Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To List and Trade Shares of the John Hancock Fundamental All Cap Core ETF Under Rule 8.601-E, Active Proxy Portfolio Shares, 72545-72553 [2023-23265]
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Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Notices
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeBZX–2023–081 on the subject line.
Paper Comments
ddrumheller on DSK120RN23PROD with NOTICES1
• 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–CboeBZX–2023–081. 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
a.m. and 3 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–CboeBZX–2023–081 and should be
submitted on or before November 13,
2023.
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18:20 Oct 19, 2023
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–23141 Filed 10–19–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–563, OMB Control No.
3235–0625]
Submission for OMB Review;
Comment Request; Extension: Rule
17g–1 and Form NRSRO
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rule 17g–1, Form NRSRO and
Instructions to Form NRSRO under the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.).1
Rule 17g–1, Form NRSRO and the
Instructions to Form NRSRO contain
certain recordkeeping and disclosure
requirements for NRSROs. Currently,
there are 10 credit rating agencies
registered as NRSROs with the
Commission. Based on staff experience,
the Commission estimates that the
revised ongoing annual burden for
respondents to comply with Rule 17g–
1 and Form NRSRO is 2,750 hours.2 In
addition, the Commission estimates an
industry-wide annual external cost to
NRSROs of $4,000 to comply with the
requirements.
Written comments are invited on: (a)
whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information on respondents; and
(d) ways to minimize the burden of the
collection of information on
CFR 200.30–3(a)(12).
17 CFR 240.17g–1 and 17 CFR 249b.300.
2 10 currently registered NRSROs × 275 hours =
2,750 hours
respondents, including through the use
of automated collection techniques or
other forms of information technology.
The Commission may not conduct or
sponsor a collection of information
unless it displays a currently valid
control number. No person shall be
subject to any penalty for failing to
comply with a collection of information
subject to the PRA that does not display
a valid Office of Management and
Budget (OMB) control number.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function. Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice by November 20, 2023 to (i)
MBX.OMB.OIRA.SEC_desk_officer@
omb.eop.gov and (ii) Dave Bottom,
Director/Chief Information Officer,
Securities and Exchange Commission, c/
o John Pezzullo, 100 F St NE,
Washington, DC 20549 or send an email
to: PRA_Mailbox@sec.gov.
Dated: October 16, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–23136 Filed 10–19–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98765; File No. SR–
NYSEARCA–2023–71]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To List and Trade Shares
of the John Hancock Fundamental All
Cap Core ETF Under Rule 8.601–E,
Active Proxy Portfolio Shares
October 17, 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 October
13, 2023, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘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
19 17
1 See
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1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Notices
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the following under
NYSE Arca Rule 8.601–E: John Hancock
Fundamental All Cap Core ETF. The
proposed rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange has adopted NYSE
Arca Rule 8.601–E for the purpose of
permitting the listing and trading, or
trading pursuant to unlisted trading
privileges (‘‘UTP’’), of Active Proxy
Portfolio Shares, which are securities
issued by an actively managed open-end
investment management company.4
4 See Securities Exchange Act Release No. 89185
(June 29, 2020), 85 FR 40328 (July 6, 2020) (SR–
NYSEArca–2019–95). Rule 8.601–E(c)(1) provides
that ‘‘[t]he term ‘‘Active Proxy Portfolio Share’’
means a security that (a) is issued by a investment
company registered under the Investment Company
Act of 1940 (‘‘Investment Company’’) organized as
an open-end management investment company that
invests in a portfolio of securities selected by the
Investment Company’s investment adviser
consistent with the Investment Company’s
investment objectives and policies; (b) is issued in
a specified minimum number of shares, or
multiples thereof, in return for a deposit by the
purchaser of the Proxy Portfolio or Custom Basket,
as applicable, and/or cash with a value equal to the
next determined net asset value (‘‘NAV’’); (c) when
aggregated in the same specified minimum number
of Active Proxy Portfolio Shares, or multiples
thereof, may be redeemed at a holder’s request in
return for the Proxy Portfolio or Custom Basket, as
applicable, and/or cash to the holder by the issuer
with a value equal to the next determined NAV; and
(d) the portfolio holdings for which are disclosed
within at least 60 days following the end of every
fiscal quarter.’’ Rule 8.601–E(c)(2) provides that
‘‘[t]he term ‘‘Actual Portfolio’’ means the identities
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Commentary .01 to Rule 8.601–E
requires the Exchange to file separate
proposals under section 19(b) of the Act
before listing and trading any series of
Active Proxy Portfolio Shares on the
Exchange. Therefore, the Exchange is
submitting this proposal in order to list
and trade shares (‘‘Shares’’) of the John
Hancock Fundamental All Cap Core
ETF (the ‘‘Fund’’) under Rule 8.601–E.
Key Features of Active Proxy Portfolio
Shares
While funds issuing Active Proxy
Portfolio Shares will be activelymanaged and, to that extent, will be
similar to Managed Fund Shares, Active
Proxy Portfolio Shares differ from
Managed Fund Shares in the following
important respects. First, in contrast to
Managed Fund Shares, which are
actively-managed funds listed and
traded under NYSE Arca Rule 8.600–E 5
and for which a ‘‘Disclosed Portfolio’’ is
required to be disseminated at least
once daily,6 the portfolio for an issue of
and quantities of the securities and other assets
held by the Investment Company that shall form the
basis for the Investment Company’s calculation of
NAV at the end of the business day.’’ Rule 8.601–
E(c)(3) provides that ‘‘[t]he term ‘‘Proxy Portfolio’’
means a specified portfolio of securities, other
financial instruments and/or cash designed to track
closely the daily performance of the Actual
Portfolio of a series of Active Proxy Portfolio Shares
as provided in the exemptive relief pursuant to the
Investment Company Act of 1940 applicable to such
series.’’ Rule 8.601–E(c)(4) provides that the term
‘‘Custom Basket’’ means a portfolio of securities
that is different from the Proxy Portfolio and is
otherwise consistent with the exemptive relief
issued pursuant to the Investment Company Act of
1940 applicable to a series of Active Proxy Portfolio
Shares.
5 The Commission has previously approved
listing and trading on the Exchange of a number of
issues of Managed Fund Shares under NYSE Arca
Rule 8.600–E. See, e.g., Securities Exchange Act
Release Nos. 57801 (May 8, 2008), 73 FR 27878
(May 14, 2008) (SR–NYSEArca–2008–31) (order
approving Exchange listing and trading of twelve
actively-managed funds of the WisdomTree Trust);
60460 (August 7, 2009), 74 FR 41468 (August 17,
2009) (SR–NYSEArca–2009–55) (order approving
listing of Dent Tactical ETF); 63076 (October 12,
2010), 75 FR 63874 (October 18, 2010) (SR–
NYSEArca–2010–79) (order approving Exchange
listing and trading of Cambria Global Tactical ETF);
63802 (January 31, 2011), 76 FR 6503 (February 4,
2011) (SR–NYSEArca–2010–118) (order approving
Exchange listing and trading of the SiM Dynamic
Allocation Diversified Income ETF and SiM
Dynamic Allocation Growth Income ETF). The
Commission also has approved a proposed rule
change relating to generic listing standards for
Managed Fund Shares. See Securities Exchange Act
Release No. 78397 (July 22, 2016), 81 FR 49320
(July 27, 2016) (SR–NYSEArca–2015–110)
(amending NYSE Arca Equities Rule 8.600 to adopt
generic listing standards for Managed Fund Shares).
6 NYSE Arca Rule 8.600–E(c)(2) defines the term
‘‘Disclosed Portfolio’’ as the identities and
quantities of the securities and other assets held by
the Investment Company that will form the basis for
the Investment Company’s calculation of net asset
value at the end of the business day. NYSE Arca
Rule 8.600–E(d)(2)(B)(i) requires that the Disclosed
Portfolio will be disseminated at least once daily
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Active Proxy Portfolio Shares will be
publicly disclosed within at least 60
days following the end of every fiscal
quarter in accordance with normal
disclosure requirements otherwise
applicable to open-end management
investment companies registered under
the Investment Company Act of 1940, as
amended (the ‘‘1940 Act’’).7 The
composition of the portfolio of an issue
of Active Proxy Portfolio Shares would
not be available at commencement of
Exchange listing and trading. Second, in
connection with the creation and
redemption of Active Proxy Portfolio
Shares, such creation or redemption
may be exchanged for a Proxy Portfolio
or Custom Basket, as applicable, and/or
cash with a value equal to the nextdetermined NAV. A series of Active
Proxy Portfolio Shares will disclose the
Proxy Portfolio on a daily basis, which,
as described above, is designed to track
closely the daily performance of the
Actual Portfolio of a series of Active
Proxy Portfolio Shares, instead of the
actual holdings of the Investment
Company, as provided by a series of
Managed Fund Shares. As set forth in
NYSE Arca Rule 8.601–E(d)(2)(B)(ii), for
Active Proxy Portfolio Shares using a
Custom Basket, each Business Day,8
before the opening of trading in the Core
Trading Session (as defined in NYSE
Arca Rule 7.34–E (a)), the Investment
Company shall make publicly available
on its website the composition of any
Custom Basket transacted on the
previous Business Day, except a Custom
Basket that differs from the applicable
Proxy Portfolio only with respect to
cash.
The Commission has previously
approved 9 and noticed for immediate
and will be made available to all market
participants at the same time.
7 A mutual fund is required to file with the
Commission its complete portfolio schedules for the
second and fourth fiscal quarters on Form N–CSR
under the 1940 Act. Information reported on Form
N–PORT for the third month of a fund’s fiscal
quarter will be made publicly available 60 days
after the end of a fund’s fiscal quarter. Form N–
PORT requires reporting of a fund’s complete
portfolio holdings on a position-by-position basis
on a quarterly basis within 60 days after fiscal
quarter end. Investors can obtain a series of Active
Proxy Portfolio Shares’ Statement of Additional
Information (‘‘SAI’’), its Shareholder Reports, its
Form N–CSR, filed twice a year, and its Form N–
CEN, filed annually. A series of Active Proxy
Portfolio Shares’ SAI and Shareholder Reports will
be available free upon request from the Investment
Company, and those documents and the Form N–
PORT, Form N–CSR, and Form N–CEN may be
viewed on-screen or downloaded from the
Commission’s website at www.sec.gov.
8 ‘‘Business Day’’ is defined to mean any day that
the Exchange is open, including any day when the
Fund satisfies redemption requests as required by
section 22(e) of the 1940 Act.
9 See, e.g., Securities Exchange Act Release Nos.
89185 (June 29, 2020), 85 FR 40328 (July 6, 2020)
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effectiveness 10 the listing and trading
on the Exchange of series of Active
Proxy Portfolio Shares under NYSE
Arca Rule 8.601–E.
The Shares will be issued by the
Fund, a series of the John Hancock
Exchange-Traded Fund Trust (the
(SR–NYSEArca–2019–95) (Notice of Filing of
Amendment No. 6 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified
by Amendment No. 6, to Adopt NYSE Arca Rule
8.601–E to Permit the Listing and Trading of Active
Proxy Portfolio Shares and To List and Trade
Shares of the Natixis U.S. Equity Opportunities ETF
Under Proposed NYSE Arca Rule 8.601–E); 89192
(June 30, 2020), 85 FR 40699 (July 7, 2020) (SR–
NYSEArca–2019–96) (Notice of Filing of
Amendment No. 5 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified
by Amendment No. 5, to List and Trade Two Series
of Active Proxy Portfolio Shares Issued by the
American Century ETF Trust under NYSE Arca
Rule 8.601–E); 89191 (June 30, 2020), 85 FR 40358
(July 6, 2020) (SR–NYSEArca–2019–92) (Notice of
Filing of Amendment No. 3 and Order Granting
Accelerated Approval of a Proposed Rule Change,
as Modified by Amendment No. 3, to List and Trade
Four Series of Active Proxy Portfolio Shares Issued
by T. Rowe Price Exchange-Traded Funds, Inc.
under NYSE Arca Rule 8.601–E); 89438 (July 31,
2020), 85 FR 47821 (August 6, 2020) (SR–
NYSEArca–2020–51) (Order Granting Approval of a
Proposed Rule Change, as Modified by Amendment
No. 2, to List and Trade Shares of Natixis Vaughan
Nelson Select ETF and Natixis Vaughan Nelson
MidCap ETF under NYSE Arca Rule 8.601–E);
91266 (March 5, 2021), 86 FR 13930 (March 11,
2021) (SR–NYSEArca–2020–104) (Order Approving
a Proposed Rule Change, as Modified by
Amendment No. 2, To List and Trade Shares of the
Stance Equity ESG Large Cap Core ETF Under
NYSE Arca Rule 8.601–E).
