Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To List and Trade Shares of the Veridien Climate Action ETF Under Rule 8.900-E (Managed Portfolio Shares), 26612-26619 [2023-09077]
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Federal Register / Vol. 88, No. 83 / Monday, May 1, 2023 / Notices
action. On April 14, 2023 (ADAMS
Accession No. ML23107A223), the state
official concurred with the draft
environmental assessment and finding
of no significant impact.
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.
III. Finding of No Significant Impact
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.
On the basis of the EA referenced in
Section II of this notice and
incorporated by reference in this
finding, the NRC finds that the proposed
action will not have a significant
environmental impact and that
preparation of EIS is not warranted.
Accordingly, the NRC has determined
that a FONSI (ADAMS Accession No.
ML23026A348) is appropriate.
Dated: April 26, 2023.
For the Nuclear Regulatory Commission.
Shaun M. Anderson,
Chief, Reactor Decommissioning Branch,
Division of Decommissioning, Uranium
Recovery, and Waste Programs, Office of
Nuclear Material Safety and Safeguards.
[FR Doc. 2023–09154 Filed 4–28–23; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97375; File No. SR–
NYSEARCA–2023–33]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To List and Trade Shares
of the Veridien Climate Action ETF
Under Rule 8.900–E (Managed Portfolio
Shares)
April 25, 2023.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on April 18,
2023, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the following under Rule
8.900–E (Managed Portfolio Shares):
Veridien Climate Action ETF. The
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NYSE Arca Rule 8.900–E permits the
listing and trading, or trading pursuant
to unlisted trading privileges, of
Managed Portfolio Shares, which are
securities issued by an actively managed
open-end investment management
company.4 Rule 8.900–E(b)(1) requires
the Exchange to file separate proposals
under Section 19(b) of the Act before
listing and trading any series of
Managed Portfolio Shares on the
Exchange. Therefore, the Exchange is
submitting this proposal in order to list
and trade Managed Portfolio Shares of
the Veridien Climate Action ETF (the
‘‘Fund’’), a series of the Tidal Trust II
(the ‘‘Trust’’), under Rule 8.900–E.
The Commission has previously
approved or noticed for immediate
4 Rule 8.900–E(c)(1) provides that the term
‘‘Managed Portfolio Share’’ means a security that (a)
represents an interest in an investment company
registered under the Investment Company Act of
1940 (‘‘Investment Company’’) organized as an
open-end management investment company that
invests in a portfolio of securities selected by the
Investment Company’s investment adviser
consistent with the Investment Company’s
investment objectives and policies; (b) is issued in
a Creation Unit, or multiples thereof, in return for
a designated portfolio of instruments (and/or an
amount of cash) with a value equal to the next
determined net asset value and delivered to the
Authorized Participant (as defined in the
Investment Company’s Form N–1A filed with the
Commission) through a Confidential Account; (c)
when aggregated into a Redemption Unit, or
multiples thereof, may be redeemed for a
designated portfolio of instruments (and/or an
amount of cash) with a value equal to the next
determined net asset value delivered to the
Confidential Account for the benefit of the
Authorized Participant; and (d) the portfolio
holdings for which are disclosed within at least 60
days following the end of every fiscal quarter.
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effectiveness the listing and trading on
the Exchange of Managed Portfolio
Shares under NYSE Arca Rule 8.900–E.5
Description of the Fund and the Trust
The shares of the Fund (the ‘‘Shares’’)
will be issued by the Trust, a statutory
trust organized under the laws of the
state of Delaware and registered with
the Commission as an open-end
management investment company.6 The
investment adviser to the Fund will be
Toroso Investments, LLC (the
‘‘Adviser’’). Veridien Global Investors
LLC will be the sub-adviser (the ‘‘SubAdviser’’) for the Fund. Foreside Fund
Services, LLC (the ‘‘Distributor’’) will
serve as the distributor for the Fund’s
Shares. U.S. Bank Global Fund Services
will serve as the transfer agent for the
Fund (the ‘‘Transfer Agent’’). U.S. Bank
National Association will be the Fund’s
custodian (the ‘‘Custodian’’). All
statements and representations made in
this filing regarding (a) the description
5 See Securities Exchange Act Release Nos. 89663
(August 25, 2020), 85 FR 53868 (August 31, 2020)
(SR–NYSEArca–2020–48) (Order Approving a
Proposed Rule Change, as Modified by Amendment
No. 1, To List and Trade Shares of Gabelli ETFs
Under Rule 8.900–E, Managed Portfolio Shares);
90528 (November 30, 2020), 85 FR 78389
(December 4, 2020) (SR–NYSEArca–2020–80)
(Order Approving a Proposed Rule Change, as
Modified by Amendment No. 2, To List and Trade
Shares of Alger Mid Cap 40 ETF and Alger 25 ETF
Under Rule 8.900–E); 90683 (December 16, 2020),
85 FR 83665 (December 22, 2020) (SR–NYSEArca–
2020–94) (Order Approving a Proposed Rule
Change, as Modified by Amendments No. 1 and No.
2, To List and Trade Shares of the AdvisorShares
Q Portfolio Blended Allocation ETF and
AdvisorShares Q Dynamic Growth ETF Under
NYSE Arca Rule 8.900–E); 92349 (July 19, 2021), 86
FR 39084 (July 23, 2021) (SR–NYSEArca–2021–54)
(Notice of Filing and Immediate Effectiveness of
Proposed Rule Change to List and Trade Shares of
the Cambiar Large Cap ETF, Cambiar Small Cap
ETF and Cambiar SMID ETF) (the ‘‘Cambiar
Notice’’); 94629 (April 7, 2022), 87 FR 21993 (April
13, 2022) (SR–NYSEArca–2022–17) (Notice of
Filing and Immediate Effectiveness of Proposed
Rule Change to List and Trade Shares of the FMC
Excelsior Focus Equity ETF under Rule 8.900–E
(Managed Portfolio Shares)) (the ‘‘FMC Notice’’).
6 The Trust is registered under the Investment
Company Act of 1940 (the ‘‘1940 Act’’). On October
14, 2022, the Trust filed a registration statement on
Form N–1A under the Securities Act of 1933 (the
‘‘1933 Act’’) and the 1940 Act for the Fund (File
Nos. 333–264478 and 811–23793) (‘‘Registration
Statement’’). The Trust subsequently filed PostEffective Amendment No. 74 to the Registration
Statement. See Post-Effective Amendment No. 74 to
Registration Statement on Form N–1A for the Trust,
dated April 21, 2023 (File Nos. 333–264478 and
811–23793). The Commission issued an order
granting exemptive relief to the Trust (‘‘Exemptive
Order’’) under the 1940 Act on March 21, 2023
(Investment Company Act Release No. 34863). The
Exemptive Order was granted in response to the
Trust’s application for exemptive relief (the
‘‘Exemptive Application’’) (File No. 812–15411).
The description of the operation of the Trust and
the Fund herein is based, in part, on the
Registration Statement. The Exchange will not
commence trading in Shares of the Fund until the
Registration Statement is effective.
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Federal Register / Vol. 88, No. 83 / Monday, May 1, 2023 / Notices
of the portfolio or reference assets, (b)
limitations on portfolio holdings or
reference assets, or (c) the applicability
of Exchange rules shall constitute
continued listing requirements for
listing the Shares on the Exchange, as
provided under Rule 8.900–E(b)(1).
Rule 8.900–E(b)(4) provides that, if
the investment adviser to the
Investment Company issuing Managed
Portfolio Shares is registered as a
broker-dealer or is affiliated with a
broker-dealer, such investment adviser
will erect and maintain a ‘‘fire wall’’
between the investment adviser and
personnel of the broker-dealer or brokerdealer affiliate, as applicable, with
respect to access to information
concerning the composition of and/or
changes to such Investment Company
portfolio and/or the Creation Basket.7
Any person related to the investment
adviser or Investment Company who
makes decisions pertaining to the
Investment Company’s portfolio
composition or has access to
information regarding the Investment
Company’s portfolio composition or
changes thereto or the Creation Basket
must be subject to procedures designed
to prevent the use and dissemination of
material non-public information
regarding the applicable Investment
Company portfolio or changes thereto or
the Creation Basket.
Rule 8.900–E(b)(4) is similar to
Commentary .03(a)(i) and (iii) to Rule
5.2–E(j)(3); however, Commentary .03(a)
in connection with the establishment of
a ‘‘fire wall’’ between the investment
adviser and the broker-dealer reflects
the applicable open-end fund’s
portfolio, not an underlying benchmark
index, as is the case with index-based
funds.8 Rule 8.900–E(b)(4) is also
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7 Rule
8.900–E(c)(5) provides that the term
‘‘Creation Basket’’ means, on any given business
day, the names and quantities of the specified
instruments (and/or an amount of cash) that are
required for an AP Representative to deposit inkind on behalf of an Authorized Participant in
exchange for a Creation Unit and the names and
quantities of the specified instruments (and/or an
amount of cash) that will be transferred in-kind to
an AP Representative on behalf of an Authorized
Participant in exchange for a Redemption Unit,
which will be identical and will be transmitted to
each AP Representative before the commencement
of trading.
8 An investment adviser to an open-end fund is
required to be registered under the Investment
Advisers Act of 1940 (the ‘‘Advisers Act’’). As a
result, the Adviser, Sub-Adviser, and their 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
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similar to Commentary .06 to Rule
8.600–E related to Managed Fund
Shares, except that Rule 8.900–E(b)(4)
relates to establishment and
maintenance of a ‘‘fire wall’’ between
the investment adviser and personnel of
the broker-dealer or broker-dealer
affiliate, as applicable, with respect to
an Investment Company’s portfolio and
Creation Basket, and not just to the
underlying portfolio, as is the case with
Managed Fund Shares. The Adviser is
not registered as a broker-dealer but is
affiliated with a broker-dealer. The
Adviser has implemented and will
maintain a ‘‘fire wall’’ with respect to
such broker-dealer affiliate regarding
access to information concerning the
composition of and/or changes to the
Fund’s portfolio and/or Creation Basket.
The Sub-Adviser is not registered as a
broker-dealer or affiliated with a brokerdealer.
In the event (a) the Adviser or SubAdviser becomes registered as a brokerdealer or becomes newly affiliated with
a broker-dealer, or (b) any new adviser
or sub-adviser is a registered brokerdealer, or becomes affiliated with a
broker-dealer, it will implement and
maintain a fire wall with respect to
personnel of the broker-dealer or brokerdealer affiliate regarding access to
information concerning the composition
and/or changes to the portfolio and/or
Creation Basket. Any person related to
the Adviser, Sub-Adviser, or the Trust
who makes decisions pertaining to the
Fund’s portfolio composition or that has
access to information regarding the
Fund’s portfolio composition or that has
access to information regarding the
Fund’s portfolio or changes thereto or
the Creation Basket will be subject to
procedures designed to prevent the use
and dissemination of material nonpublic information regarding such
portfolio or changes thereto and the
Creation Basket.
Further, Rule 8.900–E(b)(5) requires
that any person or entity, including an
AP Representative (as defined below),
custodian, Reporting Authority,
Act. In addition, Rule 206(4)–7 under the Advisers
Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such
investment adviser has (i) adopted and
implemented written policies and procedures
reasonably designed to prevent violations, by the
investment adviser and its supervised persons, of
the Advisers Act and the Commission rules adopted
thereunder; (ii) implemented, at a minimum, an
annual review regarding the adequacy of the
policies and procedures established pursuant to
subparagraph (i) above and the effectiveness of their
implementation; and (iii) designated an individual
(who is a supervised person) responsible for
administering the policies and procedures adopted
under subparagraph (i) above. The Fund will also
be required to comply with Exchange rules relating
to disclosure, including Rule 5.3–E(i).
