11>2014 19:41 Apr 03, 2023 Jkt 259001 throughout the day that may indicate that unusual conditions or circumstances are present that could be detrimental to the maintenance of a fair and orderly market. The Exchange will require from the Company, upon initial listing and periodically thereafter, a representation that it is in compliance with Rule 8.601–E. The Exchange notes that Commentary .01 to Rule 8.601–E requires the issuer of Shares to notify the Exchange of any failure to comply with the continued listing requirements of Rule 8.601–E. In addition, the Exchange will require the issuer to represent that it will notify the Exchange of any failure to comply with the terms of applicable exemptive and no-action relief. The Exchange will rely on the foregoing procedures to become aware of any non-compliance with the requirements of Rule 8.601–E. In addition, with respect to the Fund, a large amount of information will be publicly available regarding the Fund and the Shares, thereby promoting market transparency. Quotation and last sale information for the Shares and U.S. exchange-traded instruments (excluding futures contracts) will be available via the CTA high-speed line, from the exchanges on which such securities trade, or through major market data vendors or subscription services. Quotation and last sale information for futures contracts will be available from the exchanges on which they trade. Intraday price information for all exchangetraded instruments, which include all eligible instruments except cash and cash equivalents, will be available from the exchanges on which they trade, or through major market data vendors or subscription services. Intraday price information for cash equivalents is available through major market data vendors, subscription services and/or pricing services. The website for the Fund will include a form of the prospectus that may be downloaded, and additional data relating to NAV and other applicable quantitative information, updated on a daily basis. Trading in Shares of the Fund will be halted if the circuit breaker parameters in NYSE Arca Rule 7.12–E have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. Trading in the Shares will be subject to NYSE Arca Rule 8.601–E(d)(2)(D), which sets forth circumstances under which Shares of the Fund will be halted. In addition, as noted above, investors will have ready access to the Proxy Portfolio and quotation and last sale information for the Shares. The identity and quantity of PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 20001 investments in the Proxy Portfolio will be publicly available on the Fund’s website before the commencement of trading in Shares on each Business Day. The Shares will conform to the initial and continued listing criteria under Rule 8.601–E.28 The Fund’s holdings will conform to the permissible investments as set forth in the Application and Exemptive Order, and the holdings will be consistent with all requirements in the Application and Exemptive Order.29 Any foreign common stocks held by the Fund will be traded on an exchange that is a member of the ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of activelymanaged exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. The Exchange will obtain a representation from the Adviser, prior to commencement of trading in the Shares of the Fund, that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Rule 5.5– E(m). As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement. In addition, as noted above, investors will have ready access to information regarding quotation and last sale information for the Shares. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes the proposed rule change would permit listing and trading of additional actively-managed ETFs 28 See 29 See E:\FR\FM\04APN1.SGM note 3, supra. note 13, supra. 04APN1 20002 Federal Register / Vol. 88, No. 64 / Tuesday, April 4, 2023 / Notices that have characteristics different from existing actively-managed and index ETFs and would introduce additional competition among various ETF products to the benefit of investors. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to section 19(b)(3)(A)(iii) of the Act 30 and subparagraph (f)(6) of Rule 19b–4 thereunder.31 A proposed rule change filed under Rule 19b–4(f)(6) 32 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),33 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest because the proposal does not raise any new or novel issues. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.34 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 30 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. 32 17 CFR 240.19b–4(f)(6). 33 17 CFR 240.19b–4(f)(6)(iii). 34 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). ddrumheller on DSK120RN23PROD with NOTICES1 31 17 VerDate Sep<11>2014 19:41 Apr 03, 2023 Jkt 259001 action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEARCA–2023–27 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEARCA–2023–27. 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 PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 publicly. All submissions should refer to File Number SR–NYSEARCA–2023– 27 and should be submitted on or before April 25, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.35 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–06897 Filed 4–3–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–97223; File No. PCAOB– 2023–01] Public Company Accounting Oversight Board; Notice of Filing of Proposed Rules on Amendments to Board Rule Governing Determinations Under the Holding Foreign Companies Accountable Act March 30, 2023. Pursuant to Section 107(b) of the Sarbanes-Oxley Act of 2002 (‘‘SarbanesOxley’’ or the ‘‘Act’’), notice is hereby given that on March 29, 2023, the Public Company Accounting Oversight Board (the ‘‘Board’’ or the ‘‘PCAOB’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’ or the ‘‘SEC’’) the proposed rules described in items I and II below, which items have been prepared by the Board. The Commission is publishing this notice to solicit comments on the proposed rules from interested persons. I. Board’s Statement of the Terms of Substance of the Proposed Rules On March 28, 2023, the Board adopted amendments to PCAOB Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act (collectively, the ‘‘proposed rules’’). The text of the proposed rules appears in Exhibit A to the SEC Filing Form 19b–4 and is available on the Board’s website at https://pcaobus.org/about/rulesrulemaking/rulemaking-dockets/docket050 and at the Commission’s Public Reference Room. II. Board’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rules In its filing with the Commission, the Board included statements concerning the purpose of, and basis for, the proposed rules. The text of these statements may be examined at the places specified in Item IV below. The Board has prepared summaries, set forth 35 17 E:\FR\FM\04APN1.SGM CFR 200.30–3(a)(12). 04APN1

Agencies

[Federal Register Volume 88, Number 64 (Tuesday, April 4, 2023)]
[Notices]
[Pages 19995-20002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06897]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97220; File No. SR-NYSEARCA-2023-27]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To List and Trade 
Shares of SGI U.S. Large Cap Core ETF

March 29, 2023.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 24, 2023, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade shares of the following 
under NYSE Arca Rule 8.601-E: SGI U.S. Large Cap Core ETF. The proposed 
rule change is available on the Exchange's website at www.nyse.com, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

