[Federal Register Volume 85, Number 125 (Monday, June 29, 2020)]
[Notices]
[Pages 39000-39008]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13871]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89127; File No. SR-NYSEArca-2020-51]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change, as Modified by Amendment No. 2, Relating to
the Listing and Trading of the Shares of Natixis Vaughan Nelson Select
ETF and Natixis Vaughan Nelson MidCap ETF Under Proposed NYSE Arca Rule
8.601-E
June 23, 2020.
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 June 12, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. On June
17, 2020, the Exchange filed Amendment No. 1 to the proposed rule
change, which superseded and replaced the proposed rule change in its
entirety. On June 19, 2020, the Exchange filed Amendment No. 2 to the
proposed rule change, which superseded and replaced the proposed rule
change, as modified by Amendment No. 1, in its entirety. The Commission
is publishing this notice to solicit comments on the proposed rule
change, as modified by Amendment No. 2, 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 list and trade shares of the following
under proposed NYSE Arca Rule 8.601-E: Natixis Vaughan Nelson Select
ETF and Natixis Vaughan Nelson MidCap ETF. This Amendment No. 2 to SR-
NYSEArca-2020-51 replaces SR-NYSEArca-2020-51 as originally filed and
Amendment 1 thereto and supersedes such filings in their entirety. The
proposed 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 proposed to add new 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\ Proposed Commentary .01 to
[[Page 39001]]
Rule 8.601-E would require the Exchange to file separate proposals
under Section 19(b) of the Act before listing and trading any series of
Active Proxy Portfolio Shares on the Exchange. Therefore, the Exchange
is submitting this proposal in order to list and trade shares
(``Shares'') of Active Proxy Portfolio Shares of the Natixis Vaughan
Nelson Select ETF and Natixis Vaughan Nelson MidCap ETF (each a
``Fund'' and, collectively, the ``Funds'') under proposed Rule 8.601-E.
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\4\ See Amendment 6 to SR-NYSEArca-2019-95, filed on June 19,
2020. See also, Securities Exchange Act Release No. 87866 (December
30, 2019), 85 FR 357 (January 3, 2020) (SR-NYSEArca-2019-95).
Proposed 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 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 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.'' Proposed 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.'' Proposed Rule
8.601-E(c)(3) provides that ``[t{time} 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.''
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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 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 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.
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\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. 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.
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The Exchange, after consulting with various Lead Market Makers
(``LMMs'') \8\ that trade exchange-traded funds (``ETFs'') on the
Exchange, believes that market makers will be able to make efficient
and liquid markets priced near the ETF's intraday value, and market
makers employ market making techniques such as ``statistical
arbitrage,'' including correlation hedging, beta hedging, and
dispersion trading, which is currently used throughout the financial
services industry, to make efficient markets in exchange-traded
products.\9\ For Active Proxy Portfolio Shares, market makers may use
the knowledge of a fund's means of achieving its investment objective,
as described in the applicable fund registration statement, as well as
a fund's disclosed Proxy Portfolio, to construct a hedging proxy for a
fund to manage a market maker's quoting risk in connection with trading
fund shares. Market makers can then conduct statistical arbitrage
between their hedging proxy (for example, the Russell 1000 Index) and
shares of a fund, buying and selling one against the other over the
course of the trading day. This ability should permit market makers to
make efficient markets in an issue of Active Proxy Portfolio Shares
without precise knowledge of a fund's underlying portfolio. This is
similar to certain other existing exchange-traded products (for
example, ETFs that invest in foreign securities that do not trade
during U.S. trading hours), in which spreads may be generally wider in
the early days of trading and then narrow as market makers gain more
confidence in their real-time hedges.
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\8\ The term ``Lead Market Maker'' is defined in Rule 1.1(w) to
mean a registered Market Maker that is the exclusive Designated
Market Maker in listings for which the Exchange is the primary
market.
