82 FR 16075 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To List and Trade Exchange-Traded Managed Funds
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 61 (March 31, 2017)
Federal Register Volume 82, Issue 61 (March 31, 2017)
| Page Range | 16075-16082 | |
| FR Document | 2017-06333 |
[Federal Register Volume 82, Number 61 (Friday, March 31, 2017)] [Notices] [Pages 16075-16082] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-06333] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80315; File No. SR-NASDAQ-2017-029] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To List and Trade Exchange- Traded Managed Funds March 27, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 [[Page 16076]] (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on March 17, 2017, The Nasdaq Stock Market LLC (``Nasdaq'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to list and trade under Nasdaq Rule 5745 (Exchange-Traded Managed Fund Shares (``NextShares'')) the common shares (``Shares'') of the exchange-traded managed funds described herein (each, a ``Fund,'' and collectively, the ``Funds'').\3\ --------------------------------------------------------------------------- \3\ Except for the specific Fund information set forth below, this rule filing conforms to the rule filing, as modified by amendments 1 and 2 thereto, relating to the listing and trading on Nasdaq of the shares of 18 series of the Eaton Vance ETMF Trust and the Eaton Vance ETMF Trust II, as approved by the Commission in Securities Exchange Act Release No. 75499 (Jul. 21, 2015) (SR- NASDAQ-2015-036) and to the rule filing, as modified by amendment 1 thereto, relating to the listing and trading on Nasdaq of the shares of 5 series of the Gabelli NextShares Trust, as approved by the Commission in Securities Exchange Act Release No. 79377 (Nov. 22, 2016) (SR-NASDAQ-2016-134). --------------------------------------------------------------------------- II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to list and trade the Shares of each Fund under Nasdaq Rule 5745, which governs the listing and trading of exchange-traded managed fund shares, as defined in Nasdaq Rule 5745(c)(1), on the Exchange.\4\ Each Fund listed below is registered with the Commission as an open-end investment company and has filed a registration statement on Form N-1A (``Registration Statement'') with the Commission. Each Fund is a series of the Trust listed below and will be advised by an investment adviser registered under the Investment Advisers Act of 1940 (``Adviser''), as described below. Each Fund will be actively managed and will pursue various principal investment strategies, as noted below.\5\ --------------------------------------------------------------------------- \4\ The Commission approved Nasdaq Rule 5745 in Securities Exchange Act Release No. 34-73562 (Nov. 7, 2014), 79 FR 68309 (Nov. 14, 2014) (SR-NASDAQ-2014-020). \5\ Additional information regarding the Funds will be available on one of two free public Web sites (www.gabelli.com or www.nextshares.com, as indicated more fully below), as well as in the Registration Statement for the Funds. --------------------------------------------------------------------------- Gabelli NextSharesTM Trust Gabelli NextSharesTM Trust (the ``Trust'') is registered with the Commission as an open-end investment company and has filed a Registration Statement with the Commission.\6\ Each of the following Funds is a series of the Trust.\7\ --------------------------------------------------------------------------- \6\ See Registration Statement on Form N-1A for the Trust dated March 14, 2017 (File Nos. 333-211881 and 811-23160). The descriptions of the Funds and the Shares contained herein conform to the Registration Statement. \7\ The Commission has issued an order granting the Trust and certain affiliates exemptive relief under the Investment Company Act. See Investment Company Act Release No. 31608 (May 19, 2015) (File No. 812-14438). --------------------------------------------------------------------------- Gabelli Funds, LLC will be the Adviser to the Funds. The Adviser is not a registered broker-dealer, although it is affiliated with a broker-dealer. Gabelli Funds, LLC will also act as administrator to the Funds. The Adviser has implemented a fire wall with respect to its affiliated broker-dealer regarding access to information concerning the composition and/or changes to each Fund's portfolio.