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

1. Purpose
    The Exchange has adopted NYSE Arca Rule 8.601-E for the purpose of 
permitting the listing and trading, or trading pursuant to unlisted 
trading privileges (``UTP''), of Active Proxy Portfolio Shares, which 
are securities issued by an actively managed open-end investment 
management company.\3\ Commentary .01 to Rule 8.601-E requires the 
Exchange to file separate proposals under section 19(b) of the Act 
before listing and trading any series of Active Proxy Portfolio Shares 
on the Exchange. Therefore, the Exchange is submitting this proposal in 
order to list and trade shares (``Shares'') of Active Proxy Portfolio 
Shares of the SGI U.S. Large Cap Core ETF (the ``Fund'') under Rule 
8.601-E.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 89185 (June 29, 
2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95). Rule 8.601-
E(c)(1) provides that ``[t]he term ``Active Proxy Portfolio Share'' 
means a security that (a) is issued by a investment company 
registered under the Investment Company Act of 1940 (``Investment 
Company'') organized as an open-end management investment company 
that invests in a portfolio of securities selected by the Investment 
Company's investment adviser consistent with the Investment 
Company's investment objectives and policies; (b) is issued in a 
specified minimum number of shares, or multiples thereof, in return 
for a deposit by the purchaser of the Proxy Portfolio or Custom 
Basket, as applicable, and/or cash with a value equal to the next 
determined net asset value (``NAV''); (c) when aggregated in the 
same specified minimum number of Active Proxy Portfolio Shares, or 
multiples thereof, may be redeemed at a holder's request in return 
for the Proxy Portfolio or Custom Basket, as applicable, and/or cash 
to the holder by the issuer with a value equal to the next 
determined NAV; and (d) the portfolio holdings for which are 
disclosed within at least 60 days following the end of every fiscal 
quarter.'' Rule 8.601-E(c)(2) provides that ``[t]he term ``Actual 
Portfolio'' means the identities and quantities of the securities 
and other assets held by the Investment Company that shall form the 
basis for the Investment Company's calculation of NAV at the end of 
the business day.'' Rule 8.601-E(c)(3) provides that ``[t]he term 
``Proxy Portfolio'' means a specified portfolio of securities, other 
financial instruments and/or cash designed to track closely the 
daily performance of the Actual Portfolio of a series of Active 
Proxy Portfolio Shares as provided in the exemptive relief pursuant 
to the Investment Company Act of 1940 applicable to such series.'' 
Rule 8.601-E(c)(4) provides that the term ``Custom Basket'' means a 
portfolio of securities that is different from the Proxy Portfolio 
and is otherwise consistent with the exemptive relief issued 
pursuant to the Investment Company Act of 1940 applicable to a 
series of Active Proxy Portfolio Shares.
---------------------------------------------------------------------------

Key Features of Active Proxy Portfolio Shares
    While funds issuing Active Proxy Portfolio Shares will be actively-
managed and, to that extent, will be similar to Managed Fund Shares, 
Active Proxy Portfolio Shares differ from Managed Fund Shares in the 
following important respects. First, in contrast to Managed Fund 
Shares, which are actively-managed funds listed and traded under NYSE 
Arca Rule 8.600-E \4\ and for which a ``Disclosed Portfolio'' is 
required to be disseminated at least once daily,\5\ the portfolio for 
an issue of Active Proxy Portfolio Shares will be publicly disclosed 
within at least 60 days following the end of every fiscal quarter in 
accordance with normal disclosure requirements otherwise applicable to 
open-end management investment companies registered under the 
Investment Company Act of 1940 (the ``1940 Act'').\6\ The composition 
of

[[Page 19996]]

the portfolio of an issue of Active Proxy Portfolio Shares would not be 
available at commencement of Exchange listing and trading. Second, in 
connection with the creation and redemption of Active Proxy Portfolio 
Shares, such creation or redemption may be exchanged for a Proxy 
Portfolio or Custom Basket, as applicable, and/or cash with a value 
equal to the next-determined NAV. A series of Active Proxy Portfolio 
Shares will disclose the Proxy Portfolio on a daily basis, which, as 
described above, is designed to track closely the daily performance of 
the Actual Portfolio of a series of Active Proxy Portfolio Shares, 
instead of the actual holdings of the Investment Company, as provided 
by a series of Managed Fund Shares. As set forth in NYSE Arca Rule 
8.601-E(d)(2)(B)(ii), for Active Proxy Portfolio Shares using a Custom 
Basket, each Business Day,\7\ before the opening of trading in the Core 
Trading Session (as defined in NYSE Arca Rule 7.34-E(a)), the 
Investment Company shall make publicly available on its website the 
composition of any Custom Basket transacted on the previous Business 
Day, except a Custom Basket that differs from the applicable Proxy 
Portfolio only with respect to cash.
---------------------------------------------------------------------------

    \4\ The Commission has previously approved listing and trading 
on the Exchange of a number of issues of Managed Fund Shares under 
NYSE Arca Rule 8.600-E. See, e.g., Securities Exchange Act Release 
Nos. 57801 (May 8, 2008), 73 FR 27878 (May 14, 2008) (SR-NYSEArca-
2008-31) (order approving Exchange listing and trading of twelve 
actively-managed funds of the WisdomTree Trust); 60460 (August 7, 
2009), 74 FR 41468 (August 17, 2009) (SR-NYSEArca-2009-55) (order 
approving listing of Dent Tactical ETF); 63076 (October 12, 2010), 
75 FR 63874 (October 18, 2010) (SR-NYSEArca-2010-79) (order 
approving Exchange listing and trading of Cambria Global Tactical 
ETF); 63802 (January 31, 2011), 76 FR 6503 (February 4, 2011) (SR-
NYSEArca-2010-118) (order approving Exchange listing and trading of 
the SiM Dynamic Allocation Diversified Income ETF and SiM Dynamic 
Allocation Growth Income ETF). The Commission also has approved a 
proposed rule change relating to generic listing standards for 
Managed Fund Shares. See Securities Exchange Act Release No. 78397 
(July 22, 2016), 81 FR 49320 (July 27, 2016) (SR-NYSEArca-2015-110) 
(amending NYSE Arca Equities Rule 8.600 to adopt generic listing 
standards for Managed Fund Shares).
    \5\ NYSE Arca Rule 8.600-E(c)(2) defines the term ``Disclosed 
Portfolio'' as the identities and quantities of the securities and 
other assets held by the Investment Company that will form the basis 
for the Investment Company's calculation of net asset value at the 
end of the business day. NYSE Arca Rule 8.600-E(d)(2)(B)(i) requires 
that the Disclosed Portfolio will be disseminated at least once 
daily and will be made available to all market participants at the 
same time.
    \6\ A mutual fund is required to file with the Commission its 
complete portfolio schedules for the second and fourth fiscal 
quarters on Form N-CSR under the 1940 Act. Information reported on 
Form N-PORT for the third month of a fund's fiscal quarter will be 
made publicly available 60 days after the end of a fund's fiscal 
quarter. Form N-PORT requires reporting of a fund's complete 
portfolio holdings on a position-by-position basis on a quarterly 
basis within 60 days after fiscal quarter end. Investors can obtain 
a series of Active Proxy Portfolio Shares' Statement of Additional 
Information (``SAI''), its Shareholder Reports, its Form N-CSR, 
filed twice a year, and its Form N-CEN, filed annually. A series of 
Active Proxy Portfolio Shares' SAI and Shareholder Reports will be 
available free upon request from the Investment Company, and those 
documents and the Form N-PORT, Form N-CSR, and Form N-CEN may be 
viewed on-screen or downloaded from the Commission's website at 
www.sec.gov.
    \7\ ``Business Day'' is defined to mean any day that the 
Exchange is open, including any day when the Fund satisfies 
redemption requests as required by section 22(e) of the 1940 Act.
---------------------------------------------------------------------------