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26613
distributor, or administrator, who has
access to non-public information
regarding the Investment Company’s
portfolio composition or changes thereto
or the Creation Basket, must be subject
to procedures reasonably designed to
prevent the use and dissemination of
material non-public information
regarding the applicable Investment
Company portfolio or changes thereto or
the Creation Basket. Moreover, if any
such person or entity is registered as a
broker-dealer or affiliated with a brokerdealer, such person or entity will erect
and maintain a ‘‘fire wall’’ between the
person or entity and the broker-dealer
with respect to access to information
concerning the composition and/or
changes to such Investment Company
portfolio or Creation Basket.
Description of the Fund 9
The Fund’s holdings will conform to
the permissible investments as set forth
in the Exemptive Application and
Exemptive Order, and the holdings will
be consistent with all requirements in
the Exemptive Application and
Exemptive Order.10
The Fund’s primary objective is to
seek long-term growth of capital by
investing in public companies with
technologies and business models that
contribute to climate change mitigation.
Under normal circumstances, the Fund
will invest at least 80% of its net assets,
plus borrowings for investment
purposes, in equity securities of
companies that the Adviser and/or SubAdviser believes are making a
substantial contribution to mitigating
climate change. The Fund’s portfolio
will generally hold the securities of
between 35 and 50 companies.
9 The Exchange represents that, for initial and
continued listing, the Fund will be in compliance
with Rule 10A–3 under the Act. See 17 CFR
240.10A–3.
10 Pursuant to the Exemptive Order, the only
permissible investments for the Fund are the
following that trade on a U.S. exchange
contemporaneously with Shares of the Fund:
exchange-traded funds (‘‘ETFs’’), exchange-traded
notes, exchange-listed common stocks, exchangetraded preferred stocks, exchange-traded American
Depositary Receipts, exchange-traded real estate
investment trusts, exchange-traded commodity
pools, exchange-traded metal trusts, exchangetraded currency trusts, and exchange-traded futures
for which the reference asset is one in which the
Fund may invest directly, in the case of an index
future traded on a U.S. exchange, is based on an
index, the components of which are a type of asset
in which the Fund could invest directly, as well as
cash and cash equivalents (which are short-term
U.S. Treasury securities, government money market
funds, and repurchase agreements). All of the
equity instruments or futures held by the Fund will
be traded on an exchange that is a member of the
Intermarket Surveillance group (‘‘ISG’’) or affiliated
with a member of ISG or with which the Exchange
has in place a comprehensive surveillance sharing
agreement.
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Federal Register / Vol. 88, No. 83 / Monday, May 1, 2023 / Notices
Investment Restrictions
The Fund’s holdings will be
consistent with all requirements
described in the Exemptive Application
and Exemptive Order.11
The Fund’s investments, including
derivatives, will be consistent with its
investment objective and will not be
used to enhance leverage (although
certain derivatives and other
investments may result in leverage).
That is, the Fund’s investments will not
be used to seek performance that is the
multiple or inverse multiple (e.g., 2X or
–3X) of the Fund’s primary broad-based
securities benchmark index (as defined
in Form N–1A).12
Creations and Redemptions of Shares
Creations and redemptions of Shares
will take place as described in Rule
8.900–E. Specifically, in connection
with the creation and redemption of
Creation Units 13 the delivery or receipt
of any portfolio securities in-kind will
be required to be effected through a
separate confidential brokerage account
(a ‘‘Confidential Account’’).14 An
Authorized Participant (‘‘AP’’), as
defined in the applicable Form N–1A
filed with the Commission, will sign an
agreement with an AP Representative 15
11 See
id.
Fund’s broad-based securities benchmark
index will be identified in a future amendment to
the Registration Statement following the Fund’s
first full calendar year of performance.
13 Rule 8.900–E(c)(6) provides that the term
‘‘Creation Unit’’ means a specified minimum
number of Managed Portfolio Shares issued by an
Investment Company at the request of an
Authorized Participant in return for a designated
portfolio of instruments and/or cash. Rule 8.900–
E(c)(7) provides that the term ‘‘Redemption Unit’’
means a specified minimum number of Managed
Portfolio Shares that may be redeemed to an
Investment Company at the request of an
Authorized Participant in return for a portfolio of
instruments and/or cash. For purposes of this filing,
the terms ‘‘Creation Unit’’ means either a Creation
Unit as defined in Rules 8.900–E(c)(6) or a
Redemption Unit as defined in Rule 8.900–E(c)(7).
14 Rule 8.900–E(c)(4) provides that the term
‘‘Confidential Account’’ means an account owned
by an Authorized Participant and held with an AP
Representative on behalf of the Authorized
Participant. The account will be established and
governed by contractual agreement between the AP
Representative and the Authorized Participant
solely for the purposes of creation and redemption,
while keeping confidential the Creation Basket
constituents of each series of Managed Portfolio
Shares, including from the Authorized Participant.
The books and records of the Confidential Account
will be maintained by the AP Representative on
behalf of the Authorized Participant.
15 Rule 8.900–E(c)(3) provides that the term ‘‘AP
Representative’’ means an unaffiliated brokerdealer, with which an Authorized Participant has
signed an agreement to establish a Confidential
Account for the benefit of such Authorized
Participant, that will deliver or receive, on behalf
of the Authorized Participant, all consideration to
or from the Investment Company in a creation or
redemption. An AP Representative will not be
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12 The
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establishing the Confidential Account
for the benefit of the AP. AP
Representatives will be broker-dealers.
An AP must be a participant in the
Continuous Net Settlement System of
the National Securities Clearing
Corporation (‘‘NSCC’’) or a participant
in the Depository Trust Company, and
must have executed an authorized
participant agreement (‘‘Participant
Agreement’’) with the Distributor with
respect to the creation and redemption
of Creation Units and formed a
Confidential Account for its benefit in
accordance with the terms of the
Participant Agreement. For purposes of
creations or redemptions, all
transactions will be effected through the
respective AP’s Confidential Account,
for the benefit of the AP, without
disclosing the identity of such securities
to the AP.
Each business day, the Fund’s
Custodian will transmit the underlying
securities of the Fund’s Creation Basket
(as described below) to each AP
Representative. This information will
permit an AP that has established a
Confidential Account with an AP
Representative to transact in the
underlying securities of the Creation
Basket through their AP
Representatives, enabling them to
engage in in-kind creation or
redemption activity without knowing
the identity or weighting of those
securities. Fund Shares will be issued
and redeemed in Creation Units of
25,000 Shares. The size of a Creation
Unit is subject to change. The Fund will
offer and redeem Creation Units on a
continuous basis at the net asset value
(‘‘NAV’’) per Share next determined
after receipt of an order in proper form.
The Fund’s NAV will be determined as
of the scheduled closing time of the
regular trading session on the Exchange
(ordinarily, 4:00 p.m. Eastern Time
(‘‘E.T.’’)) on each day that it is open for
business.
In order to keep costs low and permit
the Fund to be as fully invested as
possible, Shares will be purchased and
redeemed in Creation Units and
generally on an in-kind basis. The Fund
will issue Creation Units in exchange
for a ‘‘Fund Deposit,’’ which is either (i)
the in-kind deposit of a designated
portfolio of securities (the ‘‘Deposit
Securities’’) and the amount of the
‘‘Cash Component’’ (as defined below)
or (ii) the cash value of the Deposit
Securities. The Fund may permit or
require the substitution of a ‘‘cash in
lieu’’ amount (the ‘‘Deposit Cash’’) to be
added to the Cash Component to replace
permitted to disclose the Creation Basket to any
person, including the Authorized Participants.
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any Deposit Security. The Cash
Component is an amount equal to the
difference between the NAV of the
Shares (per Creation Unit) and the value
of the Deposit Securities or Deposit
Cash, as applicable. The Cash
Component serves the function of
compensating for any differences
between the NAV per Creation Unit and
the value of the Deposit Securities or
Deposit Cash, as applicable. The Fund
will redeem Creation Units either inkind or in cash, or combination thereof,
as determined by the Trust. Redemption
proceeds may consist of a designated
portfolio of securities (the ‘‘Fund
Securities’’) plus cash in an amount
equal to the difference between the NAV
of Shares being redeemed, as next
determined after a receipt of a
redemption request in proper form, or
the cash value of the Fund Securities
(the ‘‘Cash Redemption Amount’’). In
addition, at the Trust’s discretion, an AP
may receive the corresponding cash
value of the securities in lieu of the inkind securities value representing one
or more Fund Securities.
On each business day, prior to the
opening of business on the Exchange
(ordinarily, 9:30 a.m. E.T.), the
Custodian will transmit to each AP
Representative the list of names and
quantities of each Deposit Security and
the amount of the Cash Component (if
any) to be included in the current Fund
Deposit (based on information as of the
ends of the previous business day).
Such Fund Deposit is applicable to
purchases of Creation Units until such
time as the next-announced Fund
Deposit is made available. On each
business day, prior to the opening of
business on the Exchange, the
Custodian will also transmit to each AP
Representative the list of the names and
quantities of the Fund Securities that
will be applicable to redemption
requests received in proper form on that
day. On any given business day, the
names and quantities of the instruments
that constitute the Deposit Securities
and the names and quantities of the
instruments that constitute the Fund
Securities will correspond pro rata to
the positions in the Fund’s portfolio
and, thus, will be identical. These
instruments may be referred to, in the
case of either a purchase or a
redemption, as the ‘‘Creation Basket.’’
Placement of Purchase Orders
The Fund will issue Shares through
the Transfer Agent on a continuous
basis at NAV. The Exchange represents
that the issuance of Shares will operate
in a manner substantially similar to that
of other ETFs, including transparent
ETFs. The Fund will issue Shares only
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at the NAV per Share next determined
after an order in proper form is received.
The Transfer Agent will furnish
acknowledgements to those placing
such orders that the orders have been
accepted, but the Transfer Agent may
reject any order which is not submitted
in proper form, as described in the
Fund’s prospectus or Statement of
Additional Information (‘‘SAI’’). The
NAV of the Fund is expected to be
determined once each business day as of
the close of the regular trading session
on the Exchange (ordinarily, 4:00 p.m.
E.T.). An AP generally must submit an
irrevocable purchase order no later than
4:00 p.m. E.T. (the ‘‘Cut-Off Time’’) in
order to receive that business day’s
NAV. The business day the order is
deemed received by the Transfer Agent
is referred to as the ‘‘Order Placement
Date.’’ An order to create Creation Units
is deemed received on a business day if
(i) such order is received by the Cut-Off
Time on such day and (ii) all other
procedures set forth in the Participant
Agreement are properly followed. In
purchasing the necessary securities, the
AP Representative will use methods,
such as breaking the transaction into
multiple transactions and transacting in
multiple marketplaces, to avoid
revealing the composition of the
Creation Basket.
Purchases of Shares will be settled inkind and/or in cash for an amount equal
to the applicable NAV per Share
purchased plus applicable transaction
fees.16
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Authorized Participant Redemption
The Shares may be redeemed to the
Fund in Creation Unit size or multiples
thereof as described below. Redemption
orders of Creation Units must be placed
by or through an AP. Creation Units of
the Fund will be redeemable at their
NAV per Share next determined after
receipt of a redemption request by the
Fund through the Transfer Agent. A
fixed redemption transaction fee may be
imposed to offset costs associated with
redemption orders.
Orders to redeem Creation Units must
be submitted in proper form to the
Transfer Agent prior to the Order CutOff Time. A redemption request is
deemed received on a business day if (i)
such order is received by the Transfer
Agent by the Cut-off Time on such day
and (ii) all other procedures set forth in
the Participant Agreement are properly
followed. As with the purchase of
securities, the AP Representative will
16 To the extent that the Fund allows creations or
redemptions to be conducted in cash, such
transactions will be effected in the same manner for
all APs transacting in cash.
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use methods, such as breaking the
transaction into multiple transactions
and transacting in multiple
marketplaces, to avoid revealing the
composition of the Creation Basket.
