81_FR_54312 81 FR 54155 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Relating to Listing and Trading of Shares of Cumberland Municipal Bond ETF Under NYSE Arca Equities Rule 8.600

81 FR 54155 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Relating to Listing and Trading of Shares of Cumberland Municipal Bond ETF Under NYSE Arca Equities Rule 8.600

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 157 (August 15, 2016)

Page Range54155-54162
FR Document2016-19325

Federal Register, Volume 81 Issue 157 (Monday, August 15, 2016)
[Federal Register Volume 81, Number 157 (Monday, August 15, 2016)]
[Notices]
[Pages 54155-54162]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-19325]



[[Page 54155]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78523; File No. SR-NYSEArca-2016-107]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to Listing and Trading of Shares of 
Cumberland Municipal Bond ETF Under NYSE Arca Equities Rule 8.600

August 9, 2016.
    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 July 26, 2016, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') 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 list and trade shares of the following 
under NYSE Arca Equities Rule 8.600 (``Managed Fund Shares''): 
Cumberland Municipal Bond ETF. The proposed rule change is available on 
the Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

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

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the 
following under NYSE Arca Equities Rule 8.600, which governs the 
listing and trading of Managed Fund Shares: \4\ Cumberland Municipal 
Bond ETF (the ``Fund''),\5\ a series of the ETFis Series Trust I 
(``Trust'').\6\
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    \4\ 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. In contrast, 
an open-end investment company that issues Investment Company Units, 
listed and traded on the Exchange under NYSE Arca Equities Rule 
5.2(j)(3), seeks to provide investment results that correspond 
generally to the price and yield performance of a specific foreign 
or domestic stock index, fixed income securities index or 
combination thereof.
    \5\ The Securities and Exchange Commission (``Commission'') has 
approved listing and trading on the Exchange of a number of actively 
managed funds under Rule 8.600. See, e.g., Securities Exchange Act 
Release Nos. 69591 (May 16, 2013), 78 FR 30372 (May 22, 2013) (SR-
NYSEArca-2013-33) (order approving Exchange listing and trading of 
International Bear ETF); 69061 (March 7, 2013), 78 FR 15990 (March 
13, 2013) (SR-NYSEArca-2013-01) (order approving Exchange listing 
and trading of Newfleet Multi-Sector Income ETF). The Commission has 
approved for Exchange listing and trading shares of two actively 
managed funds of the PIMCO ETF Trust that principally hold municipal 
bonds. See Securities Exchange Act Release No. 60981 (November 10, 
2009), 74 FR 59594 (November 18, 2009) (SR-NYSEArca-2009-79) (order 
approving listing and trading of shares of the PIMCO Short-Term 
Municipal Bond Strategy Fund and PIMCO Intermediate Municipal Bond 
Strategy Fund). The Commission also has approved listing and trading 
on the Exchange of shares of the SPDR Nuveen S&P High Yield 
Municipal Bond Fund under Commentary .02 of NYSE Arca Equities Rule 
5.2(j)(3). See Securities Exchange Act Release No.63881 (February 9, 
2011), 76 FR 9065 (February 16, 2011) (SR-NYSEArca-2010-120).
    \6\ The Trust is registered under the 1940 Act. On May 20, 2015, 
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. 333-187668 and 811-22819) (``Registration 
Statement''). The description of the operation of the Trust and the 
Fund herein is based, in part, on the 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. 30607 (July 23, 2013) (File No. 812-14080) 
(``Exemptive Order'').
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    The investment adviser to the Fund will be Virtus ETF Advisers LLC 
(the ``Adviser''). The Fund's sub-adviser will be Cumberland Advisors 
Inc. (``Sub-Adviser''). Virtus ETF Solutions LLC will serve as the 
Fund's operational administrator. ETF Distributors LLC will serve as 
the distributor (the ``Distributor'') of Fund Shares on an agency 
basis. The Bank of New York Mellon (the ``Administrator'') will serve 
as the administrator, custodian, transfer agent and fund accounting 
agent for the Fund.
    Commentary .06 to Rule 8.600 provides that, if the investment 
adviser to the investment company issuing Managed Fund Shares is 
affiliated with a broker-dealer, such investment adviser shall erect a 
``fire wall'' between the investment adviser and the broker-dealer with 
respect to access to information concerning the composition and/or 
changes to such investment company portfolio.\7\ In addition, 
Commentary .06 further requires that personnel who make decisions on 
the open-end fund's portfolio composition must be subject to procedures 
designed to prevent the use and dissemination of material nonpublic 
information regarding the open-end fund's portfolio. The Adviser and 
Sub-Adviser are not registered as broker-dealers. The Adviser (but not 
the Sub-Adviser) is affiliated with one or more broker-dealers and the 
Adviser has implemented and will maintain a fire wall with respect to 
each such broker-dealer affiliate regarding access to information 
concerning the composition and/or changes to the portfolio. In the 
event (a) the Adviser or Sub-Adviser become registered broker-dealers 
or 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 its broker-dealer affiliate regarding access to 
information concerning the composition and/or

[[Page 54156]]

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.
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    \7\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). As a result, the Adviser and Sub-Adviser and their related 
personnel 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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Description of the Fund
Principal Investments
    According to the Registration Statement, the Fund will seek to 
provide a competitive level of current income exempt from federal 
income tax, while preserving capital. The Fund, under normal market 
conditions,\8\ will invest at least eighty percent (80%) of the Fund's 
net assets in debt securities whose interest is, in the opinion of bond 
counsel for the issuer at the time of issuance, exempt from U.S. 
federal income tax (``Municipal Bonds''). The Sub-Adviser will invest 
the Fund's assets using a barbell strategy, which means that the Sub-
Adviser will overweight the Fund's investments in Municipal Bonds with 
maturities on the short and long ends of the fixed income yield curve, 
while underweighting exposure to Municipal Bonds with intermediate 
maturities.
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    \8\ The term ``under normal market conditions'' includes, but is 
not limited to, the absence of extreme volatility or trading halts 
in the fixed income markets or the financial markets generally; 
operational issues (e.g., system failure) causing dissemination of 
inaccurate market information; or force majeure type events such as\ 
natural or man-made disaster, act of God, armed conflict, act of 
terrorism, riot or labor disruption or any similar intervening 
circumstance.
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    According to the Registration Statement, Municipal Bonds in which 
the Fund may invest include one or more of the following:

     General obligation bonds, which are typically backed by 
the full faith, credit, and taxing power of the issuer;
     revenue bonds, which are typically secured by revenues 
generated by the issuer;
     discount bonds, which may be originally issued at a 
discount to par value or sold at market price below par value;
     premium bonds, which are sold at a premium to par value;
     zero coupon bonds, which are issued at an original issue 
discount, with the full value, including accrued interest, paid at 
maturity; and
     private activity bonds, which are typically issued by or 
on behalf of local or state government for the purpose of financing the 
project of a private user.

    The Fund will have no target duration for its investment portfolio, 
and the Sub-Adviser may target a shorter or longer average portfolio 
duration based on the Sub-Adviser's forecast of interest rates and view 
of fixed-income markets generally.\9\ The Sub-Adviser will generally 
apply a heavier weight toward Municipal Bonds with shorter maturities 
during periods of high interest rates and longer maturities during 
periods of lower interest rates. At least 80% of the weight of the 
Fund's assets will be in Municipal Bonds with a modified duration of 15 
years or less.
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    \9\ Duration measures the interest rate sensitivity of a debt 
security by assessing and weighting the present value of the 
security's payment pattern. Generally, the longer the maturity, the 
greater the duration and, therefore, the greater effect interest 
rate changes have on the price of the security.
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    With respect to credit quality, under normal market conditions, at 
least 90% of the Fund's assets invested in Municipal Bonds will be in 
Municipal Bonds rated ``A'' or better by at least one major credit 
rating agency or, if unrated, deemed to be of comparable quality by the 
Sub-Adviser. From time to time, the Fund may concentrate (i.e., invest 
more than 25% of its total assets) in particular sectors. The Fund may 
sell investments for a variety of reasons, such as to adjust the 
portfolio's average maturity, duration, or overall credit quality, or 
to shift assets into and out of higher-yielding or lower-yielding 
securities or certain sectors.
    Under normal market conditions, each Municipal Bond held by the 
Fund must be a constituent of a deal where the deal's original offering 
amount was at least $100 million. The Fund will hold a minimum of 75 
Municipal Bonds. No Municipal Bond held by the Fund will exceed 4% of 
the weight of the Fund's portfolio and no single Municipal Bond issuer 
will account for more than 10% of the weight of the Fund's portfolio. 
The Fund will hold Municipal Bonds of a minimum of 30 non-affiliated 
issuers.\10\
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    \10\ For purposes of this restriction, each state and each 
separate political subdivision, agency, authority, or 
instrumentality of such state, each multi-state agency or authority, 
and each guarantor, if any, will be treated as separate issuers of 
Municipal Bonds.
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    According to the Registration Statement, under normal market 
conditions, at least 80% of the Fund's income will be exempt from 
federal income taxes. However, a significant portion of the Fund's 
income could be derived from securities subject to the alternative 
minimum tax.
Other Investments
    While the Fund, under normal market conditions, will invest at 
least eighty percent (80%) of its assets in Municipal Bonds, as 
described above, the Fund may invest its remaining assets in other 
assets and financial instruments, as described below.
    The Fund may invest in equity securities, both directly and 
indirectly through investment in shares of exchange-traded funds 
(``ETFs''),\11\ other investment companies, and other types of 
securities and instruments described below. The equity portion of the 
Fund's portfolio may include common stocks traded on securities 
exchanges or in the over-the-counter (``OTC'') market. In addition to 
common stocks, the equity portion of the Fund's portfolio may also 
include exchange-traded and OTC preferred stocks, and exchange-traded 
and OTC warrants.\12\
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    \11\ The ETFs in which the Fund may invest will be registered 
under the 1940 Act and include Investment Company Units (as 
described in NYSE Arca Equities Rule 5.2(j)(3)); Portfolio 
Depositary Receipts (as described in NYSE Arca Equities Rule 8.100); 
and Managed Fund Shares (as described in NYSE Arca Equities Rule 
8.600). Such ETFs all will be listed and traded in the U.S. on 
registered exchanges.
    \12\ With respect to its exchange-traded equity securities 
investments, the Fund will normally invest in equity securities that 
are listed and traded on a U.S. exchange or in markets that are 
members of the Intermarket Surveillance Group (``ISG'') or parties 
to a comprehensive surveillance sharing agreement with the Exchange. 
In any case, not more than 10% of the net assets of the Fund in the 
aggregate invested in equity securities (except for non-exchange-
traded investment company securities) will consist of equity 
securities whose principal market is not a member of ISG or a market 
with which the Exchange does not have a comprehensive surveillance 
sharing agreement. See note 29, infra.
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    The Fund may purchase taxable municipal bonds when the Sub-Adviser 
believes they offer opportunities for the Fund, or variable rate demand 
notes (VRDNs) that pay interest monthly or quarterly based on a 
floating rate that is reset daily or weekly based on an index of short-
term municipal rates.
    The Fund may invest in exchange-traded and OTC securities 
convertible into common stock. Such securities are the following: 
Convertible bonds and convertible preferred stocks.\13\
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    \13\ The criteria in note 12 above also will apply to exchange-
traded convertible preferred stocks and exchange-traded stocks into 
which convertible bonds may be converted.
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    The Fund may invest directly and indirectly in cash equivalents, 
namely, money market instruments that are the following: U.S. 
Government obligations or corporate debt obligations (including those 
subject to repurchase agreements); banker's acceptances \14\ and 
certificates of deposit \15\ of domestic branches of