    The Commission has previously approved \8\ and noticed for 
immediate effectiveness \9\ the listing and trading on the Exchange of 
series of Active Proxy Portfolio Shares under NYSE Arca Rule 8.601-E.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release Nos. 89185 (June 29, 
2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95) (Notice of 
Filing of Amendment No. 6 and Order Granting Accelerated Approval of 
a Proposed Rule Change, as Modified by Amendment No. 6, to Adopt 
NYSE Arca Rule 8.601-E to Permit the Listing and Trading of Active 
Proxy Portfolio Shares and To List and Trade Shares of the Natixis 
U.S. Equity Opportunities ETF Under Proposed NYSE Arca Rule 8.601-E) 
(the ``Natixis Order''); 89192 (June 30, 2020), 85 FR 40699 (July 7, 
2020) (SR-NYSEArca-2019-96) (Notice of Filing of Amendment No. 5 and 
Order Granting Accelerated Approval of a Proposed Rule Change, as 
Modified by Amendment No. 5, to List and Trade Two Series of Active 
Proxy Portfolio Shares Issued by the American Century ETF Trust 
under NYSE Arca Rule 8.601-E); 89191 (June 30, 2020), 85 FR 40358 
(July 6, 2020) (SR-NYSEArca-2019-92) (Notice of Filing of Amendment 
No. 3 and Order Granting Accelerated Approval of a Proposed Rule 
Change, as Modified by Amendment No. 3, to List and Trade Four 
Series of Active Proxy Portfolio Shares Issued by T. Rowe Price 
Exchange-Traded Funds, Inc. under NYSE Arca Rule 8.601-E); 89438 
(July 31, 2020), 85 FR 47821 (August 6, 2020) (SR-NYSEArca-2020-51) 
(Order Granting Approval of a Proposed Rule Change, as Modified by 
Amendment No. 2, to List and Trade Shares of Natixis Vaughan Nelson 
Select ETF and Natixis Vaughan Nelson MidCap ETF under NYSE Arca 
Rule 8.601-E); 91266 (March 5, 2021), 86 FR 13930 (March 11, 2021) 
(SR-NYSEArca-2020-104) (Order Approving a Proposed Rule Change, as 
Modified by Amendment No. 2, To List and Trade Shares of the Stance 
Equity ESG Large Cap Core ETF Under NYSE Arca Rule 8.601-E) (the 
``Stance Order'').
    \9\ See Securities Exchange Act Release Nos. 92104 (June 3, 
2021), 86 FR 30635 (June 9, 2021) (NYSEArca-2021-46) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to List 
and Trade Shares of the Nuveen Santa Barbara Dividend Growth ETF, 
Nuveen Small Cap Select ETF, and Nuveen Winslow Large-Cap Growth ESG 
ETF Under NYSE Arca Rule 8.601-E (Active Proxy Portfolio Shares); 
92958 (September 13, 2021), 86 FR 51933 (September 17, 2021) 
(NYSEArca-2021-77) (Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To List and Trade Shares of the Nuveen Growth 
Opportunities ETF Under NYSE Arca Rule 8.601-E (Active Proxy 
Portfolio Shares); 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); 94486 (March 22, 2022), 87 FR 17351 (March 28, 
2022) (SR-NYSEArca-2022-14) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change to List and Trade Shares of 
the Columbia Seligman Semiconductor and Technology ETF Under NYSE 
Arca Rule 8.601 (Active Proxy Portfolio Shares); 94908 (May 13, 
2022), 87 FR 30524 (May 19, 2022) (SR-NYSEArca-2022-28) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to List 
and Trade Shares of the Principal Real Estate Active Opportunities 
ETF Under NYSE Arca Rule 8.601 (Active Proxy Portfolio Shares)); 
94902 (May 12, 2022), 87 FR 30286 (May 18, 2022) (SR-NYSEArca-2022-
29) (Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change to List and Trade Shares of the IQ Winslow Large Cap Growth 
ETF and IQ Winslow Focused Large Cap Growth ETF Under NYSE Arca Rule 
8.601-E (Active Proxy Portfolio Shares)).
---------------------------------------------------------------------------

    The Shares of the Fund will be series of The RBB Fund, Inc. (the 
``Company''), a Maryland corporation registered with the Commission as 
an open-end management investment company.\10\ Summit Global 
Investments, LLC will be the investment adviser to the Fund (the 
``Adviser''). U.S. Bank, N.A. will serve as the Fund's custodian (the 
``Custodian''). Quasar Distributors, LLC will act as the distributor 
(the ``Distributor'') for the Fund.
---------------------------------------------------------------------------

    \10\ The Company is registered under the 1940 Act. On April 8, 
2022, the Company filed a registration statement on Form N-1A under 
the 1940 Act relating to the Fund (File No. 811-05518) (the 
``Registration Statement''). The Company filed a third amended 
application for an order under section 6(c) of the 1940 Act for 
exemptions from various provisions of the 1940 Act and rules 
thereunder on September 26, 2022 (File No. 812-15352). See 
Investment Company Act Release No. 34835 (February 17, 2023) (the 
``Application''). On March 15, 2023, the Commission issued an order 
under the 1940 Act granting the exemptions requested in the 
Application (Investment Company Act Release Nos. 34858 (March 15, 
2023)) (the ``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, Application, and 
Exemptive Order. The Exchange will not commence trading in Shares of 
the Fund until the Registration Statement is effective.
---------------------------------------------------------------------------

    Commentary .04 to NYSE Arca Rule 8.601-E provides that, if the 
investment adviser to the Investment Company issuing Active Proxy 
Portfolio Shares is registered as a broker-dealer or is affiliated with 
a broker-dealer, such investment adviser will erect and maintain a 
``fire wall'' between the investment adviser and personnel of the 
broker-dealer or broker-dealer affiliate, as applicable, with respect 
to access to information concerning the composition and/or changes to 
such Investment Company's Actual Portfolio, Proxy Portfolio, and/or 
Custom Basket, as applicable. Any person related to the investment 
adviser or Investment Company who makes decisions pertaining to the 
Investment Company's Actual Portfolio, Proxy Portfolio, and/or Custom 
Basket, as applicable, or has access to non-public information 
regarding the Investment Company's Actual Portfolio, Proxy Portfolio, 
and/or Custom Basket, as applicable, or changes thereto must be subject 
to procedures reasonably designed to prevent the use and dissemination 
of material non-public information regarding the Actual Portfolio, 
Proxy Portfolio, and/or Custom Basket, as applicable, or changes 
thereto. Commentary .04 is similar to Commentary .03(a)(i) and (iii) to 
NYSE Arca Rule 5.2-E(j)(3); however, Commentary .04, in connection with 
the establishment of a ``fire wall'' between the investment adviser and 
the broker-dealer, reflects the applicable open-end fund's portfolio, 
not an underlying benchmark index, as is the case with index-based 
funds.\11\ Commentary .04 is

