[Federal Register Volume 87, Number 248 (Wednesday, December 28, 2022)]
[Notices]
[Pages 79919-79922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28196]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96559; File No. SR-NYSEARCA-2022-84]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Certain 
Representations Relating to the Stance Equity ESG Large Cap Core ETF

December 21, 2022
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on December 15, 2022, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to certain representations made in the 
proposed rule change previously filed with the Securities and Exchange 
Commission (the ``Commission'' or ``SEC'') pursuant to Rule 19b-4 
relating to the Stance Equity ESG Large Cap Core ETF (the ``Target 
ETF''). Shares of the Target ETF are currently listed and traded on the 
Exchange under NYSE Arca Rule 8.601-E. 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.

[[Page 79920]]

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

    1. Purpose
    The Commission has approved the listing and trading on the Exchange 
of shares of the Target ETF, under NYSE Arca Rule 8.601-E, which 
governs the listing and trading of Active Proxy Portfolio Shares, which 
are securities issued by an actively managed open-end investment 
management company.\4\ Shares of the Target ETF are currently listed 
and traded on the Exchange under NYSE Arca Rule 8.601-E.\5\ The shares 
of the Target ETF are issued by The RBB Fund, Inc. (the ``Issuer''), a 
corporation organized under the laws of the State of Maryland and 
registered with the Commission as an open-end management investment 
company.\6\
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    \4\ See Securities Exchange Act Release No. 89185 (June 29, 
2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95) (Approval of 
a Proposed Rule Change To Adopt NYSE Arca Rule 8.601-E To Permit the 
Listing and Trading of Active Proxy Portfolio Shares and To List and 
Trade Shares of the Natixis U.S. Equity Opportunities ETF Under 
Proposed NYSE Arca Rule 8.601-E). 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.'' Rule 
8.601-E(c)(2) provides that ``[t]he term ``Actual Portfolio'' means 
the identities and quantities of the securities and other assets 
held by the Investment Company that shall form the basis for the 
Investment Company's calculation of NAV at the end of the business 
day.'' Rule 8.601-E(c)(3) provides that ``[t]he term ``Proxy 
Portfolio'' means a specified portfolio of securities, other 
financial instruments and/or cash designed to track closely the 
daily performance of the Actual Portfolio of a series of Active 
Proxy Portfolio Shares as provided in the exemptive relief pursuant 
to the Investment Company Act of 1940 applicable to such series.''
    \5\ The Commission previously approved the listing and trading 
of the shares of the Target ETF. See Securities Exchange Act Nos. 
91266 (March 5, 2021) 86 FR 13930 (March 11, 2021) (SR-NYSEArca-
2020-104) (Order Approving a Proposed Rule Change, as Modified by 
Amendment No. 2, To List and Trade Shares of the Stance Equity ESG 
Large Cap Core ETF Under NYSE Arca Rule 8.601-E) (``Approval 
Order''); and 90665 (December 15, 2020) 85 FR 83129 (December 21, 
2020) (SR-NYSEArca-2020-104) (Notice of Filing of Proposed Rule 
Change To List and Trade Shares of the Stance Equity ESG Large Cap 
Core ETF Under NYSE Arca Rule 8.601-E) (``Notice''). (The Approval 
Order and the Notice are referred to collectively herein as the 
``Releases'').
    \6\ The Issuer is registered under the Investment Company Act of 
1940 (the ``1940 Act''). On November 23, 2020, the Issuer filed a 
registration statement on Form N-1A under the Securities Act of 1933 
(15 U.S.C. 77a), and under the 1940 Act relating to the Target ETF 
(File Nos. 033-20827 and 811- 05518) (``Registration Statement''). 
The Issuer filed an 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. 812-15165), dated September 28, 2020 
(``Application''). The Issuer filed an amended Application on 
December 10, 2020, and a second amended Application on January 15, 
2021. On February 26, 2021, the Commission issued an order 
(``Exemptive Order'') under the 1940 Act granting the exemptions 
requested in the Application (Investment Company Act Release No. 
34215, February 26, 2021).
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    The Hennessy Funds Trust has filed a combined prospectus and proxy 
statement (the ``Proxy Statement'') with the Commission on Form N-14 
describing a ``Plan of Reorganization'' pursuant to which the assets of 
the Target ETF will be merged into the Hennessy Stance ESG Large Cap 
ETF (``Acquiring ETF''), a series of the Hennessy Funds Trust.\7\ 
According to the Proxy Statement, the Target ETF has the same 
investment objective and investment strategies as the Acquiring ETF. 
Following approval of the Target ETF's shareholders and closing of the 
Reorganization, the Target ETF will transfer all of its assets and 
liabilities (other than the excluded liabilities) to the Acquiring ETF 
in exchange for shares of the Acquiring ETF, with the Target ETF 
distributing shares of the Acquiring ETF pro rata to its shareholders. 
Shareholders of the Target ETF will thus effectively be converted into 
shareholders of the Acquiring ETF and will hold shares of the Acquiring 
ETF with the same NAV as shares of the Target ETF that they held prior 
to the Reorganization. Following the Reorganization, the Target ETF 
will be renamed as the Hennessy Stance ESG Large Cap ETF.
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    \7\ See https://www.sec.gov/Archives/edgar/data/891944/000089706922000614/cmw453.htm.
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    In this proposed rule change, the Exchange proposes to change 
certain representations made in the proposed rule change previously 
filed with the Commission pursuant to Rule 19b-4 relating to the Target 
ETF, as described above,\8\ which changes would be implemented as a 
result of the Reorganization.\9\ Following the Reorganization, the 
Acquiring ETF will continue to comply with all initial and continued 
listing requirements under NYSE Arca Rule 8.601-E.
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    \8\ See note 4 supra.
    \9\ Stance Capital, LLC (``Stance Capital''), a sub-advisor to 
the Target ETF, represents that it will continue the day-to-day 
management of the Acquiring ETF's investment portfolio following the 
Reorganization in the manner described in the proposed rule change 
for the Target ETF referenced in note 4, supra, and the changes 
described herein will not be implemented until this proposed rule 
change is operative.
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Hennessy Stance ESG Large Cap ETF
    The Notice stated that shares of the Target ETF are issued by The 
RBB Fund, Inc. Following the Reorganization, shares will be issued by 
Hennessy Funds Trust. The Target ETF's investment adviser is Red Gate 
Advisers, LLC. Following the Reorganization, the investment adviser 
will be Hennessy Advisors, Inc.\10\ The

