[Federal Register Volume 86, Number 26 (Wednesday, February 10, 2021)]
[Notices]
[Pages 8972-8977]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02711]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91062; File No. SR-NASDAQ-2021-005]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to the ALPS Active REIT ETF of ALPS ETF Trust To List and
Trade Shares of the Fund Under Nasdaq Rule 5750
February 4, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 25, 2021, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
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\ 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 a rule change relating to the ALPS Active
REIT ETF (the ``Fund'') of ALPS ETF Trust (the ``Trust''), to list and
trade shares of the Fund under Nasdaq Rule 5750 (``Proxy Portfolio
Shares''). The shares of the Fund are collectively referred to herein
as the ``Shares.''
(b) Not applicable. [sic]
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 Exchange 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 these 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 aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Commission has approved the listing and trading of Proxy
Portfolio Shares under Nasdaq Rule 5750, which governs the listing and
trading of Proxy Portfolio Shares on the Exchange.\3\
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\3\ The Commission approved Nasdaq Rule 5750 in Securities
Exchange Act Release No. 89110 (June 22, 2020), 85 FR 38461 (June
26, 2020) (SR-NASDAQ-2020-032).
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The Fund is an actively-managed exchange-traded fund (``ETF''). The
Shares are offered by the Trust, which was established as a Delaware
statutory trust on September 13, 2007.\4\ The Trust, which is
registered with the Commission as an investment company under the
Investment Company Act of 1940 (the ``1940 Act''), has filed a
registration statement on Form N-1A (``Registration Statement'')
relating to the Fund with the Commission.\5\ The Fund is a series of
the Trust. ALPS Advisors, Inc. (``Adviser'') is the investment adviser
to the Fund. ALPS Portfolio Solutions Distributor, Inc. is the
principal underwriter and distributor of the Fund's Shares. ALPS Fund
Services, Inc. acts as the administrator and provides fund
[[Page 8973]]
accounting services to the Fund. State Street Bank and Trust Company
acts as the custodian and transfer agent to the Fund.
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\4\ The Commission has issued an order, upon which the Trust may
rely, granting certain exemptive relief under the 1940 Act. See
Investment Company Act Release No. 34181 (Jan. 21, 2021)
(``Exemptive Order'').
\5\ The Registration Statement is available on the Commission's
website at https://www.sec.gov/Archives/edgar/data/1414040/000139834420019856/fp0058104_485apos.htm.
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Nasdaq Rule 5750(b)(5) provides that if the investment adviser to
the investment company issuing Proxy Portfolio Shares \6\ 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 the Fund Portfolio \7\
and/or the Proxy Basket.\8\ In addition, Nasdaq Rule 5750(b)(5) further
requires that any person related to the investment adviser or
Investment Company who makes decisions pertaining to the Investment
Company's Fund Portfolio and/or the Proxy Basket or has access to
nonpublic information regarding the Fund Portfolio and/or Proxy Basket
or changes thereto must be subject to procedures designed to prevent
the use and dissemination of material non-public information regarding
the Fund Portfolio or the Proxy Basket or changes thereto.\9\
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\6\ The term ``Proxy Portfolio Share'' means a security that:
(A) Represents an interest in an investment company registered under
the Investment Company Act of 1940 (``Investment Company'')
organized as an open-end management investment company, that invests
in a portfolio of securities selected by the Investment Company's
investment adviser consistent with the Investment Company's
investment objectives and policies; (B) is issued in a specified
aggregate minimum number in return for a deposit of a specified
Proxy Basket and/or a cash amount with a value equal to the next
determined net asset value; (C) when aggregated in the same
specified minimum number, may be redeemed at a holder's request,
which holder will be paid specified Proxy Basket and/or a cash
amount with a value equal to the next determined net asset value;
and (D) the portfolio holdings for which are disclosed within at
least 60 days following the end of every fiscal quarter.
\7\ The term ``Fund Portfolio'' means 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.
\8\ The term ``Proxy Basket'' means the identities and
quantities of the securities and other assets included in a basket
that is designed to closely track the daily performance of the Fund
Portfolio, as provided in the exemptive relief under the 1940 Act
applicable to a series of Proxy Portfolio Shares. The website for
each series of Proxy Portfolio Shares shall disclose the following
information regarding the Proxy Basket as required under Rule 5750,
to the extent applicable:
(A) Ticker symbol;
(B) CUSIP or other identifier;
(C) Description of holding;
(D) Quantity of each security or other asset held; and
(E) Percentage weight of the holding in the portfolio.