[[Page 54157]]

banks, commercial paper,\16\ and master notes.\17\
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    \14\ Banker's acceptances are time drafts drawn on and 
``accepted'' by a bank. When a bank ``accepts'' such a time draft, 
it assumes liability for its payment. When the Fund acquires a 
banker's acceptance, the bank that ``accepted'' the time draft is 
liable for payment of interest and principal when due. The banker's 
acceptance carries the full faith and credit of such bank.
    \15\ A certificate of deposit is an unsecured, interest bearing 
debt obligation of a bank.
    \16\ Commercial paper is an unsecured, short-term debt 
obligation of a bank, corporation, or other borrower. Commercial 
paper maturity generally ranges from two to 270 days and is usually 
sold on a discounted basis rather than as an interest-bearing 
instrument. The Fund will invest directly in commercial paper only 
if it is rated in one of the top two rating categories by Moody's, 
S&P or Fitch or, if not rated, is of equivalent quality in the 
Adviser's opinion. Commercial paper may include master notes of the 
same quality. Master notes are unsecured obligations which are 
redeemable upon demand of the holder and which permit the investment 
of fluctuating amounts at varying rates of interest.
    \17\ Master notes may be acquired by the Fund through the master 
note program of the Fund's custodian bank.
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    In order to maintain sufficient liquidity, to implement investment 
strategies or for temporary defensive purposes, the Fund may invest a 
significant portion of its assets in shares of one or more money market 
funds. Generally, money market mutual funds are registered investment 
companies that seek to earn income consistent with the preservation of 
capital and maintenance of liquidity by investing primarily in high 
quality money market instruments.
    The Fund may invest in the securities of other non-exchange-traded 
investment company securities in compliance with Section 12(d)(1)(E), 
(F) and (G) of the 1940 Act and the rules thereunder.\18\
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    \18\ 15 U.S.C. 80a-12(d)(1)(E), (F) and (G).
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    The Fund may write U.S. exchange-traded call and put options on 
securities, ETFs or security indexes to seek income or may purchase or 
write U.S. exchange-traded put or call options for hedging purposes.
    The Fund may purchase securities on a when-issued basis or for 
settlement at a future date (forward commitment) if the Fund holds 
sufficient liquid assets to meet the purchase price.
    Additionally, the Trust, on behalf of the Fund, has claimed an 
exclusion from the definition of the term ``commodity pool operator'' 
pursuant to Rule 4.5 under the Commodity Exchange Act, as amended (the 
``CEA''). Therefore, the Fund is not subject to regulation or 
registration as a commodity pool operator under the CEA.
Investment Restrictions
    The Fund may, from time to time, take temporary defensive positions 
that are inconsistent with its principal investment strategies in an 
attempt to respond to adverse market, economic, political or other 
conditions. In such circumstances, the Fund may also hold up to 100% of 
its portfolio in cash and cash equivalent positions.
    The Fund may hold up to an aggregate amount of 15% of its net 
assets in illiquid assets (calculated at the time of investment), 
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. Illiquid assets include securities subject to 
contractual or other restrictions on resale and other instruments that 
lack readily available markets as determined in accordance with 
Commission staff guidance.\19\
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    \19\ The Commission has stated that long-standing Commission 
guidelines have required open-end funds to hold no more than 15% of 
their net assets in illiquid securities and other illiquid assets. 
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 
14618 (March 18, 2008), footnote 34. See also, Investment Company 
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 
1970) (Statement Regarding ``Restricted Securities''); Investment 
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio 
security is illiquid if it cannot be disposed of in the ordinary 
course of business within seven days at approximately the value 
ascribed to it by the fund. See Investment Company Act Release No. 
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting 
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act 
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) 
(adopting Rule 144A under the 1933 Act).
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    The Fund will seek to qualify for treatment as a regulated 
investment company under the Internal Revenue Code of 1986.\20\
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    \20\ 26 U.S.C. 851.
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    The Fund's investments will be consistent with its investment 
objective and will not be used to provide multiple returns of a 
benchmark or to produce leveraged returns.
Creation and Redemption of Shares
    According to the Registration Statement, the Trust will issue and 
sell Shares of the Fund only in ``Creation Units'' on a continuous 
basis through the Distributor, at their net asset value (``NAV'') next 
determined after receipt, on any business day, for an order received in 
proper form. All orders to create Creation Units must be placed for one 
or more Creation Unit size aggregations of Shares (50,000 Shares per 
Creation Unit). The Creation Unit size is subject to change. Cash 
creations will be the default mechanism for creation of Shares.
    However, the Fund will retain the ability to utilize an in-kind 
mechanism for creation of Shares, upon approval of the Distributor. In 
such case, the consideration for purchase of a Creation Unit of the 
Fund generally will consist of an in-kind deposit of ``Deposit 
Securities'' for each Creation Unit constituting a substantial 
replication, or a representation, of the securities included in the 
Fund's portfolio and a ``Cash Component'' computed as described below. 
Together, the Deposit Securities and the Cash Component constitute the 
``Fund Deposit'', which represents the minimum initial and subsequent 
investment amount for a Creation Unit of the Fund. The Cash Component 
is an amount equal to the difference between the NAV of the Shares (per 
Creation Unit) and the market value of the Deposit Securities. If the 
Cash Component is a positive number (i.e., the NAV per Creation Unit 
exceeds the market value of the Deposit Securities), the Cash Component 
will be such positive amount. If the Cash Component is a negative 
number (i.e., the NAV per Creation Unit is less than the market value 
of the Deposit Securities), the Cash Component will be such negative 
amount, and the creator will be entitled to receive cash from the Fund 
in an amount equal to the Cash Component. The Cash Component serves the 
function of compensating for any differences between the NAV per 
Creation Unit and the market value of the Deposit Securities.
    The Administrator, through the National Securities Clearing 
Corporation (``NSCC''), will make available on each business day, 
immediately prior to the opening of business on the Exchange (currently 
9:30 a.m., Eastern Time), the list of the names and the required number 
of Shares of each Deposit Security to be included in the current Fund 
Deposit (based on information at the end of the previous business day) 
for the Fund. Such Fund Deposit will be applicable, subject to any 
adjustments as described below, in order to effect creations of 
Creation Units of the Fund until such time as the next-announced 
composition of the Deposit Securities is made available.
    The identity and number of Shares of the Deposit Securities 
required for the Fund Deposit for the Fund will change as rebalancing 
adjustments and corporate action events occur from time to time. In 
addition, the Trust reserves the right to permit or require the 
substitution of an amount of cash--i.e., a ``cash in lieu'' amount--to 
be added to the Cash Component to replace any Deposit Security that may 
not be available in sufficient quantity for delivery, that may not be 
eligible for transfer or that may not be eligible for

[[Page 54158]]

trading by an ``Authorized Participant'' (as described below) or the 
investor for which it is acting.
    In addition to the list of names and numbers of securities 
constituting the current Deposit Securities of the Fund Deposit, the 
Administrator, through NSCC, also will make available on each business 
day the estimated Cash Component, effective through and including the 
previous business day, per outstanding Creation Unit of the Fund.
Procedures for Creation of Creation Units
    To be eligible to place orders to create a Creation Unit of the 
Fund, an entity must be (i) a ``Participating Party'', i.e., a broker-
dealer or other participant in the clearing process through the 
Continuous Net Settlement System of NSCC (the ``Clearing Process'') or 
a clearing agency that is registered with the Commission, or (ii) a 
Depositary Trust Company (``DTC'') Participant and, in each case, must 
have executed an agreement with the Trust, the Distributor and the 
Administrator with respect to creations and redemptions of Creation 
Units (``Participant Agreement''). A Participating Party and DTC 
Participant are collectively referred to as an ``Authorized 
Participant''.
    All orders to create Creation Units must be received by the 
Distributor no later than the close of the regular trading session on 
the Exchange (ordinarily 4:00 p.m., Eastern Time), in each case on the 
date such order is placed in order for the creation of Creation Units 
to be effected based on the NAV of Shares of the Fund as next 
determined on such date after receipt of the order in proper form.
Redemption of Creation Units
    Shares may be redeemed only in Creation Units at their NAV next 
determined after receipt of a redemption request in proper form by the 
Distributor and the Fund through the Administrator and only on a 
business day. Cash redemptions will be the default mechanism for 
redemptions of Shares.
    However, the Fund will retain the ability to utilize an in-kind 
mechanism for redemption of Shares, upon approval of the Distributor. 
In such case, the redemption proceeds for a Creation Unit generally 
consist of Deposit Securities, as announced by the Administrator on the 
business day of the request for redemption received in proper form, 
plus cash in an amount equal to the difference between the NAV of the 
Shares being redeemed, as next determined after a receipt of a request 
in proper form, and the value of the Deposit Securities (the ``Cash 
Redemption Amount''), less a redemption transaction fee. In the event 
that the Deposit Securities have a value greater than the NAV of the 
Shares, a compensating cash payment equal to the differential is 
required to be made by or through an Authorized Participant by the 
redeeming shareholder.
    With respect to the Fund, the Administrator, through NSCC, will 
make available immediately prior to the opening of business on the 
Exchange (currently 9:30 a.m., Eastern Time) on each business day, the 
Deposit Securities that will be applicable (subject to possible 
amendment or correction) to redemption requests received in proper form 
on that day. Deposit Securities received on redemption may not be 
identical to Deposit Securities which are applicable to creations of 
Creation Units.
    If it is not possible to effect deliveries of the Deposit 
Securities, the Trust may in its discretion exercise its option to 
redeem such shares in cash, and the redeeming beneficial owner will be 
required to receive its redemption proceeds in cash. In addition, an 
investor may request a redemption in cash which the Fund may, in its 
sole discretion, permit.\21\ In either case, the investor will receive 
a cash payment equal to the NAV of its Shares based on the NAV of 
Shares of the Fund next determined after the redemption request is 
received in proper form (minus a redemption transaction fee and 
additional charge for requested cash redemptions, to offset the Trust's 
brokerage and other transaction costs associated with the disposition 
of Deposit Securities).
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    \21\ The Adviser represents that, to the extent the Trust 
effects the creation or redemption of Shares in cash, such 
transactions will be effected in the same manner for all Authorized 
Participants.
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    The right of redemption may be suspended or the date of payment 
postponed with respect to the Fund (1) for any period during which the 
Exchange is closed (other than customary weekend and holiday closings); 
(2) for any period during which trading on the Exchange is suspended or 
restricted; (3) for any period during which an emergency exists as a 
result of which disposal of the Shares of the Fund or determination of 
the Shares' NAV is not reasonably practicable; or (4) in such other 
circumstance as is permitted by the Commission.
Net Asset Value
    The NAV per Share for the Fund will be computed by dividing the 
value of the net assets of the Fund (i.e., the value of its total 
assets less total liabilities) by the total number of Shares 
outstanding, rounded to the nearest cent. Expenses and fees, including 
the management fee, will be accrued daily and taken into account for 
purposes of determining NAV. The NAV of the Fund will be determined as 
of the close of the regular trading session on the Exchange (ordinarily 
4:00 p.m., Eastern Time) on each day that the Exchange is open. Any 
assets or liabilities denominated in currencies other than the U.S. 
dollar will be converted into U.S. dollars at the current market rates 
on the date of valuation as quoted by one or more sources.
    The pricing and valuation of portfolio securities will be 
determined in good faith in accordance with procedures approved by, and 
under the direction of, the Trust's Board of Trustees (``Board''). In 
determining the value of the Fund's assets, equity securities will be 
generally valued at market using quotations from the primary market in 
which they are traded. Debt securities (other than short-term 
investments) will be valued on the basis of broker quotes or valuations 
provided by a pricing service, which in determining value will utilize 
information regarding recent sales, market transactions in comparable 
securities, quotations from dealers, and various relationships between 
securities. Other assets, such as accrued interest, accrued dividends 
and cash also will be included in determining the NAV. The Fund 
normally will use third party pricing services to obtain portfolio 
security prices.
    Municipal Bonds, money market instruments, convertible bonds, 
taxable municipal bonds, and VRDNs will generally be valued at bid 
prices received from independent pricing services as of the announced 
closing time for trading in fixed-income instruments in the respective 
market.
    Exchange-traded equity securities, including common stocks, ETFs, 
preferred stocks, convertible preferred stocks and warrants, will be 
valued at market value, which will generally be determined using the 
last reported official closing or last trading price on the exchange or 
market on which the security is primarily traded at the time of 
valuation or, if no sale has occurred, at the last quoted bid price on 
the primary market or exchange on which they are traded. If market 
prices are unavailable or the Fund believes that they are unreliable, 
or when the value of a security has been materially affected by events 
occurring after the relevant market closes, the Fund will price those 
securities at fair value as

[[Page 54159]]

determined in good faith using methods approved by the Trust's Board.
    Equity securities traded in the OTC market, including common 
stocks, preferred stocks, and warrants, will be valued at the last 
reported sale price on the valuation date. OTC traded convertible 
preferred stocks will be valued based on price quotations obtained from 
a broker-dealer who makes markets in such securities or other 
equivalent indications of value provided by a third-party pricing 
service. Securities of non-exchange-traded investment company 
securities registered under the 1940 Act, including money market funds, 
will be valued at NAV.
    Option contracts will be valued at their most recent sale price on 
the applicable exchange. If no such sales are reported, these contracts 
will be valued at their most recent bid price.
    To the extent the assets of the Fund are invested in other open-end 
investment companies that are registered under the 1940 Act, the Fund's 
NAV will be calculated based upon the NAVs reported by such registered 
open-end investment companies.
    Securities and assets for which market quotations are not readily 
available or which cannot be accurately valued using the Fund's normal 
pricing procedures will be valued by the Trust's Fair Value Pricing 
Committee at fair value as determined in good faith under policies 
approved by the Board. Fair value pricing may be used, for example, in 
situations where (i) portfolio securities, such as securities with 
small capitalizations, are so thinly traded that there have been no 
transactions for that security over an extended period of time; (ii) an 
event occurs after the close of the exchange on which a portfolio 
security is principally traded that is likely to change the value of 
the portfolio security prior to the Fund's NAV calculation; (iii) the 
exchange on which the portfolio security is principally traded closes 
early; or (iv) trading of the particular portfolio security is halted 
during the day and does not resume prior to the Fund's NAV calculation. 
The Board will monitor and evaluate the Fund's use of fair value 
pricing, and periodically reviews the results of any fair valuation 
under the Trust's policies.
Availability of Information
    The Fund's Web site (www.cumberetfs.com), which will be publicly 
available prior to the public offering of Shares, will include a form 
of the prospectus for the Fund that may be downloaded. The Fund's Web 
site will include additional quantitative information updated on a 
daily basis, including, for the Fund, (1) daily trading volume, the 
prior business day's reported closing price, NAV and mid-point of the 
bid/ask spread at the time of calculation of such NAV (the ``Bid/Ask 
Price''),\22\ and a calculation of the premium and discount of the Bid/
Ask Price against the NAV, and (2) data in chart format displaying the 
frequency distribution of discounts and premiums of the daily Bid/Ask 
Price against the NAV, within appropriate ranges, for each of the four 
previous calendar quarters. On each business day, before commencement 
of trading in Shares in the Core Trading Session on the Exchange, the 
Fund's Web site will disclose the Disclosed Portfolio that will form 
the basis for the Fund's calculation of NAV at the end of the business 
day.\23\
---------------------------------------------------------------------------