[[Page 79921]]

Target ETF's sub-advisers, Stance Capital and Vident Investment 
Advisory, LLC will remain the sub-advisers for the Acquiring ETF 
following the Reorganization.
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    \10\ Hennessy Advisors, Inc. is an SEC-registered investment 
adviser. Hennessy Advisors is not registered as a broker-dealer or 
affiliated with a broker-dealer. In the event (a) Hennessy Advisors, 
Inc. becomes registered as a broker-dealer or becomes newly 
affiliated with a broker-dealer, or (b) any new adviser or sub-
adviser is a registered broker-dealer, or becomes affiliated with a 
broker-dealer, it will implement and maintain a ``fire wall'' with 
respect to its relevant personnel or its broker-dealer affiliate 
regarding access to information concerning the composition and/or 
changes to the Acquiring ETF'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 
the Acquiring ETF's Actual Portfolio and/or Proxy Portfolio or 
changes thereto. In addition, any person related to the adviser, 
sub-adviser(s), or the Acquiring ETF who make decisions pertaining 
to the Acquiring ETF's Actual Portfolio or the Proxy Portfolio or 
has access to non-public information regarding the Acquiring ETF's 
Actual Portfolio and/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 
Acquiring ETF's Actual Portfolio and/or the Proxy Portfolio or 
changes thereto. 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-Advisers 
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. Hennessy Advisors 
filed an 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. 812-15387), dated September 21, 2022 
(``Hennessy Application''). Hennessy Advisors filed an amended 
Hennessy Application on November 3, 2022, and a second amended 
Hennessy Application on November 16, 2022. On December 14, 2022, the 
Commission issued an order (``Hennessy Exemptive Order'') under the 
1940 Act granting the exemptions requested in the Hennessy 
Application (Investment Company Act Release No. 34773, December 14, 
2022). Shares of the Acquiring ETF are not currently listed and 
traded on the Exchange. The Exchange will not commence trading in 
shares of the Acquiring ETF until the Proxy Statement is effective.
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    The investment objective of the Acquiring ETF will remain 
unchanged. In addition, the Acquiring ETF's portfolio meets and will 
continue to meet the representations regarding the Target ETF's 
investments as described in the Releases.\11\ Except for the changes 
noted above, all other representations made in the Releases remain 
unchanged. As stated above and in the Releases, shares of the Acquiring 
ETF shall also conform to the initial and continued listing criteria 
under Rule 8.601-E.
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    \11\ Pursuant to the Hennessy Application and Hennessy Exemptive 
Order, the permissible investments for the Acquiring ETF will 
continue to include only the following instruments: ETFs traded on a 
U.S. exchange, exchange-traded notes traded on a U.S. exchange, U.S. 
exchange-traded common stocks, U.S. exchange-traded preferred 
stocks, U.S. exchange-traded American Depositary Receipts, 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; common 
stocks listed on a foreign exchange that trade on such exchange 
contemporaneously with the Acquiring ETF's Shares; exchange-traded 
futures that are traded on a U.S. futures exchange contemporaneously 
with the Acquiring ETF's Shares; and cash and cash equivalents 
(which are short-term U.S. Treasury securities, government money 
market funds, and repurchase agreements). The Acquiring ETF will 
also continue to not borrow for investment purposes, hold short 
positions, or purchase any securities that are illiquid investments 
at the time of purchase.
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2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \12\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest.
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    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices, and is designed 
