80 FR 43512 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Amendment Nos. 1, 2, and 3 and Order Approving on an Accelerated Basis a Proposed Rule Change, as Modified by Amendment Nos. 1, 2, and 3, To List and Trade Shares of the SPDR® SSgA Flexible Allocation ETF Under NYSE Arca Equities Rule 8.600
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 140 (July 22, 2015)
Federal Register Volume 80, Issue 140 (July 22, 2015)
| Page Range | 43512-43515 | |
| FR Document | 2015-17898 |
[Federal Register Volume 80, Number 140 (Wednesday, July 22, 2015)] [Notices] [Pages 43512-43515] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-17898] [[Page 43512]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75461; File No. SR-NYSEArca-2015-44] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Amendment Nos. 1, 2, and 3 and Order Approving on an Accelerated Basis a Proposed Rule Change, as Modified by Amendment Nos. 1, 2, and 3, To List and Trade Shares of the SPDR[supreg] SSgA Flexible Allocation ETF Under NYSE Arca Equities Rule 8.600 July 15, 2015. I. Introduction On May 15, 2015, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange Commission (the ``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to list and trade shares (``Shares'') of the SPDR[supreg] SSgA Flexible Allocation ETF (``Fund'') under NYSE Arca Equities Rule 8.600. The proposed rule change was published for comment in the Federal Register on June 4, 2015.\3\ On June 30, 2015, the Exchange filed Amendment No. 1 to the proposal.\4\ On July 10, 2015, the Exchange filed Amendment No. 2 to the proposal.\5\ The Exchange also filed Amendment No. 3 to the proposal on July 13, 2015.\6\ The Commission received no comments on the proposal. The Commission is publishing this notice to solicit comments on Amendment Nos. 1, 2, and 3 from interested persons, and is approving the proposed rule change, as modified by Amendment Nos. 1, 2, and 3, on an accelerated basis. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 75071 (May 29, 2015), 80 FR 31934. \4\ Amendment No. 1 replaces SR-NYSEArca-2015-44 as originally filed and supersedes such filing in its entirety. In Amendment No. 1, the Exchange clarifies that: (1) Under normal circumstances, the SSgA Flexible Allocation Portfolio (``Portfolio'') will invest at least 80% of its net assets in exchange-traded products (``ETPs''), futures contracts based on the Chicago Board Options Exchange Volatility Index (``VIX Futures''), and equity options; (2) up to 20% of the Portfolio's net assets may be invested in the various investments described as ``Non-Principal Investments;'' (3) the Portfolio may invest in equities, including exchange-listed or over- the-counter common stock and preferred securities of domestic and foreign corporations, as Non-Principal Investments; (4) the restricted securities that may be held as Non-Principal Investments may be either fixed income or equity securities; (5) the derivatives that the Portfolio invests in may be based on equity or fixed income securities and/or equity or fixed income indices, currencies, and interest rates; (6) not more than 10% of the options that the Portfolio invests in will trade in markets that are not members of the Intermarket Surveillance Group (``ISG'') or are not parties to a comprehensive surveillance sharing agreement (``CSSA'') with the Exchange; and (7) to the extent the SSgA Active ETF Trust effects the creation or redemption of Shares in cash, such transactions will be effected in materially the same manner for all authorized participants. Amendment No. 1 also removes from the proposal a description of the circumstances in which the SSgA Active ETF Trust reserves the right to permit or require the substitution of the cash to replace any of the components of the portfolio of securities designated as consideration for the purchase of a ``Creation Unit.'' The Fund will offer and issue Shares only in ``Creation Units,'' aggregations of 50,000 Shares. See Amendment No. 1, at 17. All the amendments to the proposed rule change are available at: http://www.sec.gov/comments/sr-nysearca-2015-44/nysearca201544.shtml. \5\ In Amendment No. 2, the Exchange clarifies that: (1) Not more than 10% of the net assets of the Fund will consist of equity securities that trade in markets that are not members of the ISG or are not parties to a CSSA with the Exchange; (2) the Fund will not invest in leveraged or inverse leveraged exchange-traded funds (``ETFs'') or leveraged or inverse leveraged exchange-traded notes (``ETNs''); and (3) over-the-counter-traded derivative assets, excluding forward foreign currency contracts, normally will be valued on the basis of quotes obtained from a third-party broker- dealer who makes markets in such securities or on the basis of quotes obtained from a third-party pricing service. \6\ Amendment No. 3 clarifies that equity securities held as ``Non-Principal Investments'' are separate from the ETPs categorized as ``Principal Investments.'' --------------------------------------------------------------------------- II. The Exchange's Description of the Proposal \7\ --------------------------------------------------------------------------- \7\ Additional information regarding, among other things, the Shares, the Fund, its investment objective, its investments, its investment strategies, its investment methodology, its investment restrictions, its fees, its creation and redemption procedures, availability of information, trading rules and halts, and surveillance procedures can be found in Amendment No. 1 and in the Registration Statement. See Amendment No. 1, supra note 4, and Registration Statement, infra note 9, respectively. --------------------------------------------------------------------------- NYSE Arca proposes to list and trade shares of the Fund under NYSE Arca Equities Rule 8.600, which governs the listing and trading of Managed Fund Shares.\8\ The Shares will be offered by SSgA Active ETF Trust (``Trust''), which is organized as a Massachusetts business trust and is registered with the Commission as an open-end management investment company.\9\ SSgA Funds Management, Inc. will serve as the investment adviser to the Fund (``Adviser'').