[[Page 19997]]

also similar to Commentary .06 to Rule 8.600-E related to Managed Fund 
Shares, except that Commentary .04 relates to establishment and 
maintenance of a ``fire wall'' between the investment adviser and 
personnel of the broker-dealer or broker-dealer affiliate, as 
applicable, applicable to an Investment Company's Actual Portfolio, 
Proxy Portfolio, and/or Custom Basket, as applicable, or changes 
thereto, and not just to the underlying portfolio, as is the case with 
Managed Fund Shares.
---------------------------------------------------------------------------

    \11\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). As a result, the Adviser and its related personnel will be 
subject to the provisions of Rule 204A-1 under the Advisers Act 
relating to codes of ethics. This Rule requires investment advisers 
to adopt a code of ethics that reflects the fiduciary nature of the 
relationship to clients as well as compliance with other applicable 
securities laws. Accordingly, procedures designed to prevent the 
communication and misuse of non-public information by an investment 
adviser must be consistent with Rule 204A-1 under the Advisers Act. 
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful 
for an investment adviser to provide investment advice to clients 
unless such investment adviser has (i) adopted and implemented 
written policies and procedures reasonably designed to prevent 
violations, by the investment adviser and its supervised persons, of 
the Advisers Act and the Commission rules adopted thereunder; (ii) 
implemented, at a minimum, an annual review regarding the adequacy 
of the policies and procedures established pursuant to subparagraph 
(i) above and the effectiveness of their implementation; and (iii) 
designated an individual (who is a supervised person) responsible 
for administering the policies and procedures adopted under 
subparagraph (i) above.
---------------------------------------------------------------------------

    In addition, Commentary .05 to Rule 8.601-E provides that any 
person or entity, including a custodian, Reporting Authority, 
distributor, or administrator, who has access to non-public information 
regarding the Investment Company's Actual Portfolio, Proxy Portfolio, 
or Custom Basket, as applicable, or changes thereto, must be subject to 
procedures reasonably designed to prevent the use and dissemination of 
material non-public information regarding the applicable Investment 
Company Actual Portfolio, Proxy Portfolio, 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 and/or changes to such 
Investment Company Actual Portfolio, Proxy Portfolio, or Custom Basket, 
as applicable.
    The Adviser is not registered as a broker-dealer but is affiliated 
with a broker-dealer. The Adviser has implemented and will maintain a 
``fire wall'' with respect to such broker-dealer affiliate regarding 
access to information concerning the composition of and/or changes to 
the Fund's Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as 
applicable.
    In the event (a) the Adviser becomes registered as a broker-dealer 
or becomes newly affiliated with a broker-dealer, or (b) any new 
adviser or sub-adviser is a registered broker-dealer, or becomes 
affiliated with a broker-dealer, it will implement and maintain a 
``fire wall'' with respect to its relevant personnel or its broker-
dealer affiliate regarding access to information concerning the 
composition and/or changes to the Fund's Actual Portfolio, Proxy 
Portfolio, and/or Custom Basket, as applicable, and will be subject to 
procedures designed to prevent the use and dissemination of material 
non-public information regarding the Fund's Actual Portfolio, Proxy 
Portfolio, and/or Custom Basket, as applicable, or changes thereto. Any 
person related to the Adviser or the Fund who makes decisions 
pertaining to the Fund's Actual Portfolio, Proxy Portfolio, or Custom 
Basket, as applicable, or has access to non-public information 
regarding the Fund's Actual Portfolio, Proxy Portfolio, and/or Custom 
Basket, as applicable, or changes thereto are subject to procedures 
reasonably designed to prevent the use and dissemination of material 
non-public information regarding the Fund's Actual Portfolio, Proxy 
Portfolio, and/or Custom Basket, as applicable or changes thereto.
    In addition, any person or entity, including any service provider 
for the Fund, who has access to non-public information regarding the 
Fund's Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as 
applicable, or changes thereto, will be subject to procedures 
reasonably designed to prevent the use and dissemination of material 
non-public information regarding the Fund's Actual Portfolio, Proxy 
Portfolio, and/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 has erected 
and will maintain a ``fire wall'' between the person or entity and the 
broker-dealer with respect to access to information concerning the 
composition and/or changes to the Fund's Actual Portfolio, Proxy 
Portfolio, and/or Custom Basket, as applicable.
Description of the Fund
    According to the Registration Statement, the Adviser will identify 
a Proxy Portfolio for the Fund that is designed to recreate the daily 
performance of the Fund's Actual Portfolio and will only include 
securities and investments in which the Fund may invest. While the 
Fund's Proxy Portfolio and Actual Portfolio will hold some of the same 
securities, the Proxy Portfolio and Actual Portfolio may not include 
identical securities.
    The composition of the Proxy Portfolio will be published on the 
Fund's website (www.sgiam.com) each Business Day before the 
commencement of trading of the Fund's Shares. The Fund's website will 
include the following information for each portfolio holding in the 
Proxy Portfolio: (1) ticker symbol; (2) CUSIP or other identifier; (3) 
description of holding; (4) quantity of each security or other asset 
held; and (5) percentage weight of the holding in the Proxy Portfolio. 
The Proxy Portfolio will be reconstituted daily, and the Adviser will 
not make intra-day changes to the Proxy Portfolio except to correct 
errors in the published Proxy Portfolio.
    The Fund will, at the end of each trading day, calculate the 
percentage weight overlap between its Proxy Portfolio and Actual 
Portfolio (the ``Proxy Overlap'') and the standard deviation over the 
past three months of the daily proxy spread (i.e., the difference, in 
percentage terms, between the Proxy Portfolio per share NAV and that of 
the Actual Portfolio at the end of the trading day) (the ``Tracking 
Error'') and publish such information on its website before the opening 
of trading each Business Day.
    The Fund's holdings will conform to the permissible investments as 
set forth in the Application and Exemptive Order, and the holdings will 
be consistent with all requirements in the Application and Exemptive 
Order.\12\ Any foreign common stocks held by the Fund will be traded on 
an exchange that is a member of the Intermarket Surveillance Group 
(``ISG'') or with which the Exchange has in place a comprehensive 
surveillance sharing agreement.
---------------------------------------------------------------------------