to promote just and equitable principles of trade and to protect 
investors and the public interest. Hennessy Funds Trust has filed the 
Proxy Statement describing the Reorganization pursuant to which, 
following approval of the Target ETF's shareholders and closing of the 
Reorganization, all of the assets of the Stance Equity ESG Large Cap 
Core ETF will be transferred to a corresponding fund of the Hennessy 
Funds Trust, which will have the name Hennessy Stance ESG Large Cap 
ETF. This filing proposes to reflect organizational and administrative 
changes that would be implemented as a result of the Reorganization, 
including changes to the trust entity issuing shares of the Target ETF 
and the adviser to the Target ETF. As noted above, Hennessy Advisors, 
Inc. is not registered as a broker-dealer or affiliated with a broker-
dealer. In the event (a) Hennessy Advisors, Inc. becomes registered as 
a broker-dealer or becomes newly affiliated with a broker-dealer, or 
(b) any new adviser or sub-adviser is a registered broker-dealer, or 
becomes affiliated with a broker-dealer, it will implement and maintain 
a ``fire wall'' with respect to its relevant personnel or its broker-
dealer affiliate regarding access to information concerning the 
composition and/or changes to the Acquiring ETF'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 the Acquiring ETF's Actual Portfolio and/or Proxy Portfolio 
or changes thereto. According to the Proxy Statement, the investment 
objective of the Acquiring ETF will be the same as that of the Target 
ETF following the Reorganization. The Exchange believes these changes 
will not adversely impact investors or Exchange trading. In addition, 
the Acquiring ETF's portfolio meets and will continue to meet the 
representations regarding the Target ETF's investments as described in 
the Releases. Except for the changes noted above, all other 
representations made in the Releases remain unchanged. As stated above 
and in the Releases, shares of the Acquiring ETF shall also conform to 
the initial and continued listing criteria under Rule 8.601-E.

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 purpose of the Act. The Exchange believes the 
proposed rule change will not impose a burden on competition and will 
benefit investors and the marketplace by permitting continued listing 
and trading of shares of the Acquiring ETF following implementation of 
the changes described above that would follow the Reorganization, which 
changes would not impact the investment objective of the Acquiring ETF.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \13\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange 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 under Rule 19b-4(f)(6) \15\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission 
may 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 immediately upon filing. The Exchange states that 
the proposed changes reflect organizational and administrative changes 
that would be implemented as a result of the Reorganization, including 
changes to the trust entity issuing shares of the Target ETF and the 
investment adviser to the Target ETF, and that the proposed changes do 
not raise novel regulatory issues and would not affect the public 
interest or the protection of investors. The Commission believes that 
waiver of the 30-day operative delay is consistent with the protection 
of investors and the public interest because the proposal does not 
raise any new or novel issues.

[[Page 79922]]

Accordingly, the Commission hereby waives the 30-day operative delay 
and designates the proposal operative upon filing.\17\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission 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 such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule 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-NYSEARCA-2022-84 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-2022-84. 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-NYSEARCA-2022-84 and 
should be submitted on or before January 18, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-28196 Filed 12-27-22; 8:45 am]
BILLING CODE 8011-01-P