10 See, e.g., Securities Exchange Act Release Nos.
92104 (June 3, 2021), 86 FR 30635 (June 9, 2021)
(NYSEArca–2021–46) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
to List and Trade Shares of the Nuveen Santa
Barbara Dividend Growth ETF, Nuveen Small Cap
Select ETF, and Nuveen Winslow Large-Cap
Growth ESG ETF Under NYSE Arca Rule 8.601–E
(Active Proxy Portfolio Shares); 92958 (September
13, 2021), 86 FR 51933 (September 17, 2021)
(NYSEArca–2021–77) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
To List and Trade Shares of the Nuveen Growth
Opportunities ETF Under NYSE Arca Rule 8.601–
E (Active Proxy Portfolio Shares); 93264 (October 6,
2021), 86 FR 56989 (October 13, 2021) (SR–
NYSEArca–2021–84) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
To List and Trade Shares of the Schwab Ariel ESG
ETF Under NYSE Arca Rule 8.601–E (Active Proxy
Portfolio Shares); 94486 (March 22, 2022), 87 FR
17351 (March 28, 2022) (SR–NYSEArca–2022–14)
(Notice of Filing and Immediate Effectiveness of
Proposed Rule Change to List and Trade Shares of
the Columbia Seligman Semiconductor and
Technology ETF Under NYSE Arca Rule 8.601
(Active Proxy Portfolio Shares); 94908 (May 13,
2022), 87 FR 30524 (May 19, 2022) (SR–NYSEArca–
2022–28) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change to List and
Trade Shares of the Principal Real Estate Active
Opportunities ETF Under NYSE Arca Rule 8.601
(Active Proxy Portfolio Shares)); 94902 (May 12,
2022), 87 FR 30286 (May 18, 2022) (SR–NYSEArca–
2022–29) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change to List and
Trade Shares of the IQ Winslow Large Cap Growth
ETF and IQ Winslow Focused Large Cap Growth
ETF Under NYSE Arca Rule 8.601–E (Active Proxy
Portfolio Shares)).
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18:20 Oct 19, 2023
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‘‘Trust’’), which is organized as a
business trust under the laws of the
Commonwealth of Massachusetts and
registered with the Commission as an
open-end management investment
company.11 John Hancock Investment
Management LLC (the ‘‘Adviser’’) will
be the investment adviser to the Fund.
Manulife Investment Management (US)
LLC will be the sub-adviser (the ‘‘SubAdviser’’) for the Fund. State Street
Bank and Trust Company will serve as
the Fund’s custodian and transfer agent
(the ‘‘Custodian’’). Foreside Fund
Services, LLC will act as the distributor
(the ‘‘Distributor’’) for the Fund.
Commentary .04 to NYSE Arca Rule
8.601–E provides that, if the investment
adviser to the Investment Company
issuing Active Proxy Portfolio Shares is
registered as a broker-dealer or is
affiliated with a broker-dealer, such
investment adviser will erect and
maintain a ‘‘fire wall’’ between the
investment adviser and personnel of the
broker-dealer or broker-dealer affiliate,
as applicable, with respect to access to
information concerning the composition
and/or changes to such Investment
Company’s Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as
applicable. Any person related to the
investment adviser or Investment
Company who makes decisions
pertaining to the Investment Company’s
Actual Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable, or has
access to non-public information
regarding the Investment Company’s
Actual Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable, or
changes thereto must be subject to
procedures reasonably designed to
prevent the use and dissemination of
material non-public information
regarding the Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as
applicable, or changes thereto.
11 The Trust is registered under the 1940 Act. On
August 2, 2023, the Trust filed a registration
statement on Form N–1A under the 1940 Act
relating to the Fund (File Nos. 333–183173 and
811–22733) (the ‘‘Registration Statement’’). The
Trust filed a second amended and restated
application for an order under section 6(c) of the
1940 Act for exemptions from various provisions of
the 1940 Act and rules thereunder on December 20,
2021 (File No. 812–15235) (the ‘‘Application’’). On
January 10, 2022, the Commission issued a notice
relating to the Application (Investment Company
Act Release No. 34468, January 10, 2022), and on
February 7, 2022, the Commission issued an order
under the 1940 Act granting the relief sought in the
Application (Investment Company Act Release No.
34496, February 7, 2022) (the ‘‘Exemptive Order’’).
Investments made by the Fund will comply with
the conditions set forth in the Application and the
Exemptive Order. The description of the operation
of the Fund herein is based, in part, on the
Registration Statement, Application, and Exemptive
Order. The Exchange will not commence trading in
Shares of the Fund until the Registration Statement
is effective.
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72547
Commentary .04 is similar to
Commentary .03(a)(i) and (iii) to NYSE
Arca Rule 5.2–E(j)(3); however,
Commentary .04, in connection with the
establishment of a ‘‘fire wall’’ between
the investment adviser and the brokerdealer, reflects the applicable open-end
fund’s portfolio, not an underlying
benchmark index, as is the case with
index-based funds.12 Commentary .04 is
also similar to Commentary .06 to Rule
8.600–E related to Managed Fund
Shares, except that Commentary .04
relates to establishment and
maintenance of a ‘‘fire wall’’ between
the investment adviser and personnel of
the broker-dealer or broker-dealer
affiliates, as applicable, applicable to an
Investment Company’s Actual Portfolio,
Proxy Portfolio, and/or Custom Basket,
as applicable, or changes thereto, and
not just to the underlying portfolio, as
is the case with Managed Fund Shares.
In addition, Commentary .05 to Rule
8.601–E provides that any person or
entity, including a custodian, Reporting
Authority, distributor, or administrator,
who has access to non-public
information regarding the Investment
Company’s Actual Portfolio, Proxy
Portfolio, or Custom Basket, as
applicable, or changes thereto, must be
subject to procedures reasonably
designed to prevent the use and
dissemination of material non-public
information regarding the applicable
Investment Company Actual Portfolio,
Proxy Portfolio, or Custom Basket, as
applicable, or changes thereto.
Moreover, if any such person or entity
is registered as a broker-dealer or
affiliated with a broker-dealer, such
person or entity will erect and maintain
a ‘‘fire wall’’ between the person or
12 An investment adviser to an open-end fund is
required to be registered under the Investment
Advisers Act of 1940 (the ‘‘Advisers Act’’). As a
result, the Adviser and 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.
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entity and the broker-dealer with
respect to access to information
concerning the composition and/or
changes to such Investment Company
Actual Portfolio, Proxy Portfolio, or
Custom Basket, as applicable.
Neither the Adviser nor the SubAdviser is registered as a broker-dealer,
but each is affiliated with a brokerdealer. The Adviser and Sub-Adviser
have implemented and will maintain a
‘‘fire wall’’ with respect to such brokerdealer affiliate regarding access to
information concerning the composition
of and/or changes to the Fund’s Actual
Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable.
In the event (a) the Adviser 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 its
relevant personnel or its broker-dealer
affiliate regarding access to information
concerning the composition and/or
changes to the Fund’s Actual Portfolio,
Proxy Portfolio, and/or Custom Basket,
as applicable, and will be subject to
procedures designed to prevent the use
and dissemination of material nonpublic information regarding the Fund’s
Actual Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable, or
changes thereto. Any person related to
the Adviser, Sub-Adviser, or the Fund
who makes decisions pertaining to the
Fund’s Actual Portfolio, Proxy Portfolio,
or Custom Basket, as applicable, or has
access to non-public information
regarding the Fund’s Actual Portfolio,
Proxy Portfolio, and/or Custom Basket,
as applicable, or changes thereto are
subject to procedures reasonably
designed to prevent the use and
dissemination of material non-public
information regarding the Fund’s Actual
Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable, or
changes thereto.
In addition, any person or entity,
including any service provider for the
Fund, who has access to non-public
information regarding the Fund’s Actual
Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable, or
changes thereto, will be subject to
procedures reasonably designed to
prevent the use and dissemination of
material non-public information
regarding the Fund’s Actual Portfolio,
Proxy Portfolio, and/or Custom Basket,
as applicable, or changes thereto.
Moreover, if any such person or entity
is registered as a broker-dealer or
affiliated with a broker-dealer, such
person or entity has erected and will
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maintain a ‘‘fire wall’’ between the
person or entity and the broker-dealer
with respect to access to information
concerning the composition and/or
changes to the Fund’s Actual Portfolio,
Proxy Portfolio, and/or Custom Basket,
as applicable.
Description of the Fund
According to the Registration
Statement, the Fund will publish a
‘‘Tracking Basket’’ 13 on its website on
each Business Day.14 The Tracking
Basket is designed to closely track the
daily performance of the Fund but is not
the Fund’s Actual Portfolio. The
Tracking Basket is comprised of (1)
select recently disclosed portfolio
holdings and/or select securities from
the universe from which the Fund’s
investments are selected (‘‘Strategy
Components’’); (2) liquid U.S. exchangetraded ETFs that convey information
about the types of instruments (that are
not otherwise fully represented by the
Strategy Components) in which the
Fund invests (‘‘Representative ETFs’’);
and (3) cash and cash equivalents.
Representative ETFs will be selected for
inclusion in the Tracking Basket such
that, when aggregated with the other
Tracking Basket components, the
Tracking Basket corresponds to the
Fund’s overall holdings exposure. The
Fund will publish the Tracking Basket
for the Fund on its website before the
commencement of trading of the Fund’s
Shares on each Business Day, and the
Adviser will not make intra-day changes
to the Tracking Basket except to correct
errors in the published Tracking Basket.
In addition, on each Business Day,
before commencement of trading of
Shares, the Fund will publish on its
website the ‘‘Tracking Basket Weight
Overlap,’’ which is the percentage
weight overlap between the holdings of
the prior Business Day’s Tracking
Basket compared to the holdings of the
Fund that formed the basis for the
Fund’s calculation of NAV at the end of
the prior Business Day. The Tracking
Basket Weight Overlap is calculated by
taking the lesser weight of each asset
held in common between the Fund’s
Actual Portfolio and the Tracking Basket
and adding the totals. The Tracking
Basket Weight Overlap is designed to
provide investors with an
understanding of the degree to which
the Tracking Basket and the Fund’s
Actual Portfolio overlap and help
investors evaluate the risk that the
13 The ‘‘Tracking Basket’’ is the Proxy Portfolio
for purposes of Rule 8.601–E(c)(3).
14 ‘‘Business Day’’ is defined to mean any day that
the Exchange is open, including any day when the
Fund satisfies redemption requests as required by
section 22(e) of the 1940 Act.
PO 00000
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Sfmt 4703
performance of the Tracking Basket may
deviate from the performance of the
Fund’s Actual Portfolio.
The Fund’s holdings will conform to
the permissible investments as set forth
in the Application and Exemptive
Order, and the holdings will be
consistent with all requirements in the
Application and Exemptive Order.15
Any foreign common stocks held by the
Fund will be traded on an exchange that
is a member of the Intermarket
Surveillance Group (‘‘ISG’’) or with
which the Exchange has in place a
comprehensive surveillance sharing
agreement.
According to the Registration
Statement, the Fund will under normal
market conditions invest at least 80% of
its net assets in equity securities
(including exchange-traded common
and preferred securities and exchangetraded futures providing such
exposure). Market capitalizations of the
companies in whose securities the Fund
may invest will span the capitalization
spectrum. The Fund may invest up to
20% of its net assets in equity securities
of foreign issuers, including ADRs, and
may invest only in common stocks
listed on a foreign exchange that trade
contemporaneously with the Fund’s
Shares.