    \12\ Pursuant to the Application and Exemptive Order, the 
permissible investments for the Fund include only the following 
instruments: ETFs traded on a U.S. exchange; exchange-traded notes 
(``ETNs'') traded on a U.S. exchange; U.S. exchange-traded common 
stocks; common stocks listed on a foreign exchange that trade on 
such exchange contemporaneously with the Shares (``foreign common 
stocks'') in the Exchange's Core Trading Session (normally, 9:30 
a.m. to 4:00 p.m. Eastern time (``E.T.'')); U.S. exchange-traded 
preferred stocks; U.S. exchange-traded American Depositary Receipts 
(``ADRs''); U.S. exchange-traded real estate investment trusts; U.S. 
exchange-traded commodity pools; U.S. exchange-traded metals trusts; 
U.S. exchange-traded currency trusts; and U.S. exchange-traded 
futures that trade contemporaneously with the Fund's Shares. In 
addition, the Fund may hold cash and cash equivalents (short-term 
U.S. Treasury securities, government money market funds, and 
repurchase agreements). Pursuant to the Application and Exemptive 
Order, the Fund will not hold short positions or invest in 
derivatives other than U.S. exchange-traded futures, will not borrow 
for investment purposes, and will not purchase any securities that 
are illiquid investments at the time of purchase.
---------------------------------------------------------------------------

    According to the Registration Statement, the Fund's investment 
objective is long-term capital

[[Page 19998]]

appreciation. The Fund will, under normal circumstances, invest at 
least 80% of its assets in securities of companies within the Russell 
1000 Index and S&P 500 Index. The Fund's investments will generally 
consist of primarily of common stocks, but may also include preferred 
stocks, warrants to acquire common stock, and securities convertible 
into common stock. The Adviser will seek to achieve the Fund's 
investment objective by investing in stocks that the Adviser believes 
exhibit less volatile price patterns, strengthening business metrics 
(e.g., earnings, debt, return on assets, competition, customers, 
industry), and quantitative factors such as earnings variability, 
leverage, and volatility.
Investment Restrictions
    The Shares of the Fund will conform to the initial and continued 
listing criteria under Rule 8.601-E. The Fund's holdings will be 
limited to and consistent with permissible holdings as described in the 
Application and Exemptive Order and all requirements in the Application 
and Exemptive Order.\13\
---------------------------------------------------------------------------

    \13\ See id.
---------------------------------------------------------------------------

    The Fund's investments, including derivatives, will be consistent 
with its investment objectives and will not be used to enhance leverage 
(although certain derivatives and other investments may result in 
leverage). That is, the Fund's investments will not be used to seek 
performance that is the multiple or inverse multiple (e.g., 2X or -3X) 
of the Fund's primary broad-based securities benchmark index (as 
defined in Form N-1A).\14\
---------------------------------------------------------------------------

    \14\ The Fund's broad-based securities benchmark index will be 
identified in a future amendment to its Registration Statement 
following the Fund's first full calendar year of performance.
---------------------------------------------------------------------------

Purchases and Redemptions
    According to the Registration Statement, the Company will issue and 
sell Shares of the Fund only in specified minimum size ``Creation 
Units'' on a continuous basis through the Distributor at their NAV next 
determined after receipt of an order, on any Business Day, in proper 
form. The NAV of the Fund's Shares will be calculated each Business Day 
as of the close of regular trading on the Exchange, ordinarily 4:00 
p.m. E.T. A Creation Unit will generally consist of at least 25,000 
Shares.
    According to the Registration Statement, Shares of the Fund will be 
purchased and redeemed in Creation Units. Creation Units will generally 
be purchased in-kind through the deposit of a designated portfolio of 
securities (the ``Deposit Securities''), which will typically replicate 
the Proxy Portfolio, plus the ``Cash Component,'' which is an amount 
equal to the difference between the NAV of the Fund's shares (per 
Creation Unit) and the market value of the Deposit Securities or 
``Deposit Cash'' (as defined below), as applicable. The Cash Component 
serves the function of compensating for any differences between the NAV 
per Creation Unit and the market value of the Deposit Securities or 
Deposit Cash, as applicable. The Deposit Cash is a ``cash in lieu'' 
amount that the Company may permit or require to be added to the Cash 
Component to replace any Deposit Security. Together, the Deposit 
Securities or Deposit Cash, as applicable, and the Cash Component 
constitute the ``Fund Deposit.'' The names and quantities of the 
instruments that constitute the Deposit Securities will be the same as 
the Proxy Portfolio, except to the extent that the Fund requires 
purchases and redemptions to be made entirely or in part on a cash 
basis. Creation Units will typically be redeemed in exchange for ``Fund 
Securities'' (which may not be identical to the Deposit Securities) and 
a ``Cash Redemption Amount,'' which represents the difference between 
the NAV of the Shares being redeemed and the value of the Fund 
Securities.
    Creation Units of the Fund may be purchased and/or redeemed 
entirely or partially for cash in the Company's discretion. When full 
or partial cash purchases or redemptions of Creation Units are 
available or specified for the Fund, they will be effected in 
essentially the same manner as in-kind purchases or redemptions 
thereof.\15\
---------------------------------------------------------------------------

    \15\ The Adviser represents that, to the extent the Company 
effects the creation or redemption of Shares in cash on any given 
day, such transactions will be effected in the same manner for all 
Authorized Participants (as defined below) placing trades with the 
Fund on that day.
---------------------------------------------------------------------------

    The identity and number of shares of the Deposit Securities or the 
amount of Deposit Cash, as applicable, required for a Fund Deposit may 
change from time to time. The Fund, through the National Securities 
Clearing Corporation (the ``NSCC''), will make available on each 
Business Day, immediately prior to the opening of business on the 
Exchange, the list of the names and the required number of shares of 
each Deposit Security or the required amount of Deposit Cash, as 
applicable, to be included in the Fund Deposit. The published Fund 
Deposit will apply until such time as the next-announced composition of 
the Deposit Securities is made available, and there will be no intra-
day changes except to correct errors in the published Fund Deposit. The 
Fund Deposit will be published each Business Day regardless of whether 
the Fund decides to issue or redeem Creation Units entirely or in part 
on a cash basis. The identity of the Fund Securities that will be 
applicable to redemption requests received in proper form on a Business 
Day will also be made available prior to the opening of business on the 
Exchange on each Business Day.
    All orders to purchase or redeem Creation Units must be placed with 
the Distributor by or through an Authorized Participant, who may engage 
in creation or redemption transactions directly with the Fund.\16\ 
Orders to purchase or redeem Creation Units will be accepted until the 
``Cut-Off Time,'' generally 4:00 p.m. E.T. The date on which an order 
to purchase or redeem Creation Units is placed is referred to as the 
``Order Placement Date.'' All Creation Unit orders must be received by 
the Distributor no later than the Cut-Off Time in order to receive the 
NAV determined on the Order Placement Date. When the Exchange closes 
earlier than normal, the Fund may require orders for Creation Units to 
be placed earlier in the Business Day.
---------------------------------------------------------------------------