\9\ Statistical arbitrage enables a trader to construct an
accurate proxy for another instrument, allowing it to hedge the
other instrument or buy or sell the instrument when it is cheap or
expensive in relation to the proxy. Statistical analysis permits
traders to discover correlations based purely on trading data
without regard to other fundamental drivers. These correlations are
a function of differentials, over time, between one instrument or
group of instruments and one or more other instruments. Once the
nature of these price deviations have been quantified, a universe of
securities is searched in an effort to, in the case of a hedging
strategy, minimize the differential. Once a suitable hedging proxy
has been identified, a trader can minimize portfolio risk by
executing the hedging basket. The trader then can monitor the
performance of this hedge throughout the trade period making
corrections where warranted. In the case of correlation hedging, the
analysis seeks to find a proxy that matches the pricing behavior of
a fund. In the case of beta hedging, the analysis seeks to determine
the relationship between the price movement over time of a fund and
that of another stock. Dispersion trading is a hedged strategy
designed to take advantage of relative value differences in implied
volatilities between an index and the component stocks of that
index. Such trading strategies will allow market participants to
engage in arbitrage between series of Active Proxy Portfolio Shares
and other instruments, both through the creation and redemption
process and strictly through arbitrage without such processes.
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Description of the Funds and the Trust
Each Fund will be a series of Natixis ETF Trust II (``Trust''),
which will be registered with the Commission as an open-end management
investment company.\10\
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\10\ The Trust is registered under the 1940 Act. On April 24,
2020, the Trust filed a registration statement on Form N-1A under
the Securities Act of 1933 (the ``1933 Act'') (15 U.S.C. 77a), and
under the 1940 Act relating to the Funds (File Nos. 333-235466 and
811-23500) (the ``Registration Statement''). The Trust and NYSE
Group, Inc. filed a Seventh 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 (File No. 812-
14870), dated October 21, 2019 (``Application''). On November 14,
2019, the Commission issued a notice regarding the Application.
Investment Company Release No. 33684 (File No. 812-14870). On
December 10, 2019, the Commission issued an order (``Exemptive
Order'') under the 1940 Act granting the exemptions requested in the
Application (Investment Company Act Release No. 33711 (December 10,
2019)). The description of the operation of the Trust and the Funds
herein is based, in part, on the Registration Statement and the
Application.
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[[Page 39002]]
Natixis Advisors, L.P. (``Adviser'') will be the investment adviser
to the Funds. Vaughan Nelson Investment Management, L.P. will be the
subadviser (``Sub-Adviser'') for the Funds. ALPS Distributors, Inc.
will act as the distributor and principal underwriter (``Distributor'')
for the Funds.
Proposed Commentary.04 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 and/or Proxy Portfolio. Any person related to the
investment adviser or Investment Company who makes decisions pertaining
to the Investment Company's Actual Portfolio and/or Proxy Portfolio or
has access to non-public information regarding the Investment Company's
Actual Portfolio and/or Proxy Portfolio 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 and/or Proxy Portfolio or changes thereto. Proposed
Commentary .04 is similar to Commentary .03(a)(i) and (iii) to NYSE
Arca Rule 5.2-E(j)(3); however, proposed Commentary .04, in connection
with the establishment of a ``fire wall'' between the investment
adviser and the broker-dealer, reflects the applicable open-end fund's
portfolio, not an underlying benchmark index, as is the case with
index-based funds.\11\ Proposed Commentary .04 is also similar to
Commentary .06 to Rule 8.600-E related to Managed Fund Shares, except
that proposed Commentary .04 relates to establishment and maintenance
of a ``fire wall'' between the investment adviser and personnel of the
broker-dealer or broker-dealer affiliate, as applicable, applicable to
an Investment Company's Actual Portfolio and/or Proxy Portfolio or
changes thereto, and not just to the underlying portfolio, as is the
case with Managed Fund Shares.
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\11\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Adviser and 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, proposed Commentary.05 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 or the Proxy Portfolio 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 or the Proxy
Portfolio or changes thereto. Moreover, if any such person or entity is
registered as a broker-dealer or affiliated with a broker-dealer, such
person or entity will erect and maintain a ``fire wall'' between the
person or entity and the broker-dealer with respect to access to
information concerning the composition and/or changes to such
Investment Company Actual Portfolio or Proxy Portfolio.
The Adviser is not registered as a broker-dealer but is affiliated
with a broker-dealer. The Adviser has implemented and will maintain a
``fire wall'' with respect to such broker-dealer affiliate regarding
access to information concerning the composition of and/or changes to a
Fund's Actual Portfolio and/or Proxy Portfolio. The Sub-Adviser is not
registered as a broker-dealer but is affiliated with a broker-dealer.
The Sub-Adviser has implemented and will maintain a ``fire wall'' with
respect to its broker-dealer affiliate regarding access to information
concerning the composition of and/or changes to the applicable Fund's
Actual Portfolio and/or Proxy Portfolio.