Investment Restrictions
The Shares of the Fund will conform
to the initial and continued listing
criteria under Rule 8.601–E. The Fund’s
holdings will be limited to and
consistent with permissible holdings as
described in the Application and
Exemptive Order and all requirements
in the Application and Exemptive
Order.16
The Fund’s investments, including
derivatives, will be consistent with its
investment objectives and will not be
used to enhance leverage (although
15 Pursuant to the Application and Exemptive
Order, the permissible investments for the Fund
include only the following instruments: exchangetraded funds, exchange-traded notes, exchangetraded common stocks, common stocks listed on a
foreign exchange that trade on such exchange
contemporaneously with the Shares (‘‘foreign
common stocks’’), exchange-traded preferred stocks,
exchange-traded American Depositary Receipts
(‘‘ADRs’’), exchange-traded real estate investment
trusts, exchange-traded commodity pools,
exchange-traded metals trusts, exchange-traded
currency trusts, and exchange-traded futures that
trade contemporaneously with the Shares. In
addition, the Fund may hold cash and cash
equivalents (short-term U.S. Treasury securities,
government money market funds, and repurchase
agreements). Pursuant to the Application and
Exemptive Order, the Fund will not hold short
positions or invest in derivatives other than U.S.
exchange-traded futures, will not borrow for
investment purposes, and will not purchase any
securities that are illiquid investments at the time
of purchase.
16 Id.
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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).17
ddrumheller on DSK120RN23PROD with NOTICES1
Creations and Redemptions of Shares
According to the Registration
Statement, the Trust will issue and sell
Shares of the Fund only in specified
minimum size ‘‘Creation Units’’ on a
continuous basis through the Distributor
at the NAV next determined after
receipt of an order, on any Business
Day, in proper form. The NAV of the
Fund’s Shares will be calculated each
Business Day as of the close of regular
trading on the Exchange, ordinarily 4:00
p.m. Eastern Time (‘‘E.T.’’). A Creation
Unit will generally consist of at least
5,000 Shares.
According to the Registration
Statement, Shares of the Fund will be
purchased and redeemed in Creation
Units and generally on an in-kind basis
in exchange for a basket of securities
and/or instruments (the ‘‘Deposit
Securities’’) together with a deposit of a
specified cash payment (the ‘‘Cash
Component’’) or, alternatively, a
specified all cash payment (the ‘‘Cash
Deposit’’). Together, the Deposit
Securities and Cash Component or,
alternatively, the Cash Deposit
constitute the ‘‘Fund Deposit,’’ which
represents the minimum initial and
subsequent investment amount for a
Creation Unit of the Fund. In the event
the Fund requires Deposit Securities
and a Cash Component in exchange for
the purchase of a Creation Unit, the
function of the Cash Component is to
compensate for any differences between
the NAV per Creation Unit and the
‘‘Deposit Amount,’’ which is an amount
equal to the market value of the Deposit
Securities. Deposit Securities may
include securities that are not included,
or that are included with different
weightings, in a fund’s Tracking Basket.
Creation Units of the Fund may be
purchased and/or redeemed partially or
entirely for cash. When full or partial
cash purchases or redemptions of
Creation Units are available or specified
for the Fund, they will be effected in
essentially the same manner as in-kind
purchases or redemptions thereof.
In the event the Fund requires Deposit
Securities and a Cash Component in
consideration for purchasing a Creation
17 The Fund’s broad-based securities benchmark
index will be identified in a future amendment to
its Registration Statement following the Fund’s first
full calendar year of performance.
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18:20 Oct 19, 2023
Jkt 262001
Unit, the Fund may determine, upon
receiving a purchase order from an
Authorized Participant (as defined
below), to accept a basket of securities
or cash that differs from Deposit
Securities or to permit the substitution
of an amount of cash (i.e., a ‘‘cash in
lieu’’ amount) to be added to the Cash
Component to replace any Deposit
Security. The Fund will generally
require the substitution of an amount of
cash (i.e., a cash-in-lieu amount) to
replace Deposit Securities that are
Representative ETFs. Similarly, the
Fund will generally substitute a cash-inlieu amount to replace any Fund
Securities that are Representative ETFs
in connection with the redemption of
Creation Units and may determine to
permit a ‘‘cash-in-lieu’’ amount for any
reason, and the amount of cash paid out
in such cases will be equivalent to the
value of the instrument listed as a Fund
Security (as defined below).
The identity and number of Deposit
Securities comprising a Creation Unit
may change from time to time. The
Custodian, through the National
Securities Clearing Corporation
(‘‘NSCC’’), will make available on each
Business Day, immediately prior to the
opening of business on the Exchange
(9:30 a.m. E.T.), a list of the names and
the required number of each Deposit
Security and the amount of the Cash
Component that Fund would accept as
a Fund Deposit for that day, as well as
the identity of a basket of securities
(‘‘Fund Securities’’) and/or an amount
of cash applicable to redemption
requests received on that day. The
published Fund Deposit and Fund
Securities will apply until a new Fund
Deposit and Fund Securities are
announced on the following Business
Day, and there will be no intra-day
changes to the Fund Deposit or Fund
Securities except to correct errors in the
published Fund Deposit or Fund
Securities and except to the extent
permitted under the Exemptive Order.
The Fund Deposit and Fund Securities
will be published each Business Day
regardless of whether the Fund decides
to issue or redeem Creation Units
entirely or in part on a cash basis.
All orders to purchase or redeem
Creation Units must be placed with the
Distributor by or through an Authorized
Participant.18 Conforming orders to
purchase or redeem Creation Units will
generally be accepted until the closing
time of regular trading hours on the
18 An Authorized Participant is a member or
participant of a clearing agency registered with the
Commission, which has a written agreement with
the Fund or one of its service providers that allows
the Authorized Participant to place orders for the
purchase and redemption of creation units.
PO 00000
Frm 00131
Fmt 4703
Sfmt 4703
72549
Exchange (ordinarily 4:00 p.m. E.T.) (the
‘‘Closing Time’’). The date on which an
order to purchase or redeem Creation
Units is received and accepted is
referred to as the ‘‘Transmittal Date.’’
All conforming Creation Unit orders
must be received by the Distributor no
later than the Closing Time in order to
receive the NAV determined on the
Transmittal Date. When the Exchange
closes earlier than normal, the Fund
may require orders for Creation Units to
be placed earlier in the Business Day.
Availability of Information
The Fund’s website
(jhinvestments.com/etf), which will be
publicly available prior to the public
offering of Shares, will include a form
of the prospectus for the Fund that may
be downloaded. The Fund’s website
will include on a daily basis, per Share
for the Fund: (1) the prior Business
Day’s NAV; (2) the prior Business Day’s
‘‘Closing Price’’ or ‘‘Mid-Point of the
Bid/Ask Price;’’ 19 and (3) a calculation
of the premium/discount of such
Closing Price or Mid-Point of the Bid/
Ask Price against such NAV.20 The
Adviser has represented that the Fund’s
website will also provide: (1) any other
information regarding premiums/
discounts as may be required for other
ETFs under Rule 6c–11 under the 1940
Act, as amended, and (2) any
information regarding the bid/ask
spread for the Fund as may be required
for other ETFs under Rule 6c–11 under
the 1940 Act, as amended. The Fund’s
website also will disclose the
information required under Rule 8.601–
E(c)(3).21 The website and information
will be publicly available at no charge.
The identity and quantity of
investments in the Tracking Basket will
be publicly available on the Fund’s
website before the commencement of
19 The records relating to Bid/Ask Prices will be
retained by the Fund or its service providers. The
‘‘Bid/Ask Price’’ is the midpoint of the highest bid
and lowest offer based upon the National Best Bid
and Offer as of the time of calculation of the Fund’s
NAV. The ‘‘National Best Bid and Offer’’ is the
current national best bid and national best offer as
disseminated by the Consolidated Quotation
System or UTP Plan Securities Information
Processor. The ‘‘Closing Price’’ of Shares is the
official closing price of the Shares on the Exchange.
20 The ‘‘premium/discount’’ refers to the
premium or discount to the NAV at the end of a
trading day and will be calculated based on the last
Bid/Ask Price on a given trading day.
21 See note 4, supra. Rule 8.601–E(c)(3) provides
that the website for each series of Active Proxy
Portfolio Shares shall disclose the information
regarding the Proxy Portfolio as provided in the
exemptive relief pursuant to the 1940 Act
applicable to such series, including the following,
to the extent applicable: (i) ticker symbol; (ii) CUSIP
or other identifier; (iii) description of holding; (iv)
quantity of each security or other asset held; and
(v) percentage weighting of the holding in the
portfolio.
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Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Notices
trading in Shares on each Business Day.
The website will also include
information relating to the Tracking
Basket Weight Overlap, as discussed
above. With respect to each Custom
Basket utilized by the Fund, each
Business Day, before the opening of
trading in the Core Trading Session (as
defined in NYSE Arca Rule 7.34–E(a)),
the Fund’s website will also include the
composition of any Custom Basket
transacted on the previous Business
Day, except a Custom Basket that differs
from the Tracking Basket only with
respect to cash.
Typical mutual fund-style annual,
semi-annual and quarterly disclosures
contained in the Fund’s Commission
filings will be provided on the Fund’s
website on a current basis.22 Thus, the
Fund will publish the portfolio contents
of its Actual Portfolio on a periodic
basis, no less than 60 days after the end
of every fiscal quarter, and will make
such information publicly available to
all market participants at the same time.
Investors can also obtain the Fund’s
prospectus, SAI, Shareholder Reports,
Form N–CSR, Form N–PORT, and Form
N–CEN. The prospectus, SAI, and
Shareholder Reports are available free
upon request, and those documents and
the Form N–CSR, Form N–PORT, and
Form N–CEN may be viewed on-screen
or downloaded from the Commission’s
website. The Exchange also notes that
pursuant to the Application, the Fund
must comply with Regulation Fair
Disclosure, which prohibits selective
disclosure of any material non-public
information.
Information regarding the market
price of Shares and trading volume in
Shares, will be continually available on
a real-time basis throughout the day on
brokers’ computer screens and other
electronic services. The previous day’s
closing price and trading volume
information for the Shares will be
published daily in the financial section
of newspapers or news websites.
Quotation and last sale information
for the Shares and U.S. exchange-traded
instruments (excluding futures
contracts) will be available via the
Consolidated Tape Association (‘‘CTA’’)
high-speed line, from the exchanges on
which such securities trade, or through
major market data vendors or
subscription services. Quotation and
last sale information for futures
contracts will be available from the
exchanges on which they trade. Intraday
price information for all exchangetraded instruments, which include all
eligible instruments except cash and
cash equivalents, will be available from
22 See
note 7, supra.
VerDate Sep<11>2014
18:20 Oct 19, 2023
the exchanges on which they trade, or
through major market data vendors or
subscription services. Intraday price
information for cash equivalents is
available through major market data
vendors, subscription services and/or
pricing services.
Trading Halts
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares of
the Fund.23 Trading in Shares of the
Fund will be halted if the circuit breaker
parameters in NYSE Arca Rule 7.12–E
have been reached. Trading also may be
halted because of market conditions or
for reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable. Trading in the Shares will
be subject to NYSE Arca Rule 8.601–
E(d)(2)(D), which sets forth
circumstances under which Shares of
the Fund will be halted.
Specifically, Rule 8.601–E(d)(2)(D)
provides that the Exchange may
consider all relevant factors in
exercising its discretion to halt trading
in a series of Active Proxy Portfolio
Shares. Trading may be halted because
of market conditions or for reasons that,
in the view of the Exchange, make
trading in the series of Active Proxy
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
Proxy Portfolio and/or Actual Portfolio;
or (b) whether other unusual conditions
or circumstances detrimental to the
maintenance of a fair and orderly
market are present. If the Exchange
becomes aware that the NAV, Proxy
Portfolio, or Actual Portfolio with
respect to a series of Active Proxy
Portfolio Shares is not disseminated to
all market participants at the same time,
the Exchange shall halt trading in such
series until such time as the NAV, Proxy
Portfolio, or Actual Portfolio is available
to all market participants at the same
time.
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Shares subject to the Exchange’s
existing rules governing the trading of
equity securities. Shares will trade on
the NYSE Arca Marketplace in all
trading sessions in accordance with
NYSE Arca Rule 7.34–E(a). As provided
in NYSE Arca Rule 7.6–E, the minimum
price variation (‘‘MPV’’) for quoting and
entry of orders in equity securities
traded on the NYSE Arca Marketplace is
23 See
Jkt 262001
PO 00000
NYSE Arca Rule 7.12–E.
Frm 00132
Fmt 4703
Sfmt 4703
$0.01, with the exception of securities
that are priced less than $1.00 for which
the MPV for order entry is $0.0001.
The Shares will conform to the initial
and continued listing criteria under
NYSE Arca Rule 8.601–E. The Exchange
has appropriate rules to facilitate
trading in the Shares during all trading
sessions.