    \22\ The Bid/Ask Price of the Fund's Shares will be determined 
using the mid-point of the highest bid and the lowest offer on the 
Exchange as of the time of calculation of the Fund's NAV. The 
records relating to Bid/Ask Prices will be retained by the Fund and 
its service providers.
    \23\ 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 Fund will disclose on the Fund's Web site the following 
information regarding each portfolio holding, as applicable to the type 
of holding: Ticker symbol, CUSIP number or other identifier, if any; a 
description of the holding (including the type of holding); the 
identity of the security, index or other asset or instrument underlying 
the holding, if any; for options, the option strike price; quantity 
held (as measured by, for example, par value, notional value or number 
of shares, contracts or units); maturity date, if any; coupon rate, if 
any; effective date, if any; market value of the holding; and the 
percentage weighting of the holding in the Fund's portfolio. The Web 
site information will be publicly available at no charge.
    In addition, a basket composition file, which includes the security 
names and share quantities, if applicable, required to be delivered in 
exchange for the Fund's Shares, together with estimates and actual cash 
components, will be publicly disseminated daily prior to the opening of 
the Exchange via the NSCC. The basket represents one Creation Unit of 
the Fund. The NAV of Shares of the Fund will normally be determined as 
of the close of the regular trading session on the Exchange (ordinarily 
4:00 p.m., Eastern Time) on each business day. Authorized Participants 
may refer to the basket composition file for information regarding 
securities and financial instruments that may comprise the Fund's 
basket on a given day.
    The approximate value of the Fund's investments on a per-Share 
basis, the Indicative Intra-Day Value (``IIV''), will be disseminated 
every 15 seconds during the Exchange Core Trading Session. The IIV 
should not be viewed as a ``real-time'' update of NAV because the IIV 
will be calculated by an independent third party and may not be 
calculated in the exact same manner as NAV, which will be computed 
daily.
    The IIV for the Fund will be calculated by dividing the ``Estimated 
Fund Value'' as of the time of the calculation by the total number of 
outstanding Shares. ``Estimated Fund Value'' is the sum of the 
estimated amount of cash held in the Fund's portfolio, the estimated 
amount of accrued interest owing to the Fund and the estimated value of 
the securities held in the Fund's portfolio, minus the estimated amount 
of the Fund's liabilities. The IIV will be calculated based on the same 
portfolio holdings disclosed on the Fund's Web site. In determining the 
estimated value for each of the component securities, the IIV will use 
last sale, market prices or other methods that would be considered 
appropriate for pricing securities held by registered investment 
companies.
    Investors can also obtain the Trust's Statement of Additional 
Information (``SAI''), the Fund's shareholder reports, and its Form N-
CSR and Form N-SAR, filed twice a year. The Trust's SAI and Shareholder 
Reports will be available free upon request from the Trust, and those 
documents and the Form N-CSR and Form N-SAR may be viewed on-screen or 
downloaded from the Commission's Web site at www.sec.gov. Information 
regarding market price and trading volume of the Shares will be 
continually available on a real-time basis throughout the day on 
brokers' computer screens and other electronic services. Information 
regarding the previous day's closing price and trading volume 
information for the Shares will be published daily in the financial 
section of newspapers.
    Quotation and last sale information for the Shares and the 
underlying U.S. exchange-traded equity securities will be available via 
the Consolidated Tape Association (``CTA'') high-speed line, and from 
the national securities exchange on which they are listed. Price 
information regarding non-U.S. exchange-traded equity securities held 
by the Fund will be available from the exchanges trading such assets.
    Quotation information from brokers and dealers or pricing services 
will be

[[Page 54160]]

available for Municipal Bonds, taxable municipal bonds, convertible 
bonds, OTC traded convertible preferred stocks, corporate debt 
obligations, VRDNs, and cash equivalents. Price information for 
investment company securities (other than ETFs) will be available from 
the applicable investment company's Web site and from market data 
vendors. Intra-day and closing price information for OTC equity 
securities will be available from major market data vendors. Pricing 
information regarding each asset class in which the Fund will invest 
will generally be available through nationally recognized data service 
providers through subscription agreements. Quotation and last sale 
information for exchange-traded options will be available via the 
Options Price Reporting Authority and from the applicable U.S. options 
exchange. In addition, the IIV, (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 Core Trading 
Session by one or more major market data vendors.\24\ The dissemination 
of the IIV, together with the Disclosed Portfolio, will allow investors 
to determine the value of the underlying portfolio of the Fund on a 
daily basis and will provide a close estimate of that value throughout 
the trading day.
---------------------------------------------------------------------------

    \24\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available IIVs 
taken from CTA or other data feeds.
---------------------------------------------------------------------------

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.\25\ Trading in Shares of the Fund 
will be halted if the circuit breaker parameters in NYSE Arca Equities 
Rule 7.12 have been reached. Trading also may be halted because of 
market conditions or for reasons that, in the view of the Exchange, 
make trading in the Shares inadvisable. 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. Trading in 
the Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), 
which sets forth circumstances under which Shares of the Fund may be 
halted.
---------------------------------------------------------------------------

    \25\ See NYSE Arca Equities Rule 7.12, Commentary .04.
---------------------------------------------------------------------------

Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the NYSE Arca Marketplace from 4 a.m. to 8 p.m., Eastern Time in 
accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late 
Trading Sessions). The Exchange has appropriate rules to facilitate 
transactions in the Shares during all trading sessions. As provided in 
NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price 
variation (``MPV'') for quoting and entry of orders in equity 
securities traded on the NYSE Arca Marketplace is $0.01, with the 
exception of securities that are priced less than $1.00 for which the 
MPV for order entry is $0.0001.
    The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.600. Consistent with NYSE Arca 
Equities Rule 8.600(d)(2)(B)(ii), the Adviser will implement and 
maintain, or be subject to, procedures designed to prevent the use and 
dissemination of material non-public information regarding the actual 
components of the Fund's portfolio. The Exchange represents that, for 
initial and/or continued listing, the Fund will be in compliance with 
Rule 10A-3 \26\ under the Act, as provided by NYSE Arca Equities Rule 
5.3. A minimum of 100,000 Shares will be outstanding at the 
commencement of trading on the Exchange. 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 
\27\ as defined in NYSE Arca Equities Rule 8.600(c)(2) will be made 
available to all market participants at the same time. The Fund's 
investments will be consistent with the Fund's investment objective and 
will not be used to enhance leverage.
---------------------------------------------------------------------------

    \26\ 17 CFR 240.10A-3.
    \27\ The term ``Disclosed Portfolio'' is defined in NYSE Arca 
Equities Rule 8.600(c)(2).
---------------------------------------------------------------------------

Surveillance
    The Exchange represents 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, or 
by regulatory staff of the Exchange, which are designed to detect 
violations of Exchange rules and applicable federal securities laws. 
The Exchange represents that these procedures are adequate to properly 
monitor Exchange trading of the Shares in all trading sessions and to 
deter and detect violations of Exchange rules and federal securities 
laws applicable to trading on the Exchange.\28\
---------------------------------------------------------------------------

    \28\ 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.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations.\29\
---------------------------------------------------------------------------

    \29\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio may trade on markets that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement.
---------------------------------------------------------------------------

    FINRA, on behalf of the Exchange, or regulatory staff of the 
Exchange, will communicate as needed regarding trading in the Shares, 
options and certain exchange-traded equity securities with other 
markets and other entities that are members of the ISG, and FINRA, on 
behalf of the Exchange, or regulatory staff of the Exchange, may obtain 
trading information regarding trading in the Shares, options and 
certain exchange-traded equity securities from such markets and other 
entities. In addition, the Exchange may obtain information regarding 
trading in the Shares, options and certain exchange-traded equity 
securities from markets and other entities that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement. In addition, 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 (``TRACE''). FINRA also can access data obtained from 
the Municipal Securities Rulemaking Board (``MSRB'') relating to 
municipal bond trading activity for surveillance purposes in connection 
with trading in the Shares.
    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
    All statements and representations made in this filing regarding 
(a) the description of the portfolio, (b) limitations on portfolio 
holdings or reference assets, or (c) the applicability of Exchange 
rules and surveillance

[[Page 54161]]

procedures shall constitute continued listing requirements for listing 
the Shares of the Fund on the Exchange.
    The issuer has represented 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 Act, the Exchange will monitor 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 NYSE Arca Equities Rule 5.5(m).
Information Bulletin
    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. Specifically, the Bulletin will discuss the following: (1) The 
procedures for purchases and redemptions of Shares in Creation Unit 
aggregations (and that Shares are not individually redeemable); (2) 
NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence 
on its Equity Trading Permit Holders to learn the essential facts 
relating to every customer prior to trading the Shares; (3) the risks 
involved in trading the Shares during the Opening and Late Trading 
Sessions when an updated IIV will not be calculated or publicly 
disseminated; (4) how information regarding the IIV and the Disclosed 
Portfolio is disseminated; (5) 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 (6) trading information.
    In addition, the Bulletin will reference that the Fund is subject 
to various fees and expenses described in the Registration Statement. 
The Bulletin will discuss any exemptive, no-action, and interpretive 
relief granted by the Commission from any rules under the Act. The 
Bulletin will also disclose that the NAV for the Shares will be 
calculated after 4:00 p.m., Eastern Time each trading day.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \30\ 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.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in NYSE Arca Equities Rule 
8.600. The Exchange has in place surveillance procedures that are 
adequate to properly monitor trading in the Shares in all trading 
sessions and to deter and detect violations of Exchange rules and 
applicable federal securities laws. FINRA, on behalf of the Exchange, 
or regulatory staff of the Exchange, will communicate as needed 
regarding trading in the Shares, options and certain exchange-traded 
equity securities with other markets and other entities that are 
members of the ISG, and FINRA, on behalf of the Exchange, or regulatory 
staff of the Exchange, may obtain trading information regarding trading 
in the Shares, options and certain exchange-traded equity securities 
from such markets and other entities. In addition, the Exchange may 
obtain information regarding trading in the Shares, options and certain 
exchange-traded equity securities from markets and other entities that 
are members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement. In addition, 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 TRACE. 
FINRA also can access data obtained from the MSRB relating to municipal 
bond trading activity for surveillance purposes in connection with 
trading in the Shares. The Fund may not purchase or hold illiquid 
assets if, in the aggregate, more than 15% of its net assets would be 
invested in illiquid assets. The Adviser and Sub-Adviser are not 
registered as broker-dealers but the Adviser is affiliated with one or 
more broker-dealers and has implemented and will maintain a fire wall 
with respect to each such broker-dealer affiliate regarding access to 
information concerning the composition and/or changes to the portfolio. 
The Fund's investments in Municipal Bonds will be well-diversified in 
that, under normal market conditions, the Fund will hold a minimum of 
75 Municipal Bonds; no Municipal Bond held by the Fund will exceed 4% 
of the weight of the Fund's portfolio; no single Municipal Bond issuer 
will account for more than 10% of the weight of the Fund's portfolio; 
and the Fund will hold Municipal Bonds of a minimum of 30 non-
affiliated issuers. In addition, each Municipal Bond held by the Fund 
must be a constituent of a deal where the deal's original offering 
amount was at least $100 million.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that the Exchange will obtain a representation from the 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, a large amount of 
information is publicly available regarding the Fund and the Shares, 
thereby promoting market transparency. Quotation and last sale 
information for the Shares and the underlying U.S. exchange-traded 
equity securities will be available via the CTA high-speed line, and 
from the national securities exchange on which they are listed. The 
Fund will disclose on the Fund's Web site the following information 
regarding each portfolio holding, as applicable to the type of holding: 
Ticker symbol, CUSIP number or other identifier, if any; a description 
of the holding (including the type of holding); the identity of the 
security, index or other asset or instrument underlying the holding, if 
any; for options, the option strike price; quantity held (as measured 
by, for example, par value, notional value or number of shares, 
contracts or units); maturity date, if any; coupon rate, if any; 
effective date, if any; market value of the holding; and the percentage 
weighting of the holding in the Fund's portfolio. Moreover, prior to 
the commencement of trading, the Exchange will inform its Equity 
Trading Permit Holders in an Information Bulletin of the special 
characteristics and risks associated with trading the Shares. Trading 
in Shares of the Fund 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. Trading in the Shares will be 
subject to NYSE Arca Equities Rule 8.600(d)(2)(D), which sets forth 
circumstances under which Shares of the Fund may be halted. In 
addition, as noted above, investors will have ready access to 
information regarding the Fund's holdings, the IIV, the Disclosed 
Portfolio, and quotation and last sale information for the Shares.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect