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 a Fund's Actual Portfolio and/or Proxy Portfolio, and
will be subject to procedures designed to prevent the use and
dissemination of material non-public information regarding a Fund's
Actual Portfolio and/or Proxy Portfolio or changes thereto. Any person
related to the Adviser, Sub-Adviser or a Fund who makes decisions
pertaining to a Fund's Actual Portfolio or the Proxy Portfolio or has
access to non-public information regarding a Fund's Actual Portfolio
and/or the Proxy Portfolio or changes thereto are subject to procedures
reasonably designed to prevent the use and dissemination of material
non-public information regarding a Fund's Actual Portfolio and/or the
Proxy Portfolio or changes thereto.
In addition, any person or entity, including any service provider
for a Fund, who has access to non-public information regarding a Fund's
Actual Portfolio or the Proxy Portfolio or changes thereto, will be
subject to procedures reasonably designed to prevent the use and
dissemination of material non-public information regarding a Fund's
Actual Portfolio and/or the Proxy Portfolio 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 a Fund's Actual Portfolio and/or Proxy
Portfolio.
The Funds
According to the Application, the Adviser believes a Fund would
allow for efficient trading of Shares through an effective Fund
portfolio transparency substitute and publication of related
information metrics, while still shielding the identity of the full
Fund portfolio contents to protect a Fund's performance-seeking
strategies. Even
[[Page 39003]]
though a Fund would not publish its full portfolio contents daily, the
Adviser believes that the NYSE Proxy Portfolio Methodology would allow
market participants to assess the intraday value and associated risk of
a Fund's Actual Portfolio. As a result, the Adviser believes that
investors would be able to purchase and sell Shares in the secondary
market at prices that are close to their NAV.
In this regard, the Funds will utilize a proxy portfolio
methodology-- the ``NYSE Proxy Portfolio Methodology''--that would
allow market participants to assess the intraday value and associated
risk of a Fund's Actual Portfolio and thereby facilitate the purchase
and sale of Shares by investors in the secondary market at prices that
do not vary materially from their NAV.\12\ The NYSE Proxy Portfolio
Methodology would utilize creation of a Proxy Portfolio for hedging and
arbitrage purposes.\13\
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\12\ The NYSE Proxy Portfolio Methodology is owned by the NYSE
Group, Inc. and licensed for use by the Funds. NYSE Group, Inc. is
not affiliated with the Funds, Adviser or Distributor. Not all
series of Active Proxy Portfolio Shares will utilize the NYSE Proxy
Portfolio Methodology.
\13\ With respect to the Funds, the Funds will have in place
policies and procedures regarding the construction and composition
of their respective Proxy Portfolio. Such policies and procedures
will be covered by a Fund's compliance program and other
requirements under Rule 38a-1 under the 1940 Act.
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Natixis Vaughan Nelson Select ETF
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.\14\ 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.
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\14\ Pursuant to the Application and Exemptive Order, the
permissible investments for each of the Funds include only the
following instruments: ETFs traded on a U.S. exchange; exchange-
traded notes (``ETNs'') traded on a U.S. exchange; U.S. exchange-
traded common stocks; common stocks listed on a foreign exchange
that trade on such exchange contemporaneously with the Shares
(``foreign common stocks'') in the Exchange's Core Trading Session
(normally 9:30 a.m. and 4:00 p.m. Eastern time (``E.T.'')); U.S.
exchange-traded preferred stocks; U.S. exchange-traded American
Depositary Receipts (``ADRs''); U.S. exchange-traded real estate
investment trusts; U.S. exchange-traded commodity pools; U.S.
exchange-traded metals trusts; U.S. exchange-traded currency trusts;
and U.S. exchange-traded futures that trade contemporaneously with a
Fund's Shares. In addition, a Fund may hold cash and cash
equivalents (short-term U.S. Treasury securities, government money
market funds, and repurchase agreements). A 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.
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According to the Registration Statement, the Fund's investment
objective is to seek long-term capital appreciation. The Fund, under
normal market conditions,\15\ will invest primarily in equity
securities, including exchange-traded common stocks, exchange-traded
preferred stocks and exchange-traded real estate investment trusts
(``REITs'').
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\15\ The term ``normal market conditions'' is defined in
proposed Rule 8.601-E(c)(6).
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Natixis Vaughan Nelson MidCap ETF
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.\16\ 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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\16\ See note 14, supra.