A minimum of 100,000 Shares for the
Fund will be outstanding at the
commencement of trading on the
Exchange. In addition, pursuant to Rule
8.601–E(d)(1)(B), the Exchange, prior to
commencement of trading in the Shares,
will obtain a representation from the
Company that (i) the NAV per Share of
the Fund will be calculated daily, (ii)
the NAV, Tracking Basket, and the
Actual Portfolio for the Fund will be
made publicly available to all market
participants at the same time, and (iii)
the Company and any person acting on
behalf of the Company will comply with
Regulation Fair Disclosure under the
Act, including with respect to any
Custom Basket.
With respect to Active Proxy Portfolio
Shares, all of the Exchange member
obligations relating to product
description and prospectus delivery
requirements will continue to apply in
accordance with Exchange rules and
federal securities laws, and the
Exchange and the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
will continue to monitor Exchange
members for compliance with such
requirements.
Surveillance
The Exchange represents that trading
in the Shares will be subject to the
existing trading surveillances,
administered by the Exchange, as well
as cross-market surveillances
administered by FINRA on behalf of the
Exchange, which are designed to detect
violations of Exchange rules and
applicable federal securities laws.24 The
Exchange represents that these
procedures are adequate to properly
monitor Exchange trading of the Shares
in all trading sessions and to deter and
detect violations of Exchange rules and
federal securities laws applicable to
trading on the Exchange.
The surveillances referred to above
generally focus on detecting securities
trading outside their normal patterns,
which could be indicative of
manipulative or other violative activity.
When such situations are detected,
surveillance analysis follows and
24 FINRA conducts cross-market surveillances on
behalf of the Exchange pursuant to a regulatory
services agreement. The Exchange is responsible for
FINRA’s performance under this regulatory services
agreement.
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investigations are opened, where
appropriate, to review the behavior of
all relevant parties for all relevant
trading violations.
The Exchange or FINRA, on behalf of
the Exchange, or both, will
communicate as needed regarding
trading in the Shares and underlying
exchange-traded instruments with other
markets and other entities that are
members of the ISG, and the Exchange
or FINRA, on behalf of the Exchange, or
both, may obtain trading information
regarding trading such securities and
underlying exchange-traded instruments
from such markets and other entities. In
addition, the Exchange may obtain
information regarding trading in such
securities and underlying exchangetraded instruments from markets and
other entities that are members of ISG or
with which the Exchange has in place
a comprehensive surveillance sharing
agreement.25
The Adviser will make available daily
to FINRA and the Exchange the Actual
Portfolio of the Fund, upon request, as
necessary to assist with the performance
of the surveillances and investigations
referred to above.
In addition, the Exchange also has a
general policy prohibiting the
distribution of material, non-public
information by its employees.
Commentary .03 to NYSE Arca Rule
8.601–E provides that the Exchange will
implement and maintain written
surveillance procedures applicable to
Active Proxy Portfolio Shares. As part of
these surveillance procedures, the
Investment Company’s investment
adviser will, upon request by the
Exchange or FINRA, on behalf of the
Exchange, make available to the
Exchange or FINRA the daily Actual
Portfolio holdings of each series of
Active Proxy Portfolio Shares. The
Exchange believes that the ability to
access the information on an as needed
basis will provide it with sufficient
information to perform the necessary
regulatory functions associated with
listing and trading series of Active
Proxy Portfolio Shares on the Exchange,
including the ability to monitor
compliance with the initial and
continued listing requirements as well
as the ability to surveil for manipulation
of Active Proxy Portfolio Shares.
The Exchange will utilize its existing
procedures to monitor issuer
compliance with the requirements of
Rule 8.601–E. For example, the
Exchange will continue to use intraday
alerts that will notify Exchange
personnel of trading activity throughout
the day that may indicate that unusual
conditions or circumstances are present
that could be detrimental to the
maintenance of a fair and orderly
market. The Exchange will require from
the issuer of a series of Active Proxy
Portfolio Shares, upon initial listing and
periodically thereafter, a representation
that it is in compliance with Rule
8.601–E. The Exchange notes that
Commentary .01 to Rule 8.601–E
requires an issuer of Active Proxy
Portfolio Shares to notify the Exchange
of any failure to comply with the
continued listing requirements of Rule
8.601–E. In addition, the Exchange will
require issuers to represent that they
will notify the Exchange of any failure
to comply with the terms of applicable
exemptive and no-action relief. As part
of its surveillance procedures, the
Exchange will rely on the foregoing
procedures to become aware of any noncompliance with the requirements of
Rule 8.601–E.
With respect to the Fund, all
statements and representations made in
this filing regarding (a) the description
of the portfolio, (b) limitations on
portfolio holdings, or (c) the
applicability of Exchange listing rules
specified in this rule filing shall
constitute continued listing
requirements for listing the Shares on
the Exchange. The Exchange will obtain
a representation from the Trust, prior to
commencement of trading in the Shares
of the Fund, that it will advise the
Exchange of any failure by the Fund to
comply with the continued listing
requirements, and, pursuant to its
obligations under section 19(g)(1) of the
Act, the Exchange will monitor for
compliance with the continued listing
requirements. If the Fund is not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
NYSE Arca Rule 5.5–E(m).
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
section 6(b) of the Act,26 in general, and
furthers the objectives of section 6(b)(5)
of the Act,27 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.28
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
28 The Exchange represents that, for initial and
continued listing, the Fund will be in compliance
a list of the current members of ISG, see
www.isgportal.org.
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With respect to the proposed listing
and trading of Shares of the Fund, the
Exchange believes that the proposed
rule change is designed to prevent
fraudulent and manipulative acts and
practices in that the Shares will be
listed and traded on the Exchange
pursuant to the initial and continued
listing criteria in NYSE Arca Rule
8.601–E.
The Fund’s holdings will conform to
the permissible investments as set forth
in the Application and Exemptive
Order, and the holdings will be
consistent with all requirements in the
Application and Exemptive Order.29
The Exchange or FINRA, on behalf of
the Exchange, or both, will
communicate as needed regarding
trading in the Shares and underlying
exchange-traded instruments with other
markets and other entities that are
members of the ISG, and the Exchange
or FINRA, on behalf of the Exchange, or
both, may obtain trading information
regarding trading in the Shares and
underlying exchange-traded instruments
from such markets and other entities. In
addition, the Exchange may obtain
information regarding trading in the
Shares and underlying exchange-traded
instruments from markets and other
entities that are members of ISG or with
which the Exchange has in place a
comprehensive surveillance sharing
agreement. Any foreign common stocks
held by the Fund will be traded on an
exchange that is a member of the ISG or
with which the Exchange has in place
a comprehensive surveillance sharing
agreement.
The daily dissemination of the
identity and quantity of Tracking Basket
component investments, together with
the right of Authorized Participants to
create and redeem each day at the NAV,
will be sufficient for market participants
to value and trade Shares in a manner
that will not lead to significant
deviations between the Shares’ Bid/Ask
Price and NAV.
The Fund’s investments, including
derivatives, will be consistent with its
investment objective and will not be
used to enhance leverage (although
certain derivatives and other
investments may result in leverage).
That is, the Fund’s investments will not
be used to seek performance that is the
multiple or inverse multiple (e.g., 2X or
–3X) of the Fund’s primary broad-based
securities benchmark index (as defined
in Form N–1A).
The proposed rule change is designed
to promote just and equitable principles
26 15
27 15
25 For
72551
PO 00000
Frm 00133
Fmt 4703
Sfmt 4703
with Rule 10A–3 under the Act, as provided by
NYSE Arca Rule 5.3–E.
29 See note 15, supra.
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ddrumheller on DSK120RN23PROD with NOTICES1
72552
Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Notices
of trade and to protect investors and the
public interest in that the Exchange will
obtain a representation from the Trust
that the NAV per Share of the Fund will
be calculated daily and that the NAV,
Tracking Basket, Actual Portfolio, and/
or Custom Basket, as applicable, for the
Fund will be made available to all
market participants at the same time.
Investors can obtain the Fund’s SAI,
shareholder reports, and its Form N–
CSR, Form N–PORT, and Form N–CEN.
The Fund’s SAI and shareholder reports
will be available free upon request from
the Fund, and those documents and the
Form N–CSR, Form N–PORT, and Form
N–CEN may be viewed on-screen or
downloaded from the Commission’s
website.
Commentary .03 to NYSE Arca Rule
8.601–E provides that the Exchange will
implement and maintain written
surveillance procedures applicable to
Active Proxy Portfolio Shares. As part of
these surveillance procedures, the
Investment Company’s investment
adviser will, upon request by the
Exchange or FINRA, on behalf of the
Exchange, make available to the
Exchange or FINRA the daily portfolio
holdings of each series of Active Proxy
Portfolio Shares. The Exchange believes
that the ability to access the information
on an as needed basis will provide it
with sufficient information to perform
the necessary regulatory functions
associated with listing and trading
series of Active Proxy Portfolio Shares
on the Exchange, including the ability to
monitor compliance with the initial and
continued listing requirements as well
as the ability to surveil for manipulation
of Active Proxy Portfolio Shares. With
respect to the Fund, the Adviser will
make available daily to FINRA and the
Exchange the portfolio holdings of the
Fund upon request as necessary to
facilitate the performance of the
surveillances and investigations referred
to above.
The Exchange will utilize its existing
procedures to monitor compliance with
the requirements of Rule 8.601–E. For
example, the Exchange will continue to
use intraday alerts that will notify
Exchange personnel of trading activity
throughout the day that may indicate
that unusual conditions or
circumstances are present that could be
detrimental to the maintenance of a fair
and orderly market. The Exchange will
require from the Trust, upon initial
listing and periodically thereafter, a
representation that it is in compliance
with Rule 8.601–E. The Exchange notes
that Commentary .01 to Rule 8.601–E
requires the issuer of Shares to notify
the Exchange of any failure to comply
with the continued listing requirements
VerDate Sep<11>2014
18:20 Oct 19, 2023
Jkt 262001
of Rule 8.601–E. In addition, the
Exchange will require the issuer to
represent that it will notify the
Exchange of any failure to comply with
the terms of applicable exemptive and
no-action relief. The Exchange will rely
on the foregoing procedures to become
aware of any non-compliance with the
requirements of Rule 8.601–E.
In addition, with respect to the Fund,
a large amount of information will be
publicly available regarding the Fund
and the Shares, thereby promoting
market transparency.
Quotation and last sale information
for the Shares and U.S. exchange-traded
instruments (excluding futures
contracts) will be available via the CTA
high-speed line, from the exchanges on
which such securities trade, or through
major market data vendors or
subscription services. Quotation and
last sale information for futures
contracts will be available from the
exchanges on which they trade. Intraday
price information for all exchangetraded instruments, which include all
eligible instruments except cash and
cash equivalents, will be available from
the exchanges on which they trade, or
through major market data vendors or
subscription services. Intraday price
information for cash equivalents is
available through major market data
vendors, subscription services and/or
pricing services.
The website for the Fund will include
a form of the prospectus that may be
downloaded, and additional data
relating to NAV and other applicable
quantitative information, updated on a
daily basis. Trading in Shares of the
Fund will be halted if the circuit breaker
parameters in NYSE Arca Rule 7.12–E
have been reached or because of market
conditions or for reasons that, in the
view of the Exchange, make trading in
the Shares inadvisable. Trading in the
Shares will be subject to NYSE Arca
Rule 8.601–E(d)(2)(D), which sets forth
circumstances under which Shares of
the Fund will be halted. In addition, as
noted above, investors will have ready
access to the Fund’s Tracking Basket
and quotation and last sale information
for the Shares. The identity and quantity
of investments in the Fund’s Tracking
Basket will be publicly available on the
Fund’s website before the
commencement of trading in Shares on
each Business Day. The Shares will
conform to the initial and continued
listing criteria under Rule 8.601–E.30
The Fund’s holdings will conform to
the permissible investments as set forth
in the Application and Exemptive
Order, and the holdings will be
30 See
PO 00000
note 4, supra.
Frm 00134
Fmt 4703
consistent with all requirements in the
Application and Exemptive Order.31
Any foreign common stocks held by the
Fund will be traded on an exchange that
is a member of the ISG or with which
the Exchange has in place a
comprehensive surveillance sharing
agreement.