[[Page 54162]]

investors and the public interest in that it will facilitate the 
listing and trading of an additional type of actively-managed exchange-
traded product that principally holds municipal bonds and that will 
enhance competition among market participants, to the benefit of 
investors and the marketplace. As noted above, the Exchange has in 
place surveillance procedures relating to trading in the Shares and may 
obtain information via ISG from other exchanges that are members of ISG 
or with which the Exchange has entered into a comprehensive 
surveillance sharing agreement. In addition, as noted above, investors 
will have ready access to information regarding the Fund's holdings, 
the IIV, the Disclosed Portfolio, and quotation and last sale 
information for the Shares.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change will facilitate the listing and trading of an 
additional type of actively-managed exchange-traded product that 
principally holds municipal bonds and that will enhance competition 
among market participants, 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 solicited or received with respect to the 
proposed rule change.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:

    (A) by order approve or disapprove such proposed rule change; or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change 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-2016-107 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-2016-107. 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 the 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-2016-107 and should 
be submitted on or before September 6, 2016.
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19325 Filed 8-12-16; 8:45 am]
 BILLING CODE 8011-01-P



                                                                              Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices                                                       54155

                                                SECURITIES AND EXCHANGE                                  A. Self-Regulatory Organization’s                       ‘‘Distributor’’) of Fund Shares on an
                                                COMMISSION                                               Statement of the Purpose of, and the                    agency basis. The Bank of New York
                                                                                                         Statutory Basis for, the Proposed Rule                  Mellon (the ‘‘Administrator’’) will serve
                                                [Release No. 34–78523; File No. SR–                      Change                                                  as the administrator, custodian, transfer
                                                NYSEArca–2016–107]                                                                                               agent and fund accounting agent for the
                                                                                                         1. Purpose
                                                                                                                                                                 Fund.
                                                                                                            The Exchange proposes to list and                       Commentary .06 to Rule 8.600
                                                Self-Regulatory Organizations; NYSE
                                                                                                         trade shares (‘‘Shares’’) of the following              provides that, if the investment adviser
                                                Arca, Inc.; Notice of Filing of Proposed
                                                                                                         under NYSE Arca Equities Rule 8.600,                    to the investment company issuing
                                                Rule Change Relating to Listing and                      which governs the listing and trading of                Managed Fund Shares is affiliated with
                                                Trading of Shares of Cumberland                          Managed Fund Shares: 4 Cumberland                       a broker-dealer, such investment adviser
                                                Municipal Bond ETF Under NYSE Arca                       Municipal Bond ETF (the ‘‘Fund’’),5 a                   shall erect a ‘‘fire wall’’ between the
                                                Equities Rule 8.600                                      series of the ETFis Series Trust I                      investment adviser and the broker-
                                                August 9, 2016.
                                                                                                         (‘‘Trust’’).6                                           dealer with respect to access to
                                                                                                            The investment adviser to the Fund                   information concerning the composition
                                                   Pursuant to Section 19(b)(1) 1 of the                 will be Virtus ETF Advisers LLC (the                    and/or changes to such investment
                                                Securities Exchange Act of 1934 (the                     ‘‘Adviser’’). The Fund’s sub-adviser will               company portfolio.7 In addition,
                                                ‘‘Act’’) 2 and Rule 19b–4 thereunder,3                   be Cumberland Advisors Inc. (‘‘Sub-                     Commentary .06 further requires that
                                                notice is hereby given that, on July 26,                 Adviser’’). Virtus ETF Solutions LLC                    personnel who make decisions on the
                                                2016, NYSE Arca, Inc. (the ‘‘Exchange’’                  will serve as the Fund’s operational                    open-end fund’s portfolio composition
                                                or ‘‘NYSE Arca’’) filed with the                         administrator. ETF Distributors LLC will                must be subject to procedures designed
                                                Securities and Exchange Commission                       serve as the distributor (the                           to prevent the use and dissemination of
                                                (the ‘‘Commission’’) the proposed rule                                                                           material nonpublic information
                                                                                                            4 A Managed Fund Share is a security that
                                                change as described in Items I and II                                                                            regarding the open-end fund’s portfolio.
                                                                                                         represents an interest in an investment company
                                                below, which Items have been prepared                    registered under the Investment Company Act of
                                                                                                                                                                 The Adviser and Sub-Adviser are not
                                                by the self-regulatory organization. The                 1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as      registered as broker-dealers. The
                                                Commission is publishing this notice to                  an open-end investment company or similar entity        Adviser (but not the Sub-Adviser) is
                                                                                                         that invests in a portfolio of securities selected by   affiliated with one or more broker-
                                                solicit comments on the proposed rule                    its investment adviser consistent with its
                                                change from interested persons.                          investment objectives and policies. In contrast, an
                                                                                                                                                                 dealers and the Adviser has
                                                                                                         open-end investment company that issues                 implemented and will maintain a fire
                                                I. Self-Regulatory Organization’s                        Investment Company Units, listed and traded on          wall with respect to each such broker-
                                                Statement of the Terms of Substance of                   the Exchange under NYSE Arca Equities Rule              dealer affiliate regarding access to
                                                                                                         5.2(j)(3), seeks to provide investment results that
                                                the Proposed Rule Change                                 correspond generally to the price and yield
                                                                                                                                                                 information concerning the composition
                                                                                                         performance of a specific foreign or domestic stock     and/or changes to the portfolio. In the
                                                   The Exchange proposes to list and                     index, fixed income securities index or combination     event (a) the Adviser or Sub-Adviser
                                                trade shares of the following under                      thereof.                                                become registered broker-dealers or
                                                                                                            5 The Securities and Exchange Commission
                                                NYSE Arca Equities Rule 8.600                                                                                    newly affiliated with a broker-dealer, or
                                                                                                         (‘‘Commission’’) has approved listing and trading
                                                (‘‘Managed Fund Shares’’): Cumberland                    on the Exchange of a number of actively managed         (b) any new adviser or sub-adviser is a
                                                Municipal Bond ETF. The proposed rule                    funds under Rule 8.600. See, e.g., Securities           registered broker-dealer or becomes
                                                change is available on the Exchange’s                    Exchange Act Release Nos. 69591 (May 16, 2013),         affiliated with a broker-dealer, it will
                                                                                                         78 FR 30372 (May 22, 2013) (SR–NYSEArca–2013–           implement a fire wall with respect to its
                                                Web site at www.nyse.com, at the                         33) (order approving Exchange listing and trading
                                                principal office of the Exchange, and at                 of International Bear ETF); 69061 (March 7, 2013),      relevant personnel or its broker-dealer
                                                the Commission’s Public Reference                        78 FR 15990 (March 13, 2013) (SR–NYSEArca–              affiliate regarding access to information
                                                                                                         2013–01) (order approving Exchange listing and          concerning the composition and/or
                                                Room.                                                    trading of Newfleet Multi-Sector Income ETF). The
                                                                                                         Commission has approved for Exchange listing and
                                                II. Self-Regulatory Organization’s                       trading shares of two actively managed funds of the
                                                                                                                                                                    7 An investment adviser to an open-end fund is

                                                Statement of the Purpose of, and                         PIMCO ETF Trust that principally hold municipal         required to be registered under the Investment
                                                                                                         bonds. See Securities Exchange Act Release No.          Advisers Act of 1940 (the ‘‘Advisers Act’’). As a
                                                Statutory Basis for, the Proposed Rule                                                                           result, the Adviser and Sub-Adviser and their
                                                                                                         60981 (November 10, 2009), 74 FR 59594
                                                Change                                                   (November 18, 2009) (SR–NYSEArca–2009–79)               related personnel are subject to the provisions of
                                                                                                                                                                 Rule 204A–1 under the Advisers Act relating to
                                                                                                         (order approving listing and trading of shares of the
                                                  In its filing with the Commission, the                 PIMCO Short-Term Municipal Bond Strategy Fund
                                                                                                                                                                 codes of ethics. This Rule requires investment
                                                                                                                                                                 advisers to adopt a code of ethics that reflects the
                                                self-regulatory organization included                    and PIMCO Intermediate Municipal Bond Strategy
                                                                                                                                                                 fiduciary nature of the relationship to clients as
                                                statements concerning the purpose of,                    Fund). The Commission also has approved listing
                                                                                                                                                                 well as compliance with other applicable securities
                                                                                                         and trading on the Exchange of shares of the SPDR
                                                and basis for, the proposed rule change                  Nuveen S&P High Yield Municipal Bond Fund
                                                                                                                                                                 laws. Accordingly, procedures designed to prevent
                                                                                                                                                                 the communication and misuse of non-public
                                                and discussed any comments it received                   under Commentary .02 of NYSE Arca Equities Rule         information by an investment adviser must be
                                                on the proposed rule change. The text                    5.2(j)(3). See Securities Exchange Act Release          consistent with Rule 204A–1 under the Advisers
                                                                                                         No.63881 (February 9, 2011), 76 FR 9065 (February
                                                of those statements may be examined at                   16, 2011) (SR–NYSEArca–2010–120).
                                                                                                                                                                 Act. In addition, Rule 206(4)–7 under the Advisers
                                                                                                                                                                 Act makes it unlawful for an investment adviser to
                                                the places specified in Item IV below.                      6 The Trust is registered under the 1940 Act. On
                                                                                                                                                                 provide investment advice to clients unless such
                                                The Exchange has prepared summaries,                     May 20, 2015, the Trust filed with the Commission       investment adviser has (i) adopted and
                                                set forth in sections A, B, and C below,                 an amendment to its registration statement on Form      implemented written policies and procedures
                                                                                                         N–1A under the Securities Act of 1933 (15 U.S.C.        reasonably designed to prevent violation, by the
                                                of the most significant parts of such                    77a) (‘‘Securities Act’’), and under the 1940 Act       investment adviser and its supervised persons, of
sradovich on DSK3GMQ082PROD with NOTICES




                                                statements.                                              relating to the Fund (File Nos. 333–187668 and          the Advisers Act and the Commission rules adopted
                                                                                                         811–22819) (‘‘Registration Statement’’). The            thereunder; (ii) implemented, at a minimum, an
                                                                                                         description of the operation of the Trust and the       annual review regarding the adequacy of the
                                                                                                         Fund herein is based, in part, on the Registration      policies and procedures established pursuant to
                                                                                                         Statement. In addition, the Commission has issued       subparagraph (i) above and the effectiveness of their
                                                  1 15
                                                                                                         an order granting certain exemptive relief to the       implementation; and (iii) designated an individual
                                                       U.S.C. 78s(b)(1).
                                                                                                         Trust under the 1940 Act. See Investment Company        (who is a supervised person) responsible for
                                                  2 15 U.S.C. 78a.                                       Act Release No. 30607 (July 23, 2013) (File No. 812–    administering the policies and procedures adopted
                                                  3 17 CFR 240.19b–4.                                    14080) (‘‘Exemptive Order’’).                           under subparagraph (i) above.



