[Federal Register Volume 80, Number 221 (Tuesday, November 17, 2015)]
[Notices]
[Pages 71880-71883]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-29232]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76412; File No. SR-NYSEArca-2015-111]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to the 
Listing and Trading of Shares of the RiverFront Strategic Income Fund 
Under NYSE Arca Equities Rule 8.600

November 10, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on November 4, 2015, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to reflect a change to the means of achieving 
the investment objective applicable to shares of the RiverFront 
Strategic Income Fund, which has been approved by the Securities and 
Exchange Commission (``Commission''), and is currently listed and 
traded on the Exchange, under NYSE Arca Equities Rule 8.600. The 
proposed rule change is available on the Exchange's Web site 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,

[[Page 71881]]

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 Commission has approved listing and trading on the Exchange of 
shares (``Shares'') of the RiverFront Strategic Income Fund (the 
``Fund''), a series of the ALPS ETF Trust (the ``Trust''),\4\ under 
NYSE Arca Equities Rule 8.600, which governs the listing and trading of 
Managed Fund Shares. The Fund is an actively managed exchange traded 
fund. The Shares are offered by the Trust.\5\ Shares of the Fund are 
currently listed and traded on the Exchange under NYSE Arca Equities 
Rule 8.600.
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    \4\ See Securities Exchange Act Release No. 68030 (October 10, 
2012), 77 FR 63380 (October 16, 2012) (SR-NYSEArca-2012-88) (``Prior 
Order''). See also Securities Exchange Act Release No. 67715 (August 
22, 2012), 77 FR 52083 (August 28, 2012) (``Prior Notice'', and 
together with the Prior Order, the ``Prior Release'').
    \5\ The Trust is registered under the Investment Company Act of 
1940 (``1940 Act''). On March 30, 2015, the Trust filed with the 
Commission an amendment to its registration statement on Form N-1A 
under the Securities Act of 1933 (``Securities Act'') and the1940 
Act relating to the Fund (File Nos. 333-148826 and 811-22175) 
(``Registration Statement''). The description of the operation of 
the Trust and the Fund herein is based, in part, on the Registration 
Statement.
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    RiverFront Investment Group, LLC (``RiverFront'') is the investment 
sub-adviser for the Fund (the ``Sub-Adviser'').
    As stated in the Prior Release, the Fund's investment objective is 
to seek total return, with an emphasis on income as the source of that 
total return. The Fund seeks to achieve its investment objective by 
investing in a global portfolio of fixed income securities of various 
maturities, ratings and currency denominations. The Fund utilizes 
various investment strategies in a broad array of fixed income sectors. 
The Fund allocates its investments based upon the analysis of the Sub-
Adviser of the pertinent economic and market conditions, as well as 
yield, maturity and currency considerations.
    In this proposed rule change, the Exchange proposes to reflect a 
change to the description of the investments the Sub-Adviser will 
utilize to implement the Fund's investment objective, as described 
below.\6\
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    \6\ The changes described herein will be effective upon filing 
with the Commission of another amendment to the Trust's Registration 
Statement and/or a supplement to the Fund's prospectus and/or 
Statement of Additional Information. See note 5, supra. The Sub-
Adviser represents that the Sub-Adviser will not implement the 
changes described herein until the instant proposed rule change is 
operative.
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    First, the Prior Release stated that the Fund may invest up to 5% 
of its assets in mortgage-backed securities (``MBS'') (which may 
include commercial MBS) or other asset-backed securities (``ABS'') 
issued or guaranteed by private issuers.\7\ The Sub-Adviser wishes to 
change this representation to state that the Fund may invest up to 20% 
of its total assets in MBS and ABS that are privately issued, non-
agency and non-government sponsored entity (``Private MBS/ABS'').\8\ 
Such holdings would be subject to the limitation on the Fund's 
investments in illiquid assets. The liquidity of a security, especially 
in the case of Private MBS/ABS, will be a substantial factor in the 
Fund's security selection process.
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    \7\ This limitation does not apply to securities issued or 
guaranteed by federal agencies and/or U.S. government sponsored 
instrumentalities, such as the Government National Mortgage 
Administration (``GNMA''), the Federal Housing Administration 