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According to the Registration Statement, the Fund's investment
objective is to seek long-term capital appreciation. The Fund, under
normal market conditions, will invest primarily in companies that, at
the time of purchase, have market capitalizations either within the
capitalization range of the Russell Midcap[supreg] Value Index, an
unmanaged index that measures the performance of companies with lower
price-to-book ratios and lower forecasted growth values within the
broader Russell Midcap Index, or of $15 billion or less. Equity
securities may take the form of exchange-traded stock in corporations
and exchange-traded REITs or other exchange-traded trusts and similar
securities representing direct or indirect ownership interests in
business organizations.
Creations and Redemptions of Shares
According to the Registration Statement, the Trust will offer,
issue and sell Shares of the Funds to investors only in specified
minimum size ``Creation Units'' through the Distributor on a continuous
basis at the NAV per Share next determined after an order in proper
form is received. The NAV of a Fund is expected to be determined as of
4:00 p.m. E.T. on each Business Day. The Trust will sell and redeem
Creation Units of a Fund only on a Business Day. Creation Units of a
Fund may be purchased and/or redeemed entirely for cash, as permissible
under the procedures described below.
The ``Creation Basket'' (as defined below) for a Fund's Shares will
be based on a Fund's Proxy Portfolio, which is designed to approximate
the value and performance of the Actual Portfolio. All Creation Basket
instruments will be valued in the same manner as they are valued for
purposes of calculating a Fund's NAV, and such valuation will be made
in the same manner regardless of the identity of the purchaser or
redeemer. Further, the total consideration paid for the purchase or
redemption of a Creation Unit of Shares will be based on the NAV of a
Fund, as calculated in accordance with the policies and procedures set
forth in the Registration Statement.
According to the Application, Shares will be purchased and redeemed
in Creation Units and generally on an in-kind basis. Accordingly,
except where the purchase or redemption will include cash under the
circumstances specified below, purchasers will be required to purchase
Creation Units by making an in-kind deposit of specified instruments
(``Deposit Instruments''), and shareholders redeeming their Shares will
receive an in-kind transfer of specified instruments (``Redemption
Instruments''). The names and quantities of the instruments that
constitute the Deposit Instruments and the Redemption Instruments for a
Fund (collectively, the ``Creation Basket'') will be the same as a
Fund's Proxy Portfolio, except to the extent purchases and redemptions
are made entirely or in part on a cash basis.
If there is a difference between the NAV attributable to a Creation
Unit and the aggregate market value of the Creation Basket exchanged
for the Creation Unit, the party conveying instruments with the lower
value will also pay to the other an amount in cash equal to that
difference (the ``Cash Amount'').
While a Fund normally will issue and redeem Shares in kind, a Fund
may require purchases and redemptions to be made entirely or in part on
a cash basis. In such an instance, a Fund will announce, before the
open of trading in the Core Trading Session (normally, 9:30 a.m. to
4:00 p.m. E.T.) on a given Business Day, that all purchases, all
redemptions, or all purchases and redemptions on that day will be made
wholly or partly in cash. A Fund may also determine, upon receiving a
purchase or redemption order from an Authorized Participant, to have
the purchase or redemption, as applicable,
[[Page 39004]]
be made entirely or in part in cash.\17\ Each Business Day, before the
open of trading on the Exchange, a Fund will cause to be published
through the National Securities Clearing Corporation (``NSCC'') the
names and quantities of the instruments comprising the Creation Basket,
as well as the estimated Cash Amount (if any), for that day. The
published Creation Basket will apply until a new Creation Basket is
announced on the following Business Day, and there will be no intra-day
changes to the Creation Basket except to correct errors in the
published Creation Basket.
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\17\ The Adviser represents that, to the extent the Trust
effects the creation or redemption of Shares in cash on any given
day, such transactions will be effected in the same manner for all
Authorized Participants placing trades with a Fund on that day.
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All orders to purchase Creation Units must be placed with the
Distributor by or through an Authorized Participant, which is either:
(1) A ``participating party'' (i.e., a broker or other participant), in
the Continuous Net Settlement (``CNS'') System of the NSCC, a clearing
agency registered with the Commission and affiliated with the
Depository Trust Company (``DTC''), or (2) a DTC Participant, which in
any case has executed a participant agreement with the Distributor and
the transfer agent.