\10\ State Street Global Markets, LLC will be the principal underwriter and distributor of the Fund's Shares. State Street Bank and Trust Company will serve as administrator, custodian and transfer agent for the Fund (``Custodian''). --------------------------------------------------------------------------- \8\ A Managed Fund Share is a security that represents an interest in an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1) (``1940 Act'') organized as an open-end investment company or similar entity that invests in a portfolio of securities selected by its investment adviser consistent with its investment objectives and policies. \9\ The Trust is registered under the 1940 Act. On December 18, 2013, the Trust filed with the Commission an amendment to its registration statement on Form N-1A under the Securities Act of 1933 (15 U.S.C. 77a) (``Securities Act''), and under the 1940 Act relating to the Fund (File Nos. 333-173276 and 811-22542) (``Registration Statement''). In addition, the Commission has issued an order granting certain exemptive relief to the Trust under the 1940 Act. See Investment Company Act Release No. 29524 (December 13, 2010) (File No. 812-13487). \10\ 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. --------------------------------------------------------------------------- The Adviser is not a registered broker-dealer but is affiliated with a broker-dealer and has implemented a ``fire wall'' with respect to such broker-dealer regarding access to information concerning the composition and/or changes to the Fund's portfolio.\11\ --------------------------------------------------------------------------- \11\ See Amendment No. 1, supra note 4, at 5. In the event (a) the Adviser or any 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 a fire wall with respect to its relevant personnel or broker-dealer affiliate regarding access to information concerning the composition and/or changes to the portfolio, and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding such portfolio. See id. at 5-6. --------------------------------------------------------------------------- A. Principal Investments of the Fund The Fund will seek to provide long-term total return. In seeking long-term total return, the Adviser will target a return that exceeds one-month London Interbank Offered Rate (``LIBOR'') by at least 4% every year over a five-year investment timeframe. According to the Exchange, the Fund will be actively managed and will not seek to replicate the performance of a specified index. Under normal circumstances,\12\ the Fund will invest substantially all of its [[Page 43513]] assets in the Portfolio, a separate series of the SSgA Master Trust with an identical investment objective as the Fund. As a result, the Fund will invest indirectly in all of the securities and assets owned by the Portfolio.\13\ The investment practices of the Portfolio are the same in all material respects to those of the Fund. --------------------------------------------------------------------------- \12\ The term ``under normal circumstances'' includes, but is not limited to, the absence of extreme volatility or trading halts in the equity markets or the financial markets generally; operational issues causing dissemination of inaccurate market information; or force majeure type events such as systems failure, natural or man-made disaster, act of God, armed conflict, act of terrorism, riot or labor disruption or any similar intervening circumstance. See id. at 6, n.8. \13\ According to the Exchange, the Fund is intended to be managed in a ``master-feeder'' structure, under which the Fund will invest substantially all of its assets in a corresponding Portfolio (i.e. a ``master fund''), which is a separate 1940 Act-registered mutual fund that has an identical investment objective. As a result, the Fund (i.e., the ``feeder fund'') will have an indirect interest in all of the securities and other assets owned by the Portfolio. Because of this indirect interest, the Fund's investment returns should be the same as those of the Portfolio, adjusted for the expenses of the Fund. In extraordinary instances, the Fund reserves the right to make direct investments in securities. The Adviser will manage the investments of the Portfolio. Under the master-feeder arrangement, and pursuant to the investment advisory agreement between the Adviser and the Trust, investment advisory fees charged at the Portfolio level will be deducted from the advisory fees charged at the Fund level. In extraordinary instances, the Fund reserves the right to make direct investments in securities to meet its investment objectives directly. See id. at 6, n.9. --------------------------------------------------------------------------- The Adviser will seek to gain exposure to a wide range of asset classes, including real estate; equity and fixed income securities, including high yield debt securities; commodities; instruments that seek to track movements in volatility indices; and cash and cash equivalents or money market instruments. Under normal circumstances, the Portfolio will invest at least 80% of its net assets in ETPs,\14\ VIX Futures, and equity options (including options on ETPs). --------------------------------------------------------------------------- \14\ ETPs include ETFs registered under the 1940 Act, exchange- traded commodity trusts and exchange-traded notes. The Portfolio may also invest in ETPs that are qualified publicly traded partnerships (``QPTPs''). --------------------------------------------------------------------------- B. Non-Principal Investments While under normal circumstances, the Adviser will invest at least 80% of the Portfolio's net assets as described in the Principal Investments section, above, the Adviser may invest up to 20% of the Portfolio's net assets in other securities and financial instruments, as described below. The Portfolio may hold in the following types of assets:Equities securities other than ETPs mentioned above,\15\ including exchange-listed or over-the-counter (``OTC'') common stock and preferred securities of domestic and foreign corporations; real estate investment trusts; and the securities of other