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                                                54156                        Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices

                                                changes to the portfolio, and will be                   generally.9 The Sub-Adviser will                             The Fund may invest in equity
                                                subject to procedures designed to                       generally apply a heavier weight toward                   securities, both directly and indirectly
                                                prevent the use and dissemination of                    Municipal Bonds with shorter                              through investment in shares of
                                                material non-public information                         maturities during periods of high                         exchange-traded funds (‘‘ETFs’’),11 other
                                                regarding such portfolio.                               interest rates and longer maturities                      investment companies, and other types
                                                                                                        during periods of lower interest rates. At                of securities and instruments described
                                                Description of the Fund
                                                                                                        least 80% of the weight of the Fund’s                     below. The equity portion of the Fund’s
                                                Principal Investments                                   assets will be in Municipal Bonds with                    portfolio may include common stocks
                                                   According to the Registration                        a modified duration of 15 years or less.                  traded on securities exchanges or in the
                                                Statement, the Fund will seek to                           With respect to credit quality, under                  over-the-counter (‘‘OTC’’) market. In
                                                provide a competitive level of current                  normal market conditions, at least 90%                    addition to common stocks, the equity
                                                income exempt from federal income tax,                  of the Fund’s assets invested in                          portion of the Fund’s portfolio may also
                                                while preserving capital. The Fund,                     Municipal Bonds will be in Municipal                      include exchange-traded and OTC
                                                under normal market conditions,8 will                   Bonds rated ‘‘A’’ or better by at least one               preferred stocks, and exchange-traded
                                                invest at least eighty percent (80%) of                 major credit rating agency or, if unrated,                and OTC warrants.12
                                                the Fund’s net assets in debt securities                deemed to be of comparable quality by                        The Fund may purchase taxable
                                                whose interest is, in the opinion of bond               the Sub-Adviser. From time to time, the                   municipal bonds when the Sub-Adviser
                                                counsel for the issuer at the time of                   Fund may concentrate (i.e., invest more                   believes they offer opportunities for the
                                                issuance, exempt from U.S. federal                      than 25% of its total assets) in particular               Fund, or variable rate demand notes
                                                income tax (‘‘Municipal Bonds’’). The                   sectors. The Fund may sell investments                    (VRDNs) that pay interest monthly or
                                                Sub-Adviser will invest the Fund’s                      for a variety of reasons, such as to adjust               quarterly based on a floating rate that is
                                                assets using a barbell strategy, which                  the portfolio’s average maturity,                         reset daily or weekly based on an index
                                                means that the Sub-Adviser will                         duration, or overall credit quality, or to                of short-term municipal rates.
                                                overweight the Fund’s investments in                    shift assets into and out of higher-                         The Fund may invest in exchange-
                                                Municipal Bonds with maturities on the                  yielding or lower-yielding securities or                  traded and OTC securities convertible
                                                short and long ends of the fixed income                 certain sectors.                                          into common stock. Such securities are
                                                yield curve, while underweighting                          Under normal market conditions,                        the following: Convertible bonds and
                                                exposure to Municipal Bonds with                        each Municipal Bond held by the Fund                      convertible preferred stocks.13
                                                intermediate maturities.                                must be a constituent of a deal where                        The Fund may invest directly and
                                                   According to the Registration                        the deal’s original offering amount was                   indirectly in cash equivalents, namely,
                                                Statement, Municipal Bonds in which                     at least $100 million. The Fund will                      money market instruments that are the
                                                the Fund may invest include one or                      hold a minimum of 75 Municipal                            following: U.S. Government obligations
                                                more of the following:                                  Bonds. No Municipal Bond held by the                      or corporate debt obligations (including
                                                   • General obligation bonds, which are                Fund will exceed 4% of the weight of                      those subject to repurchase agreements);
                                                typically backed by the full faith, credit,             the Fund’s portfolio and no single                        banker’s acceptances 14 and certificates
                                                and taxing power of the issuer;                         Municipal Bond issuer will account for                    of deposit 15 of domestic branches of
                                                   • revenue bonds, which are typically                 more than 10% of the weight of the
                                                secured by revenues generated by the                    Fund’s portfolio. The Fund will hold                         11 The ETFs in which the Fund may invest will

                                                issuer;                                                 Municipal Bonds of a minimum of 30                        be registered under the 1940 Act and include
                                                   • discount bonds, which may be                       non-affiliated issuers.10                                 Investment Company Units (as described in NYSE
                                                                                                                                                                  Arca Equities Rule 5.2(j)(3)); Portfolio Depositary
                                                originally issued at a discount to par                     According to the Registration                          Receipts (as described in NYSE Arca Equities Rule
                                                value or sold at market price below par                 Statement, under normal market                            8.100); and Managed Fund Shares (as described in
                                                value;                                                  conditions, at least 80% of the Fund’s                    NYSE Arca Equities Rule 8.600). Such ETFs all will
                                                   • premium bonds, which are sold at                   income will be exempt from federal                        be listed and traded in the U.S. on registered
                                                                                                                                                                  exchanges.
                                                a premium to par value;                                 income taxes. However, a significant                         12 With respect to its exchange-traded equity
                                                   • zero coupon bonds, which are                       portion of the Fund’s income could be                     securities investments, the Fund will normally
                                                issued at an original issue discount,                   derived from securities subject to the                    invest in equity securities that are listed and traded
                                                with the full value, including accrued                  alternative minimum tax.                                  on a U.S. exchange or in markets that are members
                                                interest, paid at maturity; and                                                                                   of the Intermarket Surveillance Group (‘‘ISG’’) or
                                                                                                                                                                  parties to a comprehensive surveillance sharing
                                                   • private activity bonds, which are                  Other Investments
                                                                                                                                                                  agreement with the Exchange. In any case, not more
                                                typically issued by or on behalf of local                 While the Fund, under normal market                     than 10% of the net assets of the Fund in the
                                                or state government for the purpose of                  conditions, will invest at least eighty                   aggregate invested in equity securities (except for
                                                financing the project of a private user.                                                                          non-exchange-traded investment company
                                                                                                        percent (80%) of its assets in Municipal                  securities) will consist of equity securities whose
                                                   The Fund will have no target duration                Bonds, as described above, the Fund                       principal market is not a member of ISG or a market
                                                for its investment portfolio, and the                   may invest its remaining assets in other                  with which the Exchange does not have a
                                                Sub-Adviser may target a shorter or                     assets and financial instruments, as                      comprehensive surveillance sharing agreement. See
                                                                                                                                                                  note 29, infra.
                                                longer average portfolio duration based                 described below.                                             13 The criteria in note 12 above also will apply
                                                on the Sub-Adviser’s forecast of interest                                                                         to exchange-traded convertible preferred stocks and
                                                rates and view of fixed-income markets                     9 Duration measures the interest rate sensitivity of   exchange-traded stocks into which convertible
                                                                                                        a debt security by assessing and weighting the            bonds may be converted.
                                                  8 The term ‘‘under normal market conditions’’         present value of the security’s payment pattern.             14 Banker’s acceptances are time drafts drawn on
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                                                includes, but is not limited to, the absence of         Generally, the longer the maturity, the greater the       and ‘‘accepted’’ by a bank. When a bank ‘‘accepts’’
                                                extreme volatility or trading halts in the fixed        duration and, therefore, the greater effect interest      such a time draft, it assumes liability for its
                                                income markets or the financial markets generally;      rate changes have on the price of the security.           payment. When the Fund acquires a banker’s
                                                operational issues (e.g., system failure) causing          10 For purposes of this restriction, each state and    acceptance, the bank that ‘‘accepted’’ the time draft
                                                dissemination of inaccurate market information; or      each separate political subdivision, agency,              is liable for payment of interest and principal when
                                                force majeure type events such as\ natural or man-      authority, or instrumentality of such state, each         due. The banker’s acceptance carries the full faith
                                                made disaster, act of God, armed conflict, act of       multi-state agency or authority, and each guarantor,      and credit of such bank.
                                                terrorism, riot or labor disruption or any similar      if any, will be treated as separate issuers of               15 A certificate of deposit is an unsecured, interest

                                                intervening circumstance.                               Municipal Bonds.                                          bearing debt obligation of a bank.



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                                                                              Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices                                             54157

                                                banks, commercial paper,16 and master                      The Fund may hold up to an aggregate                 for creation of Shares, upon approval of
                                                notes.17                                                amount of 15% of its net assets in                      the Distributor. In such case, the
                                                   In order to maintain sufficient                      illiquid assets (calculated at the time of              consideration for purchase of a Creation
                                                liquidity, to implement investment                      investment), consistent with                            Unit of the Fund generally will consist
                                                strategies or for temporary defensive                   Commission guidance. The Fund will                      of an in-kind deposit of ‘‘Deposit
                                                purposes, the Fund may invest a                         monitor its portfolio liquidity on an                   Securities’’ for each Creation Unit
                                                significant portion of its assets in shares             ongoing basis to determine whether, in                  constituting a substantial replication, or
                                                of one or more money market funds.                      light of current circumstances, an                      a representation, of the securities
                                                Generally, money market mutual funds                    adequate level of liquidity is being                    included in the Fund’s portfolio and a
                                                are registered investment companies                     maintained, and will consider taking                    ‘‘Cash Component’’ computed as
                                                that seek to earn income consistent with                appropriate steps in order to maintain                  described below. Together, the Deposit
                                                the preservation of capital and                         adequate liquidity if, through a change                 Securities and the Cash Component
                                                maintenance of liquidity by investing                   in values, net assets, or other                         constitute the ‘‘Fund Deposit’’, which
                                                primarily in high quality money market                  circumstances, more than 15% of the                     represents the minimum initial and
                                                instruments.                                            Fund’s net assets are held in illiquid                  subsequent investment amount for a
                                                   The Fund may invest in the securities                assets. Illiquid assets include securities              Creation Unit of the Fund. The Cash
                                                of other non-exchange-traded                            subject to contractual or other                         Component is an amount equal to the
                                                investment company securities in                        restrictions on resale and other                        difference between the NAV of the
                                                compliance with Section 12(d)(1)(E), (F)                instruments that lack readily available                 Shares (per Creation Unit) and the
                                                and (G) of the 1940 Act and the rules                   markets as determined in accordance                     market value of the Deposit Securities.
                                                thereunder.18                                           with Commission staff guidance.19                       If the Cash Component is a positive
                                                   The Fund may write U.S. exchange-                       The Fund will seek to qualify for                    number (i.e., the NAV per Creation Unit
                                                traded call and put options on                          treatment as a regulated investment                     exceeds the market value of the Deposit
                                                securities, ETFs or security indexes to                 company under the Internal Revenue                      Securities), the Cash Component will be
                                                seek income or may purchase or write                    Code of 1986.20                                         such positive amount. If the Cash
                                                U.S. exchange-traded put or call options                   The Fund’s investments will be                       Component is a negative number (i.e.,
                                                for hedging purposes.                                   consistent with its investment objective                the NAV per Creation Unit is less than
                                                   The Fund may purchase securities on                  and will not be used to provide multiple                the market value of the Deposit
                                                a when-issued basis or for settlement at                returns of a benchmark or to produce                    Securities), the Cash Component will be
                                                a future date (forward commitment) if                   leveraged returns.                                      such negative amount, and the creator
                                                the Fund holds sufficient liquid assets                                                                         will be entitled to receive cash from the
                                                to meet the purchase price.                             Creation and Redemption of Shares                       Fund in an amount equal to the Cash
                                                   Additionally, the Trust, on behalf of                   According to the Registration                        Component. The Cash Component
                                                the Fund, has claimed an exclusion                      Statement, the Trust will issue and sell                serves the function of compensating for
                                                from the definition of the term                         Shares of the Fund only in ‘‘Creation                   any differences between the NAV per
                                                ‘‘commodity pool operator’’ pursuant to                 Units’’ on a continuous basis through                   Creation Unit and the market value of
                                                Rule 4.5 under the Commodity                            the Distributor, at their net asset value               the Deposit Securities.
                                                Exchange Act, as amended (the ‘‘CEA’’).                 (‘‘NAV’’) next determined after receipt,                   The Administrator, through the
                                                Therefore, the Fund is not subject to                   on any business day, for an order                       National Securities Clearing Corporation
                                                regulation or registration as a                         received in proper form. All orders to                  (‘‘NSCC’’), will make available on each
                                                commodity pool operator under the                       create Creation Units must be placed for                business day, immediately prior to the
                                                CEA.                                                    one or more Creation Unit size                          opening of business on the Exchange
                                                Investment Restrictions                                 aggregations of Shares (50,000 Shares                   (currently 9:30 a.m., Eastern Time), the
                                                                                                        per Creation Unit). The Creation Unit                   list of the names and the required
                                                  The Fund may, from time to time,                                                                              number of Shares of each Deposit
                                                take temporary defensive positions that                 size is subject to change. Cash creations
                                                                                                        will be the default mechanism for                       Security to be included in the current
                                                are inconsistent with its principal                                                                             Fund Deposit (based on information at
                                                investment strategies in an attempt to                  creation of Shares.
                                                                                                           However, the Fund will retain the                    the end of the previous business day) for
                                                respond to adverse market, economic,                                                                            the Fund. Such Fund Deposit will be
                                                political or other conditions. In such                  ability to utilize an in-kind mechanism
                                                                                                                                                                applicable, subject to any adjustments
                                                circumstances, the Fund may also hold                     19 The Commission has stated that long-standing       as described below, in order to effect
                                                up to 100% of its portfolio in cash and                 Commission guidelines have required open-end            creations of Creation Units of the Fund
                                                cash equivalent positions.                              funds to hold no more than 15% of their net assets      until such time as the next-announced
                                                                                                        in illiquid securities and other illiquid assets. See
                                                  16 Commercial paper is an unsecured, short-term       Investment Company Act Release No. 28193 (March         composition of the Deposit Securities is
                                                debt obligation of a bank, corporation, or other        11, 2008), 73 FR 14618 (March 18, 2008), footnote       made available.
                                                borrower. Commercial paper maturity generally           34. See also, Investment Company Act Release No.           The identity and number of Shares of
                                                ranges from two to 270 days and is usually sold on      5847 (October 21, 1969), 35 FR 19989 (December          the Deposit Securities required for the
                                                a discounted basis rather than as an interest-bearing   31, 1970) (Statement Regarding ‘‘Restricted
                                                                                                        Securities’’); Investment Company Act Release No.
                                                                                                                                                                Fund Deposit for the Fund will change
                                                instrument. The Fund will invest directly in
                                                commercial paper only if it is rated in one of the      18612 (March 12, 1992), 57 FR 9828 (March 20,           as rebalancing adjustments and
                                                top two rating categories by Moody’s, S&P or Fitch      1992) (Revisions of Guidelines to Form N–1A). A         corporate action events occur from time
                                                or, if not rated, is of equivalent quality in the       fund’s portfolio security is illiquid if it cannot be   to time. In addition, the Trust reserves
                                                Adviser’s opinion. Commercial paper may include         disposed of in the ordinary course of business
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                                                                                                        within seven days at approximately the value
                                                                                                                                                                the right to permit or require the
                                                master notes of the same quality. Master notes are
                                                unsecured obligations which are redeemable upon         ascribed to it by the fund. See Investment Company      substitution of an amount of cash—i.e.,
                                                demand of the holder and which permit the               Act Release No. 14983 (March 12, 1986), 51 FR           a ‘‘cash in lieu’’ amount—to be added to
                                                investment of fluctuating amounts at varying rates      9773 (March 21, 1986) (adopting amendments to           the Cash Component to replace any
                                                of interest.                                            Rule 2a–7 under the 1940 Act); Investment               Deposit Security that may not be
                                                  17 Master notes may be acquired by the Fund           Company Act Release No. 17452 (April 23, 1990),
                                                through the master note program of the Fund’s           55 FR 17933 (April 30, 1990) (adopting Rule 144A        available in sufficient quantity for
                                                custodian bank.                                         under the 1933 Act).                                    delivery, that may not be eligible for
                                                  18 15 U.S.C. 80a–12(d)(1)(E), (F) and (G).              20 26 U.S.C. 851.                                     transfer or that may not be eligible for