Redemptions will occur primarily inkind, although redemption payments
may also be made partly or wholly in
cash. In the case of full or partial cash
redemptions, the AP will receive the
cash equivalent of the Fund Securities
it would otherwise receive through an
in-kind redemption, plus the same Cash
Redemption Amount to be paid to an inkind redeemer. The Participant
Agreement signed by each AP will
require establishment of a Confidential
Account to receive distributions of
securities in-kind upon redemption.
Each AP will be required to open a
Confidential Account with an AP
Representative in order to facilitate
orderly processing of redemptions.
Net Asset Value
The NAV will be calculated for the
Shares of the Fund on each business
day. The Fund’s NAV is determined as
of the scheduled close of regular trading
on the Exchange, normally 4:00 p.m.
E.T., each day the Exchange is open for
business. The NAV of the Fund’s Shares
is determined by dividing the total
value of the Fund’s assets, less any
liabilities, by the total number of Shares
outstanding of the Fund at the time the
determination is made.
Generally, the Fund’s portfolio
securities are valued each day at the last
quoted sales price on each security’s
primary exchange. Securities traded or
dealt in upon one or more securities
exchanges for which market quotations
are readily available and not subject to
restrictions against resale shall be
valued at the last quoted sales price on
the primary exchange or, in the absence
of a sale on the primary exchange, at the
mean between the current bid and ask
prices on such exchange. Securities
primarily traded in the NASDAQ
National Market System for which
market quotations are readily available
shall be valued using the NASDAQ
Official Closing Price. If market
quotations are not readily available,
securities will be valued at their fair
market value as determined in good
faith by the Fund’s fair value committee
in accordance with procedures
approved by the Board. Securities that
are not traded or dealt in any securities
exchange (whether domestic or foreign)
and for which over-the-counter market
quotations are readily available
generally shall be valued at the last sale
price or, in the absence of a sale, at the
mean between the current bid and ask
price on such over-the- counter market.
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26615
More information about the valuation
of the Fund’s holdings can be found in
the SAI.
Information regarding the Fund’s
NAV and how often Shares of the Fund
traded at a price above (i.e., at a
premium) or below (i.e., at a discount)
the Fund’s NAV will be available on the
Fund’s website
(www.veridienglobalinvestors.com).
Availability of Information
The Fund’s website,
www.veridienglobalinvestors.com, will
include the prospectus for the Fund that
may be downloaded. The Fund’s
website will include additional
quantitative information updated on a
daily basis, including the prior business
day’s NAV, market closing price or midpoint of the bid/ask spread at the time
of calculation of such NAV (the ‘‘Bid/
Ask Price’’),17 and a calculation of the
premium and discount of the market
closing price or Bid/Ask Price against
the NAV. The website and information
will be publicly available at no charge.
Form N–PORT requires reporting of a
Fund’s complete portfolio holdings on a
position-by-position basis on a quarterly
basis within 60 days after fiscal quarter
end. Investors can obtain a Fund’s SAI,
its shareholder reports, its Form N–CSR,
filed twice a year, and its Form N–CEN,
filed annually. The Fund’s SAI and
shareholder reports are available free
upon request from the Fund, and those
documents and the Form N–PORT,
Form N–CSR, and Form N–CEN may be
viewed onscreen or downloaded from
the Commission’s website at
www.sec.gov.
Information regarding market price
and trading volume of the Shares will be
continually available on a real-time
basis throughout the day on brokers’
computer screens and other electronic
services. Information regarding the
previous day’s closing price and trading
volume information for the Shares will
be published daily in the financial
section of newspapers. Quotation and
last sale information for the Shares will
be available via the Consolidated Tape
Association (‘‘CTA’’) high-speed line. In
addition, the Verified Intraday
Indicative Value (‘‘VIIV’’), as defined in
Rule 8.900–E(c)(2),18 will be widely
17 The Bid/Ask Price of the Fund’s Shares is
determined using the mid-point between the
current national best bid and offer at the time of
calculation of the Fund’s NAV. The records relating
to Bid/Ask Prices will be retained by the Fund or
its service providers.
18 Rule 8.900–E(c)(2) provides that the term
‘‘Verified Intraday Indicative Value’’ is the
indicative value of a Managed Portfolio Share based
on all of the holdings of a series of Managed
Portfolio Shares as of the close of business on the
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disseminated by the Reporting
Authority 19 and/or one or more major
market data vendors in one second
intervals during the Exchange’s Core
Trading Session and will be available to
all market participants at the same time.
Dissemination of the VIIV
With respect to trading of the Shares,
the ability of market participants to buy
and sell Shares at prices near the VIIV
is dependent upon their assessment that
the VIIV is a reliable, indicative realtime value for the Fund’s underlying
holdings. Market participants are
expected to accept the VIIV as a reliable,
indicative real-time value because (1)
the VIIV will be calculated and
disseminated based on the Fund’s actual
portfolio holdings, (2) the securities in
which the Fund plans to invest are
generally highly liquid and actively
traded and trade at the same time as the
Fund and therefore generally have
accurate real time pricing available, and
(3) market participants will have a daily
opportunity to evaluate whether the
VIIV at or near the close of trading is
indeed predictive of the actual NAV.
The VIIV will be widely disseminated
to all market participants at the same
time by the Reporting Authority and/or
by one or more major market data
vendors in one second intervals during
the Exchange’s Core Trading Session.
The VIIV is based on the current market
value of the securities in the Fund’s
portfolio that day. The methodology for
calculating the Fund’s VIIV is available
on the Fund’s website. The VIIV is
intended to provide investors and other
market participants with a highly
correlated per Share value of the Fund’s
portfolio that can be compared to the
current market price. Therefore, under
normal circumstances the VIIV would
be effectively a near real time
approximation of the Fund’s NAV,
which is computed only once a day and
is available free of charge from one or
more market data vendors.
Trading Halts
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares of
the Fund.20 Trading in Shares of the
Fund will be halted if the circuit breaker
parameters in Rule 7.12–E have been
reached. Trading also may be halted
because of market conditions or for
reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable. Trading in the Shares will
be subject to Rule 8.900–E(d)(2)(C),
which sets forth circumstances under
which trading in the Shares of the Fund
will be halted.
Specifically, Rule 8.900–E(d)(2)(C)(i)
provides that the Exchange may
consider all relevant factors in
exercising its discretion to halt trading
in a series of Managed Portfolio Shares.
Trading may be halted because of
market conditions or for reasons that, in
the view of the Exchange, make trading
in the series of Managed Portfolio
Shares inadvisable. These may include:
(a) the extent to which trading is not
occurring in the securities and/or the
financial instruments composing the
portfolio; or (b) whether other unusual
conditions or circumstances detrimental
to the maintenance of a fair and orderly
market are present.21
Rule 8.900–E(d)(2)(C)(ii) provides
that, if the Exchange becomes aware
that: (i) the VIIV of a series of Managed
Portfolio Shares is not being calculated
or disseminated in one second intervals,
as required; (ii) the NAV with respect to
a series of Managed Portfolio Shares is
not disseminated to all market
participants at the same time; (iii) the
holdings of a series of Managed
Portfolio Shares are not made available
on at least a quarterly basis as required
under the 1940 Act; or (iv) such
holdings are not made available to all
market participants at the same time
lotter on DSK11XQN23PROD with NOTICES1
20 See
prior business day and, for corporate actions, based
on the applicable holdings as of the opening of
business on the current business day, priced and
disseminated in one second intervals during the
Exchange’s Core Trading Session by the Reporting
Authority.
19 Rule 8.900–E(c)(8) provides that the term
‘‘Reporting Authority’’ in respect of a particular
series of Managed Portfolio Shares means the
Exchange, an institution, or a reporting service
designated by the Exchange or by the exchange that
lists a particular series of Managed Portfolio Shares
(if the Exchange is trading such series pursuant to
unlisted trading privileges), as the official source for
calculating and reporting information relating to
such series, including, but not limited to, the NAV,
the VIIV, or other information relating to the
issuance, redemption, or trading of Managed
Portfolio Shares. A series of Managed Portfolio
Shares may have more than one Reporting
Authority, each having different functions.
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Rule 7.12–E.
Exemptive Application provides that the
Investment Company or their agent will request that
the Exchange halt trading in the applicable series
of Managed Portfolio Shares where: (i) the intraday
indicative values calculated by the calculation
engines differ by more than 25 basis points for 60
seconds in connection with pricing of the VIIV; or
(ii) holdings representing 10% or more of a series
of Managed Portfolio Shares’ portfolio have become
subject to a trading halt or otherwise do not have
readily available market quotations. Any such
requests will be one of many factors considered in
order to determine whether to halt trading in a
series of Managed Portfolio Shares and the
Exchange retains sole discretion in determining
whether trading should be halted. As provided in
the Exemptive Application, each series of Managed
Portfolio Shares would employ a pricing
verification agent to continuously compare two
intraday indicative values during regular trading
hours in order to ensure the accuracy of the VIIV.
21 The
PO 00000
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Fmt 4703
Sfmt 4703
(except as otherwise permitted under
the currently applicable exemptive
order or no-action relief granted by the
Commission or Commission staff to the
Investment Company with respect to the
series of Managed Portfolio Shares), it
will halt trading in such series until
such time as the Verified Intraday
Indicative Value, the NAV, or the
holdings are available, as required.
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Shares subject to the Exchange’s
existing rules governing the trading of
equity securities. Shares will trade on
the Exchange in all trading sessions in
accordance with Rule 7.34–E(a). As
provided in Rule 7.6–E, the minimum
price variation (‘‘MPV’’) for quoting and
entry of orders in equity securities
traded on the NYSE Arca Marketplace is
$0.01, with the exception of securities
that are priced less than $1.00, for
which the MPV for order entry is
$0.0001. A minimum of 100,000 Shares
of the Fund will be outstanding at the
commencement of trading on the
Exchange.
The Shares will conform to the initial
and continued listing criteria under
Rule 8.900–E, as well as all terms in the
Exemptive Order. The Exchange will
obtain a representation from the issuer
of the Shares of the Fund that the NAV
per Share of the Fund will be calculated
daily and will be made available to all
market participants at the same time.
Surveillance
The Exchange believes that its
surveillance procedures are adequate to
properly monitor the trading of Shares
on the Exchange during all trading
sessions and to deter and detect
violations of Exchange rules and the
applicable federal securities laws.
Trading of Shares through the Exchange
will be subject to the Exchange’s
surveillance procedures for derivative
products. As part of these surveillance
procedures and consistent with Rule
8.900–E(b)(3) and 8.900–E(d)(2)(B), the
Adviser will upon request make
available to the Exchange and/or the
Financial Industry Regulatory Authority
(‘‘FINRA’’), on behalf of the Exchange,
the daily portfolio holdings of the Fund.
The issuer of the Shares of the Fund
will be required to represent to the
Exchange that it will advise the
Exchange of any failure by the Fund to
comply with the continued listing
requirements, and, pursuant to its
obligations under Section 19(g)(1) of the
Exchange Act, the Exchange will surveil
for compliance with the continued
listing requirements. If the Fund is not
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lotter on DSK11XQN23PROD with NOTICES1
in compliance with the applicable
listing requirements, the Exchange will
commence delisting procedures under
Exchange Rule 5.5–E(m).
FINRA, on behalf of the Exchange, or
the regulatory staff of the Exchange, or
both, will communicate as needed
regarding trading in the Shares and
certain exchange-traded instruments
with other markets and other entities
that are members of the ISG, and
FINRA, on behalf of the Exchange, or
the regulatory staff of the Exchange, or
both, may obtain trading information
regarding trading such securities from
such markets and other entities. In
addition, the Exchange may obtain
information regarding trading in the
Shares and certain exchange-traded
instruments from markets and other
entities that are members of ISG or with
which the Exchange has in place a
comprehensive surveillance sharing
agreement.