The proposed rule change is designed
to perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest in that
it will facilitate the listing and trading
of an additional type of activelymanaged exchange-traded product that
will enhance competition among market
participants, to the benefit of investors
and the marketplace. The Exchange will
obtain a representation from the
Adviser, prior to commencement of
trading in the Shares of the Fund, that
it will advise the Exchange of any
failure by the Fund to comply with the
continued listing requirements, and,
pursuant to its obligations under section
19(g)(1) of the Act, the Exchange will
monitor for compliance with the
continued listing requirements. If the
Fund is not in compliance with the
applicable listing requirements, the
Exchange will commence delisting
procedures under NYSE Arca Rule 5.5–
E(m).
As noted above, the Exchange has in
place surveillance procedures relating to
trading in the Shares and may obtain
information via ISG from other
exchanges that are members of ISG or
with which the Exchange has entered
into a comprehensive surveillance
sharing agreement. In addition, as noted
above, investors will have ready access
to information regarding quotation and
last sale information for the Shares.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes the proposed rule
change would permit listing and trading
of an additional actively-managed ETF
that has characteristics different from
existing actively-managed and index
ETFs and would introduce additional
competition among various ETF
products to the benefit of investors.
31 See
Sfmt 4703
E:\FR\FM\20OCN1.SGM
note 15, supra.
20OCN1
Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Notices
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 32 and Rule 19b–
4(f)(6) thereunder.33
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) 34 permits
the Commission to designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange notes that the
Commission has approved and noticed
for immediate effectiveness proposed
rule changes to permit listing and
trading on the Exchange of Active Proxy
Portfolio Shares similar to the Fund.35
The proposed listing rule for the Fund
raises no novel legal or regulatory
issues. Thus, the Commission believes
that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest.
Accordingly, the Commission hereby
waives the 30-day operative delay and
designates the proposed rule change
operative upon filing.36
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
32 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
34 17 CFR 240.19b–4(f)(6)(iii).
35 See supra notes 9 and 10.
36 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).
ddrumheller on DSK120RN23PROD with NOTICES1
33 17
VerDate Sep<11>2014
18:20 Oct 19, 2023
Jkt 262001
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–2023–71 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–2023–71. 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
a.m. and 3 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–2023–71 and should be
PO 00000
Frm 00135
Fmt 4703
Sfmt 4703
72553
submitted on or before November 13,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.37
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–23265 Filed 10–19–23; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
SBA Invention, Innovation, and
Entrepreneurship Advisory Committee
Meeting
Small Business Administration.
Notice of Federal Advisory
committee meeting: SBA Invention,
Innovation, and Entrepreneurship
Advisory Committee.
AGENCY:
ACTION:
The U.S. Small Business
Administration (SBA) will hold the
inaugural meeting of the SBA Invention,
Innovation, and Entrepreneurship
Advisory Committee on Wednesday,
November 1, 2023. Members will
convene as an independent source of
advice and recommendations to SBA on
matters supporting U.S. innovation,
addressing commercialization hurdles
and other vulnerabilities in the
domestic investment and innovation
ecosystem, and facilitating
entrepreneurial access-to and
participation-in federal innovation
support and funding programs. The
meeting will be in person for members
and streamed live to the public.
DATES: Wednesday November 15, 2023,
from 9 a.m. to 3 p.m. Eastern Time (ET).
ADDRESSES: The Invention, Innovation,
and Entrepreneurship Advisory
Committee will meet at the SBA
Headquarters Building located at 409
3rd Street SW, Washington, DC 20416
and the meeting will be live streamed
for the public. Register at https://bit.ly/
IIEAC-Nov23.
FOR FURTHER INFORMATION CONTACT:
Jennifer Shieh, Designated Federal
Officer, Office of Investment and
Innovation, SBA, 409 3rd Street SW,
Washington, DC 20416, (202) 539–1448
or IIEAC@sba.gov. The meeting will be
live streamed to the public, and anyone
wishing to submit questions to the SBA
Invention, Innovation, and
Entrepreneurship Advisory Committee
can do so by submitting them via email
to IIEAC@sba.gov. Individuals who
require an alternative aid or service to
communicate effectively with SBA
should email the point of contact listed
SUMMARY:
37 17
E:\FR\FM\20OCN1.SGM
CFR 200.30–3(a)(12), (59).
20OCN1
]]>Agencies
[Federal Register Volume 88, Number 202 (Friday, October 20, 2023)]
[Notices]
[Pages 72545-72553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-23265]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98765; File No. SR-NYSEARCA-2023-71]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To List and Trade
Shares of the John Hancock Fundamental All Cap Core ETF Under Rule
8.601-E, Active Proxy Portfolio Shares
October 17, 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 October 13, 2023, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the Securities and Exchange Commission
(``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
[[Page 72546]]
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 NYSE Arca Rule 8.601-E: John Hancock Fundamental All Cap Core
ETF. The proposed rule change is available on the Exchange's website at
www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange has adopted NYSE Arca Rule 8.601-E for the purpose of
permitting the listing and trading, or trading pursuant to unlisted
trading privileges (``UTP''), of Active Proxy Portfolio Shares, which
are securities issued by an actively managed open-end investment
management company.\4\ Commentary .01 to Rule 8.601-E requires the
Exchange to file separate proposals under section 19(b) of the Act
before listing and trading any series of Active Proxy Portfolio Shares
on the Exchange. Therefore, the Exchange is submitting this proposal in
order to list and trade shares (``Shares'') of the John Hancock
Fundamental All Cap Core ETF (the ``Fund'') under Rule 8.601-E.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 89185 (June 29,
2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95). Rule 8.601-
E(c)(1) provides that ``[t]he term ``Active Proxy Portfolio Share''
means a security that (a) is issued by a investment company
registered under the Investment Company Act of 1940 (``Investment
Company'') organized as an open-end management investment company
that invests in a portfolio of securities selected by the Investment
Company's investment adviser consistent with the Investment
Company's investment objectives and policies; (b) is issued in a
specified minimum number of shares, or multiples thereof, in return
for a deposit by the purchaser of the Proxy Portfolio or Custom
Basket, as applicable, and/or cash with a value equal to the next
determined net asset value (``NAV''); (c) when aggregated in the
same specified minimum number of Active Proxy Portfolio Shares, or
multiples thereof, may be redeemed at a holder's request in return
for the Proxy Portfolio or Custom Basket, as applicable, and/or cash
to the holder by the issuer with a value equal to the next
determined NAV; and (d) the portfolio holdings for which are
disclosed within at least 60 days following the end of every fiscal
quarter.'' Rule 8.601-E(c)(2) provides that ``[t]he term ``Actual
Portfolio'' means the identities and quantities of the securities
and other assets held by the Investment Company that shall form the
basis for the Investment Company's calculation of NAV at the end of
the business day.'' Rule 8.601-E(c)(3) provides that ``[t]he term
``Proxy Portfolio'' means a specified portfolio of securities, other
financial instruments and/or cash designed to track closely the
daily performance of the Actual Portfolio of a series of Active
Proxy Portfolio Shares as provided in the exemptive relief pursuant
to the Investment Company Act of 1940 applicable to such series.''
Rule 8.601-E(c)(4) provides that the term ``Custom Basket'' means a
portfolio of securities that is different from the Proxy Portfolio
and is otherwise consistent with the exemptive relief issued
pursuant to the Investment Company Act of 1940 applicable to a
series of Active Proxy Portfolio Shares.
---------------------------------------------------------------------------
Key Features of Active Proxy Portfolio Shares
While funds issuing Active Proxy Portfolio Shares will be actively-
managed and, to that extent, will be similar to Managed Fund Shares,
Active Proxy Portfolio Shares differ from Managed Fund Shares in the
following important respects. First, in contrast to Managed Fund
Shares, which are actively-managed funds listed and traded under NYSE
Arca Rule 8.600-E \5\ and for which a ``Disclosed Portfolio'' is
required to be disseminated at least once daily,\6\ the portfolio for
an issue of Active Proxy Portfolio Shares will be publicly disclosed
within at least 60 days following the end of every fiscal quarter in
accordance with normal disclosure requirements otherwise applicable to
open-end management investment companies registered under the
Investment Company Act of 1940, as amended (the ``1940 Act'').\7\ The
composition of the portfolio of an issue of Active Proxy Portfolio
Shares would not be available at commencement of Exchange listing and
trading. Second, in connection with the creation and redemption of
Active Proxy Portfolio Shares, such creation or redemption may be
exchanged for a Proxy Portfolio or Custom Basket, as applicable, and/or
cash with a value equal to the next-determined NAV. A series of Active
Proxy Portfolio Shares will disclose the Proxy Portfolio on a daily
basis, which, as described above, is designed to track closely the
daily performance of the Actual Portfolio of a series of Active Proxy
Portfolio Shares, instead of the actual holdings of the Investment
Company, as provided by a series of Managed Fund Shares. As set forth
in NYSE Arca Rule 8.601-E(d)(2)(B)(ii), for Active Proxy Portfolio
Shares using a Custom Basket, each Business Day,\8\ before the opening
of trading in the Core Trading Session (as defined in NYSE Arca Rule
7.34-E (a)), the Investment Company shall make publicly available on
its website the composition of any Custom Basket transacted on the
previous Business Day, except a Custom Basket that differs from the
applicable Proxy Portfolio only with respect to cash.
---------------------------------------------------------------------------
\5\ The Commission has previously approved listing and trading
on the Exchange of a number of issues of Managed Fund Shares under
NYSE Arca Rule 8.600-E. See, e.g., Securities Exchange Act Release
Nos. 57801 (May 8, 2008), 73 FR 27878 (May 14, 2008) (SR-NYSEArca-
2008-31) (order approving Exchange listing and trading of twelve
actively-managed funds of the WisdomTree Trust); 60460 (August 7,
2009), 74 FR 41468 (August 17, 2009) (SR-NYSEArca-2009-55) (order
approving listing of Dent Tactical ETF); 63076 (October 12, 2010),
75 FR 63874 (October 18, 2010) (SR-NYSEArca-2010-79) (order
approving Exchange listing and trading of Cambria Global Tactical
ETF); 63802 (January 31, 2011), 76 FR 6503 (February 4, 2011) (SR-
NYSEArca-2010-118) (order approving Exchange listing and trading of
the SiM Dynamic Allocation Diversified Income ETF and SiM Dynamic
Allocation Growth Income ETF). The Commission also has approved a
proposed rule change relating to generic listing standards for
Managed Fund Shares. See Securities Exchange Act Release No. 78397
(July 22, 2016), 81 FR 49320 (July 27, 2016) (SR-NYSEArca-2015-110)
(amending NYSE Arca Equities Rule 8.600 to adopt generic listing
standards for Managed Fund Shares).
\6\ NYSE Arca Rule 8.600-E(c)(2) defines the term ``Disclosed
Portfolio'' as the identities and quantities of the securities and
other assets held by the Investment Company that will form the basis
for the Investment Company's calculation of net asset value at the
end of the business day. NYSE Arca Rule 8.600-E(d)(2)(B)(i) requires
that the Disclosed Portfolio will be disseminated at least once
daily and will be made available to all market participants at the
same time.
\7\ A mutual fund is required to file with the Commission its
complete portfolio schedules for the second and fourth fiscal
quarters on Form N-CSR under the 1940 Act. Information reported on
Form N-PORT for the third month of a fund's fiscal quarter will be
made publicly available 60 days after the end of a fund's fiscal
quarter. Form N-PORT requires reporting of a fund's complete
portfolio holdings on a position-by-position basis on a quarterly
basis within 60 days after fiscal quarter end. Investors can obtain
a series of Active Proxy Portfolio Shares' Statement of Additional
Information (``SAI''), its Shareholder Reports, its Form N-CSR,
filed twice a year, and its Form N-CEN, filed annually. A series of
Active Proxy Portfolio Shares' SAI and Shareholder Reports will be
available free upon request from the Investment Company, and those
documents and the Form N-PORT, Form N-CSR, and Form N-CEN may be
viewed on-screen or downloaded from the Commission's website at
www.sec.gov.
\8\ ``Business Day'' is defined to mean any day that the
Exchange is open, including any day when the Fund satisfies
redemption requests as required by section 22(e) of the 1940 Act.
---------------------------------------------------------------------------
The Commission has previously approved \9\ and noticed for
immediate
[[Page 72547]]
effectiveness \10\ the listing and trading on the Exchange of series of
Active Proxy Portfolio Shares under NYSE Arca Rule 8.601-E.