(``FHA''), the Federal National Mortgage Association (``FNMA''), and 
the Federal Home Loan Mortgage Corporation (``FHLMC'').
    \8\ As described in the Prior Release, the MBS in which the Fund 
may invest are either pass-through securities or collateralized 
mortgage obligations (``CMOs'').
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    The Sub-Adviser believes the revised representations will permit 
the Sub-Adviser, through such additional flexibility, to better achieve 
the Fund's stated investment objective to seek total return, with an 
emphasis on income as the source of that total return. The Fund will 
continue to primarily invest in fixed income instruments. The Sub-
Adviser represents that the purpose of this change is to provide 
additional flexibility to the Sub-Adviser to meet the Fund's investment 
objective by potentially expanding the percentage of the Fund's assets 
that may be allocated to Private MBS/ABS that would provide the Fund 
with an enhanced ability to identify debt issues that have sound 
investment characteristics while providing the potential for an 
increased yield for investors.
    Second, the Prior Release stated that the Fund may not hold more 
than 15% of its net assets in: (1) illiquid securities (which include 
participation interests); and (2) Rule 144A securities. Going forward, 
the Fund wishes to change this representation to state that, as an 
investment restriction of the Fund, the Fund may not hold more than 15% 
of its net assets in illiquid assets (calculated at the time of 
investment),\9\ including Rule 144A securities deemed illiquid by the 
Sub-Adviser, consistent with Commission guidance.\10\ The Exchange 
notes that the Commission has approved similar representations relating 
to issues of Managed Fund Shares proposed to be listed and traded on 
the Exchange.\11\ The Sub-Adviser represents that the Sub-Adviser and 
the Trust's Board of Trustees will continue to evaluate each Rule 144A 
security based on the Fund's valuation procedures to oversee liquidity 
and valuation concerns.
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    \9\ In reaching liquidity decisions, the Sub-Adviser may 
consider the following factors: the frequency of trades and quotes 
for the security; the number of dealers wishing to purchase or sell 
the security and the number of other potential purchasers; dealer 
undertakings to make a market in the security; and the nature of the 
security and the nature of the marketplace trades (e.g., the time 
needed to dispose of the security, the method of soliciting offers, 
and the mechanics of transfer).
    \10\ The Commission has stated that long-standing Commission 
guidelines have required open-end funds to hold no more than 15% of 
their net assets in illiquid securities and other illiquid assets. 
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 
14618 (March 18, 2008), footnote 34. See also, Investment Company 
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 
1970) (Statement Regarding ``Restricted Securities''); Investment 
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio 
security is illiquid if it cannot be disposed of in the ordinary 
course of business within seven days at approximately the value 
ascribed to it by the fund. See Investment Company Act Release No. 
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting 
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act 
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) 
(adopting Rule 144A under the 1933 Act).
    \11\ See, e.g., Securities Exchange Act Release No. 70282 
(August 29, 2013), 78 FR 54700 (September 5, 2013) (SR-NYSEArca-
2013-70) (order approving listing and trading on the exchange of 
First Trust Inflation Managed Fund).
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    Third, the Prior Release stated that the Fund may also invest in 
structured notes.\12\ Going forward, the Fund proposes that the Fund 
may invest up to 20% of its total assets in structured notes. The 
Exchange notes that the Commission has previously approved listing and 
trading on the Exchange of issues of Managed Fund Shares that may hold 
up to 20% of total assets in structured notes.\13\
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    \12\ As noted in the Prior Release, structured notes are notes 
on which the amount of principal repayment and interest payments are 
based on the movement of one or more specified factors, such as the 
movement of a particular bond or bond index.
    \13\ See, e.g., Securities Exchange Act Release No. 74093 
(January 20, 2015), 80 FR 4015 (January 26, 2015) (SR-NYSEArca-2014-
126) (order approving listing and trading of Shares of the 
AdvisorShares Pacific Asset Enhanced Floating Rate ETF under NYSE 
Arca Equities Rule 8.600).
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    Fourth, the Prior Release stated the Fund may invest without 
limitation in debt securities denominated in foreign