Timing and Transmission of Purchase Orders
All orders to purchase (or redeem) Creation Units, whether using
the NSCC Process or the DTC Process, must be received by the
Distributor no later than the NAV calculation time (``NAV Calculation
Time''), generally 4:00 p.m. E.T. on the date the order is placed
(``Transmittal Date'') in order for the purchaser (or redeemer) to
receive the NAV determined on the Transmittal Date.
Daily Disclosures
With respect to the Funds, the following information will comprise
the ``Proxy Portfolio Disclosures'' and, pursuant to the Application
and Exemptive Order, will be publicly available on the Funds' website
before the commencement of trading in Shares on each Business Day:
The Proxy Portfolio holdings (including the identity and
quantity of investments in the Proxy Portfolio) will be publicly
available on the Funds' website before the commencement of trading in
Shares on each Business Day.
The historical ``Tracking Error'' between a Fund's last
published NAV per share and the value, on a per Share basis, of a
Fund's Proxy Portfolio calculated as of the close of trading on the
prior Business Day will be publicly available on the Funds' website
before the commencement of trading in Shares each Business Day.
The ``Proxy Overlap'' will be publicly available on the
Funds' website before the commencement of trading in Shares on each
Business Day. The Proxy Overlap is the percentage weight overlap
between the Proxy Portfolio's holdings compared to the Actual
Portfolio's holdings that formed the basis for a Fund's calculation of
NAV at the end of the prior Business Day. The Proxy Overlap will be
calculated by taking the lesser weight of each asset held in common
between the Actual Portfolio and the Proxy Portfolio and adding the
totals.
Availability of Information
The Funds' website (www.im.natixis.com), which will be publicly
available prior to the public offering of Shares, will include a form
of the prospectus for a Fund that may be downloaded. The Funds' website
will include on a daily basis, per Share for a Fund, the prior Business
Day's NAV and the ``Closing Price'' or ``Bid/Ask Price,'' \18\ and a
calculation of the premium/discount of the Closing Price or Bid/Ask
Price against such NAV. The Adviser has represented that the Funds'
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 a Fund as may be required for other ETFs under Rule
6c-11 under the 1940 Act, as amended. The Funds' website also will
disclose the information required under proposed Rule 8.601-
E(c)(3).\19\ The website and information will be publicly available at
no charge.
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\18\ The records relating to Bid/Ask Prices will be retained by
the Funds or their 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 a 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.
\19\ See note 4, supra. Proposed 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 Investment Company
Act of 1940 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 Proxy Portfolio holdings for each Fund (including the identity
and quantity of investments in the Proxy Portfolio) will be publicly
available on the Funds' website before the commencement of trading in
Shares on each Business Day.
Typical mutual fund-style annual, semi-annual and quarterly
disclosures contained in a Fund's Commission filings will be provided
on the Funds' website on a current basis.\20\ Thus, each Fund will
publish the portfolio contents of its Actual Portfolio on a periodic
basis, and no less than 60 days after the end of every fiscal quarter.
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\20\ See note 7, supra.
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Investors can also obtain a Fund's SAI, Shareholder Reports, Form
N-CSR, N-PORT and Form N-CEN. The prospectus, SAI and Shareholder
Reports are available free upon request from the Trust, and those
documents and the Form N-CSR, N-PORT, and Form N-CEN may be viewed on-
screen or downloaded from the Commission's website. The Exchange also
notes that pursuant to its Exemptive Order, a Fund must comply with
Regulation Fair Disclosure, which prohibits selective disclosure of any
material non-public information.
Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers. Quotation and last sale information for the
Shares, ETFs, ETNs, U.S. exchange-traded common stocks, preferred
stocks and ADRs will be available via the Consolidated Tape Association
(``CTA'') high-speed line or from the exchange on which such securities
trade. Price information for futures, foreign stocks and cash
equivalents is available through major market data vendors. Intraday
pricing information for all constituents of the Proxy Portfolio for
each Fund that are exchange-traded, which includes all eligible
instruments except cash and cash equivalents, will be available on the
exchanges on which they are traded and through subscription services.
Intraday pricing information for cash equivalents will be available
through subscription services and/or pricing services.
[[Page 39005]]
Investment Restrictions
The Shares of the Funds will conform to the initial and continued
listing criteria under proposed Rule 8.601-E. Each Fund's holdings will
be limited to and consistent with permissible holdings as described in
the Application and all requirements in the Application and Exemptive
Order.\21\
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\21\ See note 14, supra.