---------------------------------------------------------------------------
\9\ See, e.g., Securities Exchange Act Release Nos. 89185 (June
29, 2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95) (Notice
of Filing of Amendment No. 6 and Order Granting Accelerated Approval
of a Proposed Rule Change, as Modified by Amendment No. 6, to Adopt
NYSE Arca Rule 8.601-E to Permit the Listing and Trading of Active
Proxy Portfolio Shares and To List and Trade Shares of the Natixis
U.S. Equity Opportunities ETF Under Proposed NYSE Arca Rule 8.601-
E); 89192 (June 30, 2020), 85 FR 40699 (July 7, 2020) (SR-NYSEArca-
2019-96) (Notice of Filing of Amendment No. 5 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment No. 5, to List and Trade Two Series of Active Proxy
Portfolio Shares Issued by the American Century ETF Trust under NYSE
Arca Rule 8.601-E); 89191 (June 30, 2020), 85 FR 40358 (July 6,
2020) (SR-NYSEArca-2019-92) (Notice of Filing of Amendment No. 3 and
Order Granting Accelerated Approval of a Proposed Rule Change, as
Modified by Amendment No. 3, to List and Trade Four Series of Active
Proxy Portfolio Shares Issued by T. Rowe Price Exchange-Traded
Funds, Inc. under NYSE Arca Rule 8.601-E); 89438 (July 31, 2020), 85
FR 47821 (August 6, 2020) (SR-NYSEArca-2020-51) (Order Granting
Approval of a Proposed Rule Change, as Modified by Amendment No. 2,
to List and Trade Shares of Natixis Vaughan Nelson Select ETF and
Natixis Vaughan Nelson MidCap ETF under NYSE Arca Rule 8.601-E);
91266 (March 5, 2021), 86 FR 13930 (March 11, 2021) (SR-NYSEArca-
2020-104) (Order Approving a Proposed Rule Change, as Modified by
Amendment No. 2, To List and Trade Shares of the Stance Equity ESG
Large Cap Core ETF Under NYSE Arca Rule 8.601-E).
\10\ See, e.g., Securities Exchange Act Release Nos. 92104 (June
3, 2021), 86 FR 30635 (June 9, 2021) (NYSEArca-2021-46) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to List
and Trade Shares of the Nuveen Santa Barbara Dividend Growth ETF,
Nuveen Small Cap Select ETF, and Nuveen Winslow Large-Cap Growth ESG
ETF Under NYSE Arca Rule 8.601-E (Active Proxy Portfolio Shares);
92958 (September 13, 2021), 86 FR 51933 (September 17, 2021)
(NYSEArca-2021-77) (Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To List and Trade Shares of the Nuveen Growth
Opportunities ETF Under NYSE Arca Rule 8.601-E (Active Proxy
Portfolio Shares); 93264 (October 6, 2021), 86 FR 56989 (October 13,
2021) (SR-NYSEArca-2021-84) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To List and Trade Shares of
the Schwab Ariel ESG ETF Under NYSE Arca Rule 8.601-E (Active Proxy
Portfolio Shares); 94486 (March 22, 2022), 87 FR 17351 (March 28,
2022) (SR-NYSEArca-2022-14) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change to List and Trade Shares of
the Columbia Seligman Semiconductor and Technology ETF Under NYSE
Arca Rule 8.601 (Active Proxy Portfolio Shares); 94908 (May 13,
2022), 87 FR 30524 (May 19, 2022) (SR-NYSEArca-2022-28) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to List
and Trade Shares of the Principal Real Estate Active Opportunities
ETF Under NYSE Arca Rule 8.601 (Active Proxy Portfolio Shares));
94902 (May 12, 2022), 87 FR 30286 (May 18, 2022) (SR-NYSEArca-2022-
29) (Notice of Filing and Immediate Effectiveness of Proposed Rule
Change to List and Trade Shares of the IQ Winslow Large Cap Growth
ETF and IQ Winslow Focused Large Cap Growth ETF Under NYSE Arca Rule
8.601-E (Active Proxy Portfolio Shares)).
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The Shares will be issued by the Fund, a series of the John Hancock
Exchange-Traded Fund Trust (the ``Trust''), which is organized as a
business trust under the laws of the Commonwealth of Massachusetts and
registered with the Commission as an open-end management investment
company.\11\ John Hancock Investment Management LLC (the ``Adviser'')
will be the investment adviser to the Fund. Manulife Investment
Management (US) LLC will be the sub-adviser (the ``Sub-Adviser'') for
the Fund. State Street Bank and Trust Company will serve as the Fund's
custodian and transfer agent (the ``Custodian''). Foreside Fund
Services, LLC will act as the distributor (the ``Distributor'') for the
Fund.
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\11\ The Trust is registered under the 1940 Act. On August 2,
2023, the Trust filed a registration statement on Form N-1A under
the 1940 Act relating to the Fund (File Nos. 333-183173 and 811-
22733) (the ``Registration Statement''). The Trust filed a second
amended and restated application for an order under section 6(c) of
the 1940 Act for exemptions from various provisions of the 1940 Act
and rules thereunder on December 20, 2021 (File No. 812-15235) (the
``Application''). On January 10, 2022, the Commission issued a
notice relating to the Application (Investment Company Act Release
No. 34468, January 10, 2022), and on February 7, 2022, the
Commission issued an order under the 1940 Act granting the relief
sought in the Application (Investment Company Act Release No. 34496,
February 7, 2022) (the ``Exemptive Order''). Investments made by the
Fund will comply with the conditions set forth in the Application
and the Exemptive Order. The description of the operation of the
Fund herein is based, in part, on the Registration Statement,
Application, and Exemptive Order. The Exchange will not commence
trading in Shares of the Fund until the Registration Statement is
effective.
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Commentary .04 to NYSE Arca Rule 8.601-E provides that, if the
investment adviser to the Investment Company issuing Active Proxy
Portfolio Shares is registered as a broker-dealer or is affiliated with
a broker-dealer, such investment adviser will erect and maintain a
``fire wall'' between the investment adviser and personnel of the
broker-dealer or broker-dealer affiliate, as applicable, with respect
to access to information concerning the composition and/or changes to
such Investment Company's Actual Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable. Any person related to the investment
adviser or Investment Company who makes decisions pertaining to the
Investment Company's Actual Portfolio, Proxy Portfolio, and/or Custom
Basket, as applicable, or has access to non-public information
regarding the Investment Company's Actual Portfolio, Proxy Portfolio,
and/or Custom Basket, as applicable, or changes thereto must be subject
to procedures reasonably designed to prevent the use and dissemination
of material non-public information regarding the Actual Portfolio,
Proxy Portfolio, and/or Custom Basket, as applicable, or changes
thereto. Commentary .04 is similar to Commentary .03(a)(i) and (iii) to
NYSE Arca Rule 5.2-E(j)(3); however, Commentary .04, in connection with
the establishment of a ``fire wall'' between the investment adviser and
the broker-dealer, reflects the applicable open-end fund's portfolio,
not an underlying benchmark index, as is the case with index-based
funds.\12\ Commentary .04 is also similar to Commentary .06 to Rule
8.600-E related to Managed Fund Shares, except that Commentary .04
relates to establishment and maintenance of a ``fire wall'' between the
investment adviser and personnel of the broker-dealer or broker-dealer
affiliates, as applicable, applicable to an Investment Company's Actual
Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable, or
changes thereto, and not just to the underlying portfolio, as is the
case with Managed Fund Shares.
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\12\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Adviser and 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.
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In addition, Commentary .05 to Rule 8.601-E provides that any
person or entity, including a custodian, Reporting Authority,
distributor, or administrator, who has access to non-public information
regarding the Investment Company's Actual Portfolio, Proxy Portfolio,
or Custom Basket, as applicable, or changes thereto, must be subject to
procedures reasonably designed to prevent the use and dissemination of
material non-public information regarding the applicable Investment
Company Actual Portfolio, Proxy Portfolio, or Custom Basket, as
applicable, or changes thereto. Moreover, if any such person or entity
is registered as a broker-dealer or affiliated with a broker-dealer,
such person or entity will erect and maintain a ``fire wall'' between
the person or
[[Page 72548]]
entity and the broker-dealer with respect to access to information
concerning the composition and/or changes to such Investment Company
Actual Portfolio, Proxy Portfolio, or Custom Basket, as applicable.
Neither the Adviser nor the Sub-Adviser is registered as a broker-
dealer, but each is affiliated with a broker-dealer. The Adviser and
Sub-Adviser have implemented and will maintain a ``fire wall'' with
respect to such broker-dealer affiliate regarding access to information
concerning the composition of and/or changes to the Fund's Actual
Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable.
In the event (a) the Adviser 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 its relevant personnel or its broker-
dealer affiliate regarding access to information concerning the
composition and/or changes to the Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable, and will be subject to
procedures designed to prevent the use and dissemination of material
non-public information regarding the Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable, or changes thereto. Any
person related to the Adviser, Sub-Adviser, or the Fund who makes
decisions pertaining to the Fund's Actual Portfolio, Proxy Portfolio,
or Custom Basket, as applicable, or has access to non-public
information regarding the Fund's Actual Portfolio, Proxy Portfolio,
and/or Custom Basket, as applicable, or changes thereto are subject to
procedures reasonably designed to prevent the use and dissemination of
material non-public information regarding the Fund's Actual Portfolio,
Proxy Portfolio, and/or Custom Basket, as applicable, or changes
thereto.
In addition, any person or entity, including any service provider
for the Fund, who has access to non-public information regarding the
Fund's Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as
applicable, or changes thereto, will be subject to procedures
reasonably designed to prevent the use and dissemination of material
non-public information regarding the Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable, or changes thereto.
Moreover, if any such person or entity is registered as a broker-dealer
or affiliated with a broker-dealer, such person or entity has erected
and will maintain a ``fire wall'' between the person or entity and the
broker-dealer with respect to access to information concerning the
composition and/or changes to the Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable.
Description of the Fund
According to the Registration Statement, the Fund will publish a
``Tracking Basket'' \13\ on its website on each Business Day.\14\ The
Tracking Basket is designed to closely track the daily performance of
the Fund but is not the Fund's Actual Portfolio. The Tracking Basket is
comprised of (1) select recently disclosed portfolio holdings and/or
select securities from the universe from which the Fund's investments
are selected (``Strategy Components''); (2) liquid U.S. exchange-traded
ETFs that convey information about the types of instruments (that are
not otherwise fully represented by the Strategy Components) in which
the Fund invests (``Representative ETFs''); and (3) cash and cash
equivalents. Representative ETFs will be selected for inclusion in the
Tracking Basket such that, when aggregated with the other Tracking
Basket components, the Tracking Basket corresponds to the Fund's
overall holdings exposure. The Fund will publish the Tracking Basket
for the Fund on its website before the commencement of trading of the
Fund's Shares on each Business Day, and the Adviser will not make
intra-day changes to the Tracking Basket except to correct errors in
the published Tracking Basket.
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\13\ The ``Tracking Basket'' is the Proxy Portfolio for purposes
of Rule 8.601-E(c)(3).
\14\ ``Business Day'' is defined to mean any day that the
Exchange is open, including any day when the Fund satisfies
redemption requests as required by section 22(e) of the 1940 Act.
---------------------------------------------------------------------------
In addition, on each Business Day, before commencement of trading
of Shares, the Fund will publish on its website the ``Tracking Basket
Weight Overlap,'' which is the percentage weight overlap between the
holdings of the prior Business Day's Tracking Basket compared to the
holdings of the Fund that formed the basis for the Fund's calculation
of NAV at the end of the prior Business Day. The Tracking Basket Weight
Overlap is calculated by taking the lesser weight of each asset held in
common between the Fund's Actual Portfolio and the Tracking Basket and
adding the totals. The Tracking Basket Weight Overlap is designed to
provide investors with an understanding of the degree to which the
Tracking Basket and the Fund's Actual Portfolio overlap and help
investors evaluate the risk that the performance of the Tracking Basket
may deviate from the performance of the Fund's Actual Portfolio.
The Fund's holdings will conform to the permissible investments as
set forth in the Application and Exemptive Order, and the holdings will
be consistent with all requirements in the Application and Exemptive
Order.\15\ Any foreign common stocks held by the Fund will be traded on
an exchange that is a member of the Intermarket Surveillance Group
(``ISG'') or with which the Exchange has in place a comprehensive
surveillance sharing agreement.