\8\ In the future event that (a) the Adviser registers as a broker-dealer or becomes newly affiliated with a broker-dealer, or (b) any new adviser or a sub- adviser to a Fund is a registered broker-dealer or becomes affiliated with a broker-dealer, it will implement a fire wall with respect to its relevant personnel and/or such broker-dealer affiliate, if applicable, regarding access to information concerning the composition and/or changes to the relevant Fund's portfolio and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding such portfolio. G.distributors, LLC, will be the principal underwriter and distributor of the Funds' Shares. The Bank of New York Mellon will act as custodian and transfer agent. BNY Mellon Investment Servicing (US) Inc. will act as the sub- administrator to the Funds. Interactive Data Pricing and Reference Data, Inc. will be the IIV calculator to the Funds. --------------------------------------------------------------------------- \8\ An investment adviser to an open-end fund is required to be registered under the Investment Advisers Act of 1940 (the ``Advisers Act''). As a result, the Adviser and its related personnel are subject to the provisions of Rule 204A-1 under the Advisers Act relating to codes of ethics. This Rule requires investment advisers to adopt a code of ethics that reflects the fiduciary nature of the relationship to clients as well as compliance with other applicable securities laws. Accordingly, procedures designed to prevent the communication and misuse of non-public information by an investment adviser must be consistent with Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful for an investment adviser to provide investment advice to clients unless such investment adviser has (i) adopted and implemented written policies and procedures reasonably designed to prevent violation, by the investment adviser and its supervised persons, of the Advisers Act and the Commission rules adopted thereunder; (ii) implemented, at a minimum, an annual review regarding the adequacy of the policies and procedures established pursuant to subparagraph (i) above and the effectiveness of their implementation; and (iii) designated an individual (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. --------------------------------------------------------------------------- Each Fund will be actively managed and will pursue the various principal investment strategies described below.\9\ --------------------------------------------------------------------------- \9\ See footnote 5. --------------------------------------------------------------------------- a. Gabelli Small Cap Growth NextSharesTM (the ``Gabelli Small Cap Growth Fund'') The Gabelli Small Cap Growth Fund seeks to provide a high level of capital appreciation. Under normal market conditions, the Gabelli Small Cap Growth Fund invests at least 80% of its net assets, plus borrowings for investment purposes, in equity securities of companies that are considered to be small companies at the time the Gabelli Small Cap Growth Fund makes its investment. The Adviser currently characterizes small companies for the Gabelli Small Cap Growth Fund as those with total common stock market values of $3 billion or less at the time of investment. b. Gabelli RBI NextSharesTM (the ``Gabelli RBI Fund'') The Gabelli RBI Fund seeks to provide above average capital appreciation. Under normal market conditions, the Gabelli RBI Fund invests in domestic and foreign services and equipment companies focused on physical asset development, including roads, bridges, and infrastructure [[Page 16077]] (``RBI''). The Adviser selects companies which it believes are currently undervalued and have the potential to benefit from domestic and global reinvestment and development of physical assets, including roads, bridges, and other infrastructure-related industries. Creations and Redemptions of Shares Shares will be issued and redeemed on a daily basis for each Fund at the next-determined net asset value (``NAV'') \10\ in specified blocks of Shares called ``Creation Units.'' A Creation Unit will consist of at least 25,000 Shares. Creation Units may be purchased and redeemed by or through ``Authorized Participants.'' \11\ Purchases and sales of Shares in amounts less than a Creation Unit may be effected only in the secondary market, as described below, and not directly with a Fund. --------------------------------------------------------------------------- \10\ As with other registered open-end investment companies, NAV generally will be calculated daily Monday through Friday as of the close of regular trading on the New York Stock Exchange, normally 4:00 p.m. Eastern Time (``E.T.''). NAV will be calculated by dividing a Fund's net asset value by the number of Shares outstanding. Information regarding the valuation of investments in calculating a Fund's NAV will be contained in the Registration Statement for its Shares. \11\ ``Authorized Participants'' will be either: (1) ``Participating parties,'' i.e., brokers or other participants in the Continuous Net Settlement System (``CNS System'') of the National Securities Clearing Corporation (``NSCC''), a clearing agency registered with the Commission and affiliated