investment companies. --------------------------------------------------------------------------- \15\ See Amendment No. 3, supra note 6. --------------------------------------------------------------------------- Fixed income securities, including U.S. government and U.S. government agency securities; repurchase agreements and reverse repurchase agreements; bonds, including sovereign debt and U.S. registered, dollar-denominated bonds of foreign corporations, governments, agencies and supra-national entities; convertible securities; short term instruments, including money market instruments; inflation-protected public obligations, commonly known as ``TIPS,'' of the U.S. Treasury, as well as TIPS of major governments and emerging market countries; and variable and floating rate securities, including variable rate demand notes and variable rate demand obligations. Cash and cash equivalents. Restricted securities, including equity and fixed income restricted securities. The following types of derivatives: Exchange-listed and non-exchange listed options (other than the equity options mentioned above), swaps, forward contracts, and futures contracts (other than the VIX Futures mentioned above). The derivatives that the Portfolio invests in may be based on equity or fixed income securities and/or equity or fixed income indices, currencies, and interest rates. The Portfolio also may conduct foreign currency transactions on a spot (i.e., cash) basis and engage in short sales ``against the box.'' \16\ --------------------------------------------------------------------------- \16\ In a short sale against the box, the Fund agrees to sell at a future date a security that it either contemporaneously owns or has the right to acquire at no extra cost. --------------------------------------------------------------------------- III. Discussion and Commission Findings After careful review, the Commission finds that the Exchange's proposal to list and trade the Shares is consistent with the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange.\17\ In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Exchange Act,\18\ which requires, among other things, that the Exchange's rules be designed 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. --------------------------------------------------------------------------- \17\ In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition and capital formation. See 15 U.S.C. 78c(f). \18\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Commission finds that the proposal to list and trade the Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the Exchange Act,\19\ which sets forth Congress' finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Quotation and last-sale information for the Shares and underlying equity securities traded on a national securities exchange will be available via the Consolidated Tape Association high speed line. The Exchange represents that the intra-day, closing and settlement prices of underlying equity securities traded on a national securities exchange, as well as exchange-traded futures and foreign exchange-traded common stocks and preferred securities, will be readily available from the exchanges trading such assets as well as automated quotation systems, published or other public sources, or on-line information services. Intra-day and closing price information for exchange-listed options and futures will be available from the applicable exchange and from major market data vendors. In addition, price information for U.S. exchange-listed options is available from the Options Price Reporting Authority. Quotation information from brokers and dealers or pricing services will be available for fixed income securities, spot, and forward currency transactions; and equity securities traded in the OTC market (e.g., restricted securities and non-exchange listed securities of investment companies). Price information regarding OTC-traded derivative instruments, as well as equity securities traded in the OTC market, is available from major market data vendors. Pricing information regarding each asset class in which the Fund or Portfolio will invest will generally be available through nationally recognized data service providers through subscription arrangements. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78k-1(a)(1)(C)(iii). --------------------------------------------------------------------------- The Commission also believes that the proposal to list and trade the Shares is reasonably designed to promote fair disclosure of information that may be necessary to price the Shares appropriately and to prevent trading when a reasonable degree of transparency cannot be assured. On [[Page 43514]] each business day, before commencement of trading in Shares in the Core Trading Session on the Exchange, the Fund will disclose on its Web site the Disclosed Portfolio as defined in NYSE Arca Equities Rule 8.600(c)(2) that will form the basis for the Fund's calculation of NAV at the end of the business day.\20\ --------------------------------------------------------------------------- \20\ Under accounting procedures followed by the Fund, trades made on the prior business day (``T'') will be booked and reflected in NAV on the current business day (``T+1''). Accordingly, the Fund will be able to disclose at the beginning of the business day the portfolio that will form the basis for the NAV calculation at the end of the business day. --------------------------------------------------------------------------- The Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the Disclosed Portfolio will be made available to all market participants at the same time. In addition, the Indicative Optimized Portfolio Value (``IOPV'') of the Fund, which is the Portfolio Indicative Value as defined in NYSE Arca Equities Rule 8.600 (c)(3), will be widely disseminated at least every 15 seconds during the Exchange's Core Trading Session by one or more major market data vendors. The Custodian, through the National Securities Clearing Corporation, will make available on each Business Day, immediately prior to the opening of business on the Exchange (currently 9:30 a.m., Eastern Time (``E.T.'')), the list of the names and the required number of shares of each Deposit Security or the required amount of Deposit Cash, as applicable, to be included in the current Fund Deposit (based on information at the end of the previous Business Day) for the Fund. The NAV of the Portfolio will be calculated by the Custodian and determined at the close of the regular trading session on the New York Stock Exchange (ordinarily 4:00 p.m. E.T.) on each day that such exchange is open. The Fund's Web site will include a form of the prospectus for the Fund that may be downloaded and additional information relating to NAV and other applicable information. The Exchange represents that trading in the Shares will be halted if the circuit breaker parameters in NYSE Arca Equities Rule 7.12 have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable.\21\ Trading in the Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), which sets forth circumstances under which Shares may be halted. --------------------------------------------------------------------------- \21\ These may include: (1) The extent to which trading is not occurring in the securities and/or the financial instruments comprising the Disclosed Portfolio of the Fund; or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. See Amendment No. 1, supra note 4, at 22. --------------------------------------------------------------------------- The Exchange states that it has a general policy prohibiting the distribution of material, non-public information by its employees.\22\ The Exchange represents that the Adviser is not registered as a broker- dealer but is affiliated with a broker-dealer and has implemented a ``fire wall'' with respect to such broker-dealer regarding access to information concerning the composition and/or changes to the Fund's portfolio.\23\ --------------------------------------------------------------------------- \22\ See id. at 24. \23\ See note 11, supra, and accompanying text. --------------------------------------------------------------------------- Prior to the commencement of trading, the Exchange will inform its Equity Trading Permit Holders in an Information Bulletin (``Bulletin'') of the special characteristics and risks associated with trading the Shares. The Exchange states that trading in the Shares will be subject to the existing trading surveillances, administered by the Financial Industry Regulatory Authority (``FINRA'') on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.\24\ On behalf of the Exchange, FINRA will communicate as needed regarding trading in the Shares, underlying U.S. exchange-traded equity securities, exchange-traded options, futures, and foreign exchange-traded common stocks and preferred securities with other markets and other entities that are members of ISG, and FINRA, on behalf of the Exchange, may obtain trading information regarding trading in the Shares and underlying U.S. exchange-traded equity securities, exchange-traded options, futures, and common stocks and preferred securities of foreign corporations from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and U.S. exchange-traded equity securities, exchange-traded options, futures, and common stocks and preferred securities of foreign corporations from markets and other entities that are members of ISG or with which the Exchange has in place a CSSA.\25\ FINRA, on behalf of the Exchange, is able to access, as needed, trade information for certain fixed income securities held by the Fund reported to FINRA's Trade Reporting and Compliance Engine. --------------------------------------------------------------------------- \24\ See Amendment No. 1, supra note 4, at 23. FINRA surveils trading on the Exchange pursuant to a regulatory services agreement. The Exchange is responsible for FINRA's performance under this regulatory services agreement. \25\ For a list of the current members of ISG, see www.isgportal.org. --------------------------------------------------------------------------- The Exchange represents that it 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.\26\ In support of this proposal, the Exchange has also made the following representations: --------------------------------------------------------------------------- \26\ See Amendment No. 1, supra note 4, at 22-23. --------------------------------------------------------------------------- (1) The Shares of the Fund will conform to the initial and continued listing criteria under NYSE Arca Equities Rule 8.600. (2) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. (3) Trading in the Shares will be subject to the existing trading surveillances, administered by FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws, and 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. (4) Prior to the commencement of trading, the Exchange will inform its Equity Trading Permit Holders in a Bulletin of the special characteristics and risks associated with trading the Shares. Specifically, the Bulletin will discuss the following: (a) The procedures for purchases and redemptions of Shares in Creation Unit aggregations (and that Shares are not individually redeemable); (b) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading the Shares; (c) the risks involved in trading the Shares during the Opening and Late Trading Sessions when an updated IOPV will not be calculated or publicly disseminated; (d) how information regarding the IOPV and the Disclosed Portfolio is disseminated; (e) the requirement that Equity Trading Permit Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (f) trading information. (5) For initial and/or continued listing, the Fund will be in compliance with Rule 10A-3 \27\ under the Act, as provided by NYSE Arca Equities Rule 5.3. --------------------------------------------------------------------------- \27\ 17 CFR 240 10A-3. --------------------------------------------------------------------------- (6) While the Fund may invest in inverse ETFs, the Fund will not invest [[Page 43515]] in leveraged or inverse leveraged ETFs or ETNs (e.g., 2X or 3X).\28\ --------------------------------------------------------------------------- \28\ See Amendment No. 2, supra note 5. --------------------------------------------------------------------------- (7) The Portfolio may invest up to 20% of its assets in derivatives.