---------------------------------------------------------------------------
\15\ Pursuant to the Application and Exemptive Order, the
permissible investments for the Fund include only the following
instruments: exchange-traded funds, exchange-traded notes, exchange-
traded common stocks, common stocks listed on a foreign exchange
that trade on such exchange contemporaneously with the Shares
(``foreign common stocks''), exchange-traded preferred stocks,
exchange-traded American Depositary Receipts (``ADRs''), exchange-
traded real estate investment trusts, exchange-traded commodity
pools, exchange-traded metals trusts, exchange-traded currency
trusts, and exchange-traded futures that trade contemporaneously
with the Shares. In addition, the Fund may hold cash and cash
equivalents (short-term U.S. Treasury securities, government money
market funds, and repurchase agreements). Pursuant to the
Application and Exemptive Order, the Fund will not hold short
positions or invest in derivatives other than U.S. exchange-traded
futures, will not borrow for investment purposes, and will not
purchase any securities that are illiquid investments at the time of
purchase.
---------------------------------------------------------------------------
According to the Registration Statement, the Fund will under normal
market conditions invest at least 80% of its net assets in equity
securities (including exchange-traded common and preferred securities
and exchange-traded futures providing such exposure). Market
capitalizations of the companies in whose securities the Fund may
invest will span the capitalization spectrum. The Fund may invest up to
20% of its net assets in equity securities of foreign issuers,
including ADRs, and may invest only in common stocks listed on a
foreign exchange that trade contemporaneously with the Fund's Shares.
Investment Restrictions
The Shares of the Fund will conform to the initial and continued
listing criteria under Rule 8.601-E. The Fund's holdings will be
limited to and consistent with permissible holdings as described in the
Application and Exemptive Order and all requirements in the Application
and Exemptive Order.\16\
---------------------------------------------------------------------------
\16\ Id.
---------------------------------------------------------------------------
The Fund's investments, including derivatives, will be consistent
with its investment objectives and will not be used to enhance leverage
(although
[[Page 72549]]
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).\17\
---------------------------------------------------------------------------
\17\ The Fund's broad-based securities benchmark index will be
identified in a future amendment to its Registration Statement
following the Fund's first full calendar year of performance.
---------------------------------------------------------------------------
Creations and Redemptions of Shares
According to the Registration Statement, the Trust will issue and
sell Shares of the Fund only in specified minimum size ``Creation
Units'' on a continuous basis through the Distributor at the NAV next
determined after receipt of an order, on any Business Day, in proper
form. The NAV of the Fund's Shares will be calculated each Business Day
as of the close of regular trading on the Exchange, ordinarily 4:00
p.m. Eastern Time (``E.T.''). A Creation Unit will generally consist of
at least 5,000 Shares.
According to the Registration Statement, Shares of the Fund will be
purchased and redeemed in Creation Units and generally on an in-kind
basis in exchange for a basket of securities and/or instruments (the
``Deposit Securities'') together with a deposit of a specified cash
payment (the ``Cash Component'') or, alternatively, a specified all
cash payment (the ``Cash Deposit''). Together, the Deposit Securities
and Cash Component or, alternatively, the Cash Deposit constitute the
``Fund Deposit,'' which represents the minimum initial and subsequent
investment amount for a Creation Unit of the Fund. In the event the
Fund requires Deposit Securities and a Cash Component in exchange for
the purchase of a Creation Unit, the function of the Cash Component is
to compensate for any differences between the NAV per Creation Unit and
the ``Deposit Amount,'' which is an amount equal to the market value of
the Deposit Securities. Deposit Securities may include securities that
are not included, or that are included with different weightings, in a
fund's Tracking Basket.
Creation Units of the Fund may be purchased and/or redeemed
partially or entirely for cash. When full or partial cash purchases or
redemptions of Creation Units are available or specified for the Fund,
they will be effected in essentially the same manner as in-kind
purchases or redemptions thereof.
In the event the Fund requires Deposit Securities and a Cash
Component in consideration for purchasing a Creation Unit, the Fund may
determine, upon receiving a purchase order from an Authorized
Participant (as defined below), to accept a basket of securities or
cash that differs from Deposit Securities or to permit the substitution
of an amount of cash (i.e., a ``cash in lieu'' amount) to be added to
the Cash Component to replace any Deposit Security. The Fund will
generally require the substitution of an amount of cash (i.e., a cash-
in-lieu amount) to replace Deposit Securities that are Representative
ETFs. Similarly, the Fund will generally substitute a cash-in-lieu
amount to replace any Fund Securities that are Representative ETFs in
connection with the redemption of Creation Units and may determine to
permit a ``cash-in-lieu'' amount for any reason, and the amount of cash
paid out in such cases will be equivalent to the value of the
instrument listed as a Fund Security (as defined below).
The identity and number of Deposit Securities comprising a Creation
Unit may change from time to time. The Custodian, through the National
Securities Clearing Corporation (``NSCC''), will make available on each
Business Day, immediately prior to the opening of business on the
Exchange (9:30 a.m. E.T.), a list of the names and the required number
of each Deposit Security and the amount of the Cash Component that Fund
would accept as a Fund Deposit for that day, as well as the identity of
a basket of securities (``Fund Securities'') and/or an amount of cash
applicable to redemption requests received on that day. The published
Fund Deposit and Fund Securities will apply until a new Fund Deposit
and Fund Securities are announced on the following Business Day, and
there will be no intra-day changes to the Fund Deposit or Fund
Securities except to correct errors in the published Fund Deposit or
Fund Securities and except to the extent permitted under the Exemptive
Order. The Fund Deposit and Fund Securities will be published each
Business Day regardless of whether the Fund decides to issue or redeem
Creation Units entirely or in part on a cash basis.
All orders to purchase or redeem Creation Units must be placed with
the Distributor by or through an Authorized Participant.\18\ Conforming
orders to purchase or redeem Creation Units will generally be accepted
until the closing time of regular trading hours on the Exchange
(ordinarily 4:00 p.m. E.T.) (the ``Closing Time''). The date on which
an order to purchase or redeem Creation Units is received and accepted
is referred to as the ``Transmittal Date.'' All conforming Creation
Unit orders must be received by the Distributor no later than the
Closing Time in order to receive the NAV determined on the Transmittal
Date. When the Exchange closes earlier than normal, the Fund may
require orders for Creation Units to be placed earlier in the Business
Day.
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\18\ An Authorized Participant is a member or participant of a
clearing agency registered with the Commission, which has a written
agreement with the Fund or one of its service providers that allows
the Authorized Participant to place orders for the purchase and
redemption of creation units.
---------------------------------------------------------------------------
Availability of Information
The Fund's website (jhinvestments.com/etf), which will be publicly
available prior to the public offering of Shares, will include a form
of the prospectus for the Fund that may be downloaded. The Fund's
website will include on a daily basis, per Share for the Fund: (1) the
prior Business Day's NAV; (2) the prior Business Day's ``Closing
Price'' or ``Mid-Point of the Bid/Ask Price;'' \19\ and (3) a
calculation of the premium/discount of such Closing Price or Mid-Point
of the Bid/Ask Price against such NAV.\20\ The Adviser has represented
that the Fund's website will also provide: (1) any other information
regarding premiums/discounts as may be required for other ETFs under
Rule 6c-11 under the 1940 Act, as amended, and (2) any information
regarding the bid/ask spread for the Fund as may be required for other
ETFs under Rule 6c-11 under the 1940 Act, as amended. The Fund's
website also will disclose the information required under Rule 8.601-
E(c)(3).\21\ The website and information will be publicly available at
no charge.
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\19\ The records relating to Bid/Ask Prices will be retained by
the Fund or its service providers. The ``Bid/Ask Price'' is the
midpoint of the highest bid and lowest offer based upon the National
Best Bid and Offer as of the time of calculation of the Fund's NAV.
The ``National Best Bid and Offer'' is the current national best bid
and national best offer as disseminated by the Consolidated
Quotation System or UTP Plan Securities Information Processor. The
``Closing Price'' of Shares is the official closing price of the
Shares on the Exchange.
\20\ The ``premium/discount'' refers to the premium or discount
to the NAV at the end of a trading day and will be calculated based
on the last Bid/Ask Price on a given trading day.
\21\ See note 4, supra. Rule 8.601-E(c)(3) provides that the
website for each series of Active Proxy Portfolio Shares shall
disclose the information regarding the Proxy Portfolio as provided
in the exemptive relief pursuant to the 1940 Act applicable to such
series, including the following, to the extent applicable: (i)
ticker symbol; (ii) CUSIP or other identifier; (iii) description of
holding; (iv) quantity of each security or other asset held; and (v)
percentage weighting of the holding in the portfolio.
---------------------------------------------------------------------------
The identity and quantity of investments in the Tracking Basket
will be publicly available on the Fund's website before the
commencement of
[[Page 72550]]
trading in Shares on each Business Day. The website will also include
information relating to the Tracking Basket Weight Overlap, as
discussed above. With respect to each Custom Basket utilized by the
Fund, each Business Day, before the opening of trading in the Core
Trading Session (as defined in NYSE Arca Rule 7.34-E(a)), the Fund's
website will also include the composition of any Custom Basket
transacted on the previous Business Day, except a Custom Basket that
differs from the Tracking Basket only with respect to cash.
Typical mutual fund-style annual, semi-annual and quarterly
disclosures contained in the Fund's Commission filings will be provided
on the Fund's website on a current basis.\22\ Thus, the Fund will
publish the portfolio contents of its Actual Portfolio on a periodic
basis, no less than 60 days after the end of every fiscal quarter, and
will make such information publicly available to all market
participants at the same time.
---------------------------------------------------------------------------
\22\ See note 7, supra.
---------------------------------------------------------------------------
Investors can also obtain the Fund's prospectus, SAI, Shareholder
Reports, Form N-CSR, Form N-PORT, and Form N-CEN. The prospectus, SAI,
and Shareholder Reports are available free upon request, and those
documents and the Form N-CSR, Form N-PORT, and Form N-CEN may be viewed
on-screen or downloaded from the Commission's website. The Exchange
also notes that pursuant to the Application, the Fund must comply with
Regulation Fair Disclosure, which prohibits selective disclosure of any
material non-public information.
Information regarding the market price of Shares and trading volume
in Shares, will be continually available on a real-time basis
throughout the day on brokers' computer screens and other electronic
services. The previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers or news websites.
Quotation and last sale information for the Shares and U.S.
exchange-traded instruments (excluding futures contracts) will be
available via the Consolidated Tape Association (``CTA'') high-speed
line, from the exchanges on which such securities trade, or through
major market data vendors or subscription services. Quotation and last
sale information for futures contracts will be available from the
exchanges on which they trade. Intraday price information for all
exchange-traded instruments, which include all eligible instruments
except cash and cash equivalents, will be available from the exchanges
on which they trade, or through major market data vendors or
subscription services. Intraday price information for cash equivalents
is available through major market data vendors, subscription services
and/or pricing services.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund.\23\ Trading in Shares of the Fund
will be halted if the circuit breaker parameters in NYSE Arca Rule
7.12-E have been reached. Trading also may be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. Trading in the Shares will be
subject to NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth
circumstances under which Shares of the Fund will be halted.
---------------------------------------------------------------------------
\23\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------
Specifically, Rule 8.601-E(d)(2)(D) provides that the Exchange may
consider all relevant factors in exercising its discretion to halt
trading in a series of Active Proxy Portfolio Shares. Trading may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the series of Active Proxy 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 Proxy Portfolio and/or Actual Portfolio; or (b) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. If the Exchange
becomes aware that the NAV, Proxy Portfolio, or Actual Portfolio with
respect to a series of Active Proxy Portfolio Shares is not
disseminated to all market participants at the same time, the Exchange
shall halt trading in such series until such time as the NAV, Proxy
Portfolio, or Actual Portfolio is available to all market participants
at the same time.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace in all trading sessions in accordance with
NYSE Arca Rule 7.34-E(a). As provided in NYSE Arca Rule 7.6-E, the
minimum price variation (``MPV'') for quoting and entry of orders in
equity securities traded on the NYSE Arca Marketplace is $0.01, with
the exception of securities that are priced less than $1.00 for which
the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing
criteria under NYSE Arca Rule 8.601-E. The Exchange has appropriate
rules to facilitate trading in the Shares during all trading sessions.