    \16\ According to the Registration Statement, an ``Authorized 
Participant'' is (i) a broker-dealer or other participant in the 
clearing process through the Continuous Net Settlement System of the 
NSCC or (ii) a DTC Participant.
---------------------------------------------------------------------------

Availability of Information
    The Fund's website (www.sgiam.com), which will be publicly 
available prior to the public offering of Shares, will include a form 
of the prospectus for the Fund that may be downloaded. The Fund's 
website will include on a daily basis, per Share for the Fund: (1) the 
prior Business Day's NAV; (2) the prior Business Day's ``Closing 
Price'' or ``Bid/Ask Price''; \17\ and (3) a calculation of the 
premium/discount of such Closing Price or Bid/Ask Price against such 
NAV.\18\ The Adviser has represented that the Fund's website will also 
provide: (1) any other information regarding premiums/discounts as may 
be required for other ETFs under Rule 6c-11 under the 1940 Act, as 
amended, and (2) any

[[Page 19999]]

information regarding the bid/ask spread for the Fund as may be 
required for other ETFs under Rule 6c-11 under the 1940 Act, as 
amended. The Fund's website also will disclose the information required 
under Rule 8.601-E(c)(3).\19\ The website and information will be 
publicly available at no charge.
---------------------------------------------------------------------------

    \17\ The ``Bid/Ask Price'' is the midpoint of the highest bid 
and lowest offer based upon the National Best Bid and Offer as of 
the time of calculation of the Fund's NAV. The ``National Best Bid 
and Offer'' is the current national best bid and national best offer 
as disseminated by the Consolidated Quotation System or UTP Plan 
Securities Information Processor. The ``Closing Price'' of Shares is 
the official closing price of the Shares on the Exchange.
    \18\ The ``premium/discount'' refers to the premium or discount 
to the NAV at the end of a trading day and will be calculated based 
on the last Bid/Ask Price on a given trading day.
    \19\ See note 3, supra. Rule 8.601-E(c)(3) provides that the 
website for each series of Active Proxy Portfolio Shares shall 
disclose the information regarding the Proxy Portfolio as provided 
in the exemptive relief pursuant to the 1940 Act applicable to such 
series, including the following, to the extent applicable: (i) 
Ticker symbol; (ii) CUSIP or other identifier; (iii) Description of 
holding; (iv) Quantity of each security or other asset held; and (v) 
Percentage weighting of the holding in the portfolio.
---------------------------------------------------------------------------

    The identity and quantity of investments in the Proxy Portfolio for 
the Fund will be publicly available on the Fund's website before the 
commencement of trading in Shares on each Business Day. The website 
will also include information relating to the Proxy Overlap and 
Tracking Error, as discussed above. With respect to each Custom Basket 
utilized by the Fund, each Business Day, before the opening of trading 
in the Core Trading Session (as defined in NYSE Arca Rule 7.34-E(a)), 
the Fund's website will also include the composition of any Custom 
Basket transacted on the previous business day, except a Custom Basket 
that differs from the Proxy Portfolio only with respect to cash.
    Typical mutual fund-style annual, semi-annual and quarterly 
disclosures contained in the Fund's Commission filings will be provided 
on the Fund's website on a current basis.\20\ Thus, the Fund will 
publish the portfolio contents of its Actual Portfolio on a periodic 
basis, and no less than 60 days after the end of every fiscal quarter.
---------------------------------------------------------------------------

    \20\ See note 6, supra.
---------------------------------------------------------------------------

    Investors can also obtain the Fund's SAI, Shareholder Reports, Form 
N-CSR, N-PORT, and Form N-CEN. The prospectus, SAI, and Shareholder 
Reports are available free upon request, and those documents and the 
Form N-CSR, N-PORT, and Form N-CEN may be viewed on-screen or 
downloaded from the Commission's website. The Exchange also notes that 
pursuant to the Application, the Fund must comply with Regulation Fair 
Disclosure, which prohibits selective disclosure of any material non-
public information.
    Information regarding the market price of Shares and trading volume 
in Shares, will be continually available on a real-time basis 
throughout the day on brokers' computer screens and other electronic 
services. The previous day's closing price and trading volume 
information for the Shares will be published daily in the financial 
section of newspapers.
    Quotation and last sale information for the Shares and U.S. 
exchange-traded instruments (excluding futures contracts) will be 
available via the Consolidated Tape Association (``CTA'') high-speed 
line, from the exchanges on which such securities trade, or through 
major market data vendors or subscription services. Quotation and last 
sale information for futures contracts will be available from the 
exchanges on which they trade. Intraday price information for all 
exchange-traded instruments, which include all eligible instruments 
except cash and cash equivalents, will be available from the exchanges 
on which they trade, or through major market data vendors or 
subscription services. Intraday price information for cash equivalents 
is available through major market data vendors, subscription services 
and/or pricing services.
Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of the Fund.\21\ Trading in Shares of the Fund 
will be halted if the circuit breaker parameters in NYSE Arca Rule 
7.12-E have been reached. Trading also may be halted because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Shares inadvisable. Trading in the Shares will be 
subject to NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth 
circumstances under which Shares of the Fund will be halted.
---------------------------------------------------------------------------