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                                                54158                        Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices

                                                trading by an ‘‘Authorized Participant’’                Deposit Securities (the ‘‘Cash                        the net assets of the Fund (i.e., the value
                                                (as described below) or the investor for                Redemption Amount’’), less a                          of its total assets less total liabilities) by
                                                which it is acting.                                     redemption transaction fee. In the event              the total number of Shares outstanding,
                                                   In addition to the list of names and                 that the Deposit Securities have a value              rounded to the nearest cent. Expenses
                                                numbers of securities constituting the                  greater than the NAV of the Shares, a                 and fees, including the management fee,
                                                current Deposit Securities of the Fund                  compensating cash payment equal to the                will be accrued daily and taken into
                                                Deposit, the Administrator, through                     differential is required to be made by or             account for purposes of determining
                                                NSCC, also will make available on each                  through an Authorized Participant by                  NAV. The NAV of the Fund will be
                                                business day the estimated Cash                         the redeeming shareholder.                            determined as of the close of the regular
                                                Component, effective through and                           With respect to the Fund, the                      trading session on the Exchange
                                                including the previous business day, per                Administrator, through NSCC, will                     (ordinarily 4:00 p.m., Eastern Time) on
                                                outstanding Creation Unit of the Fund.                  make available immediately prior to the               each day that the Exchange is open. Any
                                                Procedures for Creation of Creation                     opening of business on the Exchange                   assets or liabilities denominated in
                                                Units                                                   (currently 9:30 a.m., Eastern Time) on                currencies other than the U.S. dollar
                                                                                                        each business day, the Deposit                        will be converted into U.S. dollars at the
                                                   To be eligible to place orders to create             Securities that will be applicable                    current market rates on the date of
                                                a Creation Unit of the Fund, an entity                  (subject to possible amendment or                     valuation as quoted by one or more
                                                must be (i) a ‘‘Participating Party’’, i.e.,            correction) to redemption requests                    sources.
                                                a broker-dealer or other participant in                 received in proper form on that day.                     The pricing and valuation of portfolio
                                                the clearing process through the                        Deposit Securities received on                        securities will be determined in good
                                                Continuous Net Settlement System of                     redemption may not be identical to                    faith in accordance with procedures
                                                NSCC (the ‘‘Clearing Process’’) or a                    Deposit Securities which are applicable               approved by, and under the direction of,
                                                clearing agency that is registered with                 to creations of Creation Units.                       the Trust’s Board of Trustees (‘‘Board’’).
                                                the Commission, or (ii) a Depositary                       If it is not possible to effect deliveries         In determining the value of the Fund’s
                                                Trust Company (‘‘DTC’’) Participant                     of the Deposit Securities, the Trust may              assets, equity securities will be
                                                and, in each case, must have executed                   in its discretion exercise its option to              generally valued at market using
                                                an agreement with the Trust, the                        redeem such shares in cash, and the                   quotations from the primary market in
                                                Distributor and the Administrator with                  redeeming beneficial owner will be                    which they are traded. Debt securities
                                                respect to creations and redemptions of                 required to receive its redemption                    (other than short-term investments) will
                                                Creation Units (‘‘Participant                           proceeds in cash. In addition, an                     be valued on the basis of broker quotes
                                                Agreement’’). A Participating Party and                 investor may request a redemption in                  or valuations provided by a pricing
                                                DTC Participant are collectively referred               cash which the Fund may, in its sole                  service, which in determining value will
                                                to as an ‘‘Authorized Participant’’.                    discretion, permit.21 In either case, the             utilize information regarding recent
                                                   All orders to create Creation Units                                                                        sales, market transactions in comparable
                                                                                                        investor will receive a cash payment
                                                must be received by the Distributor no                                                                        securities, quotations from dealers, and
                                                                                                        equal to the NAV of its Shares based on
                                                later than the close of the regular trading                                                                   various relationships between
                                                                                                        the NAV of Shares of the Fund next
                                                session on the Exchange (ordinarily 4:00                                                                      securities. Other assets, such as accrued
                                                                                                        determined after the redemption request
                                                p.m., Eastern Time), in each case on the                                                                      interest, accrued dividends and cash
                                                                                                        is received in proper form (minus a
                                                date such order is placed in order for                                                                        also will be included in determining the
                                                                                                        redemption transaction fee and
                                                the creation of Creation Units to be                                                                          NAV. The Fund normally will use third
                                                                                                        additional charge for requested cash
                                                effected based on the NAV of Shares of                                                                        party pricing services to obtain portfolio
                                                                                                        redemptions, to offset the Trust’s
                                                the Fund as next determined on such                                                                           security prices.
                                                                                                        brokerage and other transaction costs                    Municipal Bonds, money market
                                                date after receipt of the order in proper
                                                                                                        associated with the disposition of                    instruments, convertible bonds, taxable
                                                form.
                                                                                                        Deposit Securities).                                  municipal bonds, and VRDNs will
                                                Redemption of Creation Units                               The right of redemption may be                     generally be valued at bid prices
                                                  Shares may be redeemed only in                        suspended or the date of payment                      received from independent pricing
                                                Creation Units at their NAV next                        postponed with respect to the Fund (1)                services as of the announced closing
                                                determined after receipt of a redemption                for any period during which the                       time for trading in fixed-income
                                                request in proper form by the                           Exchange is closed (other than                        instruments in the respective market.
                                                Distributor and the Fund through the                    customary weekend and holiday                            Exchange-traded equity securities,
                                                Administrator and only on a business                    closings); (2) for any period during                  including common stocks, ETFs,
                                                day. Cash redemptions will be the                       which trading on the Exchange is                      preferred stocks, convertible preferred
                                                default mechanism for redemptions of                    suspended or restricted; (3) for any                  stocks and warrants, will be valued at
                                                Shares.                                                 period during which an emergency                      market value, which will generally be
                                                  However, the Fund will retain the                     exists as a result of which disposal of               determined using the last reported
                                                ability to utilize an in-kind mechanism                 the Shares of the Fund or determination               official closing or last trading price on
                                                for redemption of Shares, upon approval                 of the Shares’ NAV is not reasonably                  the exchange or market on which the
                                                of the Distributor. In such case, the                   practicable; or (4) in such other                     security is primarily traded at the time
                                                redemption proceeds for a Creation Unit                 circumstance as is permitted by the                   of valuation or, if no sale has occurred,
                                                generally consist of Deposit Securities,                Commission.                                           at the last quoted bid price on the
                                                as announced by the Administrator on                                                                          primary market or exchange on which
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                        Net Asset Value
                                                the business day of the request for                                                                           they are traded. If market prices are
                                                redemption received in proper form,                       The NAV per Share for the Fund will                 unavailable or the Fund believes that
                                                plus cash in an amount equal to the                     be computed by dividing the value of                  they are unreliable, or when the value
                                                difference between the NAV of the                         21 The Adviser represents that, to the extent the
                                                                                                                                                              of a security has been materially
                                                Shares being redeemed, as next                          Trust effects the creation or redemption of Shares
                                                                                                                                                              affected by events occurring after the
                                                determined after a receipt of a request                 in cash, such transactions will be effected in the    relevant market closes, the Fund will
                                                in proper form, and the value of the                    same manner for all Authorized Participants.          price those securities at fair value as


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                                                                             Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices                                             54159