In addition, the Exchange also has a
general policy prohibiting the
distribution of material, non-public
information by its employees.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,22 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,23 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
The Exchange believes that this
proposed rule change is designed to
prevent fraudulent and manipulative
acts and practices in that the Fund
would meet each of the rules relating to
listing and trading of Managed Portfolio
Shares. To the extent that the Fund is
not in compliance with such rules, the
Exchange would either prevent the
Fund from listing and trading on the
Exchange or commence delisting
procedures under Rule 8.900–E(d)(2)(B).
Specifically, the Exchange would
consider the suspension of trading, and
commence delisting proceedings under
Rule 8.900–E(d)(2)(B), of the Fund
under any of the following
circumstances: (a) if, following the
initial twelve-month period after
commencement of trading on the
Exchange, there are fewer than 50
beneficial holders of the Fund; (b) if the
Exchange has halted trading in the Fund
22 15
23 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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Jkt 259001
because the VIIV is interrupted pursuant
to Rule 8.900–E(d)(2)(C)(ii) and such
interruption persists past the trading
day in which it occurred or is no longer
available; (c) if the Exchange has halted
trading in the Fund because the NAV
with respect to such Fund is not
disseminated to all market participants
at the same time, the holdings of such
Fund are not made available on at least
a quarterly basis as required under the
1940 Act, or such holdings are not made
available to all market participants at
the same time pursuant to Rule 8.900–
E(d)(2)(C)(ii) and such issue persists
past the trading day in which it
occurred; (d) if the Exchange has halted
trading in Shares of the Fund pursuant
to Rule 8.900–E(d)(2)(C)(i) and such
issue persists past the trading day in
which it occurred; (e) if the Fund has
failed to file any filings required by the
Commission or if the Exchange is aware
that the Fund is not in compliance with
the conditions of any currently
applicable exemptive order or no-action
relief granted by the Commission or
Commission staff with respect to the
Fund; (f) if any of the continued listing
requirements set forth in Rule 8.900–E
are not continuously maintained; (g) if
any of the statements of representations
regarding (a) the description of the
portfolio, (b) limitations on portfolio
holdings, or (c) the applicability of
Exchange listing rules as specified
herein to permit the listing and trading
of the Fund, are not continuously
maintained; or (h) if such other event
shall occur or condition exists which, in
the opinion of the Exchange, makes
further dealings on the Exchange
inadvisable.
As discussed above, the Adviser is not
registered as a broker-dealer but is
affiliated with a broker-dealer and has
implemented and will maintain a ‘‘fire
wall’’ with respect to such affiliate
broker-dealer regarding access to
information concerning the composition
and/or changes to the Fund’s portfolio
and Creation Basket. The Sub-Adviser is
neither registered as a broker-dealer nor
affiliated with a broker-dealer. In the
event that (a) the Adviser or SubAdviser becomes registered as a brokerdealer or becomes newly affiliated with
a broker-dealer, or (b) any new adviser
or sub-adviser is a registered brokerdealer or becomes affiliated with a
broker-dealer, the Adviser or SubAdviser, as applicable, will implement
and maintain a fire wall with respect to
personnel of the broker-dealer or brokerdealer affiliate regarding access to
information concerning the composition
and/or changes to the portfolio and/or
Creation Basket. Any person related to
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
26617
the Adviser, Sub-Adviser, or the Trust
who makes decisions pertaining to the
Fund’s portfolio composition or that has
access to information regarding the
Fund’s portfolio or changes thereto or
the Creation Basket will be subject to
procedures designed to prevent the use
and dissemination of material nonpublic information regarding such
portfolio or changes thereto and the
Creation Basket.
In addition, Rule 8.900–E(b)(5)
requires that any person or entity,
including an AP Representative,
custodian, Reporting Authority,
distributor, or administrator, who has
access to non-public information
regarding the Investment Company’s
portfolio composition or changes thereto
or the Creation Basket, must be subject
to procedures designed to prevent the
use and dissemination of material nonpublic information regarding the
applicable Investment Company
portfolio or changes thereto or the
Creation Basket. Moreover, if any such
person or entity is registered as a brokerdealer or affiliated with a broker-dealer,
such person or entity will erect and
maintain a ‘‘fire wall’’ between the
person or entity and the broker-dealer
with respect to access to information
concerning the composition and/or
changes to such Investment Company
portfolio or Creation Basket. Any person
or entity who has access to information
regarding the Fund’s portfolio
composition or changes thereto or the
Creation Basket will be subject to
procedures designed to prevent the use
and dissemination of material
nonpublic information regarding the
portfolio or changes thereto or the
Creation Basket.
The Exchange further believes that
Rule 8.900–E is designed to prevent
fraudulent and manipulative acts and
practices related to the listing and
trading of Shares of the Fund because it
provides meaningful requirements about
both the data that will be made publicly
available about the Shares, as well as
the information that will only be
available to certain parties and the
controls on such information.
Specifically, the Exchange believes that
the requirements related to information
protection set forth in Rule 8.900–
E(b)(5) will act as a safeguard against
misuse and improper dissemination of
information related to the Fund’s
portfolio composition, the Creation
Basket, or changes thereto. The
requirement that any person or entity
implement procedures to prevent the
use and dissemination of material nonpublic information regarding the
portfolio or Creation Basket will act to
prevent any individual or entity from
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sharing such information externally and
the internal ‘‘fire wall’’ requirements
applicable where an entity is a
registered broker-dealer or affiliated
with a broker-dealer will act to make
sure that no entity will be able to misuse
the data for their own purposes.
Accordingly, the Exchange believes that
this proposal is designed to prevent
fraudulent and manipulative acts and
practices.
The Exchange further believes that the
proposal is designed to prevent
fraudulent and manipulative acts and
practices related to the listing and
trading of Shares of the Fund and to
promote just and equitable principles of
trade and to protect investors and the
public interest because the Exchange
would halt trading under certain
circumstances under which trading in
the Shares of the Fund may be
inadvisable. Specifically, trading in the
Shares will be subject to Rule 8.900–
E(d)(2)(C)(i), which provides that the
Exchange may consider all relevant
factors in exercising its discretion to
halt trading in the Fund. Trading may
be halted because of market conditions
or for reasons that, in the view of the
Exchange, make trading in the series of
Managed Portfolio Shares inadvisable.
These may include: (a) the extent to
which trading is not occurring in the
securities and/or the financial
instruments composing the portfolio; or
(b) whether other unusual conditions or
circumstances detrimental to the
maintenance of a fair and orderly
market are present.24 Additionally,
trading in the Shares will be subject to
Rule 8.900–E(d)(2)(C)(ii), which
provides that the Exchange would halt
trading where the Exchange becomes
aware that: (a) the VIIV of a series of
Managed Portfolio Shares is not being
calculated or disseminated in one
second intervals, as required; (b) the
NAV with respect to a series of Managed
Portfolio Shares is not disseminated to
all market participants at the same time;
(c) the holdings of a series of Managed
Portfolio Shares are not made available
on at least a quarterly basis as required
under the 1940 Act; or (d) such holdings
are not made available to all market
participants at the same time (except as
otherwise permitted under the currently
applicable exemptive order or no-action
relief granted by the Commission or
Commission staff to the Investment
Company with respect to the series of
Managed Portfolio Shares). The
Exchange would halt trading in such
Shares until such time as the VIIV, the
24 See
note 20, supra.
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17:10 Apr 28, 2023
Jkt 259001
NAV, or the holdings are available, as
required.
With respect to the proposed listing
and trading of Shares of the Fund, the
Exchange believes that the proposed
rule change is designed to prevent
fraudulent and manipulative acts and
practices in that the Shares will be
listed and traded on the Exchange
pursuant to the initial and continued
listing criteria in Rule 8.900–E.25 The
Fund’s holdings will conform to the
permissible investments as set forth in
the Exemptive Application and
Exemptive Order.26 As noted above,
FINRA, on behalf of the Exchange, or
the regulatory staff of the Exchange, or
both, will communicate as needed
regarding trading in the Shares and the
underlying exchange-traded instruments
with other markets and other entities
that are members of the ISG, and
FINRA, on behalf of the Exchange, or
the regulatory staff of the Exchange, or
both, may obtain trading information
regarding trading such securities from
such markets and other entities. In
addition, the Exchange may obtain
information regarding trading in the
Shares and the underlying exchangetraded instruments from markets and
other entities that are members of ISG or
with which the Exchange has in place
a comprehensive surveillance sharing
agreement.
With respect to trading of Shares of
the Fund, the ability of market
participants to buy and sell Shares at
prices near the VIIV is dependent upon
their assessment that the VIIV is a
reliable, indicative real-time value for
the Fund’s underlying holdings. Market
participants are expected to accept the
VIIV as a reliable, indicative real-time
value because (1) the VIIV will be
calculated and disseminated based on
the Fund’s actual portfolio holdings, (2)
the securities in which the Fund plans
to invest are generally highly liquid and
actively traded and trade at the same
time as the Fund and therefore generally
have accurate real time pricing
available, and (3) market participants
will have a daily opportunity to
evaluate whether the VIIV at or near the
close of trading is indeed predictive of
the actual NAV.
The proposed rule change is designed
to promote just and equitable principles
of trade and to protect investors and the
public interest in that the Exchange will
obtain a representation that the NAV per
Share of the Fund will be calculated
25 The Exchange represents that, for initial and
continued listing, the Fund will be in compliance
with Rule 10A–3 under the Act. See 17 CFR
240.10A–3.
26 See note 9, supra.
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Sfmt 4703
daily and that the NAV will be made
available to all market participants at
the same time. Investors can also obtain
the Fund’s SAI, its shareholder reports,
its Form N–CSR (filed twice a year), and
its Form N–CEN (filed annually). The
Fund’s SAI and shareholder reports will
be available free upon request from the
Fund, and those documents and the
Form N–PORT, Form N–CSR, and Form
N–CEN may be viewed on-screen or
downloaded from the Commission’s
website at www.sec.gov. In addition, a
large amount of information will be
publicly available regarding the Fund
and the Shares, thereby promoting
market transparency. Quotation and last
sale information for the Shares will be
available via the CTA high-speed line.
Information regarding the VIIV will be
widely disseminated in one second
intervals throughout the Exchange’s
Core Trading Session by the Reporting
Authority and/or one or more major
market data vendors. The website for
the Fund will include a prospectus for
the Fund that may be downloaded, and
additional data relating to NAV and
other applicable quantitative
information, updated on a daily basis.
Moreover, prior to the commencement
of trading, the Exchange will inform its
members in an Information Bulletin of
the special characteristics and risks
associated with trading the Shares.
In addition, as noted above, investors
will have ready access to the VIIV, and
quotation and last sale information for
the Shares. The Shares will conform to
the initial and continued listing criteria
under Rule 8.900–E. The Fund’s
investments, including derivatives, will
be consistent with its investment
objective and will not be used to
enhance leverage (although certain
derivatives and other investments may
result in leverage). That is, the Fund’s
investments will not be used to seek
performance that is the multiple or
inverse multiple (e.g., 2X or –3X) of the
Fund’s primary broad-based securities
benchmark index (as defined in Form
N–1A).
The Exchange also believes that the
proposed rule change is designed to
perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest in that
it will facilitate the listing and trading
of actively-managed exchange-traded
products that will enhance competition
among market participants, to the
benefit of investors and the marketplace.
As noted above, the Exchange has in
place surveillance procedures relating to
trading in the Shares and may obtain
information via ISG from other
exchanges that are members of ISG or
with which the Exchange has entered
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into a comprehensive surveillance
sharing agreement. In addition, as noted
above, investors will have ready access
to information regarding the VIIV and
quotation and last sale information for
the Shares.