\29\ --------------------------------------------------------------------------- \29\ See Amendment No. 1, supra note 4, at 12, n.24. --------------------------------------------------------------------------- (8) The Portfolio may invest up to 25% of its total assets in one or more ETPs that are QPTPs and whose principal activities are the buying and selling of commodities or options, futures, or forwards with respect to commodities.\30\ --------------------------------------------------------------------------- \30\ See id. at 9. --------------------------------------------------------------------------- (9) The Portfolio may invest up to 10% of its net assets in high yield debt securities.\31\ --------------------------------------------------------------------------- \31\ See id. at 11. --------------------------------------------------------------------------- (10) Not more than 10% of the net assets of the Fund will consist of equity securities that trade in markets that are not members of the ISG or are not parties to CSSA with the Exchange.\32\ --------------------------------------------------------------------------- \32\ See id. at 10. --------------------------------------------------------------------------- (11) The Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), including Rule 144A securities deemed illiquid by the Adviser, consistent with Commission guidance. The Fund will monitor its portfolio liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained, and will consider taking appropriate steps in order to maintain adequate liquidity if, through a change in values, net assets, or other circumstances, more than 15% of the Fund's net assets are held in illiquid assets.\33\ --------------------------------------------------------------------------- \33\ See id. at 14. --------------------------------------------------------------------------- (12) A minimum of 100,000 Shares will be outstanding at the commencement of trading on the Exchange.\34\ --------------------------------------------------------------------------- \34\ See id. at 23. --------------------------------------------------------------------------- This approval order is based on all of the Exchange's representations, including those set forth above and in the Notice. For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendment Nos. 1, 2, and 3, is consistent with Section 6(b)(5) of the Act \35\ and the rules and regulations thereunder applicable to a national securities exchange. --------------------------------------------------------------------------- \35\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- IV. Solicitation of Comments on Amendment Nos. 1, 2 and 3 Interested persons are invited to submit written data, views, and arguments concerning whether Amendment Nos. 1, 2, and 3 is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NYSEArca-2015-44 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-2015-44. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference 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 will also be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEArca-2015-44 and should be submitted on or before August 12, 2015. V. Accelerated Approval of Proposed Rule Change as Modified by Amendment Nos. 1, 2, and 3 The Commission finds good cause to approve the proposed rule change, as modified by Amendment Nos. 1, 2, and 3, prior to the 30th day after the date of publication of notice of the amendment in the Federal Register. The Exchange submitted Amendment Nos. 1, 2, and 3 to, among other things, provide clarifying details about the investments the Portfolio would be permitted to hold and the valuation of OTC- traded derivative assets, and to limit the percentage of the Portfolio that may be comprised of options that are listed on markets that are not members of the ISG or with which the Exchange does not have a CSSA.\36\ --------------------------------------------------------------------------- \36\ See Amendment No. 1, supra note 4. --------------------------------------------------------------------------- This information is useful for evaluating the likelihood of market participants engaging in effective arbitrage and the Exchange's ability to detect improper trading activity that impacts the price of the Shares. Accordingly, the Commission believes that Amendment Nos. 1, 2, and 3 are consistent with the provisions of Section 6(b)(5) of the Act,\37\ and therefore finds good cause, pursuant to Section 19(b)(2) of the Act,\38\ for approving the proposed rule change, as modified by Amendment Nos. 1, 2, and 3, on an accelerated basis. --------------------------------------------------------------------------- \37\ 15 U.S.C. 78f(b)(5). \38\ 15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Exchange Act, that the proposed rule change (SR-NYSEArca-2015-44), as modified by Amendment Nos. 1, 2, and 3, is hereby approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\39\ --------------------------------------------------------------------------- \39\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-17898 Filed 7-21-15; 8:45 am] BILLING CODE 8011-01-P
![43512 Federal Register / Vol. 80, No. 140 / Wednesday, July 22, 2015 / Notices
SECURITIES AND EXCHANGE July 10, 2015, the Exchange filed SSgA Funds Management, Inc. will
COMMISSION Amendment No. 2 to the proposal.5 The serve as the investment adviser to the
Exchange also filed Amendment No. 3 Fund (‘‘Adviser’’).10 State Street Global
[Release No. 34–75461; File No. SR–
NYSEArca–2015–44]
to the proposal on July 13, 2015.6 The Markets, LLC will be the principal
Commission received no comments on underwriter and distributor of the
Self-Regulatory Organizations; NYSE the proposal. The Commission is Fund’s Shares. State Street Bank and
Arca, Inc.; Notice of Filing of publishing this notice to solicit Trust Company will serve as
Amendment Nos. 1, 2, and 3 and Order comments on Amendment Nos. 1, 2, administrator, custodian and transfer
Approving on an Accelerated Basis a and 3 from interested persons, and is agent for the Fund (‘‘Custodian’’).