                                                determined in good faith using methods                  will include additional quantitative                   regarding securities and financial
                                                approved by the Trust’s Board.                          information updated on a daily basis,                  instruments that may comprise the
                                                   Equity securities traded in the OTC                  including, for the Fund, (1) daily trading             Fund’s basket on a given day.
                                                market, including common stocks,                        volume, the prior business day’s                          The approximate value of the Fund’s
                                                preferred stocks, and warrants, will be                 reported closing price, NAV and mid-                   investments on a per-Share basis, the
                                                valued at the last reported sale price on               point of the bid/ask spread at the time                Indicative Intra-Day Value (‘‘IIV’’), will
                                                the valuation date. OTC traded                          of calculation of such NAV (the ‘‘Bid/                 be disseminated every 15 seconds
                                                convertible preferred stocks will be                    Ask Price’’),22 and a calculation of the               during the Exchange Core Trading
                                                valued based on price quotations                        premium and discount of the Bid/Ask                    Session. The IIV should not be viewed
                                                obtained from a broker-dealer who                       Price against the NAV, and (2) data in                 as a ‘‘real-time’’ update of NAV because
                                                makes markets in such securities or                     chart format displaying the frequency                  the IIV will be calculated by an
                                                other equivalent indications of value                   distribution of discounts and premiums                 independent third party and may not be
                                                provided by a third-party pricing                       of the daily Bid/Ask Price against the                 calculated in the exact same manner as
                                                service. Securities of non-exchange-                    NAV, within appropriate ranges, for                    NAV, which will be computed daily.
                                                traded investment company securities                    each of the four previous calendar                        The IIV for the Fund will be
                                                registered under the 1940 Act, including                quarters. On each business day, before                 calculated by dividing the ‘‘Estimated
                                                money market funds, will be valued at                   commencement of trading in Shares in                   Fund Value’’ as of the time of the
                                                NAV.                                                    the Core Trading Session on the                        calculation by the total number of
                                                   Option contracts will be valued at                   Exchange, the Fund’s Web site will                     outstanding Shares. ‘‘Estimated Fund
                                                their most recent sale price on the                     disclose the Disclosed Portfolio that will             Value’’ is the sum of the estimated
                                                applicable exchange. If no such sales are               form the basis for the Fund’s calculation              amount of cash held in the Fund’s
                                                reported, these contracts will be valued                of NAV at the end of the business day.23               portfolio, the estimated amount of
                                                at their most recent bid price.                            The Fund will disclose on the Fund’s                accrued interest owing to the Fund and
                                                   To the extent the assets of the Fund                 Web site the following information                     the estimated value of the securities
                                                are invested in other open-end                          regarding each portfolio holding, as                   held in the Fund’s portfolio, minus the
                                                investment companies that are                           applicable to the type of holding: Ticker              estimated amount of the Fund’s
                                                registered under the 1940 Act, the                      symbol, CUSIP number or other                          liabilities. The IIV will be calculated
                                                Fund’s NAV will be calculated based                     identifier, if any; a description of the               based on the same portfolio holdings
                                                upon the NAVs reported by such                          holding (including the type of holding);               disclosed on the Fund’s Web site. In
                                                registered open-end investment                          the identity of the security, index or                 determining the estimated value for
                                                companies.                                              other asset or instrument underlying the               each of the component securities, the
                                                   Securities and assets for which market               holding, if any; for options, the option               IIV will use last sale, market prices or
                                                quotations are not readily available or                 strike price; quantity held (as measured               other methods that would be considered
                                                which cannot be accurately valued                       by, for example, par value, notional                   appropriate for pricing securities held
                                                using the Fund’s normal pricing                         value or number of shares, contracts or                by registered investment companies.
                                                procedures will be valued by the Trust’s                units); maturity date, if any; coupon                     Investors can also obtain the Trust’s
                                                Fair Value Pricing Committee at fair                    rate, if any; effective date, if any; market           Statement of Additional Information
                                                value as determined in good faith under                 value of the holding; and the percentage               (‘‘SAI’’), the Fund’s shareholder reports,
                                                policies approved by the Board. Fair                    weighting of the holding in the Fund’s                 and its Form N–CSR and Form N–SAR,
                                                value pricing may be used, for example,                 portfolio. The Web site information will               filed twice a year. The Trust’s SAI and
                                                in situations where (i) portfolio                       be publicly available at no charge.                    Shareholder Reports will be available
                                                securities, such as securities with small                  In addition, a basket composition file,             free upon request from the Trust, and
                                                capitalizations, are so thinly traded that              which includes the security names and                  those documents and the Form N–CSR
                                                there have been no transactions for that                share quantities, if applicable, required              and Form N–SAR may be viewed on-
                                                security over an extended period of                     to be delivered in exchange for the                    screen or downloaded from the
                                                time; (ii) an event occurs after the close              Fund’s Shares, together with estimates                 Commission’s Web site at www.sec.gov.
                                                of the exchange on which a portfolio                    and actual cash components, will be                    Information regarding market price and
                                                security is principally traded that is                  publicly disseminated daily prior to the               trading volume of the Shares will be
                                                likely to change the value of the                       opening of the Exchange via the NSCC.                  continually available on a real-time
                                                portfolio security prior to the Fund’s                  The basket represents one Creation Unit                basis throughout the day on brokers’
                                                NAV calculation; (iii) the exchange on                  of the Fund. The NAV of Shares of the                  computer screens and other electronic
                                                which the portfolio security is                         Fund will normally be determined as of                 services. Information regarding the
                                                principally traded closes early; or (iv)                the close of the regular trading session               previous day’s closing price and trading
                                                trading of the particular portfolio                     on the Exchange (ordinarily 4:00 p.m.,                 volume information for the Shares will
                                                security is halted during the day and                   Eastern Time) on each business day.                    be published daily in the financial
                                                does not resume prior to the Fund’s                     Authorized Participants may refer to the               section of newspapers.
                                                NAV calculation. The Board will                         basket composition file for information                   Quotation and last sale information
                                                monitor and evaluate the Fund’s use of                                                                         for the Shares and the underlying U.S.
                                                fair value pricing, and periodically                      22 The Bid/Ask Price of the Fund’s Shares will be    exchange-traded equity securities will
                                                reviews the results of any fair valuation               determined using the mid-point of the highest bid      be available via the Consolidated Tape
                                                under the Trust’s policies.                             and the lowest offer on the Exchange as of the time    Association (‘‘CTA’’) high-speed line,
                                                                                                        of calculation of the Fund’s NAV. The records
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                        relating to Bid/Ask Prices will be retained by the
                                                                                                                                                               and from the national securities
                                                Availability of Information                                                                                    exchange on which they are listed. Price
                                                                                                        Fund and its service providers.
                                                  The Fund’s Web site                                     23 Under accounting procedures followed by the       information regarding non-U.S.
                                                (www.cumberetfs.com), which will be                     Fund, trades made on the prior business day (‘‘T’’)    exchange-traded equity securities held
                                                publicly available prior to the public                  will be booked and reflected in NAV on the current     by the Fund will be available from the
                                                                                                        business day (‘‘T+1’’). Accordingly, the Fund will
                                                offering of Shares, will include a form                 be able to disclose at the beginning of the business   exchanges trading such assets.
                                                of the prospectus for the Fund that may                 day the portfolio that will form the basis for the        Quotation information from brokers
                                                be downloaded. The Fund’s Web site                      NAV calculation at the end of the business day.        and dealers or pricing services will be


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                                                54160                        Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices

                                                available for Municipal Bonds, taxable                  Trading Rules                                         trading of the Shares in all trading
                                                municipal bonds, convertible bonds,                        The Exchange deems the Shares to be                sessions and to deter and detect
                                                OTC traded convertible preferred stocks,                equity securities, thus rendering trading             violations of Exchange rules and federal
                                                corporate debt obligations, VRDNs, and                  in the Shares subject to the Exchange’s               securities laws applicable to trading on
                                                cash equivalents. Price information for                 existing rules governing the trading of               the Exchange.28
                                                investment company securities (other                    equity securities. Shares will trade on                  The surveillances referred to above
                                                than ETFs) will be available from the                   the NYSE Arca Marketplace from 4 a.m.                 generally focus on detecting securities
                                                applicable investment company’s Web                     to 8 p.m., Eastern Time in accordance                 trading outside their normal patterns,
                                                site and from market data vendors.                      with NYSE Arca Equities Rule 7.34                     which could be indicative of
                                                Intra-day and closing price information                 (Opening, Core, and Late Trading                      manipulative or other violative activity.
                                                for OTC equity securities will be                       Sessions). The Exchange has                           When such situations are detected,
                                                available from major market data                        appropriate rules to facilitate                       surveillance analysis follows and
                                                vendors. Pricing information regarding                  transactions in the Shares during all                 investigations are opened, where
                                                each asset class in which the Fund will                 trading sessions. As provided in NYSE                 appropriate, to review the behavior of
                                                invest will generally be available                      Arca Equities Rule 7.6, Commentary .03,               all relevant parties for all relevant
                                                through nationally recognized data                      the minimum price variation (‘‘MPV’’)                 trading violations.29
                                                service providers through subscription                  for quoting and entry of orders in equity                FINRA, on behalf of the Exchange, or
                                                agreements. Quotation and last sale                     securities traded on the NYSE Arca                    regulatory staff of the Exchange, will
                                                information for exchange-traded options                 Marketplace is $0.01, with the exception              communicate as needed regarding
                                                will be available via the Options Price                 of securities that are priced less than               trading in the Shares, options and
                                                Reporting Authority and from the                        $1.00 for which the MPV for order entry               certain exchange-traded equity
                                                applicable U.S. options exchange. In                    is $0.0001.                                           securities with other markets and other
                                                addition, the IIV, (which is the Portfolio                 The Shares will conform to the initial             entities that are members of the ISG, and
                                                Indicative Value, as defined in NYSE                    and continued listing criteria under                  FINRA, on behalf of the Exchange, or
                                                Arca Equities Rule 8.600(c)(3)), will be                NYSE Arca Equities Rule 8.600.                        regulatory staff of the Exchange, may
                                                widely disseminated at least every 15                   Consistent with NYSE Arca Equities                    obtain trading information regarding
                                                seconds during the Core Trading                         Rule 8.600(d)(2)(B)(ii), the Adviser will             trading in the Shares, options and
                                                Session by one or more major market                     implement and maintain, or be subject                 certain exchange-traded equity
                                                data vendors.24 The dissemination of                    to, procedures designed to prevent the                securities from such markets and other
                                                                                                        use and dissemination of material non-                entities. In addition, the Exchange may
                                                the IIV, together with the Disclosed
                                                                                                        public information regarding the actual               obtain information regarding trading in
                                                Portfolio, will allow investors to
                                                                                                        components of the Fund’s portfolio. The               the Shares, options and certain
                                                determine the value of the underlying
                                                                                                        Exchange represents that, for initial                 exchange-traded equity securities from
                                                portfolio of the Fund on a daily basis
                                                                                                        and/or continued listing, the Fund will               markets and other entities that are
                                                and will provide a close estimate of that
                                                                                                        be in compliance with Rule 10A–3 26                   members of ISG or with which the
                                                value throughout the trading day.                       under the Act, as provided by NYSE                    Exchange has in place a comprehensive
                                                Trading Halts                                           Arca Equities Rule 5.3. A minimum of                  surveillance sharing agreement. In
                                                                                                        100,000 Shares will be outstanding at                 addition, FINRA, on behalf of the
                                                   With respect to trading halts, the                   the commencement of trading on the                    Exchange, is able to access, as needed,
                                                Exchange may consider all relevant                      Exchange. The Exchange will obtain a                  trade information for certain fixed
                                                factors in exercising its discretion to                 representation from the issuer of the                 income securities held by the Fund
                                                halt or suspend trading in the Shares of                Shares that the NAV per Share will be                 reported to FINRA’s Trade Reporting
                                                the Fund.25 Trading in Shares of the                    calculated daily and that the NAV and                 and Compliance Engine (‘‘TRACE’’).
                                                Fund will be halted if the circuit breaker              the Disclosed Portfolio 27 as defined in              FINRA also can access data obtained
                                                parameters in NYSE Arca Equities Rule                   NYSE Arca Equities Rule 8.600(c)(2)                   from the Municipal Securities
                                                7.12 have been reached. Trading also                    will be made available to all market                  Rulemaking Board (‘‘MSRB’’) relating to
                                                may be halted because of market                         participants at the same time. The                    municipal bond trading activity for
                                                conditions or for reasons that, in the                  Fund’s investments will be consistent                 surveillance purposes in connection
                                                view of the Exchange, make trading in                   with the Fund’s investment objective                  with trading in the Shares.
                                                the Shares inadvisable. These may                       and will not be used to enhance                          In addition, the Exchange also has a
                                                include: (1) The extent to which trading                leverage.                                             general policy prohibiting the
                                                is not occurring in the securities and/or               Surveillance                                          distribution of material, non-public
                                                the financial instruments comprising                                                                          information by its employees.
                                                the Disclosed Portfolio of the Fund; or                   The Exchange represents that trading                   All statements and representations
                                                (2) whether other unusual conditions or                 in the Shares will be subject to the                  made in this filing regarding (a) the
                                                circumstances detrimental to the                        existing trading surveillances,                       description of the portfolio, (b)
                                                maintenance of a fair and orderly                       administered by the Financial Industry                limitations on portfolio holdings or
                                                market are present. Trading in the                      Regulatory Authority (‘‘FINRA’’) on                   reference assets, or (c) the applicability
                                                Shares will be subject to NYSE Arca                     behalf of the Exchange, or by regulatory              of Exchange rules and surveillance
                                                Equities Rule 8.600(d)(2)(D), which sets                staff of the Exchange, which are
                                                forth circumstances under which Shares                  designed to detect violations of                        28 FINRA surveils trading on the Exchange
sradovich on DSK3GMQ082PROD with NOTICES




                                                of the Fund may be halted.                              Exchange rules and applicable federal                 pursuant to a regulatory services agreement. The
                                                                                                        securities laws. The Exchange                         Exchange is responsible for FINRA’s performance
                                                                                                        represents that these procedures are                  under this regulatory services agreement.
                                                  24 Currently, it is the Exchange’s understanding                                                              29 For a list of the current members of ISG, see
                                                that several major market data vendors display and/     adequate to properly monitor Exchange                 www.isgportal.org. The Exchange notes that not all
                                                or make widely available IIVs taken from CTA or                                                               components of the Disclosed Portfolio may trade on
                                                other data feeds.                                         26 17
                                                                                                              CFR 240.10A–3.                                  markets that are members of ISG or with which the
                                                  25 See NYSE Arca Equities Rule 7.12,                    27 The
                                                                                                               term ‘‘Disclosed Portfolio’’ is defined in     Exchange has in place a comprehensive
                                                Commentary .04.                                         NYSE Arca Equities Rule 8.600(c)(2).                  surveillance sharing agreement.