\9\ 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 its related personnel are
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
violation, 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, any person or entity, including a custodian, Reporting
Authority,\10\ distributor, or administrator, who has access to
nonpublic information regarding the Fund Portfolio or the Proxy Basket
or changes thereto, must be subject to procedures designed to prevent
the use and dissemination of material nonpublic information regarding
the applicable Fund Portfolio or the Proxy Basket 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 Fund Portfolio or Proxy Basket.
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\10\ The term ``Reporting Authority'' in respect of a particular
series of Proxy Portfolio Shares means the Exchange, an institution,
or a reporting service designated by the Exchange or by the exchange
that lists a particular series of Proxy Portfolio Shares (if the
Exchange is trading such series pursuant to unlisted trading
privileges) as the official source for calculating and reporting
information relating to such series, including, but not limited to,
the Proxy Basket; the Fund Portfolio; the amount of any cash
distribution to holders of Proxy Portfolio Shares, net asset value,
or other information relating to the issuance, redemption or trading
of Proxy Portfolio Shares. A series of Proxy Portfolio Shares may
have more than one Reporting Authority, each having different
functions.
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In the event (a) the Adviser or any sub-adviser registers 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 another broker-dealer, it will implement and will
maintain a fire wall with respect to its relevant personnel and/or such
broker-dealer affiliate, as applicable, regarding access to information
concerning the composition and/or changes to the Fund's Portfolio and/
or the Proxy Basket and will be subject to procedures designed to
prevent the use and dissemination of material non-public information
regarding the Fund's Portfolio and/or the Proxy Basket.
The Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as
amended.
The Fund's Principal Investment Strategies
The investment objective of the Fund will be to seek total return
through dividends and capital appreciation. Under normal market
conditions,\11\ the Fund will seek to achieve its investment objective
by investing at least 80% of its net assets in exchange-traded equity
securities of real estate investment trusts.
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\11\ The term ``normal market conditions'' as used herein, is
defined in Nasdaq Rule 5750(c)(4). On a temporary basis, including
for defensive purposes, during the initial invest-up period and
during periods of high cash inflows or outflows, the Fund may depart
from its principal investment strategies; for example, it may hold a
higher than normal proportion of its assets in cash. During such
periods, the Fund may not be able to achieve its investment
objective. The Fund may adopt a defensive strategy when the Adviser
or any sub-adviser believes securities in which such Fund normally
invests have elevated risks due to political or economic factors and
in other extraordinary circumstances.
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Under the terms of the Exemptive Order,\12\ the Fund's investments
are limited to the following: ETFs, exchange-traded notes, exchange
listed common stocks (excluding ``penny stocks'' as defined in Rule
3a51-1 under the Act), exchange-traded preferred stocks, exchange-
traded American Depositary Receipts (ADRs), exchange-traded real estate
investment trusts, exchange-traded commodity pools, exchange-traded
metals trusts, and exchange-traded currency trusts, in each case that
are traded on a U.S. securities exchange contemporaneously with the
Fund Shares; exchange-traded futures that trade contemporaneously with
the Fund Shares that are U.S. listed futures contracts where the future
contract's reference asset is an asset that the Fund could invest in
directly, or in the case of an index future, is based on an index of a
type of asset that the Fund could invest in directly; common stocks
listed on a foreign exchange that trade on such exchange
contemporaneously with the Fund Shares; and cash and cash equivalents
(which are short-term U.S. Treasury securities, government money market
funds, and repurchase agreements). The Fund's holdings will conform to
the permissible investments
[[Page 8974]]
as set forth in the Exemptive Order and the holdings will be consistent
with all requirements in the Exemptive Order. 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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\12\ See supra note 4.
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Surveillance
The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of Proxy Portfolio Shares on the
Exchange during all trading sessions and to deter and detect violations
of Exchange rules and the applicable federal securities laws. Trading
of Proxy Portfolio Shares on the Exchange will be subject to the
Exchange's surveillance procedures for derivative products. The
Exchange will require the issuer of each series of Proxy Portfolio
Shares listed on the Exchange to represent to the Exchange that it will
advise the Exchange of any failure by the Fund to comply with the
continued listing requirements, and, pursuant to its obligations under
Section 19(g)(1) of the Exchange Act, the Exchange will surveil for
compliance with the continued listing requirements. If the Fund is not
in compliance with the applicable listing requirements, the Exchange
will commence delisting procedures under the Nasdaq 5800 Series. In
addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
The Adviser will upon request make available to the Exchange and/or
Financial Industry Regulatory Authority (``FINRA''), on behalf of the
Exchange, the daily Fund Portfolio of each series of Proxy Portfolio
Shares. The Exchange believes that this is appropriate because it will
provide the Exchange or FINRA, on behalf of the Exchange, with access
to the daily Fund Portfolio of any series of Proxy Portfolio Shares
upon request on an as needed basis. 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 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 the Shares.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund. Nasdaq will halt trading in the
Shares under the conditions specified in Nasdaq Rules 4120 and 4121,
including the trading pauses under Nasdaq Rules 4120(a)(11) and (12).