For the above reasons, the Exchange
believes that the proposed rule change
is consistent with the requirements of
Section 6(b)(5) of the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes the proposed rule
change would permit the listing and
trading of an additional activelymanaged exchange-traded product,
thereby promoting competition among
exchange-traded products to the benefit
of investors and the marketplace.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 27 and Rule 19b–
4(f)(6) thereunder.28
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act normally does not become operative
for 30 days after the date of its filing.
However, Rule 19b–4(f)(6)(iii) 29 permits
the Commission to designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange requested that
the Commission waive the 30-day
operative delay so that the proposal may
become operative immediately upon
lotter on DSK11XQN23PROD with NOTICES1
27 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
29 17 CFR 240.19b–4(f)(6)(iii).
28 17
VerDate Sep<11>2014
17:10 Apr 28, 2023
Jkt 259001
filing. The Commission notes it has
approved, and noticed for immediate
effectiveness, proposed rule changes to
permit listing and trading on the
Exchange of Managed Portfolio Shares
similar to the Funds.30 The proposed
listing rule for the Fund raises no novel
legal or regulatory issues. Therefore, the
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest. Accordingly, the
Commission hereby waives the 30-day
operative delay and designates the
proposed rule change operative upon
filing.31
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEARCA–2023–33 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–2023–33. 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
30 See
supra note 5.
purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
31 For
PO 00000
Frm 00104
Fmt 4703
Sfmt 4703
26619
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. Do not include
personal identifiable information in
submissions; you should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–NYSEARCA–2023–
33 and should be submitted on or before
May 22, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–09077 Filed 4–28–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97373; File No. SR–
NYSEARCA–2023–32]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Modify the NYSE
ARCA Options Fee Schedule
April 25, 2023.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on April 18,
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.
32 17
CFR 200.30–3(a)(12), (59).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
E:\FR\FM\01MYN1.SGM
01MYN1
]]>Agencies
[Federal Register Volume 88, Number 83 (Monday, May 1, 2023)]
[Notices]
[Pages 26612-26619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-09077]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97375; File No. SR-NYSEARCA-2023-33]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To List and Trade
Shares of the Veridien Climate Action ETF Under Rule 8.900-E (Managed
Portfolio Shares)
April 25, 2023.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on April 18, 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade shares of the following
under Rule 8.900-E (Managed Portfolio Shares): Veridien Climate Action
ETF. The proposed rule change is available on the Exchange's website at
www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
NYSE Arca Rule 8.900-E permits the listing and trading, or trading
pursuant to unlisted trading privileges, of Managed Portfolio Shares,
which are securities issued by an actively managed open-end investment
management company.\4\ Rule 8.900-E(b)(1) requires the Exchange to file
separate proposals under Section 19(b) of the Act before listing and
trading any series of Managed Portfolio Shares on the Exchange.
Therefore, the Exchange is submitting this proposal in order to list
and trade Managed Portfolio Shares of the Veridien Climate Action ETF
(the ``Fund''), a series of the Tidal Trust II (the ``Trust''), under
Rule 8.900-E.
---------------------------------------------------------------------------
\4\ Rule 8.900-E(c)(1) provides that the term ``Managed
Portfolio Share'' means a security that (a) represents an interest
in an investment company registered under the Investment Company Act
of 1940 (``Investment Company'') organized as an open-end management
investment company that invests in a portfolio of securities
selected by the Investment Company's investment adviser consistent
with the Investment Company's investment objectives and policies;
(b) is issued in a Creation Unit, or multiples thereof, in return
for a designated portfolio of instruments (and/or an amount of cash)
with a value equal to the next determined net asset value and
delivered to the Authorized Participant (as defined in the
Investment Company's Form N-1A filed with the Commission) through a
Confidential Account; (c) when aggregated into a Redemption Unit, or
multiples thereof, may be redeemed for a designated portfolio of
instruments (and/or an amount of cash) with a value equal to the
next determined net asset value delivered to the Confidential
Account for the benefit of the Authorized Participant; and (d) the
portfolio holdings for which are disclosed within at least 60 days
following the end of every fiscal quarter.
---------------------------------------------------------------------------
The Commission has previously approved or noticed for immediate
effectiveness the listing and trading on the Exchange of Managed
Portfolio Shares under NYSE Arca Rule 8.900-E.\5\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release Nos. 89663 (August 25,
2020), 85 FR 53868 (August 31, 2020) (SR-NYSEArca-2020-48) (Order
Approving a Proposed Rule Change, as Modified by Amendment No. 1, To
List and Trade Shares of Gabelli ETFs Under Rule 8.900-E, Managed
Portfolio Shares); 90528 (November 30, 2020), 85 FR 78389 (December
4, 2020) (SR-NYSEArca-2020-80) (Order Approving a Proposed Rule
Change, as Modified by Amendment No. 2, To List and Trade Shares of
Alger Mid Cap 40 ETF and Alger 25 ETF Under Rule 8.900-E); 90683
(December 16, 2020), 85 FR 83665 (December 22, 2020) (SR-NYSEArca-
2020-94) (Order Approving a Proposed Rule Change, as Modified by
Amendments No. 1 and No. 2, To List and Trade Shares of the
AdvisorShares Q Portfolio Blended Allocation ETF and AdvisorShares Q
Dynamic Growth ETF Under NYSE Arca Rule 8.900-E); 92349 (July 19,
2021), 86 FR 39084 (July 23, 2021) (SR-NYSEArca-2021-54) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to List
and Trade Shares of the Cambiar Large Cap ETF, Cambiar Small Cap ETF
and Cambiar SMID ETF) (the ``Cambiar Notice''); 94629 (April 7,
2022), 87 FR 21993 (April 13, 2022) (SR-NYSEArca-2022-17) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to List
and Trade Shares of the FMC Excelsior Focus Equity ETF under Rule
8.900-E (Managed Portfolio Shares)) (the ``FMC Notice'').
---------------------------------------------------------------------------
Description of the Fund and the Trust
The shares of the Fund (the ``Shares'') will be issued by the
Trust, a statutory trust organized under the laws of the state of
Delaware and registered with the Commission as an open-end management
investment company.\6\ The investment adviser to the Fund will be
Toroso Investments, LLC (the ``Adviser''). Veridien Global Investors
LLC will be the sub-adviser (the ``Sub-Adviser'') for the Fund.
Foreside Fund Services, LLC (the ``Distributor'') will serve as the
distributor for the Fund's Shares. U.S. Bank Global Fund Services will
serve as the transfer agent for the Fund (the ``Transfer Agent''). U.S.
Bank National Association will be the Fund's custodian (the
``Custodian''). All statements and representations made in this filing
regarding (a) the description
[[Page 26613]]
of the portfolio or reference assets, (b) limitations on portfolio
holdings or reference assets, or (c) the applicability of Exchange
rules shall constitute continued listing requirements for listing the
Shares on the Exchange, as provided under Rule 8.900-E(b)(1).
---------------------------------------------------------------------------
\6\ The Trust is registered under the Investment Company Act of
1940 (the ``1940 Act''). On October 14, 2022, the Trust filed a
registration statement on Form N-1A under the Securities Act of 1933
(the ``1933 Act'') and the 1940 Act for the Fund (File Nos. 333-
264478 and 811-23793) (``Registration Statement''). The Trust
subsequently filed Post-Effective Amendment No. 74 to the
Registration Statement. See Post-Effective Amendment No. 74 to
Registration Statement on Form N-1A for the Trust, dated April 21,
2023 (File Nos. 333-264478 and 811-23793). The Commission issued an
order granting exemptive relief to the Trust (``Exemptive Order'')
under the 1940 Act on March 21, 2023 (Investment Company Act Release
No. 34863). The Exemptive Order was granted in response to the
Trust's application for exemptive relief (the ``Exemptive
Application'') (File No. 812-15411). The description of the
operation of the Trust and the Fund herein is based, in part, on the
Registration Statement. The Exchange will not commence trading in
Shares of the Fund until the Registration Statement is effective.
---------------------------------------------------------------------------
Rule 8.900-E(b)(4) provides that, if the investment adviser to the
Investment Company issuing Managed Portfolio Shares is registered as a
broker-dealer or is affiliated with a broker-dealer, such investment
adviser will erect and maintain a ``fire wall'' between the investment
adviser and personnel of the broker-dealer or broker-dealer affiliate,
as applicable, with respect to access to information concerning the
composition of and/or changes to such Investment Company portfolio and/
or the Creation Basket.\7\ Any person related to the investment adviser
or Investment Company who makes decisions pertaining to the Investment
Company's portfolio composition or has access to information regarding
the Investment Company's portfolio composition or changes thereto or
the Creation Basket must be subject to procedures designed to prevent
the use and dissemination of material non-public information regarding
the applicable Investment Company portfolio or changes thereto or the
Creation Basket.
---------------------------------------------------------------------------
\7\ Rule 8.900-E(c)(5) provides that the term ``Creation
Basket'' means, on any given business day, the names and quantities
of the specified instruments (and/or an amount of cash) that are
required for an AP Representative to deposit in-kind on behalf of an
Authorized Participant in exchange for a Creation Unit and the names
and quantities of the specified instruments (and/or an amount of
cash) that will be transferred in-kind to an AP Representative on
behalf of an Authorized Participant in exchange for a Redemption
Unit, which will be identical and will be transmitted to each AP
Representative before the commencement of trading.
---------------------------------------------------------------------------
Rule 8.900-E(b)(4) is similar to Commentary .03(a)(i) and (iii) to
Rule 5.2-E(j)(3); however, Commentary .03(a) in connection with the
establishment of a ``fire wall'' between the investment adviser and the
broker-dealer reflects the applicable open-end fund's portfolio, not an
underlying benchmark index, as is the case with index-based funds.\8\
Rule 8.900-E(b)(4) is also similar to Commentary .06 to Rule 8.600-E
related to Managed Fund Shares, except that Rule 8.900-E(b)(4) relates
to establishment and maintenance of a ``fire wall'' between the
investment adviser and personnel of the broker-dealer or broker-dealer
affiliate, as applicable, with respect to an Investment Company's
portfolio and Creation Basket, and not just to the underlying
portfolio, as is the case with Managed Fund Shares. The Adviser is not
registered as a broker-dealer but is affiliated with a broker-dealer.
The Adviser has implemented and will maintain a ``fire wall'' with
respect to such broker-dealer affiliate regarding access to information
concerning the composition of and/or changes to the Fund's portfolio
and/or Creation Basket. The Sub-Adviser is not registered as a broker-
dealer or affiliated with a broker-dealer.
---------------------------------------------------------------------------
\8\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Adviser, Sub-Adviser, and their related
personnel will be subject to the provisions of Rule 204A-1 under the
Advisers Act relating to codes of ethics. This Rule requires
investment advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as well as
compliance with other applicable securities laws. Accordingly,
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under
the Advisers Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such investment adviser
has (i) adopted and implemented written policies and procedures
reasonably designed to prevent violations, by the investment adviser
and its supervised persons, of the Advisers Act and the Commission
rules adopted thereunder; (ii) implemented, at a minimum, an annual
review regarding the adequacy of the policies and procedures
established pursuant to subparagraph (i) above and the effectiveness
of their implementation; and (iii) designated an individual (who is
a supervised person) responsible for administering the policies and
procedures adopted under subparagraph (i) above. The Fund will also
be required to comply with Exchange rules relating to disclosure,
including Rule 5.3-E(i).
---------------------------------------------------------------------------
In the event (a) the Adviser or Sub-Adviser becomes registered as a
broker-dealer or becomes newly affiliated with a broker-dealer, or (b)
any new adviser or sub-adviser is a registered broker-dealer, or
becomes affiliated with a broker-dealer, it will implement and maintain
a fire wall with respect to personnel of the broker-dealer or broker-
dealer affiliate regarding access to information concerning the
composition and/or changes to the portfolio and/or Creation Basket. Any
person related to the Adviser, Sub-Adviser, or the Trust who makes
decisions pertaining to the Fund's portfolio composition or that has
access to information regarding the Fund's portfolio composition or
that has access to information regarding the Fund's portfolio or
changes thereto or the Creation Basket will be subject to procedures
designed to prevent the use and dissemination of material non-public
information regarding such portfolio or changes thereto and the
Creation Basket.