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Each 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, a Fund's investments will not be used to seek
performance that is the multiple or inverse multiple (e.g., 2X or -3X)
of a Fund's primary broad-based securities benchmark index (as defined
in Form N-1A).\22\
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\22\ A Fund's broad-based securities benchmark index will be
identified in a future amendment to its Registration Statement
following a Fund's first full calendar year of performance.
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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 a Fund.\23\ Trading in Shares of a 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 a Fund will be halted.
---------------------------------------------------------------------------
\23\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------
Specifically, proposed 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 proposed 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 each Fund will be outstanding at
the commencement of trading on the Exchange. In addition, pursuant to
proposed Rule 8.601-E(d)(1)(B), the Exchange, prior to commencement of
trading in the Shares, will obtain a representation from the Adviser
that the NAV per Share of each Fund will be calculated daily and that
the NAV, Proxy Portfolio and the Actual Portfolio for each Fund will be
made available to all market participants at the same time.
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
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 a Fund, upon request, in order to facilitate the
performance of the surveillances referred to above.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Proposed Commentary .03 to NYSE Arca Rule 8.601-E provides that the
Exchange will implement and maintain written surveillance procedures
for 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
[[Page 39006]]
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 proposed 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 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 proposed Commentary .01 to Rule 8.601-E would require 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 Funds, all statements and representations made
in this filing regarding (a) the description of the portfolio or
reference asset, (b) limitations on portfolio holdings or reference
assets, 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 Adviser, prior to commencement of trading in
the Shares of a Fund, that it will advise the Exchange of any failure
by a 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 a 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.
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78f(b).
\27\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
With respect to the proposed listing and trading of Shares of the
Funds, 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 proposed NYSE Arca Rule
8.601-E.\28\
---------------------------------------------------------------------------
\28\ The Exchange represents that, for initial and continued
listing, the Funds will be in compliance with Rule 10A-3 under the
Act, as provided by NYSE Arca Rule 5.3-E.
---------------------------------------------------------------------------
Each Fund's holdings will conform to the permissible investments as
set forth in the Application and the Exemptive Order and the holdings
will be consistent with all requirements in the Application and
Exemptive Order.\29\
---------------------------------------------------------------------------
\29\ See note 14, supra.
---------------------------------------------------------------------------
Each 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, a Fund's investments will not be used to seek
performance that is the multiple or inverse multiple (e.g., 2X or -3X)
of a Fund's primary broad-based securities benchmark index (as defined
in Form N-1A).
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 a 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 Exchange, after consulting with various LMMs that trade ETFs on
the Exchange, believes that market makers will be able to make
efficient and liquid markets priced near the ETF's intraday value, and
market makers employ market making techniques such as ``statistical
arbitrage,'' including correlation hedging, beta hedging, and
dispersion trading, which is currently used throughout the financial
services industry, to make efficient markets in exchange-traded
products.\30\ For Active Proxy Portfolio Shares, market makers may use
the knowledge of a fund's means of achieving its investment objective,
as described in the applicable fund registration statement, as well as
a fund's disclosed Proxy Portfolio, to construct a hedging proxy for a
fund to manage a market maker's quoting risk in connection with trading
fund shares. Market makers can then conduct statistical arbitrage
between their hedging proxy and shares of a fund, buying and selling
one against the other over the course of the trading day. This ability
should permit market makers to make efficient markets in an issue of
Active Proxy Portfolio Shares without precise knowledge of a fund's
underlying portfolio. This is similar to certain other existing
exchange-traded products (for example, ETFs that invest in foreign
securities that do not trade during U.S. trading hours), in which
spreads may be generally wider in the early days of trading and then
narrow as market makers gain more confidence in their real-time hedges.
---------------------------------------------------------------------------
\30\ See note 9, supra.
---------------------------------------------------------------------------
The Funds will utilize the NYSE Proxy Portfolio Methodology that
would allow market participants to assess the intraday value and
associated risk of a Fund's Actual Portfolio and thereby facilitate the
purchase and sale of Shares by investors in the secondary market at
prices that do not vary materially from their NAV.
The daily dissemination of the identity and quantity of Proxy
Portfolio component investments, together with the right of Authorized
Participants to create and redeem each day at the NAV, will be
sufficient for market participants to value and trade Shares in a
manner that will not lead to significant deviations between the Shares'
Bid/Ask Price and NAV.