[[Page 71882]]

currencies and in U.S. dollar-denominated debt securities of foreign 
issuers, including securities of issuers located in emerging markets. 
Going forward, the Fund wishes to change this representation to state 
that the debt securities in which the Fund may invest may be 
denominated in foreign currencies or U.S. dollars.
    The Sub-Adviser represents that there is no change to the Fund's 
investment objective. The Fund will continue to comply with all initial 
and continued listing requirements under NYSE Arca Equities Rule 8.600.
    Except for the changes noted above, all other facts presented 
(except the statement ``[t]he Fund will be managed by WisdomTree Asset 
Management, Inc.'', given that ALPS Advisors, Inc. currently serves as 
the Fund's investment adviser) and representations made in the Prior 
Release remain unchanged.
    All terms referenced but not defined herein are defined in the 
Prior Release.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \14\ that an exchange have rules that 
are 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, in general, to protect investors and the public interest.
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    \14\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will continue to be listed and traded on the Exchange pursuant 
to the initial and continued listing criteria in NYSE Arca Equities 
Rule 8.600. The Sub-Adviser represents that increasing the Fund's 
flexibility to invest in Private MBS/ABS would allow the Sub-Adviser to 
better achieve the Fund's investment objective. In addition, the 
liquidity of Private MBS/ABS will be a substantial factor in the Fund's 
security selection process. The Fund's proposed limitation on 
investments in structured notes to up to 20% of its total assets is 
comparable to the limitation for investments in structured notes 
previously approved by the Commission for other issues of Managed Fund 
Shares.\15\ The Exchange believes that the proposed changes are 
consistent with the representation in the Prior Release that the 
operation of the Fund as described in the Prior Release is designed to 
prevent fraudulent and manipulative acts and practices. The proposed 
expansion of permitted investments would provide the Fund with an 
enhanced ability to identify debt issues that have sound investment 
characteristics while providing the potential for an increased yield 
for investors. The Fund will continue to comply with all initial and 
continued listing requirements under NYSE Arca Equities Rule 8.600.
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    \15\ See note 13, supra.
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    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that the Sub-Adviser represents that there is no change to the Fund's 
investment objective. As noted above, the liquidity of Private MBS/ABS 
will be a substantial factor in the Fund's security selection process. 
The Sub-Adviser also represents that the purpose of this change is to 
provide additional flexibility to the Sub-Adviser to meet the Fund's 
investment objective by potentially expanding the percentage of the 
Fund's assets that may be allocated to Private MBS/ABS that would 
provide the Fund with an enhanced ability to identify debt issues that 
have sound investment characteristics while providing the potential for 
an increased yield for investors.
    With respect to the 15% limitation on investments in illiquid 
assets, the Exchange notes that the Commission has approved similar 
representations relating to issues of Managed Fund Shares proposed to 
be listed and traded on the Exchange.\16\ The Sub-Adviser represents 
that the Sub-Adviser and the Trust's Board of Trustees will continue to 
evaluate each Rule 144A security based on the Fund's valuation 
procedures to oversee liquidity and valuation concerns.
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    \16\ See note 11, 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 the Fund will continue to comply with all 
initial and continued listing requirements under NYSE Arca Equities 
Rule 8.600. Except for the changes noted above, all other 
representations made in the Rule 19b-4 filing underlying the Prior 
Release remain unchanged.

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 regarding investments in asset-backed and/or 
mortgage-backed debt securities is consistent with other similar 
actively managed fixed income funds which the Commission has approved 
for listing and trading \17\ and will promote competition among 
actively managed funds utilizing such investments, to the benefit of 
the investing public.
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    \17\ See, e.g., Securities Exchange Act Release No. 75566 (July 
30, 2015), 80 FR 46612 (August 5, 2015) (SR-NYSEArca-2015-42) (order 
approving listing and trading of shares of the Newfleet Multi-Sector 
Unconstrained Bond ETF under NYSE Arca Equities Rule 8.600).
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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 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, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \18\ and Rule 19b-
4(f)(6) thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
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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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) of the Act \20\ to determine whether the proposed 
rule change should be approved or disapproved.
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    \20\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule

[[Page 71883]]

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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEArca-2015-111 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2015-111. 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 Web site (http://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 Web site viewing and 
printing in the Commission's Public Reference Section, 100 F Street 
NE., Washington, DC 20549 on official business days between 10 a.m. and 
3 p.m. Copies of the filing will also be available for inspection and 
copying at the NYSE's principal office and on its Internet Web site at 
www.nyse.com. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSEArca-2015-111 and should be submitted on or before December 8, 
2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-29232 Filed 11-16-15; 8:45 am]
 BILLING CODE 8011-01-P