Further, Rule 8.900-E(b)(5) requires that any person or entity,
including an AP Representative (as defined below), custodian, Reporting
Authority, distributor, or administrator, who has access to non-public
information regarding the Investment Company's portfolio composition or
changes thereto or the Creation Basket, must be subject to procedures
reasonably designed to prevent the use and dissemination of material
non-public information regarding the applicable Investment Company
portfolio or changes thereto or the Creation Basket. Moreover, if any
such person or entity is registered as a broker-dealer or affiliated
with a broker-dealer, such person or entity will erect and maintain a
``fire wall'' between the person or entity and the broker-dealer with
respect to access to information concerning the composition and/or
changes to such Investment Company portfolio or Creation Basket.
Description of the Fund \9\
---------------------------------------------------------------------------
\9\ The Exchange represents that, for initial and continued
listing, the Fund will be in compliance with Rule 10A-3 under the
Act. See 17 CFR 240.10A-3.
---------------------------------------------------------------------------
The Fund's holdings will conform to the permissible investments as
set forth in the Exemptive Application and Exemptive Order, and the
holdings will be consistent with all requirements in the Exemptive
Application and Exemptive Order.\10\
---------------------------------------------------------------------------
\10\ Pursuant to the Exemptive Order, the only permissible
investments for the Fund are the following that trade on a U.S.
exchange contemporaneously with Shares of the Fund: exchange-traded
funds (``ETFs''), exchange-traded notes, exchange-listed common
stocks, exchange-traded preferred stocks, exchange-traded American
Depositary Receipts, exchange-traded real estate investment trusts,
exchange-traded commodity pools, exchange-traded metal trusts,
exchange-traded currency trusts, and exchange-traded futures for
which the reference asset is one in which the Fund may invest
directly, in the case of an index future traded on a U.S. exchange,
is based on an index, the components of which are a type of asset in
which the Fund could invest directly, as well as cash and cash
equivalents (which are short-term U.S. Treasury securities,
government money market funds, and repurchase agreements). All of
the equity instruments or futures held by the Fund will be traded on
an exchange that is a member of the Intermarket Surveillance group
(``ISG'') or affiliated with a member of ISG or with which the
Exchange has in place a comprehensive surveillance sharing
agreement.
---------------------------------------------------------------------------
The Fund's primary objective is to seek long-term growth of capital
by investing in public companies with technologies and business models
that contribute to climate change mitigation. Under normal
circumstances, the Fund will invest at least 80% of its net assets,
plus borrowings for investment purposes, in equity securities of
companies that the Adviser and/or Sub-Adviser believes are making a
substantial contribution to mitigating climate change. The Fund's
portfolio will generally hold the securities of between 35 and 50
companies.
[[Page 26614]]
Investment Restrictions
The Fund's holdings will be consistent with all requirements
described in the Exemptive Application and Exemptive Order.\11\
---------------------------------------------------------------------------
\11\ See id.
---------------------------------------------------------------------------
The Fund's investments, including derivatives, will be consistent
with its investment objective and will not be used to enhance leverage
(although certain derivatives and other investments may result in
leverage). That is, the Fund's investments will not be used to seek
performance that is the multiple or inverse multiple (e.g., 2X or -3X)
of the Fund's primary broad-based securities benchmark index (as
defined in Form N-1A).\12\
---------------------------------------------------------------------------
\12\ The Fund's broad-based securities benchmark index will be
identified in a future amendment to the Registration Statement
following the Fund's first full calendar year of performance.
---------------------------------------------------------------------------
Creations and Redemptions of Shares
Creations and redemptions of Shares will take place as described in
Rule 8.900-E. Specifically, in connection with the creation and
redemption of Creation Units \13\ the delivery or receipt of any
portfolio securities in-kind will be required to be effected through a
separate confidential brokerage account (a ``Confidential
Account'').\14\ An Authorized Participant (``AP''), as defined in the
applicable Form N-1A filed with the Commission, will sign an agreement
with an AP Representative \15\ establishing the Confidential Account
for the benefit of the AP. AP Representatives will be broker-dealers.
An AP must be a participant in the Continuous Net Settlement System of
the National Securities Clearing Corporation (``NSCC'') or a
participant in the Depository Trust Company, and must have executed an
authorized participant agreement (``Participant Agreement'') with the
Distributor with respect to the creation and redemption of Creation
Units and formed a Confidential Account for its benefit in accordance
with the terms of the Participant Agreement. For purposes of creations
or redemptions, all transactions will be effected through the
respective AP's Confidential Account, for the benefit of the AP,
without disclosing the identity of such securities to the AP.
---------------------------------------------------------------------------
\13\ Rule 8.900-E(c)(6) provides that the term ``Creation Unit''
means a specified minimum number of Managed Portfolio Shares issued
by an Investment Company at the request of an Authorized Participant
in return for a designated portfolio of instruments and/or cash.
Rule 8.900-E(c)(7) provides that the term ``Redemption Unit'' means
a specified minimum number of Managed Portfolio Shares that may be
redeemed to an Investment Company at the request of an Authorized
Participant in return for a portfolio of instruments and/or cash.
For purposes of this filing, the terms ``Creation Unit'' means
either a Creation Unit as defined in Rules 8.900-E(c)(6) or a
Redemption Unit as defined in Rule 8.900-E(c)(7).
\14\ Rule 8.900-E(c)(4) provides that the term ``Confidential
Account'' means an account owned by an Authorized Participant and
held with an AP Representative on behalf of the Authorized
Participant. The account will be established and governed by
contractual agreement between the AP Representative and the
Authorized Participant solely for the purposes of creation and
redemption, while keeping confidential the Creation Basket
constituents of each series of Managed Portfolio Shares, including
from the Authorized Participant. The books and records of the
Confidential Account will be maintained by the AP Representative on
behalf of the Authorized Participant.
\15\ Rule 8.900-E(c)(3) provides that the term ``AP
Representative'' means an unaffiliated broker-dealer, with which an
Authorized Participant has signed an agreement to establish a
Confidential Account for the benefit of such Authorized Participant,
that will deliver or receive, on behalf of the Authorized
Participant, all consideration to or from the Investment Company in
a creation or redemption. An AP Representative will not be permitted
to disclose the Creation Basket to any person, including the
Authorized Participants.
---------------------------------------------------------------------------
Each business day, the Fund's Custodian will transmit the
underlying securities of the Fund's Creation Basket (as described
below) to each AP Representative. This information will permit an AP
that has established a Confidential Account with an AP Representative
to transact in the underlying securities of the Creation Basket through
their AP Representatives, enabling them to engage in in-kind creation
or redemption activity without knowing the identity or weighting of
those securities. Fund Shares will be issued and redeemed in Creation
Units of 25,000 Shares. The size of a Creation Unit is subject to
change. The Fund will offer and redeem Creation Units on a continuous
basis at the net asset value (``NAV'') per Share next determined after
receipt of an order in proper form. The Fund's NAV will be determined
as of the scheduled closing time of the regular trading session on the
Exchange (ordinarily, 4:00 p.m. Eastern Time (``E.T.'')) on each day
that it is open for business.
In order to keep costs low and permit the Fund to be as fully
invested as possible, Shares will be purchased and redeemed in Creation
Units and generally on an in-kind basis. The Fund will issue Creation
Units in exchange for a ``Fund Deposit,'' which is either (i) the in-
kind deposit of a designated portfolio of securities (the ``Deposit
Securities'') and the amount of the ``Cash Component'' (as defined
below) or (ii) the cash value of the Deposit Securities. The Fund may
permit or require the substitution of a ``cash in lieu'' amount (the
``Deposit Cash'') to be added to the Cash Component to replace any
Deposit Security. The Cash Component is an amount equal to the
difference between the NAV of the Shares (per Creation Unit) and the
value of the Deposit Securities or Deposit Cash, as applicable. The
Cash Component serves the function of compensating for any differences
between the NAV per Creation Unit and the value of the Deposit
Securities or Deposit Cash, as applicable. The Fund will redeem
Creation Units either in-kind or in cash, or combination thereof, as
determined by the Trust. Redemption proceeds may consist of a
designated portfolio of securities (the ``Fund Securities'') plus cash
in an amount equal to the difference between the NAV of Shares being
redeemed, as next determined after a receipt of a redemption request in
proper form, or the cash value of the Fund Securities (the ``Cash
Redemption Amount''). In addition, at the Trust's discretion, an AP may
receive the corresponding cash value of the securities in lieu of the
in-kind securities value representing one or more Fund Securities.
On each business day, prior to the opening of business on the
Exchange (ordinarily, 9:30 a.m. E.T.), the Custodian will transmit to
each AP Representative the list of names and quantities of each Deposit
Security and the amount of the Cash Component (if any) to be included
in the current Fund Deposit (based on information as of the ends of the
previous business day). Such Fund Deposit is applicable to purchases of
Creation Units until such time as the next-announced Fund Deposit is
made available. On each business day, prior to the opening of business
on the Exchange, the Custodian will also transmit to each AP
Representative the list of the names and quantities of the Fund
Securities that will be applicable to redemption requests received in
proper form on that day. On any given business day, the names and
quantities of the instruments that constitute the Deposit Securities
and the names and quantities of the instruments that constitute the
Fund Securities will correspond pro rata to the positions in the Fund's
portfolio and, thus, will be identical. These instruments may be
referred to, in the case of either a purchase or a redemption, as the
``Creation Basket.''
Placement of Purchase Orders
The Fund will issue Shares through the Transfer Agent on a
continuous basis at NAV. The Exchange represents that the issuance of
Shares will operate in a manner substantially similar to that of other
ETFs, including transparent ETFs. The Fund will issue Shares only
[[Page 26615]]
at the NAV per Share next determined after an order in proper form is
received.
The Transfer Agent will furnish acknowledgements to those placing
such orders that the orders have been accepted, but the Transfer Agent
may reject any order which is not submitted in proper form, as
described in the Fund's prospectus or Statement of Additional
Information (``SAI''). The NAV of the Fund is expected to be determined
once each business day as of the close of the regular trading session
on the Exchange (ordinarily, 4:00 p.m. E.T.). An AP generally must
submit an irrevocable purchase order no later than 4:00 p.m. E.T. (the
``Cut-Off Time'') in order to receive that business day's NAV. The
business day the order is deemed received by the Transfer Agent is
referred to as the ``Order Placement Date.'' An order to create
Creation Units is deemed received on a business day if (i) such order
is received by the Cut-Off Time on such day and (ii) all other
procedures set forth in the Participant Agreement are properly
followed. In purchasing the necessary securities, the AP Representative
will use methods, such as breaking the transaction into multiple
transactions and transacting in multiple marketplaces, to avoid
revealing the composition of the Creation Basket.
Purchases of Shares will be settled in-kind and/or in cash for an
amount equal to the applicable NAV per Share purchased plus applicable
transaction fees.\16\
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\16\ To the extent that the Fund allows creations or redemptions
to be conducted in cash, such transactions will be effected in the
same manner for all APs transacting in cash.
---------------------------------------------------------------------------
Authorized Participant Redemption
The Shares may be redeemed to the Fund in Creation Unit size or
multiples thereof as described below. Redemption orders of Creation
Units must be placed by or through an AP. Creation Units of the Fund
will be redeemable at their NAV per Share next determined after receipt
of a redemption request by the Fund through the Transfer Agent. A fixed
redemption transaction fee may be imposed to offset costs associated
with redemption orders.