Proposed Rule Change, as Modified by approving the proposed rule change, as The Adviser is not a registered broker-
Amendment Nos. 1, 2, and 3, To List modified by Amendment Nos. 1, 2, and dealer but is affiliated with a broker-
and Trade Shares of the SPDR® SSgA 3, on an accelerated basis. dealer and has implemented a ‘‘fire
Flexible Allocation ETF Under NYSE wall’’ with respect to such broker-dealer
II. The Exchange’s Description of the regarding access to information
Arca Equities Rule 8.600 Proposal 7 concerning the composition and/or
July 15, 2015. NYSE Arca proposes to list and trade changes to the Fund’s portfolio.11
shares of the Fund under NYSE Arca
I. Introduction A. Principal Investments of the Fund
Equities Rule 8.600, which governs the
On May 15, 2015, NYSE Arca, Inc. listing and trading of Managed Fund The Fund will seek to provide long-
(the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed Shares.8 The Shares will be offered by term total return. In seeking long-term
with the Securities and Exchange SSgA Active ETF Trust (‘‘Trust’’), which total return, the Adviser will target a
Commission (the ‘‘Commission’’), is organized as a Massachusetts business return that exceeds one-month London
pursuant to Section 19(b)(1) of the trust and is registered with the Interbank Offered Rate (‘‘LIBOR’’) by at
Securities Exchange Act of 1934 (the Commission as an open-end least 4% every year over a five-year
‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule management investment company.9 investment timeframe. According to the
19b–4 thereunder,2 a proposed rule Exchange, the Fund will be actively
change to list and trade shares and issue Shares only in ‘‘Creation Units,’’ managed and will not seek to replicate
(‘‘Shares’’) of the SPDR® SSgA Flexible aggregations of 50,000 Shares. See Amendment No. the performance of a specified index.
Allocation ETF (‘‘Fund’’) under NYSE 1, at 17. All the amendments to the proposed rule Under normal circumstances,12 the
change are available at: http://www.sec.gov/
Arca Equities Rule 8.600. The proposed comments/sr-nysearca-2015-44/nysearca Fund will invest substantially all of its
rule change was published for comment 201544.shtml.
in the Federal Register on June 4, 2015.3 5 In Amendment No. 2, the Exchange clarifies Company Act Release No. 29524 (December 13,
On June 30, 2015, the Exchange filed that: (1) Not more than 10% of the net assets of the 2010) (File No. 812–13487).
Fund will consist of equity securities that trade in 10 An investment adviser to an open-end fund is
Amendment No. 1 to the proposal.4 On markets that are not members of the ISG or are not required to be registered under the Investment
parties to a CSSA with the Exchange; (2) the Fund Advisers Act of 1940 (the ‘‘Advisers Act’’). As a
1 15 U.S.C. 78s(b)(1). will not invest in leveraged or inverse leveraged result, the Adviser and its related personnel are
2 17 CFR 240.19b–4. exchange-traded funds (‘‘ETFs’’) or leveraged or subject to the provisions of Rule 204A–1 under the
3 See Securities Exchange Act Release No. 75071 inverse leveraged exchange-traded notes (‘‘ETNs’’); Advisers Act relating to codes of ethics. This Rule
(May 29, 2015), 80 FR 31934. and (3) over-the-counter-traded derivative assets, requires investment advisers to adopt a code of
4 Amendment No. 1 replaces SR–NYSEArca– excluding forward foreign currency contracts, ethics that reflects the fiduciary nature of the
2015–44 as originally filed and supersedes such normally will be valued on the basis of quotes relationship to clients as well as compliance with
filing in its entirety. In Amendment No. 1, the obtained from a third-party broker-dealer who other applicable securities laws. Accordingly,
Exchange clarifies that: (1) Under normal makes markets in such securities or on the basis of procedures designed to prevent the communication
circumstances, the SSgA Flexible Allocation quotes obtained from a third-party pricing service. and misuse of non-public information by an
Portfolio (‘‘Portfolio’’) will invest at least 80% of its 6 Amendment No. 3 clarifies that equity securities investment adviser must be consistent with Rule
net assets in exchange-traded products (‘‘ETPs’’), held as ‘‘Non-Principal Investments’’ are separate 204A–1 under the Advisers Act. In addition, Rule
futures contracts based on the Chicago Board from the ETPs categorized as ‘‘Principal 206(4)–7 under the Advisers Act makes it unlawful
Options Exchange Volatility Index (‘‘VIX Futures’’), Investments.’’ for an investment adviser to provide investment
and equity options; (2) up to 20% of the Portfolio’s 7 Additional information regarding, among other advice to clients unless such investment adviser has
net assets may be invested in the various things, the Shares, the Fund, its investment (i) adopted and implemented written policies and
investments described as ‘‘Non-Principal objective, its investments, its investment strategies, procedures reasonably designed to prevent
Investments;’’ (3) the Portfolio may invest in its investment methodology, its investment violation, by the investment adviser and its
equities, including exchange-listed or over-the- restrictions, its fees, its creation and redemption supervised persons, of the Advisers Act and the
counter common stock and preferred securities of procedures, availability of information, trading Commission rules adopted thereunder; (ii)
domestic and foreign corporations, as Non-Principal rules and halts, and surveillance procedures can be implemented, at a minimum, an annual review
Investments; (4) the restricted securities that may be found in Amendment No. 1 and in the Registration regarding the adequacy of the policies and
held as Non-Principal Investments may be either Statement. See Amendment No. 1, supra note 4, procedures established pursuant to subparagraph (i)
fixed income or equity securities; (5) the derivatives and Registration Statement, infra note 9, above and the effectiveness of their
that the Portfolio invests in may be based on equity respectively. implementation; and (iii) designated an individual
or fixed income securities and/or equity or fixed 8 A Managed Fund Share is a security that (who is a supervised person) responsible for
income indices, currencies, and interest rates; (6) represents an interest in an investment company administering the policies and procedures adopted
not more than 10% of the options that the Portfolio registered under the Investment Company Act of under subparagraph (i) above.