    \21\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------

    Specifically, Rule 8.601-E(d)(2)(D) provides that the Exchange may 
consider all relevant factors in exercising its discretion to halt 
trading in a series of Active Proxy Portfolio Shares. These may 
include: (a) the extent to which trading is not occurring in the 
securities and/or the financial instruments composing the Proxy 
Portfolio and/or Actual Portfolio; or (b) whether other unusual 
conditions or circumstances detrimental to the maintenance of a fair 
and orderly market are present. If the Exchange becomes aware that the 
NAV, Proxy Portfolio, or Actual Portfolio with respect to a series of 
Active Proxy Portfolio Shares is not disseminated to all market 
participants at the same time, the Exchange shall halt trading in such 
series until such time as the NAV, Proxy Portfolio, or Actual Portfolio 
is available to all market participants at the same time.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the NYSE Arca Marketplace in all trading sessions in accordance with 
NYSE Arca Rule 7.34-E(a). As provided in NYSE Arca Rule 7.6-E, the 
minimum price variation (``MPV'') for quoting and entry of orders in 
equity securities traded on the NYSE Arca Marketplace is $0.01, with 
the exception of securities that are priced less than $1.00 for which 
the MPV for order entry is $0.0001.
    The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Rule 8.601-E. The Exchange has appropriate 
rules to facilitate trading in the Shares during all trading sessions.
    A minimum of 100,000 Shares for the Fund will be outstanding at the 
commencement of trading on the Exchange. In addition, pursuant to Rule 
8.601-E(d)(1)(B), the Exchange, prior to commencement of trading in the 
Shares, will obtain a representation from the Company that (i) the NAV 
per Share of the Fund will be calculated daily, (ii) the NAV, Proxy 
Portfolio, and the Actual Portfolio for the Fund will be made publicly 
available to all market participants at the same time, and (iii) the 
Company and any person acting on behalf of the Company will comply with 
Regulation Fair Disclosure under the Act, including with respect to any 
Custom Basket.
    With respect to Active Proxy Portfolio Shares, all of the Exchange 
member obligations relating to product description and prospectus 
delivery requirements will continue to apply in accordance with 
Exchange rules and federal securities laws, and the Exchange and the 
Financial Industry Regulatory Authority, Inc. (``FINRA'') will continue 
to monitor Exchange members for compliance with such requirements.
Surveillance
    The Exchange represents that trading in the Shares will be subject 
to the existing trading surveillances, administered by the Exchange, as 
well as cross-market surveillances administered by FINRA on behalf of 
the Exchange, which are designed to detect violations of Exchange rules 
and applicable federal securities laws.\22\ The

[[Page 20000]]

Exchange represents that these procedures are adequate to properly 
monitor Exchange trading of the Shares in all trading sessions and to 
deter and detect violations of Exchange rules and federal securities 
laws applicable to trading on the Exchange.
---------------------------------------------------------------------------

    \22\ FINRA conducts cross-market surveillances on behalf of the 
Exchange pursuant to a regulatory services agreement. The Exchange 
is responsible for FINRA's performance under this regulatory 
services agreement.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations.
    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares and underlying 
exchange-traded instruments with other markets and other entities that 
are members of the ISG, and the Exchange or FINRA, on behalf of the 
Exchange, or both, may obtain trading information regarding trading 
such securities and underlying exchange-traded instruments from such 
markets and other entities. In addition, the Exchange may obtain 
information regarding trading in such securities and underlying 
exchange-traded instruments from markets and other entities that are 
members of ISG or with which the Exchange has in place a comprehensive 
surveillance sharing agreement.\23\
---------------------------------------------------------------------------

    \23\ For a list of the current members of ISG, see 
www.isgportal.org.
---------------------------------------------------------------------------

    The Adviser will make available daily to FINRA and the Exchange the 
Actual Portfolio of the Fund, upon request, as necessary to assist with 
the performance of the surveillances and investigations referred to 
above.
    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
    Commentary .03 to NYSE Arca Rule 8.601-E provides that the Exchange 
will implement and maintain written surveillance procedures applicable 
to Active Proxy Portfolio Shares. As part of these surveillance 
procedures, the Investment Company's investment adviser will, upon 
request by the Exchange or FINRA, on behalf of the Exchange, make 
available to the Exchange or FINRA the daily Actual Portfolio holdings 
of each series of Active Proxy Portfolio Shares. The Exchange believes 
that the ability to access the information on an as needed basis will 
provide it with sufficient information to perform the necessary 
regulatory functions associated with listing and trading series of 
Active Proxy Portfolio Shares on the Exchange, including the ability to 
monitor compliance with the initial and continued listing requirements 
as well as the ability to surveil for manipulation of Active Proxy 
Portfolio Shares.
    The Exchange will utilize its existing procedures to monitor issuer 
compliance with the requirements of Rule 8.601-E. For example, the 
Exchange will continue to use intraday alerts that will notify Exchange 
personnel of trading activity throughout the day that may indicate that 
unusual conditions or circumstances are present that could be 
detrimental to the maintenance of a fair and orderly market. The 
Exchange will require from the issuer of a series of Active Proxy 
Portfolio Shares, upon initial listing and periodically thereafter, a 
representation that it is in compliance with Rule 8.601-E. The Exchange 
notes that Commentary .01 to Rule 8.601-E requires an issuer of Active 
Proxy Portfolio Shares to notify the Exchange of any failure to comply 
with the continued listing requirements of Rule 8.601-E. In addition, 
the Exchange will require issuers to represent that they will notify 
the Exchange of any failure to comply with the terms of applicable 
exemptive and no-action relief. As part of its surveillance procedures, 
the Exchange will rely on the foregoing procedures to become aware of 
any non-compliance with the requirements of Rule 8.601-E.
    With respect to the Fund, all statements and representations made 
in this filing regarding (a) the description of the portfolio, (b) 
limitations on portfolio holdings, or (c) the applicability of Exchange 
listing rules specified in this rule filing shall constitute continued 
listing requirements for listing the Shares on the Exchange. The 
Exchange will obtain a representation from the Company, prior to 
commencement of trading in the Shares of the Fund, that it will advise 
the Exchange of any failure by the Fund to comply with the continued 
listing requirements, and, pursuant to its obligations under section 
19(g)(1) of the Act, the Exchange will monitor for compliance with the 
continued listing requirements. If the Fund is not in compliance with 
the applicable listing requirements, the Exchange will commence 
delisting procedures under NYSE Arca Rule 5.5-E(m).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\24\ in general, and furthers the 
objectives of section 6(b)(5) of the Act,\25\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest.\26\
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).
    \26\ The Exchange represents that, for initial and continued 
listing, the Fund will be in compliance with Rule 10A-3 under the 
Act, as provided by NYSE Arca Rule 5.3-E.
---------------------------------------------------------------------------

    With respect to the proposed listing and trading of Shares of the 
Fund, the Exchange believes that the proposed rule change is designed 
to prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in NYSE Arca Rule 8.601-E.
    The Fund's holdings will conform to the permissible investments as 
set forth in the Application and Exemptive Order, and the holdings will 
be consistent with all requirements in the Application and Exemptive 
Order.\27\
---------------------------------------------------------------------------

    \27\ See note 13, supra.
---------------------------------------------------------------------------

    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares and underlying 
exchange-traded instruments with other markets and other entities that 
are members of the ISG, and the Exchange or FINRA, on behalf of the 
Exchange, or both, may obtain trading information regarding trading in 
the Shares and underlying exchange-traded instruments from such markets 
and other entities. In addition, the Exchange may obtain information 
regarding trading in the Shares and underlying exchange-traded 
instruments from markets and other entities that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement. Any foreign common stocks held by the Fund will be 
traded on an exchange that is a member of the ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement.
    The daily dissemination of the identity and quantity of Proxy 
Portfolio component investments, together with the right of Authorized 
Participants to create and redeem each day at the NAV, will be 
sufficient for market participants to value and trade Shares in a 
manner that will not lead to significant deviations between the Shares' 
Closing Price or Bid/Ask Price and NAV.