A minimum of 100,000 Shares for the Fund will be outstanding at the
commencement of trading on the Exchange. In addition, pursuant to Rule
8.601-E(d)(1)(B), the Exchange, prior to commencement of trading in the
Shares, will obtain a representation from the Company that (i) the NAV
per Share of the Fund will be calculated daily, (ii) the NAV, Tracking
Basket, and the Actual Portfolio for the Fund will be made publicly
available to all market participants at the same time, and (iii) the
Company and any person acting on behalf of the Company will comply with
Regulation Fair Disclosure under the Act, including with respect to any
Custom Basket.
With respect to Active Proxy Portfolio Shares, all of the Exchange
member obligations relating to product description and prospectus
delivery requirements will continue to apply in accordance with
Exchange rules and federal securities laws, and the Exchange and the
Financial Industry Regulatory Authority, Inc. (``FINRA'') will continue
to monitor Exchange members for compliance with such requirements.
Surveillance
The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances, administered by the Exchange, as
well as cross-market surveillances administered by FINRA on behalf of
the Exchange, which are designed to detect violations of Exchange rules
and applicable federal securities laws.\24\ The Exchange represents
that these procedures are adequate to properly monitor Exchange trading
of the Shares in all trading sessions and to deter and detect
violations of Exchange rules and federal securities laws applicable to
trading on the Exchange.
---------------------------------------------------------------------------
\24\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
---------------------------------------------------------------------------
The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
[[Page 72551]]
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and underlying
exchange-traded instruments with other markets and other entities that
are members of the ISG, and the Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading information regarding trading
such securities and underlying exchange-traded instruments from such
markets and other entities. In addition, the Exchange may obtain
information regarding trading in such securities and underlying
exchange-traded instruments from markets and other entities that are
members of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.\25\
---------------------------------------------------------------------------
\25\ For a list of the current members of ISG, see
www.isgportal.org.
---------------------------------------------------------------------------
The Adviser will make available daily to FINRA and the Exchange the
Actual Portfolio of the Fund, upon request, as necessary to assist with
the performance of the surveillances and investigations referred to
above.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Commentary .03 to NYSE Arca Rule 8.601-E provides that the Exchange
will implement and maintain written surveillance procedures applicable
to Active Proxy Portfolio Shares. As part of these surveillance
procedures, the Investment Company's investment adviser will, upon
request by the Exchange or FINRA, on behalf of the Exchange, make
available to the Exchange or FINRA the daily Actual Portfolio holdings
of each series of Active Proxy Portfolio Shares. The Exchange believes
that the ability to access the information on an as needed basis will
provide it with sufficient information to perform the necessary
regulatory functions associated with listing and trading series of
Active Proxy Portfolio Shares on the Exchange, including the ability to
monitor compliance with the initial and continued listing requirements
as well as the ability to surveil for manipulation of Active Proxy
Portfolio Shares.
The Exchange will utilize its existing procedures to monitor issuer
compliance with the requirements of Rule 8.601-E. For example, the
Exchange will continue to use intraday alerts that will notify Exchange
personnel of trading activity throughout the day that may indicate that
unusual conditions or circumstances are present that could be
detrimental to the maintenance of a fair and orderly market. The
Exchange will require from the issuer of a series of Active Proxy
Portfolio Shares, upon initial listing and periodically thereafter, a
representation that it is in compliance with Rule 8.601-E. The Exchange
notes that Commentary .01 to Rule 8.601-E requires an issuer of Active
Proxy Portfolio Shares to notify the Exchange of any failure to comply
with the continued listing requirements of Rule 8.601-E. In addition,
the Exchange will require issuers to represent that they will notify
the Exchange of any failure to comply with the terms of applicable
exemptive and no-action relief. As part of its surveillance procedures,
the Exchange will rely on the foregoing procedures to become aware of
any non-compliance with the requirements of Rule 8.601-E.
With respect to the Fund, all statements and representations made
in this filing regarding (a) the description of the portfolio, (b)
limitations on portfolio holdings, or (c) the applicability of Exchange
listing rules specified in this rule filing shall constitute continued
listing requirements for listing the Shares on the Exchange. The
Exchange will obtain a representation from the Trust, prior to
commencement of trading in the Shares of the Fund, that it will advise
the Exchange of any failure by the Fund to comply with the continued
listing requirements, and, pursuant to its obligations under section
19(g)(1) of the Act, the Exchange will monitor for compliance with the
continued listing requirements. If the Fund is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under NYSE Arca Rule 5.5-E(m).
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act,\26\ in general, and furthers the
objectives of section 6(b)(5) of the Act,\27\ 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.\28\
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\26\ 15 U.S.C. 78f(b).
\27\ 15 U.S.C. 78f(b)(5).
\28\ The Exchange represents that, for initial and continued
listing, the Fund will be in compliance with Rule 10A-3 under the
Act, as provided by NYSE Arca Rule 5.3-E.
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With respect to the proposed listing and trading of Shares of the
Fund, the Exchange believes that the proposed rule change is designed
to prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Rule 8.601-E.
The Fund's holdings will conform to the permissible investments as
set forth in the Application and Exemptive Order, and the holdings will
be consistent with all requirements in the Application and Exemptive
Order.\29\
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\29\ See note 15, supra.
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The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and underlying
exchange-traded instruments with other markets and other entities that
are members of the ISG, and the Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading information regarding trading in
the Shares and underlying exchange-traded instruments from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Shares and underlying exchange-traded
instruments from markets and other entities that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement. Any foreign common stocks held by the Fund will be
traded on an exchange that is a member of the ISG or with which the
Exchange has in place a comprehensive surveillance sharing agreement.
The daily dissemination of the identity and quantity of Tracking
Basket component investments, together with the right of Authorized
Participants to create and redeem each day at the NAV, will be
sufficient for market participants to value and trade Shares in a
manner that will not lead to significant deviations between the Shares'
Bid/Ask Price and NAV.
The Fund's investments, including derivatives, will be consistent
with its investment objective and will not be used to enhance leverage
(although certain derivatives and other investments may result in
leverage). That is, the Fund's investments will not be used to seek
performance that is the multiple or inverse multiple (e.g., 2X or -3X)
of the Fund's primary broad-based securities benchmark index (as
defined in Form N-1A).
The proposed rule change is designed to promote just and equitable
principles
[[Page 72552]]
of trade and to protect investors and the public interest in that the
Exchange will obtain a representation from the Trust that the NAV per
Share of the Fund will be calculated daily and that the NAV, Tracking
Basket, Actual Portfolio, and/or Custom Basket, as applicable, for the
Fund will be made available to all market participants at the same
time. Investors can obtain the Fund's SAI, shareholder reports, and its
Form N-CSR, Form N-PORT, and Form N-CEN. The Fund's SAI and shareholder
reports will be available free upon request from the Fund, and those
documents and the Form N-CSR, Form N-PORT, and Form N-CEN may be viewed
on-screen or downloaded from the Commission's website.
Commentary .03 to NYSE Arca Rule 8.601-E provides that the Exchange
will implement and maintain written surveillance procedures applicable
to Active Proxy Portfolio Shares. As part of these surveillance
procedures, the Investment Company's investment adviser will, upon
request by the Exchange or FINRA, on behalf of the Exchange, make
available to the Exchange or FINRA the daily portfolio holdings of each
series of Active Proxy Portfolio Shares. The Exchange believes that the
ability to access the information on an as needed basis will provide it
with sufficient information to perform the necessary regulatory
functions associated with listing and trading series of Active Proxy
Portfolio Shares on the Exchange, including the ability to monitor
compliance with the initial and continued listing requirements as well
as the ability to surveil for manipulation of Active Proxy Portfolio
Shares. With respect to the Fund, the Adviser will make available daily
to FINRA and the Exchange the portfolio holdings of the Fund upon
request as necessary to facilitate the performance of the surveillances
and investigations referred to above.
The Exchange will utilize its existing procedures to monitor
compliance with the requirements of Rule 8.601-E. For example, the
Exchange will continue to use intraday alerts that will notify Exchange
personnel of trading activity throughout the day that may indicate that
unusual conditions or circumstances are present that could be
detrimental to the maintenance of a fair and orderly market. The
Exchange will require from the Trust, upon initial listing and
periodically thereafter, a representation that it is in compliance with
Rule 8.601-E. The Exchange notes that Commentary .01 to Rule 8.601-E
requires the issuer of Shares to notify the Exchange of any failure to
comply with the continued listing requirements of Rule 8.601-E. In
addition, the Exchange will require the issuer to represent that it
will notify the Exchange of any failure to comply with the terms of
applicable exemptive and no-action relief. The Exchange will rely on
the foregoing procedures to become aware of any non-compliance with the
requirements of Rule 8.601-E.
In addition, with respect to the Fund, a large amount of
information will be publicly available regarding the Fund and the
Shares, thereby promoting market transparency.
Quotation and last sale information for the Shares and U.S.
exchange-traded instruments (excluding futures contracts) will be
available via the CTA high-speed line, from the exchanges on which such
securities trade, or through major market data vendors or subscription
services. Quotation and last sale information for futures contracts
will be available from the exchanges on which they trade. Intraday
price information for all exchange-traded instruments, which include
all eligible instruments except cash and cash equivalents, will be
available from the exchanges on which they trade, or through major
market data vendors or subscription services. Intraday price
information for cash equivalents is available through major market data
vendors, subscription services and/or pricing services.
The website for the Fund will include a form of the prospectus that
may be downloaded, and additional data relating to NAV and other
applicable quantitative information, updated on a daily basis. Trading
in Shares of the Fund will be halted if the circuit breaker parameters
in NYSE Arca Rule 7.12-E have been reached or because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. Trading in the Shares will be
subject to NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth
circumstances under which Shares of the Fund will be halted. In
addition, as noted above, investors will have ready access to the
Fund's Tracking Basket and quotation and last sale information for the
Shares. The identity and quantity of investments in the Fund's Tracking
Basket will be publicly available on the Fund's website before the
commencement of trading in Shares on each Business Day. The Shares will
conform to the initial and continued listing criteria under Rule 8.601-
E.\30\
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\30\ See note 4, supra.
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The Fund's holdings will conform to the permissible investments as
set forth in the Application and Exemptive Order, and the holdings will
be consistent with all requirements in the Application and Exemptive
Order.\31\ Any foreign common stocks held by the Fund will be traded on
an exchange that is a member of the ISG or with which the Exchange has
in place a comprehensive surveillance sharing agreement.
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\31\ See note 15, supra.
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The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of actively-managed exchange-traded product that
will enhance competition among market participants, to the benefit of
investors and the marketplace. The Exchange will obtain a
representation from the Adviser, prior to commencement of trading in
the Shares of the Fund, that it will advise the Exchange of any failure
by the Fund to comply with the continued listing requirements, and,
pursuant to its obligations under section 19(g)(1) of the Act, the
Exchange will monitor for compliance with the continued listing
requirements. If the Fund is not in compliance with the applicable
listing requirements, the Exchange will commence delisting procedures
under NYSE Arca Rule 5.5-E(m).
As noted above, the Exchange has in place surveillance procedures
relating to trading in the Shares and may obtain information via ISG
from other exchanges that are members of ISG or with which the Exchange
has entered into a comprehensive surveillance sharing agreement. In
addition, as noted above, investors will have ready access to
information regarding quotation and last sale information for the
Shares.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes the
proposed rule change would permit listing and trading of an additional
actively-managed ETF that has characteristics different from existing
actively-managed and index ETFs and would introduce additional
competition among various ETF products to the benefit of investors.
[[Page 72553]]
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 \32\ and Rule 19b-
4(f)(6) thereunder.\33\
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\32\ 15 U.S.C. 78s(b)(3)(A).
\33\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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) \34\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The Exchange
notes that the Commission has approved and noticed for immediate
effectiveness proposed rule changes to permit listing and trading on
the Exchange of Active Proxy Portfolio Shares similar to the Fund.\35\
The proposed listing rule for the Fund raises no novel legal or
regulatory issues. Thus, the Commission believes that waiver of the 30-
day operative delay is consistent with the protection of investors and
the public interest. Accordingly, the Commission hereby waives the 30-
day operative delay and designates the proposed rule change operative
upon filing.\36\
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\34\ 17 CFR 240.19b-4(f)(6)(iii).
\35\ See supra notes 9 and 10.
\36\ 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-2023-71 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-2023-71. 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
a.m. and 3 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-2023-71 and should
be submitted on or before November 13, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
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\37\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-23265 Filed 10-19-23; 8:45 am]
BILLING CODE 8011-01-P