Trading may be halted because of market conditions or for reasons
that, in the view of the Exchange, make trading in the Proxy Portfolio
Shares inadvisable. These may include: (1) The extent to which trading
is not occurring in the securities and/or the financial instruments
composing the Proxy Basket or Fund Portfolio; or (2) whether other
unusual conditions or circumstances detrimental to the maintenance of a
fair and orderly market are present. Trading in the Proxy Portfolio
Shares also will be subject to Rule 5750(d)(2)(D), which sets forth
circumstances under which a series of Proxy Portfolio Shares may be
halted.
Trading Rules
Nasdaq deems the Shares to be equity securities, thus rendering
trading in the Shares subject to Nasdaq's existing rules governing the
trading of equity securities. Nasdaq will allow trading in the Shares
from 4:00 a.m. until 8:00 p.m., Eastern Time. The Exchange has
appropriate rules to facilitate transactions in the Shares during all
trading sessions. As provided in Nasdaq Rule 5750(b)(3), the minimum
price variation for quoting and entry of orders in Proxy Portfolio
Shares traded on the Exchange is $0.01.
Availability of Information
Form N-PORT requires reporting of a fund's complete portfolio
holdings on a position-by-position basis on a quarterly basis within 60
days after fiscal quarter end. Investors can obtain a fund's Statement
of Additional Information, its Shareholder Reports, its Form N-CSR,
filed twice a year, and its Form N-CEN, filed annually. A fund's SAI
and Shareholder Reports are available for 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. The Exchange also notes that the
Exemptive Order provides that an issuer will comply with Regulation
Fair Disclosure, which prohibits selective disclosure of any material
non-public information, which otherwise does not apply to issuers of
Proxy Portfolio Shares. 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.
Proxy Basket for the Proposed Fund
For the Fund, the Proxy Basket will consist of all of the Fund's
portfolio holdings but will be weighted differently, subject to a
minimum weightings overlap of 90% with the Fund's Portfolio at the
beginning of each business day. Intraday pricing information for all
constituents of the Proxy Basket 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. The Exchange notes that the Fund's net asset value
(``NAV'') will form the basis for creations and redemptions for the
Fund and creations and redemptions will work in a manner substantively
identical to that of series of Managed Fund Shares.\13\ The Adviser
expects that the Shares of the Fund will generally be created and
redeemed in-kind, with limited exceptions. The names and quantities of
the instruments that constitute the basket of securities for creations
and redemptions will be the same as the Fund's Proxy Basket, except to
the extent purchases and redemptions are made entirely or in part on a
cash basis. In the event that the value of the Proxy Basket is not the
same as the Fund's NAV, the creation and redemption baskets will
consist of the securities included in the Proxy Basket plus or minus an
amount of cash equal to the difference between the NAV and the value of
the Proxy Basket, as further described below.
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\13\ See Nasdaq Rule 5735.
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The Proxy Basket will be constructed utilizing a proprietary
algorithmic process that will be applied to the Fund Portfolio on a
daily basis. The Proxy Basket will be publicly available on the Fund
website before the commencement of trading in Fund Shares on each
business day. The Proxy Basket will contain all of the names of the
securities in the Fund Portfolio, and only the securities that are in
the Fund Portfolio (and also could contain cash to represent the Fund
Portfolio's holdings of cash). The Proxy Basket will have a minimum
overlap of 90% with the Fund Portfolio at the beginning of each
business day, with the precise
[[Page 8975]]
percentage of aggregate overlap in weightings from 90% to 100% to be
randomly generated each day.
In addition to the disclosure of the Proxy Basket, the Fund will
also publish the ``Guardrail Amount'' on its website on each business
day before the commencement of trading in Shares on the Exchange. The
Guardrail Amount is the maximum deviation between the weightings of the
specific securities and cash positions in the Proxy Basket from the
weightings of those specific securities and cash positions in the Fund
Portfolio. The Guardrail Amount is intended to ensure that no
individual security in the Proxy Basket will be overweighted or
underweighted by more than the publicly disclosed percentage when
compared to the actual weighting of each security within the Fund
Portfolio as of the beginning of each business day. The Adviser expects
the performance of the Proxy Basket and the Fund Portfolio to be
closely aligned in light of the construction of the Proxy Basket, and
does not expect the ``Tracking Error'' to exceed 1%. ``Tracking Error''
is defined to mean the standard deviation over the past three months of
the daily difference, in percentage terms, between the Proxy Basket per
Share NAV and that of the Fund at the end of the business day.