[[Page 20001]]

    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 proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that the Exchange will obtain a representation from the Company that 
the NAV per Share of the Fund will be calculated daily and that the 
NAV, Proxy Portfolio, and Actual Portfolio for the Fund will be made 
available to all market participants at the same time. Investors can 
obtain the Fund's SAI, shareholder reports, and its Form N-CSR, Form N-
PORT, and Form N-CEN. The Fund's SAI and shareholder reports will be 
available free upon request from the Fund, and those documents and the 
Form N-CSR, Form N-PORT, and Form N-CEN may be viewed on-screen or 
downloaded from the Commission's website.
    Commentary .03 to NYSE Arca Rule 8.601-E provides that the Exchange 
will implement and maintain written surveillance procedures applicable 
to Active Proxy Portfolio Shares. As part of these surveillance 
procedures, the Investment Company's investment adviser will, upon 
request by the Exchange or FINRA, on behalf of the Exchange, make 
available to the Exchange or FINRA the daily portfolio holdings of each 
series of Active Proxy Portfolio Shares. The Exchange believes that the 
ability to access the information on an as needed basis will provide it 
with sufficient information to perform the necessary regulatory 
functions associated with listing and trading series of Active Proxy 
Portfolio Shares on the Exchange, including the ability to monitor 
compliance with the initial and continued listing requirements as well 
as the ability to surveil for manipulation of Active Proxy Portfolio 
Shares. With respect to the Fund, the Adviser will make available daily 
to FINRA and the Exchange the portfolio holdings of the Fund upon 
request as necessary to facilitate the performance of the surveillances 
and investigations referred to above.
    The Exchange will utilize its existing procedures to monitor 
compliance with the requirements of Rule 8.601-E. For example, the 
Exchange will continue to use intraday alerts that will notify Exchange 
personnel of trading activity throughout the day that may indicate that 
unusual conditions or circumstances are present that could be 
detrimental to the maintenance of a fair and orderly market. The 
Exchange will require from the Company, upon initial listing and 
periodically thereafter, a representation that it is in compliance with 
Rule 8.601-E. The Exchange notes that Commentary .01 to Rule 8.601-E 
requires the issuer of Shares to notify the Exchange of any failure to 
comply with the continued listing requirements of Rule 8.601-E. In 
addition, the Exchange will require the issuer to represent that it 
will notify the Exchange of any failure to comply with the terms of 
applicable exemptive and no-action relief. The Exchange will rely on 
the foregoing procedures to become aware of any non-compliance with the 
requirements of Rule 8.601-E.
    In addition, with respect to the Fund, a large amount of 
information will be publicly available regarding the Fund and the 
Shares, thereby promoting market transparency.
    Quotation and last sale information for the Shares and U.S. 
exchange-traded instruments (excluding futures contracts) will be 
available via the CTA high-speed line, from the exchanges on which such 
securities trade, or through major market data vendors or subscription 
services. Quotation and last sale information for futures contracts 
will be available from the exchanges on which they trade. Intraday 
price information for all exchange-traded instruments, which include 
all eligible instruments except cash and cash equivalents, will be 
available from the exchanges on which they trade, or through major 
market data vendors or subscription services. Intraday price 
information for cash equivalents is available through major market data 
vendors, subscription services and/or pricing services.
    The website for the Fund will include a form of the prospectus that 
may be downloaded, and additional data relating to NAV and other 
applicable quantitative information, updated on a daily basis. Trading 
in Shares of the Fund will be halted if the circuit breaker parameters 
in NYSE Arca Rule 7.12-E have been reached or because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Shares inadvisable. Trading in the Shares will be 
subject to NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth 
circumstances under which Shares of the Fund will be halted. In 
addition, as noted above, investors will have ready access to the Proxy 
Portfolio and quotation and last sale information for the Shares. The 
identity and quantity of investments in the Proxy Portfolio will be 
publicly available on the Fund's website before the commencement of 
trading in Shares on each Business Day. The Shares will conform to the 
initial and continued listing criteria under Rule 8.601-E.\28\
---------------------------------------------------------------------------

    \28\ See note 3, supra.
---------------------------------------------------------------------------

    The Fund's holdings will conform to the permissible investments as 
set forth in the Application and Exemptive Order, and the holdings will 
be consistent with all requirements in the Application and Exemptive 
Order.\29\ Any foreign common stocks held by the Fund will be traded on 
an exchange that is a member of the ISG or with which the Exchange has 
in place a comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    \29\ See note 13, supra.
---------------------------------------------------------------------------

    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
an additional type of actively-managed exchange-traded product that 
will enhance competition among market participants, to the benefit of 
investors and the marketplace. The Exchange will obtain a 
representation from the Adviser, prior to commencement of trading in 
the Shares of the Fund, that it will advise the Exchange of any failure 
by the Fund to comply with the continued listing requirements, and, 
pursuant to its obligations under section 19(g)(1) of the Act, the 
Exchange will monitor for compliance with the continued listing 
requirements. If the Fund is not in compliance with the applicable 
listing requirements, the Exchange will commence delisting procedures 
under NYSE Arca Rule 5.5-E(m).
    As noted above, the Exchange has in place surveillance procedures 
relating to trading in the Shares and may obtain information via ISG 
from other exchanges that are members of ISG or with which the Exchange 
has entered into a comprehensive surveillance sharing agreement. In 
addition, as noted above, investors will have ready access to 
information regarding quotation and last sale information for the 
Shares.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes the 
proposed rule change would permit listing and trading of additional 
actively-managed ETFs

[[Page 20002]]

that have characteristics different from existing actively-managed and 
index ETFs and would introduce additional competition among various ETF 
products to the benefit of investors.

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

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

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

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to section 19(b)(3)(A)(iii) of the Act \30\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\31\
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \31\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of its 
intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \32\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\33\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Commission believes 
that waiver of the 30-day operative delay is consistent with the 
protection of investors and the public interest because the proposal 
does not raise any new or novel issues. Accordingly, the Commission 
hereby waives the 30-day operative delay and designates the proposal 
operative upon filing.\34\
---------------------------------------------------------------------------

    \32\ 17 CFR 240.19b-4(f)(6).
    \33\ 17 CFR 240.19b-4(f)(6)(iii).
    \34\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEARCA-2023-27 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEARCA-2023-27. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange.
    All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEARCA-2023-27 and should 
be submitted on or before April 25, 2023.
---------------------------------------------------------------------------

    \35\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-06897 Filed 4-3-23; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.