[Federal Register Volume 85, Number 144 (Monday, July 27, 2020)]
[Notices]
[Pages 45268-45270]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16154]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89357; File No. SR-NYSE-2020-57]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 1.1 To Include Active Proxy Portfolio Shares, Tracking Fund 
Shares, Proxy Portfolio Shares, and Index Fund Shares

July 21, 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 July 10, 2020, New York Stock Exchange LLC (``NYSE'' 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

[[Page 45269]]

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 amend Rule 1.1 to include Active Proxy 
Portfolio Shares, Tracking Fund Shares, Proxy Portfolio Shares, and 
Index Fund Shares in the definition of ``UTP Exchange Traded Product.'' 
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 proposes to amend Rule 1.1(l), which sets forth the 
meanings of ``Exchange Traded Product'' and ``UTP Exchange Traded 
Product'' as those terms are used in Exchange rules.
    Specifically, the Exchange proposes to amend the definition of 
``UTP Exchange Traded Product'' to include Active Proxy Portfolio 
Shares listed pursuant to NYSE Arca, Inc. (``NYSE Arca'') Rule 8.601-E, 
Tracking Fund Shares listed pursuant to Cboe BZX Exchange, Inc. 
(``BZX'') Rule 14.11(m), and Proxy Portfolio Shares which may in the 
future be listed pursuant to Nasdaq Stock Market LLC (``Nasdaq'') Rule 
5750 \4\ as additional types of Exchange Traded Product (``ETPs'') that 
may trade on the Exchange pursuant to unlisted trading privileges 
(``UTP'').
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    \4\ Active Proxy Portfolio Shares, Tracking Fund Shares, and 
Proxy Portfolio Shares are substantially similar products with 
different names and generally refer to shares of actively managed 
exchange-traded funds for which the portfolio is disclosed in 
accordance with standard mutual fund disclosure rules. See 
Securities Exchange Act Release No. 89185 (June 29, 2020) (order 
approving NYSE Arca Rule 8.601-E); Securities Exchange Act Release 
No. 88887 (May 15, 2020), 85 FR 30990 (May 21, 2020) (order 
approving BZX Rule 14.11(m)); Securities Exchange Act Release No. 
89110 (June 22, 2020), 85 FR 38461 (June 26, 2020) (Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change to Adopt Nasdaq 
Rule 5750 to List and Trade Proxy Portfolio Shares). On June 4, 
2020, BZX commenced trading its first securities listed under BZX 
Rule 14.11(m) (Fidelity Blue Chip Growth ETF (FBCG), Fidelity Blue 
Chip Value ETF (FBCV), and Fidelity New Millennium ETF (FMIL)). 
Although Nasdaq has rules pertaining to Proxy Portfolio Shares, it 
does not yet list any such product.
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    To effect this change, the Exchange proposes to add a bullet point 
listing ``Active Proxy Portfolio Shares listed pursuant to NYSE Arca, 
Inc. Rule 8.601-E, Tracking Fund Shares listed pursuant to Cboe BZX 
Exchange, Inc. Rule 14.11(m), and Proxy Portfolio Shares listed 
pursuant to Nasdaq Stock Market LLC Rule 5750'' in Rule 1.1(l) to 
include them in the enumerated list of ETPs that may trade on the 
Exchange on a UTP basis. The Exchange also proposes non-substantive 
changes to accommodate the addition of this bullet point as the final 
item in the bulleted list in Rule 1.1(l).
    The Exchange also proposes to amend Rule 1.1(l) to include Index 
Fund Shares listed pursuant to BZX Rule 14.11(c) or Nasdaq Rule 5705(b) 
as a type of ETP that may trade pursuant to UTP. To effect this change, 
the Exchange proposes to amend the existing bullet point listing 
``Investment Company Units'' to include Index Fund Shares as the 
alternative name for the same product. Accordingly, the Exchange 
proposes to revise the bullet point to list ``Investment Company Units 
listed pursuant to NYSE Arca, Inc. Rule 5.2-E(j)(3) and Index Fund 
Shares listed pursuant to Cboe BZX Exchange, Inc. Rule 14.11(c) or 
Nasdaq Stock Exchange LLC Rule 5705(b).''
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\6\ in particular, because it 
is designed to remove impediments to and perfect the mechanism of a 
free and open market, to promote just and equitable principles of 
trade, and, in general, to protect investors and the public interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) & (5).
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    The proposed rule change is designed to remove impediments to and 
perfect the mechanism of a free and open market, promote just and 
equitable principles of trade, and, in general, to protect investors 
and the public interest because it modifies Rule 1.1(l) to state the 
complete list of ETPs that may trade on a UTP basis on the Exchange, 
providing specificity, clarity, and transparency in the Exchange's 
rules. Moreover, the proposed rule change will facilitate the trading 
of additional types of ETPs on the Exchange pursuant to UTP, thereby 
enhancing competition among market participants for the benefit of 
investors and the marketplace.

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 proposed change would 
provide the public and investors with up-to-date information about the 
types of ETPs that can trade on the Exchange on a UTP basis and would 
promote competition by adding additional types of ETPs that may trade 
on the Exchange pursuant to UTP.

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; or (iii) become operative prior to 
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, it has become effective pursuant to 
Section 19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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 \9\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \10\

[[Page 45270]]

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 asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative upon filing. The 
Exchange believes that a waiver of the operative delay is consistent 
with the protection of investors and the public interest because it 
would allow for the immediate trading, pursuant to UTP, of Active Proxy 
Portfolio Shares, Tracking Fund Shares, and Proxy Portfolio Shares on 
the Exchange and therefore would provide investors with an additional 
trading venue option. In addition, the proposal would specifically name 
products substantially similar to Investment Company Units known as 
Index Fund Shares on other exchanges in the list of product that may 
trade on the Exchange pursuant to unlisted trading privileges. The 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Therefore, the Commission hereby waives the operative delay and 
designates the proposed rule change operative upon filing.\11\
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    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ For purposes only of waiving the 30-day operative delay, 
the Commission also has 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 the 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSE-2020-57 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-NYSE-2020-57. 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 the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSE-2020-57 and should be submitted on 
or before August 17, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-16154 Filed 7-24-20; 8:45 am]
BILLING CODE 8011-01-P