The Fund will also disclose the entirety of its portfolio holdings,
including the name, identifier, market value and weight of each
security and instrument in the portfolio, at a minimum within at least
60 days following the end of every fiscal quarter. As described above,
the Exchange notes that the concept of the Proxy Basket employed under
this structure is designed to provide investors with the traditional
benefits of ETFs while protecting the Fund from the potential for front
running or free riding of portfolio transactions, which could adversely
impact the performance of the Fund.
Additional Information
The Exchange represents that the Shares of the Fund will continue
to comply with all other proposed requirements applicable to Proxy
Portfolio Shares, including the dissemination of key information such
as the Proxy Basket, the Fund Portfolio, and NAV, suspension of trading
or removal, trading halts, surveillance, minimum price variation for
quoting and order entry, an information circular informing members of
the special characteristics and risks associated with trading in the
series of Proxy Portfolio Shares, and firewalls as set forth in the
proposed Exchange rules applicable to Proxy Portfolio Shares.
Price information for the exchange-listed instruments held by the
Fund, including both U.S. and non-U.S. listed equity securities and
U.S. exchange-listed futures will be available through major market
data vendors or securities exchanges listing and trading such
securities. Moreover, U.S.-listed equity securities held by the Fund
will trade on markets that are a member of ISG or with which the
Exchange has in place a comprehensive surveillance sharing
agreement.\14\ Any foreign common stocks held by the Fund will be
traded on an exchange that is a member of ISG or with which the
Exchange has in place a comprehensive surveillance sharing agreement.
All futures contracts that the Fund may invest in will be traded on a
U.S. futures exchange. The Exchange or FINRA, on behalf of the
Exchange, or both, will communicate as needed regarding trading in the
Shares, underlying U.S. exchange-listed equity securities, and U.S.
exchange-listed futures with other markets and other entities that are
members of ISG, and the Exchange or FINRA, on behalf of the Exchange,
or both, may obtain trading information regarding trading such
instruments from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares,
underlying equity securities, and U.S. exchange-listed futures from
markets and other entities that are members of ISG or with which the
Exchange has in place a comprehensive surveillance sharing agreement.
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\14\ For a list of the current members of ISG, see
www.isgportal.com. The Exchange notes that not all components of the
Fund may trade on markets that are members of ISG or with which the
Exchange has in place a comprehensive surveillance sharing
agreement.
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All statements and representations made in this filing regarding
the description of the portfolio or reference assets, limitations on
portfolio holdings or reference assets, dissemination and availability
of reference assets (as applicable) such as the Fund Portfolio and
Proxy Basket, or the applicability of Exchange listing rules specified
in this filing shall constitute continued listing requirements for the
Shares. A minimum of 100,000 Shares of the Fund will be outstanding at
the commencement of trading on the Exchange. The Exchange will obtain a
representation from the issuer of the Shares of the Fund that the NAV
per share of the Fund will be calculated daily and will be made
available to all market participants at the same time.
The issuer has represented to the Exchange that it will advise the
Exchange of any failure by the Fund or Shares to comply with the
continued listing requirements, and, pursuant to its obligations under
Section 19(g)(1) of the Act, the Exchange will surveil for compliance
with the continued listing requirements. FINRA conducts certain 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. If a Fund is not in
compliance with the applicable listing requirements, the Exchange will
commence delisting procedures under the Nasdaq 5800 Series.
2. Statutory Basis
Nasdaq believes that the proposal is consistent with Section 6(b)
of the Act in general and Section 6(b)(5) of the Act, in particular, in
that it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to remove impediments to and perfect
the mechanism of a free and open market and, in general, to protect
investors and the public interest.
The Exchange believes that the particular instruments that may be
included in the Fund Portfolio and Proxy Basket do not raise any
concerns related to the Proxy Basket being able to closely track the
NAV of the Fund because such instruments include only instruments that
trade on an exchange contemporaneously with the Shares. In addition,
the Fund's Proxy Basket is designed to reliably and consistently
correlate to the performance of the Fund.
The Adviser anticipates that the returns between the Fund and its
respective Proxy Basket will have a consistent relationship and that
the deviation in the returns between the Fund and its Proxy Basket will
be sufficiently small such that the Proxy Basket will provide
authorized participants, arbitrageurs and other market participants
(collectively, ``Market Makers'') with a reliable hedging vehicle that
they can use to effectuate low-risk arbitrage trades in Fund Shares.