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                                                                                Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices                                             54161

                                                procedures shall constitute continued                      mechanism of a free and open market                   and the Fund will hold Municipal
                                                listing requirements for listing the                       and, in general, to protect investors and             Bonds of a minimum of 30 non-
                                                Shares of the Fund on the Exchange.                        the public interest.                                  affiliated issuers. In addition, each
                                                   The issuer has represented to the                          The Exchange believes that the                     Municipal Bond held by the Fund must
                                                Exchange that it will advise the                           proposed rule change is designed to                   be a constituent of a deal where the
                                                Exchange of any failure by the Fund to                     prevent fraudulent and manipulative                   deal’s original offering amount was at
                                                comply with the continued listing                          acts and practices in that the Shares will            least $100 million.
                                                requirements, and, pursuant to its                         be listed and traded on the Exchange                     The proposed rule change is designed
                                                obligations under Section 19(g)(1) of the                  pursuant to the initial and continued                 to promote just and equitable principles
                                                Act, the Exchange will monitor for                         listing criteria in NYSE Arca Equities                of trade and to protect investors and the
                                                compliance with the continued listing                      Rule 8.600. The Exchange has in place                 public interest in that the Exchange will
                                                requirements. If the Fund is not in                        surveillance procedures that are                      obtain a representation from the issuer
                                                compliance with the applicable listing                     adequate to properly monitor trading in               of the Shares that the NAV per Share
                                                requirements, the Exchange will                            the Shares in all trading sessions and to             will be calculated daily and that the
                                                commence delisting procedures under                        deter and detect violations of Exchange               NAV and the Disclosed Portfolio will be
                                                NYSE Arca Equities Rule 5.5(m).                            rules and applicable federal securities               made available to all market
                                                                                                           laws. FINRA, on behalf of the Exchange,               participants at the same time. In
                                                Information Bulletin
                                                                                                           or regulatory staff of the Exchange, will             addition, a large amount of information
                                                   Prior to the commencement of                                                                                  is publicly available regarding the Fund
                                                trading, the Exchange will inform its                      communicate as needed regarding
                                                                                                                                                                 and the Shares, thereby promoting
                                                Equity Trading Permit Holders in an                        trading in the Shares, options and
                                                                                                                                                                 market transparency. Quotation and last
                                                Information Bulletin (‘‘Bulletin’’) of the                 certain exchange-traded equity
                                                                                                                                                                 sale information for the Shares and the
                                                special characteristics and risks                          securities with other markets and other
                                                                                                                                                                 underlying U.S. exchange-traded equity
                                                associated with trading the Shares.                        entities that are members of the ISG, and
                                                                                                                                                                 securities will be available via the CTA
                                                Specifically, the Bulletin will discuss                    FINRA, on behalf of the Exchange, or
                                                                                                                                                                 high-speed line, and from the national
                                                the following: (1) The procedures for                      regulatory staff of the Exchange, may
                                                                                                                                                                 securities exchange on which they are
                                                purchases and redemptions of Shares in                     obtain trading information regarding
                                                                                                                                                                 listed. The Fund will disclose on the
                                                Creation Unit aggregations (and that                       trading in the Shares, options and
                                                                                                                                                                 Fund’s Web site the following
                                                Shares are not individually redeemable);                   certain exchange-traded equity                        information regarding each portfolio
                                                (2) NYSE Arca Equities Rule 9.2(a),                        securities from such markets and other                holding, as applicable to the type of
                                                which imposes a duty of due diligence                      entities. In addition, the Exchange may               holding: Ticker symbol, CUSIP number
                                                on its Equity Trading Permit Holders to                    obtain information regarding trading in               or other identifier, if any; a description
                                                learn the essential facts relating to every                the Shares, options and certain                       of the holding (including the type of
                                                customer prior to trading the Shares; (3)                  exchange-traded equity securities from                holding); the identity of the security,
                                                the risks involved in trading the Shares                   markets and other entities that are                   index or other asset or instrument
                                                during the Opening and Late Trading                        members of ISG or with which the                      underlying the holding, if any; for
                                                Sessions when an updated IIV will not                      Exchange has in place a comprehensive                 options, the option strike price; quantity
                                                be calculated or publicly disseminated;                    surveillance sharing agreement. In                    held (as measured by, for example, par
                                                (4) how information regarding the IIV                      addition, FINRA, on behalf of the                     value, notional value or number of
                                                and the Disclosed Portfolio is                             Exchange, is able to access, as needed,               shares, contracts or units); maturity
                                                disseminated; (5) the requirement that                     trade information for certain fixed                   date, if any; coupon rate, if any;
                                                Equity Trading Permit Holders deliver a                    income securities held by the Fund                    effective date, if any; market value of the
                                                prospectus to investors purchasing                         reported to TRACE. FINRA also can                     holding; and the percentage weighting
                                                newly issued Shares prior to or                            access data obtained from the MSRB                    of the holding in the Fund’s portfolio.
                                                concurrently with the confirmation of a                    relating to municipal bond trading                    Moreover, prior to the commencement
                                                transaction; and (6) trading information.                  activity for surveillance purposes in                 of trading, the Exchange will inform its
                                                   In addition, the Bulletin will                          connection with trading in the Shares.                Equity Trading Permit Holders in an
                                                reference that the Fund is subject to                      The Fund may not purchase or hold                     Information Bulletin of the special
                                                various fees and expenses described in                     illiquid assets if, in the aggregate, more            characteristics and risks associated with
                                                the Registration Statement. The Bulletin                   than 15% of its net assets would be                   trading the Shares. Trading in Shares of
                                                will discuss any exemptive, no-action,                     invested in illiquid assets. The Adviser              the Fund will be halted if the circuit
                                                and interpretive relief granted by the                     and Sub-Adviser are not registered as                 breaker parameters in NYSE Arca
                                                Commission from any rules under the                        broker-dealers but the Adviser is                     Equities Rule 7.12 have been reached or
                                                Act. The Bulletin will also disclose that                  affiliated with one or more broker-                   because of market conditions or for
                                                the NAV for the Shares will be                             dealers and has implemented and will                  reasons that, in the view of the
                                                calculated after 4:00 p.m., Eastern Time                   maintain a fire wall with respect to each             Exchange, make trading in the Shares
                                                each trading day.                                          such broker-dealer affiliate regarding                inadvisable. Trading in the Shares will
                                                                                                           access to information concerning the                  be subject to NYSE Arca Equities Rule
                                                2. Statutory Basis                                         composition and/or changes to the                     8.600(d)(2)(D), which sets forth
                                                   The basis under the Act for this                        portfolio. The Fund’s investments in                  circumstances under which Shares of
                                                proposed rule change is the requirement                    Municipal Bonds will be well-                         the Fund may be halted. In addition, as
                                                                                                           diversified in that, under normal market
sradovich on DSK3GMQ082PROD with NOTICES




                                                under Section 6(b)(5) 30 that an                                                                                 noted above, investors will have ready
                                                exchange have rules that are designed to                   conditions, the Fund will hold a                      access to information regarding the
                                                prevent fraudulent and manipulative                        minimum of 75 Municipal Bonds; no                     Fund’s holdings, the IIV, the Disclosed
                                                acts and practices, to promote just and                    Municipal Bond held by the Fund will                  Portfolio, and quotation and last sale
                                                equitable principles of trade, to remove                   exceed 4% of the weight of the Fund’s                 information for the Shares.
                                                impediments to, and perfect the                            portfolio; no single Municipal Bond                      The proposed rule change is designed
                                                                                                           issuer will account for more than 10%                 to perfect the mechanism of a free and
                                                  30 15   U.S.C. 78f(b)(5).                                of the weight of the Fund’s portfolio;                open market and, in general, to protect


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                                                54162                        Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices

                                                investors and the public interest in that               including whether the proposed rule                    SECURITIES AND EXCHANGE
                                                it will facilitate the listing and trading              change is consistent with the Act.                     COMMISSION
                                                of an additional type of actively-                      Comments may be submitted by any of
                                                managed exchange-traded product that                    the following methods:                                 [Release No. 34–78519; File No. SR–MIAX–
                                                principally holds municipal bonds and                   Electronic Comments                                    2016–21]
                                                that will enhance competition among
                                                market participants, to the benefit of                     • Use the Commission’s Internet                     Self-Regulatory Organizations; Miami
                                                investors and the marketplace. As noted                 comment form (http://www.sec.gov/                      International Securities Exchange LLC;
                                                above, the Exchange has in place                        rules/sro.shtml); or
                                                                                                           • Send an email to rule-comments@                   Notice of Filing and Immediate
                                                surveillance procedures relating to                                                                            Effectiveness of a Proposed Rule
                                                                                                        sec.gov. Please include File Number SR–
                                                trading in the Shares and may obtain                                                                           Change To Amend Its Fee Schedule
                                                                                                        NYSEArca–2016–107 on the subject
                                                information via ISG from other
                                                                                                        line.
                                                exchanges that are members of ISG or                                                                           August 9, 2016.
                                                with which the Exchange has entered                     Paper Comments                                            Pursuant to the provisions of Section
                                                into a comprehensive surveillance                          • Send paper comments in triplicate                 19(b)(1) of the Securities Exchange Act
                                                sharing agreement. In addition, as noted                to Secretary, Securities and Exchange                  of 1934 (‘‘Act’’),1 and Rule 19b–4
                                                above, investors will have ready access                 Commission, 100 F Street NE.,                          thereunder,2 notice is hereby given that
                                                to information regarding the Fund’s                     Washington, DC 20549–1090.                             on July 29, 2016, Miami International
                                                holdings, the IIV, the Disclosed                        All submissions should refer to File                   Securities Exchange LLC (‘‘MIAX’’ or
                                                Portfolio, and quotation and last sale                  Number SR–NYSEArca–2016–107. This
                                                information for the Shares.                                                                                    ‘‘Exchange’’) filed with the Securities
                                                                                                        file number should be included on the                  and Exchange Commission
                                                B. Self-Regulatory Organization’s                       subject line if email is used. To help the             (‘‘Commission’’) a proposed rule change
                                                Statement on Burden on Competition                      Commission process and review your                     as described in Items I, II, and III below,
                                                                                                        comments more efficiently, please use
                                                  The Exchange does not believe that                                                                           which Items have been prepared by the
                                                                                                        only one method. The Commission will
                                                the proposed rule change will impose                                                                           Exchange. The Commission is
                                                                                                        post all comments on the Commission’s
                                                any burden on competition that is not                   Internet Web site (http://www.sec.gov/                 publishing this notice to solicit
                                                necessary or appropriate in furtherance                 rules/sro.shtml). Copies of the                        comments on the proposed rule change
                                                of the purpose of the Act. The Exchange                 submission, all subsequent                             from interested persons.
                                                notes that the proposed rule change will                amendments, all written statements
                                                facilitate the listing and trading of an                                                                       I. Self-Regulatory Organization’s
                                                                                                        with respect to the proposed rule                      Statement of the Terms of Substance of
                                                additional type of actively-managed                     change that are filed with the
                                                exchange-traded product that                                                                                   the Proposed Rule Change
                                                                                                        Commission, and all written
                                                principally holds municipal bonds and                   communications relating to the                            The Exchange is filing a proposal to
                                                that will enhance competition among                     proposed rule change between the                       amend the MIAX Options Fee Schedule
                                                market participants, to the benefit of                  Commission and any person, other than                  (the ‘‘Fee Schedule’’).
                                                investors and the marketplace.                          those that may be withheld from the                       The text of the proposed rule change
                                                C. Self-Regulatory Organization’s                       public in accordance with the
                                                                                                                                                               is available on the Exchange’s Web site
                                                Statement on Comments on the                            provisions of 5 U.S.C. 552, will be
                                                                                                        available for Web site viewing and                     at http://www.miaxoptions.com/filter/
                                                Proposed Rule Change Received From                                                                             wotitle/rule_filing, at MIAX’s principal
                                                Members, Participants, or Others                        printing in the Commission’s Public
                                                                                                        Reference Room, 100 F Street NE.,                      office, and at the Commission’s Public
                                                  No written comments were solicited                                                                           Reference Room.
                                                                                                        Washington, DC 20549, on official
                                                or received with respect to the proposed
                                                                                                        business days between the hours of                     II. Self-Regulatory Organization’s
                                                rule change.
                                                                                                        10:00 a.m. and 3:00 p.m. Copies of the                 Statement of the Purpose of, and
                                                III. Date of Effectiveness of the                       filing will also be available for                      Statutory Basis for, the Proposed Rule
                                                Proposed Rule Change and Timing for                     inspection and copying at the principal                Change
                                                Commission Action                                       office of the Exchange. All comments
                                                   Within 45 days of the date of                        received will be posted without change;                  In its filing with the Commission, the
                                                publication of this notice in the Federal               the Commission does not edit personal                  Exchange included statements
                                                Register or within such longer period                   identifying information from                           concerning the purpose of and basis for
                                                up to 90 days (i) as the Commission may                 submissions. You should submit only                    the proposed rule change and discussed
                                                designate if it finds such longer period                information that you wish to make                      any comments it received on the
                                                to be appropriate and publishes its                     available publicly. All submissions                    proposed rule change. The text of these
                                                reasons for so finding or (ii) as to which              should refer to File Number SR–                        statements may be examined at the
                                                the self-regulatory organization                        NYSEArca–2016–107 and should be
                                                                                                                                                               places specified in Item IV below. The
                                                consents, the Commission will:                          submitted on or before September 6,
                                                                                                        2016.                                                  Exchange has prepared summaries, set
                                                   (A) by order approve or disapprove                                                                          forth in sections A, B, and C below, of
                                                such proposed rule change; or                             For the Commission, by the Division of               the most significant aspects of such
                                                   (B) institute proceedings to determine               Trading and Markets, pursuant to delegated
                                                                                                        authority.31                                           statements.
                                                whether the proposed rule change
                                                should be disapproved.                                  Robert W. Errett,
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                        Deputy Secretary.
                                                IV. Solicitation of Comments                            [FR Doc. 2016–19325 Filed 8–12–16; 8:45 am]
                                                  Interested persons are invited to                     BILLING CODE 8011–01–P
                                                submit written data, views, and                                                                                  1 15   U.S.C. 78s(b)(1).
                                                arguments concerning the foregoing,                       31 17   CFR 200.30–3(a)(12).                           2 17   CFR 240.19b–4.




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Document Created: 2016-08-13 02:22:14
Document Modified: 2016-08-13 02:22:14
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 54155 

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