With respect to Active Proxy Portfolio Shares generally, the
pricing efficiency with respect to trading a series of Active Proxy
Portfolio Shares will generally rest on the ability of market
participants to arbitrage between the shares and a
[[Page 39007]]
fund's portfolio, in addition to the ability of market participants to
assess a fund's underlying value accurately enough throughout the
trading day in order to hedge positions in shares effectively.
Professional traders can buy shares that they perceive to be trading at
a price less than that which will be available at a subsequent time and
sell shares they perceive to be trading at a price higher than that
which will be available at a subsequent time. It is expected that, as
part of their normal day-to-day trading activity, market makers
assigned to shares by the Exchange, off-exchange market makers, firms
that specialize in electronic trading, hedge funds and other
professionals specializing in short-term, non-fundamental trading
strategies will assume the risk of being ``long'' or ``short'' shares
through such trading and will hedge such risk wholly or partly by
simultaneously taking positions in correlated assets \31\ or by netting
the exposure against other, offsetting trading positions--much as such
firms do with existing ETFs and other equities. Disclosure of a fund's
investment objective and principal investment strategies in its
prospectus and SAI should permit professional investors to engage
easily in this type of hedging activity.
---------------------------------------------------------------------------
\31\ Price correlation trading is used throughout the financial
industry. It is used to discover both trading opportunities to be
exploited, such as currency pairs and statistical arbitrage, as well
as for risk mitigation such as dispersion trading and beta hedging.
These correlations are a function of differentials, over time,
between one or multiple securities pricing. Once the nature of these
price deviations have been quantified, a universe of securities is
searched in an effort to, in the case of a hedging strategy,
minimize the differential. Once a suitable hedging basket has been
identified, a trader can minimize portfolio risk by executing the
hedging basket. The trader then can monitor the performance of this
hedge throughout the trade period, making corrections where
warranted.
---------------------------------------------------------------------------
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation from the Adviser that
the NAV per Share of each Fund will be calculated daily and that the
NAV, Proxy Portfolio and the Actual Portfolio for each Fund will be
made available to all market participants at the same time. Investors
can obtain a Fund's SAI, shareholder reports, and its Form N-CSR, Form
N-PORT and Form N-CEN. A Fund's SAI and shareholder reports will be
available free upon request from the a 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. In addition, with respect to
each Fund, a large amount of information will be publicly available
regarding the Funds and the Shares, thereby promoting market
transparency. Quotation and last sale information for the Shares, ETFs,
ETNs, U.S. exchange-traded common stocks, preferred stocks and ADRs
will be available via the CTA high-speed line or from the exchange on
which such securities trade. Price information for futures, foreign
stocks and cash equivalents is available through major market data
vendors. The website for the Funds will include a form of the
prospectus for each Fund 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 Funds will be halted if the
circuit breaker parameters in NYSE Arca Rule 7.12-E have been reached
or because of market conditions or for reasons that, in the view of the
Exchange, make trading in the Shares inadvisable. Trading in the Shares
will be subject to NYSE Arca Rule 8.601-E (d)(2)(D), which sets forth
circumstances under which Shares of the Fund will be halted. In
addition, as noted above, investors will have ready access to the Proxy
Portfolio and quotation and last sale information for the Shares. The
Proxy Portfolio holdings for each Fund (including the identity and
quantity of investments in the Proxy Portfolio) will be publicly
available on the Funds' website before the commencement of trading in
Shares on each Business Day. The Shares will conform to the initial and
continued listing criteria under proposed Rule 8.601-E.\32\
---------------------------------------------------------------------------
\32\ See Amendment 6 to SR-NYSEArca-2019-95, referenced in note
4, supra.
---------------------------------------------------------------------------
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of actively-managed exchange-traded product that
will enhance competition among market participants, to the benefit of
investors and the marketplace. The Exchange will obtain a
representation from the Adviser, prior to commencement of trading in
the Shares of a Fund, that it will advise the Exchange of any failure
by a 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 a 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 another type
of 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.
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
Within 45 days of the date of publication of this notice in the
Federal Register or up to 90 days (i) as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or (ii) as to which the self-regulatory
organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be 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, as modified by Amendment No. 2, 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
[[Page 39008]]
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2020-51 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-2020-51. 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 (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2020-51, and should be
submitted on or before July 20, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
---------------------------------------------------------------------------
\33\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-13871 Filed 6-26-20; 8:45 am]
BILLING CODE 8011-01-P