with the Depository Trust Company (``DTC''), or (2) DTC participants, which in either case have executed participant agreements with the Funds' distributor and transfer agent regarding the creation and redemption of Creation Units. Investors will not have to be Authorized Participants in order to transact in Creation Units, but must place an order through and make appropriate arrangements with an Authorized Participant for such transactions. --------------------------------------------------------------------------- The creation and redemption process for Funds may be effected ``in kind,'' in cash, or in a combination of securities and cash. Creation ``in kind'' means that an Authorized Participant--usually a brokerage house or large institutional investor-- purchases the Creation Unit with a basket of securities equal in value to the aggregate NAV of the Shares in the Creation Unit. When an Authorized Participant redeems a Creation Unit in kind, it receives a basket of securities equal in value to the aggregate NAV of the Shares in the Creation Unit.\12\ --------------------------------------------------------------------------- \12\ In compliance with Nasdaq Rule 5745(b)(5), which applies to Shares based on an international or global portfolio, the Trust's application for exemptive relief under the Investment Company Act states that the Funds will comply with the federal securities laws in accepting securities for deposits and satisfying redemptions with securities, including that the securities accepted for deposits and the securities used to satisfy redemption requests are sold in transactions that would be exempt from registration under the Securities Act of 1933, as amended (15 U.S.C. 77a). --------------------------------------------------------------------------- Composition File As defined in Nasdaq Rule 5745(c)(3), the Composition File is the specified portfolio of securities and/or cash that a Fund will accept as a deposit in issuing a Creation Unit of Shares, and the specified portfolio of securities and/or cash that a Fund will deliver in a redemption of a Creation Unit of Shares. The Composition File will be disseminated through the NSCC once each business day before the open of trading in Shares on such day and also will be made available to the public each day on a free Web site.\13\ Because the Funds seek to preserve the confidentiality of their current portfolio trading program, a Fund's Composition File generally will not be a pro rata reflection of the Fund's investment positions. Each security included in the Composition File will be a current holding of a Fund, but the Composition File generally will not include all of the securities in the Fund's portfolio or match the weightings of the included securities in the portfolio. Securities that the Adviser is in the process of acquiring for a Fund generally will not be represented in the Fund's Composition File until their purchase has been completed. Similarly, securities that are held in a Fund's portfolio but in the process of being sold may not be removed from its Composition File until the sale program is substantially completed. Funds creating and redeeming Shares in kind will use cash amounts to supplement the in-kind transactions to the extent necessary to ensure that Creation Units are purchased and redeemed at NAV. The Composition File also may consist entirely of cash, in which case it will not include any of the securities in a Fund's portfolio.\14\ --------------------------------------------------------------------------- \13\ The free Web site containing the Composition File will be www.nextshares.com. \14\ In determining whether a Fund will issue or redeem Creation Units entirely on a cash basis, the key consideration will be the benefit that would accrue to the Fund and its investors. For instance, in bond transactions, the Adviser may be able to obtain better execution for a Fund than Authorized Participants because of the Adviser's size, experience and potentially stronger relationships in the fixed-income markets. --------------------------------------------------------------------------- Transaction Fees All persons purchasing or redeeming Creation Units of a Fund are expected to incur a transaction fee to cover the estimated cost to that Fund of processing the transaction, including the costs of clearance and settlement charged to it by NSCC or DTC, and the estimated trading costs (i.e., brokerage commissions, bid-ask spread, and market impact) to be incurred in converting the Composition File to or from the desired portfolio holdings. The transaction fee is determined daily and will be limited to amounts determined by the Adviser to be appropriate to defray the expenses that a Fund incurs in connection with the purchase or redemption of Creation Units. The purpose of transaction fees is to