11 See Amendment No. 1, supra note 4, at 5. In
invests in will trade in markets that are not 1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as
members of the Intermarket Surveillance Group an open-end investment company or similar entity the event (a) the Adviser or any sub-adviser
(‘‘ISG’’) or are not parties to a comprehensive that invests in a portfolio of securities selected by becomes registered as a broker-dealer or becomes
surveillance sharing agreement (‘‘CSSA’’) with the its investment adviser consistent with its newly affiliated with a broker-dealer, or (b) any new
Exchange; and (7) to the extent the SSgA Active investment objectives and policies. adviser or sub-adviser is a registered broker-dealer
ETF Trust effects the creation or redemption of 9 The Trust is registered under the 1940 Act. On or becomes affiliated with a broker-dealer, it will
Shares in cash, such transactions will be effected December 18, 2013, the Trust filed with the implement a fire wall with respect to its relevant
tkelley on DSK3SPTVN1PROD with NOTICES
in materially the same manner for all authorized Commission an amendment to its registration personnel or broker-dealer affiliate regarding access
participants. Amendment No. 1 also removes from statement on Form N–1A under the Securities Act to information concerning the composition and/or
the proposal a description of the circumstances in of 1933 (15 U.S.C. 77a) (‘‘Securities Act’’), and changes to the portfolio, and will be subject to
which the SSgA Active ETF Trust reserves the right under the 1940 Act relating to the Fund (File Nos. procedures designed to prevent the use and
to permit or require the substitution of the cash to 333–173276 and 811–22542) (‘‘Registration dissemination of material non-public information
replace any of the components of the portfolio of Statement’’). In addition, the Commission has regarding such portfolio. See id. at 5–6.
securities designated as consideration for the issued an order granting certain exemptive relief to 12 The term ‘‘under normal circumstances’’
purchase of a ‘‘Creation Unit.’’ The Fund will offer the Trust under the 1940 Act. See Investment includes, but is not limited to, the absence of
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![Federal Register / Vol. 80, No. 140 / Wednesday, July 22, 2015 / Notices 43515
in leveraged or inverse leveraged ETFs be submitted by any of the following and the valuation of OTC-traded
or ETNs (e.g., 2X or 3X).28 methods: derivative assets, and to limit the
(7) The Portfolio may invest up to percentage of the Portfolio that may be
20% of its assets in derivatives.29 Electronic Comments
comprised of options that are listed on
(8) The Portfolio may invest up to • Use the Commission’s Internet markets that are not members of the ISG
25% of its total assets in one or more comment form (http://www.sec.gov/ or with which the Exchange does not
ETPs that are QPTPs and whose rules/sro.shtml); or have a CSSA.36
principal activities are the buying and • Send an email to rule-comments@ This information is useful for
selling of commodities or options, sec.gov. Please include File Number SR– evaluating the likelihood of market
futures, or forwards with respect to NYSEArca–2015–44 on the subject line. participants engaging in effective
commodities.30 Paper Comments arbitrage and the Exchange’s ability to
(9) The Portfolio may invest up to detect improper trading activity that
10% of its net assets in high yield debt • Send paper comments in triplicate
impacts the price of the Shares.
securities.31 to Secretary, Securities and Exchange
Accordingly, the Commission believes
(10) Not more than 10% of the net Commission, 100 F Street NE.,
that Amendment Nos. 1, 2, and 3 are
assets of the Fund will consist of equity Washington, DC 20549–1090.