The Exchange believes that the disclosures provided by the Fund will
allow Market Makers to understand the relationship between the
performance of the Fund and its Proxy Basket. Market Makers will be
able to estimate the value of and hedge positions in the Fund's Shares,
which
[[Page 8976]]
the Exchange believes will facilitate the arbitrage process and help
ensure that the Fund's Shares normally will trade at market prices
close to their NAV. The Exchange also believes that competitive market
making, where traders are looking to take advantage of differences in
bid-ask spread, will aid in keeping spreads tight.
The Exchange notes that a significant amount of information about
the Fund and its Fund Portfolio is publicly available at all times.
Each series will disclose the Proxy Basket, which is designed to
closely track the daily performance of the Fund Portfolio, on a daily
basis. Intraday pricing information for all constituents of the Proxy
Basket 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. Each series of
Proxy Portfolio Shares will at a minimum publicly disclose the entirety
of its portfolio holdings, including the name, identifier, market value
and weight of each security and instrument in the portfolio within at
least 60 days following the end of every fiscal quarter in a manner
consistent with normal disclosure requirements otherwise applicable to
open-end investment companies registered under the 1940 Act.
The website will include additional quantitative information
updated on a daily basis, including, on a per Share basis for the Fund,
the prior business day's NAV and the closing price or bid/ask price at
the time of calculation of such NAV, and a calculation of the premium
or discount of the closing price or bid/ask price against such NAV. The
website will also disclose any other information regarding premiums and
discounts and the bid/ask spread for the Fund as may be required for
other ETFs under Rule 6c-11 under the 1940 Act, as amended. On each
business day, before the commencement of trading of Shares, the Fund
will publish on its website the Proxy Basket and the Guardrail Amount
for that day.
The Exchange represents that the Shares of the Fund will continue
to comply with all other proposed requirements applicable to Proxy
Portfolio Shares, including the dissemination of key information such
as the Proxy Basket, disclosure of the Fund Portfolio quarterly, and
NAV, suspension of trading or removal, trading halts, surveillance,
minimum price variation for quoting and order entry, an information
circular informing members of the special characteristics and risks
associated with trading in the series of Proxy Portfolio Shares, and
firewalls as set forth in the proposed Exchange rules applicable to
Proxy Portfolio Shares and the orders approving such rules. Moreover,
U.S.-listed equity securities held by the Fund will trade on markets
that are a member of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.\15\
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\15\ Id.
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All statements and representations made in this filing regarding
the description of the portfolio or reference assets, limitations on
portfolio holdings or reference assets, dissemination and availability
of reference asset (as applicable), or the applicability of Exchange
listing rules specified in this filing shall constitute continued
listing requirements for the Shares. The issuer has represented to the
Exchange that it will advise the Exchange of any failure by the Fund or
Shares to comply with the continued listing requirements, and, pursuant
to its obligations under Section 19(g)(1) of the Act, the Exchange will
surveil for compliance with the continued listing requirements. A
minimum of 100,000 Shares of the Fund will be outstanding at the
commencement of trading on the Exchange. The Exchange will obtain a
representation from the issuer of the Shares of the Fund that the NAV
per share of the Fund will be calculated daily and will be made
available to all market participants at the same time.
FINRA conducts certain 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. If a Fund is not in compliance with the applicable listing
requirements, the Exchange will commence delisting procedures under the
Nasdaq 5800 Series.
For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Rather, the Exchange notes
that the proposed rule change will facilitate the listing of a new type
of actively-managed exchange-traded product, thus enhancing competition
among both market participants and listing venues, to the benefit of
investors and the marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) thereunder.\17\
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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 \18\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \19\ 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. The
proposed rule change is substantially similar to previous proposals on
which the Commission has granted waiver of the operative delay,\20\
does not raise any novel regulatory issues, and 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
proposal as operative upon filing.\21\
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\18\ 17 CFR 240.19b-4(f)(6).
\19\ 17 CFR 240.19b-4(f)(6)(iii).
\20\ See Securities Exchange Act Releases No. 90684 (Dec. 16,
2020), 85 FR 83637 (Dec. 22, 2020) (File No. SR-CboeBZX-2020-091)
and 90686 (Dec. 16, 2020), 85 FR 83657 (Dec. 22, 2020) (File No. SR-
CboeBZX-2020-090).
\21\ 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
[[Page 8977]]
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 to determine whether the
proposed rule change should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NASDAQ-2021-005 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-NASDAQ-2021-005. 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-NASDAQ-2021-005, and should be submitted
on or before March 3, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-02711 Filed 2-9-21; 8:45 am]
BILLING CODE 8011-01-P