protect a Fund's existing shareholders from the dilutive costs associated with the purchase and redemption of Creation Units. Transaction fees will differ among Funds and may vary over time for a given Fund depending on the estimated trading costs for its portfolio positions and Composition File, processing costs and other considerations. Funds that specify greater amounts of cash in their Composition File may impose higher transaction fees. In addition, Funds that include in their Composition File instruments that clear through DTC may impose higher transaction fees than Funds with a Composition File consists [sic] solely of instruments that clear through NSCC, because DTC may charge more than NSCC in connection with Creation Unit transactions.\15\ The transaction fees applicable to each Fund's purchases and redemptions on a given business day will be disseminated through the NSCC prior to the open of market trading on that day and also will be made available to the public each day on a free Web site.\16\ In all cases, the transaction fees will be limited in accordance with the requirements of the Commission applicable to open-end management investment companies offering redeemable securities. --------------------------------------------------------------------------- \15\ Authorized Participants that participate in the CNS System of the NSCC are expected to be able to use the enhanced NSCC/CNS process for effecting in-kind purchases and redemptions of ETFs (the ``NSCC Process'') to purchase and redeem Creation Units of Funds that limit the composition of their baskets to include only NSCC Process-eligible instruments (generally domestic equity securities and cash). Because the NSCC Process is generally more efficient than the DTC clearing process, NSCC is likely to charge a Fund less than DTC to settle purchases and redemptions of Creation Units. \16\ The free Web site will be www.nextshares.com. --------------------------------------------------------------------------- NAV-Based Trading Because Shares will be listed and traded on the Exchange, Shares will be available for purchase and sale on an intraday basis. Shares will be purchased and sold in the secondary market at prices directly linked to a Fund's next-determined NAV using a new trading protocol called ``NAV-Based Trading.'' \17\ All bids, offers, and [[Page 16078]] execution prices of Shares will be expressed as a premium/discount (which may be zero) to a Fund's next-determined NAV (e.g., NAV-$0.01, NAV+$0.01). A Fund's NAV will be determined each business day, normally as of 4:00 p.m., E.T. Trade executions will be binding at the time orders are matched on Nasdaq's facilities, with the transaction prices contingent upon the determination of NAV. --------------------------------------------------------------------------- \17\ Aspects of NAV-Based Trading are protected intellectual property subject to issued and pending U.S. patents held by NextShares Solutions LLC (``NextShares Solutions''), a wholly owned subsidiary of Eaton Vance Corp. Nasdaq has entered into a license agreement with NextShares Solutions to allow for NAV-Based Trading on the Exchange of exchange-traded managed funds that have themselves entered into license agreements with NextShares Solutions. --------------------------------------------------------------------------- Trading Premiums and Discounts Bid and offer prices for Shares will be quoted throughout the day relative to NAV. The premium or discount to NAV at which Share prices are quoted and transactions are executed will vary depending on market factors, including the balance of supply and demand for Shares among investors, transaction fees, and other costs in connection with creating and redeeming Creation Units of Shares, the cost and availability of borrowing Shares, competition among market makers, the Share inventory positions and inventory strategies of market makers, the profitability requirements and business objectives of market makers, and the volume of Share trading. Reflecting such market factors, prices for Shares in the secondary market may be above, at or below NAV. Funds with higher transaction fees may trade at wider premiums or discounts to NAV than other Funds with lower transaction fees, reflecting the added costs to market makers of managing their Share inventory positions through purchases and redemptions of Creation Units. Because making markets in Shares will be simple to manage and low risk, competition among market makers seeking to earn reliable, low- risk profits should enable the Shares to routinely trade at tight bid- ask spreads and narrow premiums/discounts to NAV. As noted below, the Funds will maintain a public Web site that will be updated on a daily basis to show current and historical trading spreads and premiums/ discounts of Shares trading in the secondary market.