Orders to redeem Creation Units must be submitted in proper form to
the Transfer Agent prior to the Order Cut-Off Time. A redemption
request is deemed received on a business day if (i) such order is
received by the Transfer Agent by the Cut-off Time on such day and (ii)
all other procedures set forth in the Participant Agreement are
properly followed. As with the purchase of securities, the AP
Representative will use methods, such as breaking the transaction into
multiple transactions and transacting in multiple marketplaces, to
avoid revealing the composition of the Creation Basket.
Redemptions will occur primarily in-kind, although redemption
payments may also be made partly or wholly in cash. In the case of full
or partial cash redemptions, the AP will receive the cash equivalent of
the Fund Securities it would otherwise receive through an in-kind
redemption, plus the same Cash Redemption Amount to be paid to an in-
kind redeemer. The Participant Agreement signed by each AP will require
establishment of a Confidential Account to receive distributions of
securities in-kind upon redemption. Each AP will be required to open a
Confidential Account with an AP Representative in order to facilitate
orderly processing of redemptions.
Net Asset Value
The NAV will be calculated for the Shares of the Fund on each
business day. The Fund's NAV is determined as of the scheduled close of
regular trading on the Exchange, normally 4:00 p.m. E.T., each day the
Exchange is open for business. The NAV of the Fund's Shares is
determined by dividing the total value of the Fund's assets, less any
liabilities, by the total number of Shares outstanding of the Fund at
the time the determination is made.
Generally, the Fund's portfolio securities are valued each day at
the last quoted sales price on each security's primary exchange.
Securities traded or dealt in upon one or more securities exchanges for
which market quotations are readily available and not subject to
restrictions against resale shall be valued at the last quoted sales
price on the primary exchange or, in the absence of a sale on the
primary exchange, at the mean between the current bid and ask prices on
such exchange. Securities primarily traded in the NASDAQ National
Market System for which market quotations are readily available shall
be valued using the NASDAQ Official Closing Price. If market quotations
are not readily available, securities will be valued at their fair
market value as determined in good faith by the Fund's fair value
committee in accordance with procedures approved by the Board.
Securities that are not traded or dealt in any securities exchange
(whether domestic or foreign) and for which over-the-counter market
quotations are readily available generally shall be valued at the last
sale price or, in the absence of a sale, at the mean between the
current bid and ask price on such over-the- counter market.
More information about the valuation of the Fund's holdings can be
found in the SAI.
Information regarding the Fund's NAV and how often Shares of the
Fund traded at a price above (i.e., at a premium) or below (i.e., at a
discount) the Fund's NAV will be available on the Fund's website
(www.veridienglobalinvestors.com).
Availability of Information
The Fund's website, www.veridienglobalinvestors.com, will include
the prospectus for the Fund that may be downloaded. The Fund's website
will include additional quantitative information updated on a daily
basis, including the prior business day's NAV, market closing price or
mid-point of the bid/ask spread at the time of calculation of such NAV
(the ``Bid/Ask Price''),\17\ and a calculation of the premium and
discount of the market closing price or Bid/Ask Price against the NAV.
The website and information will be publicly available at no charge.
---------------------------------------------------------------------------
\17\ The Bid/Ask Price of the Fund's Shares is determined using
the mid-point between the current national best bid and offer at the
time of calculation of the Fund's NAV. The records relating to Bid/
Ask Prices will be retained by the Fund or its service providers.
---------------------------------------------------------------------------
Form N-PORT requires reporting of a Fund's complete portfolio
holdings on a position-by-position basis on a quarterly basis within 60
days after fiscal quarter end. Investors can obtain a Fund's SAI, its
shareholder reports, its Form N-CSR, filed twice a year, and its Form
N-CEN, filed annually. The Fund's SAI and shareholder reports are
available free upon request from the Fund, and those documents and the
Form N-PORT, Form N-CSR, and Form N-CEN may be viewed onscreen or
downloaded from the Commission's website at www.sec.gov.
Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers. Quotation and last sale information for the
Shares will be available via the Consolidated Tape Association
(``CTA'') high-speed line. In addition, the Verified Intraday
Indicative Value (``VIIV''), as defined in Rule 8.900-E(c)(2),\18\ will
be widely
[[Page 26616]]
disseminated by the Reporting Authority \19\ and/or one or more major
market data vendors in one second intervals during the Exchange's Core
Trading Session and will be available to all market participants at the
same time.
---------------------------------------------------------------------------
\18\ Rule 8.900-E(c)(2) provides that the term ``Verified
Intraday Indicative Value'' is the indicative value of a Managed
Portfolio Share based on all of the holdings of a series of Managed
Portfolio Shares as of the close of business on the prior business
day and, for corporate actions, based on the applicable holdings as
of the opening of business on the current business day, priced and
disseminated in one second intervals during the Exchange's Core
Trading Session by the Reporting Authority.
\19\ Rule 8.900-E(c)(8) provides that the term ``Reporting
Authority'' in respect of a particular series of Managed Portfolio
Shares means the Exchange, an institution, or a reporting service
designated by the Exchange or by the exchange that lists a
particular series of Managed Portfolio Shares (if the Exchange is
trading such series pursuant to unlisted trading privileges), as the
official source for calculating and reporting information relating
to such series, including, but not limited to, the NAV, the VIIV, or
other information relating to the issuance, redemption, or trading
of Managed Portfolio Shares. A series of Managed Portfolio Shares
may have more than one Reporting Authority, each having different
functions.
---------------------------------------------------------------------------
Dissemination of the VIIV
With respect to trading of the Shares, the ability of market
participants to buy and sell Shares at prices near the VIIV is
dependent upon their assessment that the VIIV is a reliable, indicative
real-time value for the Fund's underlying holdings. Market participants
are expected to accept the VIIV as a reliable, indicative real-time
value because (1) the VIIV will be calculated and disseminated based on
the Fund's actual portfolio holdings, (2) the securities in which the
Fund plans to invest are generally highly liquid and actively traded
and trade at the same time as the Fund and therefore generally have
accurate real time pricing available, and (3) market participants will
have a daily opportunity to evaluate whether the VIIV at or near the
close of trading is indeed predictive of the actual NAV.
The VIIV will be widely disseminated to all market participants at
the same time by the Reporting Authority and/or by one or more major
market data vendors in one second intervals during the Exchange's Core
Trading Session. The VIIV is based on the current market value of the
securities in the Fund's portfolio that day. The methodology for
calculating the Fund's VIIV is available on the Fund's website. The
VIIV is intended to provide investors and other market participants
with a highly correlated per Share value of the Fund's portfolio that
can be compared to the current market price. Therefore, under normal
circumstances the VIIV would be effectively a near real time
approximation of the Fund's NAV, which is computed only once a day and
is available free of charge from one or more market data vendors.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund.\20\ Trading in Shares of the Fund
will be halted if the circuit breaker parameters in Rule 7.12-E have
been reached. Trading also may be halted because of market conditions
or for reasons that, in the view of the Exchange, make trading in the
Shares inadvisable. Trading in the Shares will be subject to Rule
8.900-E(d)(2)(C), which sets forth circumstances under which trading in
the Shares of the Fund will be halted.
---------------------------------------------------------------------------
\20\ See Rule 7.12-E.
---------------------------------------------------------------------------
Specifically, Rule 8.900-E(d)(2)(C)(i) provides that the Exchange
may consider all relevant factors in exercising its discretion to halt
trading in a series of Managed Portfolio Shares. Trading may be halted
because of market conditions or for reasons that, in the view of the
Exchange, make trading in the series of Managed Portfolio Shares
inadvisable. These may include: (a) the extent to which trading is not
occurring in the securities and/or the financial instruments composing
the portfolio; or (b) whether other unusual conditions or circumstances
detrimental to the maintenance of a fair and orderly market are
present.\21\
---------------------------------------------------------------------------
\21\ The Exemptive Application provides that the Investment
Company or their agent will request that the Exchange halt trading
in the applicable series of Managed Portfolio Shares where: (i) the
intraday indicative values calculated by the calculation engines
differ by more than 25 basis points for 60 seconds in connection
with pricing of the VIIV; or (ii) holdings representing 10% or more
of a series of Managed Portfolio Shares' portfolio have become
subject to a trading halt or otherwise do not have readily available
market quotations. Any such requests will be one of many factors
considered in order to determine whether to halt trading in a series
of Managed Portfolio Shares and the Exchange retains sole discretion
in determining whether trading should be halted. As provided in the
Exemptive Application, each series of Managed Portfolio Shares would
employ a pricing verification agent to continuously compare two
intraday indicative values during regular trading hours in order to
ensure the accuracy of the VIIV.
---------------------------------------------------------------------------
Rule 8.900-E(d)(2)(C)(ii) provides that, if the Exchange becomes
aware that: (i) the VIIV of a series of Managed Portfolio Shares is not
being calculated or disseminated in one second intervals, as required;
(ii) the NAV with respect to a series of Managed Portfolio Shares is
not disseminated to all market participants at the same time; (iii) the
holdings of a series of Managed Portfolio Shares are not made available
on at least a quarterly basis as required under the 1940 Act; or (iv)
such holdings are not made available to all market participants at the
same time (except as otherwise permitted under the currently applicable
exemptive order or no-action relief granted by the Commission or
Commission staff to the Investment Company with respect to the series
of Managed Portfolio Shares), it will halt trading in such series until
such time as the Verified Intraday Indicative Value, the NAV, or the
holdings are available, as required.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the Exchange in all trading sessions in accordance with Rule 7.34-E(a).
As provided in Rule 7.6-E, the minimum price variation (``MPV'') for
quoting and entry of orders in equity securities traded on the NYSE
Arca Marketplace is $0.01, with the exception of securities that are
priced less than $1.00, for which the MPV for order entry is $0.0001. A
minimum of 100,000 Shares of the Fund will be outstanding at the
commencement of trading on the Exchange.
The Shares will conform to the initial and continued listing
criteria under Rule 8.900-E, as well as all terms in the Exemptive
Order. The Exchange will obtain a representation from the issuer of the
Shares of the Fund that the NAV per Share of the Fund will be
calculated daily and will be made available to all market participants
at the same time.
Surveillance
The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of Shares on the Exchange during all
trading sessions and to deter and detect violations of Exchange rules
and the applicable federal securities laws. Trading of Shares through
the Exchange will be subject to the Exchange's surveillance procedures
for derivative products. As part of these surveillance procedures and
consistent with Rule 8.900-E(b)(3) and 8.900-E(d)(2)(B), the Adviser
will upon request make available to the Exchange and/or the Financial
Industry Regulatory Authority (``FINRA''), on behalf of the Exchange,
the daily portfolio holdings of the Fund. The issuer of the Shares of
the Fund will be required to represent to the Exchange that it will
advise the Exchange of any failure by the Fund to comply with the
continued listing requirements, and, pursuant to its obligations under
Section 19(g)(1) of the Exchange Act, the Exchange will surveil for
compliance with the continued listing requirements. If the Fund is not
[[Page 26617]]
in compliance with the applicable listing requirements, the Exchange
will commence delisting procedures under Exchange Rule 5.5-E(m).
FINRA, on behalf of the Exchange, or the regulatory staff of the
Exchange, or both, will communicate as needed regarding trading in the
Shares and certain exchange-traded instruments with other markets and
other entities that are members of the ISG, and FINRA, on behalf of the
Exchange, or the regulatory staff of the Exchange, or both, may obtain
trading information regarding trading such securities from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Shares and certain exchange-traded instruments
from markets and other entities that are members of ISG or with which
the Exchange has in place a comprehensive surveillance sharing
agreement.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\22\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\23\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78f(b).