consistent with the provisions of
securities that trade in markets that are All submissions should refer to File Section 6(b)(5) of the Act,37 and
not members of the ISG or are not Number SR–NYSEArca–2015–44. This therefore finds good cause, pursuant to
parties to CSSA with the Exchange.32 file number should be included on the Section 19(b)(2) of the Act,38 for
(11) The Fund may hold up to an subject line if email is used. To help the approving the proposed rule change, as
aggregate amount of 15% of its net Commission process and review your modified by Amendment Nos. 1, 2, and
assets in illiquid assets (calculated at comments more efficiently, please use 3, on an accelerated basis.
the time of investment), including Rule only one method. The Commission will
144A securities deemed illiquid by the post all comments on the Commission’s VI. Conclusion
Adviser, consistent with Commission Internet Web site (http://www.sec.gov/ It is therefore ordered, pursuant to
guidance. The Fund will monitor its rules/sro.shtml). Copies of the Section 19(b)(2) of the Exchange Act,
portfolio liquidity on an ongoing basis submission, all subsequent that the proposed rule change (SR–
to determine whether, in light of current amendments, all written statements NYSEArca–2015–44), as modified by
circumstances, an adequate level of with respect to the proposed rule Amendment Nos. 1, 2, and 3, is hereby
liquidity is being maintained, and will change that are filed with the approved on an accelerated basis.
consider taking appropriate steps in Commission, and all written
communications relating to the For the Commission, by the Division of
order to maintain adequate liquidity if, Trading and Markets, pursuant to delegated
through a change in values, net assets, proposed rule change between the
authority.39
or other circumstances, more than 15% Commission and any person, other than
Robert W. Errett,
of the Fund’s net assets are held in those that may be withheld from the
public in accordance with the Deputy Secretary.
illiquid assets.33
provisions of 5 U.S.C. 552, will be [FR Doc. 2015–17898 Filed 7–21–15; 8:45 am]
(12) A minimum of 100,000 Shares
will be outstanding at the available for Web site viewing and BILLING CODE 8011–01–P
commencement of trading on the printing in the Commission’s Public
Exchange.34 Reference Room, 100 F Street NE.,
This approval order is based on all of Washington, DC 20549, on official SECURITIES AND EXCHANGE
the Exchange’s representations, business days between the hours of COMMISSION
including those set forth above and in 10:00 a.m. and 3:00 p.m. Copies of such [Release No. 34–75467; File No. SR–
the Notice. filing will also be available for NYSEARCA–2015–58]
For the foregoing reasons, the inspection and copying at the principal
Commission finds that the proposed office of the Exchange. All comments Self-Regulatory Organizations; NYSE
rule change, as modified by Amendment received will be posted without change; Arca, Inc.; Notice of Filing of Proposed
Nos. 1, 2, and 3, is consistent with the Commission does not edit personal Rule Change for New Equity Trading
Section 6(b)(5) of the Act 35 and the identifying information from Rules Relating to Trading Halts, Short
rules and regulations thereunder submissions. You should submit only Sales, Limit Up-Limit Down, and Odd
applicable to a national securities information that you wish to make Lots and Mixed Lots To Reflect the
exchange. available publicly. All submissions Implementation of Pillar, the
should refer to File Number SR– Exchange’s New Trading Technology
IV. Solicitation of Comments on Platform
Amendment Nos. 1, 2 and 3 NYSEArca–2015–44 and should be
submitted on or before August 12, 2015. July 16, 2015.
Interested persons are invited to
submit written data, views, and V. Accelerated Approval of Proposed Pursuant to Section 19(b)(1) 1 of the
arguments concerning whether Rule Change as Modified by Securities Exchange Act of 1934 (the
Amendment Nos. 1, 2, and 3 is Amendment Nos. 1, 2, and 3 ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
consistent with the Act. Comments may The Commission finds good cause to notice is hereby given that, on July 1,
approve the proposed rule change, as 2015, NYSE Arca, Inc. (the ‘‘Exchange’’
28 See Amendment No. 2, supra note 5. modified by Amendment Nos. 1, 2, and or ‘‘NYSE Arca’’) filed with the
tkelley on DSK3SPTVN1PROD with NOTICES
29 See Amendment No. 1, supra note 4, at 12, 3, prior to the 30th day after the date of
n.24. 36 See Amendment No. 1, supra note 4.
30 See id. at 9.
publication of notice of the amendment 37 15 U.S.C. 78f(b)(5).
31 See id. at 11. in the Federal Register. The Exchange 38 15 U.S.C. 78s(b)(2).
32 See id. at 10. submitted Amendment Nos. 1, 2, and 3 39 17 CFR 200.30–3(a)(12).
33 See id. at 14. to, among other things, provide 1 15 U.S.C. 78s(b)(1).
34 See id. at 23. clarifying details about the investments 2 15 U.S.C. 78a.
35 15 U.S.C. 78f(b)(5). the Portfolio would be permitted to hold 3 17 CFR 240.19b–4.
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Document Created: 2015-12-15 12:54:35
Document Modified: 2015-12-15 12:54:35
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 43512 |
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