\23\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that this proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the Fund
would meet each of the rules relating to listing and trading of Managed
Portfolio Shares. To the extent that the Fund is not in compliance with
such rules, the Exchange would either prevent the Fund from listing and
trading on the Exchange or commence delisting procedures under Rule
8.900-E(d)(2)(B). Specifically, the Exchange would consider the
suspension of trading, and commence delisting proceedings under Rule
8.900-E(d)(2)(B), of the Fund under any of the following circumstances:
(a) if, following the initial twelve-month period after commencement of
trading on the Exchange, there are fewer than 50 beneficial holders of
the Fund; (b) if the Exchange has halted trading in the Fund because
the VIIV is interrupted pursuant to Rule 8.900-E(d)(2)(C)(ii) and such
interruption persists past the trading day in which it occurred or is
no longer available; (c) if the Exchange has halted trading in the Fund
because the NAV with respect to such Fund is not disseminated to all
market participants at the same time, the holdings of such Fund are not
made available on at least a quarterly basis as required under the 1940
Act, or such holdings are not made available to all market participants
at the same time pursuant to Rule 8.900-E(d)(2)(C)(ii) and such issue
persists past the trading day in which it occurred; (d) if the Exchange
has halted trading in Shares of the Fund pursuant to Rule 8.900-
E(d)(2)(C)(i) and such issue persists past the trading day in which it
occurred; (e) if the Fund has failed to file any filings required by
the Commission or if the Exchange is aware that the Fund is not in
compliance with the conditions of any currently applicable exemptive
order or no-action relief granted by the Commission or Commission staff
with respect to the Fund; (f) if any of the continued listing
requirements set forth in Rule 8.900-E are not continuously maintained;
(g) if any of the statements of representations regarding (a) the
description of the portfolio, (b) limitations on portfolio holdings, or
(c) the applicability of Exchange listing rules as specified herein to
permit the listing and trading of the Fund, are not continuously
maintained; or (h) if such other event shall occur or condition exists
which, in the opinion of the Exchange, makes further dealings on the
Exchange inadvisable.
As discussed above, the Adviser is not registered as a broker-
dealer but is affiliated with a broker-dealer and has implemented and
will maintain a ``fire wall'' with respect to such affiliate broker-
dealer regarding access to information concerning the composition and/
or changes to the Fund's portfolio and Creation Basket. The Sub-Adviser
is neither registered as a broker-dealer nor affiliated with a broker-
dealer. In the event that (a) the Adviser or Sub-Adviser becomes
registered as a broker-dealer or becomes newly affiliated with a
broker-dealer, or (b) any new adviser or sub-adviser is a registered
broker-dealer or becomes affiliated with a broker-dealer, the Adviser
or Sub-Adviser, as applicable, will implement and maintain a fire wall
with respect to personnel of the broker-dealer or broker-dealer
affiliate regarding access to information concerning the composition
and/or changes to the portfolio and/or Creation Basket. Any person
related to the Adviser, Sub-Adviser, or the Trust who makes decisions
pertaining to the Fund's portfolio composition or that has access to
information regarding the Fund's portfolio or changes thereto or the
Creation Basket will be subject to procedures designed to prevent the
use and dissemination of material non-public information regarding such
portfolio or changes thereto and the Creation Basket.
In addition, Rule 8.900-E(b)(5) requires that any person or entity,
including an AP Representative, custodian, Reporting Authority,
distributor, or administrator, who has access to non-public information
regarding the Investment Company's portfolio composition or changes
thereto or the Creation Basket, must be subject to procedures designed
to prevent the use and dissemination of material non-public information
regarding the applicable Investment Company portfolio or changes
thereto or the Creation Basket. Moreover, if any such person or entity
is registered as a broker-dealer or affiliated with a broker-dealer,
such person or entity will erect and maintain a ``fire wall'' between
the person or entity and the broker-dealer with respect to access to
information concerning the composition and/or changes to such
Investment Company portfolio or Creation Basket. Any person or entity
who has access to information regarding the Fund's portfolio
composition or changes thereto or the Creation Basket will be subject
to procedures designed to prevent the use and dissemination of material
nonpublic information regarding the portfolio or changes thereto or the
Creation Basket.
The Exchange further believes that Rule 8.900-E is designed to
prevent fraudulent and manipulative acts and practices related to the
listing and trading of Shares of the Fund because it provides
meaningful requirements about both the data that will be made publicly
available about the Shares, as well as the information that will only
be available to certain parties and the controls on such information.
Specifically, the Exchange believes that the requirements related to
information protection set forth in Rule 8.900-E(b)(5) will act as a
safeguard against misuse and improper dissemination of information
related to the Fund's portfolio composition, the Creation Basket, or
changes thereto. The requirement that any person or entity implement
procedures to prevent the use and dissemination of material non-public
information regarding the portfolio or Creation Basket will act to
prevent any individual or entity from
[[Page 26618]]
sharing such information externally and the internal ``fire wall''
requirements applicable where an entity is a registered broker-dealer
or affiliated with a broker-dealer will act to make sure that no entity
will be able to misuse the data for their own purposes. Accordingly,
the Exchange believes that this proposal is designed to prevent
fraudulent and manipulative acts and practices.
The Exchange further believes that the proposal is designed to
prevent fraudulent and manipulative acts and practices related to the
listing and trading of Shares of the Fund and to promote just and
equitable principles of trade and to protect investors and the public
interest because the Exchange would halt trading under certain
circumstances under which trading in the Shares of the Fund may be
inadvisable. Specifically, trading in the Shares will be subject to
Rule 8.900-E(d)(2)(C)(i), which provides that the Exchange may consider
all relevant factors in exercising its discretion to halt trading in
the Fund. Trading may be halted because of market conditions or for
reasons that, in the view of the Exchange, make trading in the series
of Managed Portfolio Shares inadvisable. These may include: (a) the
extent to which trading is not occurring in the securities and/or the
financial instruments composing the portfolio; or (b) whether other
unusual conditions or circumstances detrimental to the maintenance of a
fair and orderly market are present.\24\ Additionally, trading in the
Shares will be subject to Rule 8.900-E(d)(2)(C)(ii), which provides
that the Exchange would halt trading where the Exchange becomes aware
that: (a) the VIIV of a series of Managed Portfolio Shares is not being
calculated or disseminated in one second intervals, as required; (b)
the NAV with respect to a series of Managed Portfolio Shares is not
disseminated to all market participants at the same time; (c) the
holdings of a series of Managed Portfolio Shares are not made available
on at least a quarterly basis as required under the 1940 Act; or (d)
such holdings are not made available to all market participants at the
same time (except as otherwise permitted under the currently applicable
exemptive order or no-action relief granted by the Commission or
Commission staff to the Investment Company with respect to the series
of Managed Portfolio Shares). The Exchange would halt trading in such
Shares until such time as the VIIV, the NAV, or the holdings are
available, as required.
---------------------------------------------------------------------------
\24\ See note 20, supra.
---------------------------------------------------------------------------
With respect to the proposed listing and trading of Shares of the
Fund, the Exchange believes that the proposed rule change is designed
to prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in Rule 8.900-E.\25\ The Fund's
holdings will conform to the permissible investments as set forth in
the Exemptive Application and Exemptive Order.\26\ As noted above,
FINRA, on behalf of the Exchange, or the regulatory staff of the
Exchange, or both, will communicate as needed regarding trading in the
Shares and the underlying exchange-traded instruments with other
markets and other entities that are members of the ISG, and FINRA, on
behalf of the Exchange, or the regulatory staff of the Exchange, or
both, may obtain trading information regarding trading such securities
from such markets and other entities. In addition, the Exchange may
obtain information regarding trading in the Shares and the underlying
exchange-traded instruments from markets and other entities that are
members of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.
---------------------------------------------------------------------------
\25\ The Exchange represents that, for initial and continued
listing, the Fund will be in compliance with Rule 10A-3 under the
Act. See 17 CFR 240.10A-3.
\26\ See note 9, supra.
---------------------------------------------------------------------------
With respect to trading of Shares of the Fund, the ability of
market participants to buy and sell Shares at prices near the VIIV is
dependent upon their assessment that the VIIV is a reliable, indicative
real-time value for the Fund's underlying holdings. Market participants
are expected to accept the VIIV as a reliable, indicative real-time
value because (1) the VIIV will be calculated and disseminated based on
the Fund's actual portfolio holdings, (2) the securities in which the
Fund plans to invest are generally highly liquid and actively traded
and trade at the same time as the Fund and therefore generally have
accurate real time pricing available, and (3) market participants will
have a daily opportunity to evaluate whether the VIIV at or near the
close of trading is indeed predictive of the actual NAV.
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation that the NAV per Share
of the Fund will be calculated daily and that the NAV will be made
available to all market participants at the same time. Investors can
also obtain the Fund's SAI, its shareholder reports, its Form N-CSR
(filed twice a year), and its Form N-CEN (filed annually). The Fund's
SAI and shareholder reports will be available free upon request from
the Fund, and those documents and the Form N-PORT, Form N-CSR, and Form
N-CEN may be viewed on-screen or downloaded from the Commission's
website at www.sec.gov. In addition, a large amount of information will
be publicly available regarding the Fund and the Shares, thereby
promoting market transparency. Quotation and last sale information for
the Shares will be available via the CTA high-speed line. Information
regarding the VIIV will be widely disseminated in one second intervals
throughout the Exchange's Core Trading Session by the Reporting
Authority and/or one or more major market data vendors. The website for
the Fund will include a prospectus for the Fund that may be downloaded,
and additional data relating to NAV and other applicable quantitative
information, updated on a daily basis. Moreover, prior to the
commencement of trading, the Exchange will inform its members in an
Information Bulletin of the special characteristics and risks
associated with trading the Shares.
In addition, as noted above, investors will have ready access to
the VIIV, and quotation and last sale information for the Shares. The
Shares will conform to the initial and continued listing criteria under
Rule 8.900-E. The Fund's investments, including derivatives, will be
consistent with its investment objective and will not be used to
enhance leverage (although certain derivatives and other investments
may result in leverage). That is, the Fund's investments will not be
used to seek performance that is the multiple or inverse multiple
(e.g., 2X or -3X) of the Fund's primary broad-based securities
benchmark index (as defined in Form N-1A).
The Exchange also believes that the proposed rule change is
designed to perfect the mechanism of a free and open market and, in
general, to protect investors and the public interest in that it will
facilitate the listing and trading of actively-managed exchange-traded
products that will enhance competition among market participants, to
the benefit of investors and the marketplace. As noted above, the
Exchange has in place surveillance procedures relating to trading in
the Shares and may obtain information via ISG from other exchanges that
are members of ISG or with which the Exchange has entered
[[Page 26619]]
into a comprehensive surveillance sharing agreement. In addition, as
noted above, investors will have ready access to information regarding
the VIIV and quotation and last sale information for the Shares.
For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes the
proposed rule change would permit the listing and trading of an
additional actively-managed exchange-traded product, thereby promoting
competition among exchange-traded products to the benefit of investors
and the marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \27\ and Rule 19b-
4(f)(6) thereunder.\28\
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\27\ 15 U.S.C. 78s(b)(3)(A).
\28\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \29\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange requested
that the Commission waive the 30-day operative delay so that the
proposal may become operative immediately upon filing. The Commission
notes it has approved, and noticed for immediate effectiveness,
proposed rule changes to permit listing and trading on the Exchange of
Managed Portfolio Shares similar to the Funds.\30\ The proposed listing
rule for the Fund raises no novel legal or regulatory issues.
Therefore, the Commission believes that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest. Accordingly, the Commission hereby waives the 30-day
operative delay and designates the proposed rule change operative upon
filing.\31\
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\29\ 17 CFR 240.19b-4(f)(6)(iii).
\30\ See supra note 5.
\31\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEARCA-2023-33 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-2023-33. 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. Do
not include personal identifiable information in submissions; you
should submit only information that you wish to make available
publicly. We may redact in part or withhold entirely from publication
submitted material that is obscene or subject to copyright protection.
All submissions should refer to File Number SR-NYSEARCA-2023-33 and
should be submitted on or before May 22, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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\32\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-09077 Filed 4-28-23; 8:45 am]
BILLING CODE 8011-01-P