\18\ --------------------------------------------------------------------------- \18\ The Web site containing this information will be www.gabelli.com. --------------------------------------------------------------------------- Transmitting and Processing Orders Member firms will utilize certain existing order types and interfaces to transmit Share bids and offers to Nasdaq, which will process Share trades like trades in shares of other listed securities.\19\ In the systems used to transmit and process transactions in Shares, a Fund's next-determined NAV will be represented by a proxy price (e.g., 100.00) and a premium/discount of a stated amount to the next-determined NAV to be represented by the same increment/decrement from the proxy price used to denote NAV (e.g., NAV- $0.01 would be represented as 99.99; NAV+$0.01 as 100.01). --------------------------------------------------------------------------- \19\ As noted below, all orders to buy or sell Shares that are not executed on the day the order is submitted will be automatically cancelled as of the close of trading on such day. Prior to the commencement of trading in a Fund, the Exchange will inform its members in an Information Circular of the effect of this characteristic on existing order types. --------------------------------------------------------------------------- To avoid potential investor confusion, Nasdaq will work with member firms and providers of market data services to seek to ensure that representations of intraday bids, offers, and execution prices of Shares that are made available to the investing public follow the ``NAV-$0.01/NAV+$0.01'' (or similar) display format. All Shares listed on the Exchange will have a unique identifier associated with their ticker symbols, which would indicate that the Shares are traded using NAV-Based Trading. Nasdaq makes available to member firms and market data services certain proprietary data feeds that are designed to supplement the market information disseminated through the consolidated tape (``Consolidated Tape''). Specifically, the Exchange will use the NASDAQ Basic and NASDAQ Last Sale data feeds to disseminate intraday price and quote data for Shares in real time in the ``NAV-$0.01/NAV+$0.01'' (or similar) display format. Member firms could use the NASDAQ Basic and NASDAQ Last Sale data feeds to source intraday Share prices for presentation to the investing public in the ``NAV-$0.01/NAV+$0.01'' (or similar) display format. Alternatively, member firms could source intraday Share prices in proxy price format from the Consolidated Tape and other Nasdaq data feeds (e.g., Nasdaq TotalView and Nasdaq Level 2) and use a simple algorithm to convert prices into the ``NAV-$0.01/NAV+$0.01'' (or similar) display format. As noted below, prior to the commencement of trading in a Fund, the Exchange will inform its members in an Information Circular of the identities of the specific Nasdaq data feeds from which intraday Share prices in proxy price format may be obtained. Intraday Reporting of Quotes and Trades All bids and offers for Shares and all Share trade executions will be reported intraday in real time by the Exchange to the Consolidated Tape \20\ and separately disseminated to member firms and market data services through the Exchange data feeds listed above. The Exchange will also provide the member firms participating in each Share trade with a contemporaneous notice of trade execution, indicating the number of Shares bought or sold and the executed premium/discount to NAV.\21\ --------------------------------------------------------------------------- \20\ Due to systems limitations, the Consolidated Tape will report intraday execution prices and quotes for Shares using a proxy price format. As noted, Nasdaq will separately report real-time execution prices and quotes to member firms and providers of market data services in the ``NAV-$0.01/NAV+$0.01'' (or similar) display format, and otherwise seek to ensure that representations of intraday bids, offers and execution prices for Shares that are made available to the investing public follow the same display format. \21\ All orders to buy or sell Shares that are not executed on the day the order is submitted will be automatically cancelled as of the close of trading on such day. --------------------------------------------------------------------------- Final Trade Pricing, Reporting, and Settlement All executed Share trades will be recorded and stored intraday by Nasdaq to await the calculation of such Fund's end-of- day NAV and the determination of final trade pricing. After a Fund's NAV is calculated and provided to the Exchange, Nasdaq will price each Share trade entered into during the day at the Fund's NAV plus/minus the trade's executed premium/discount. Using the final trade price, each executed Share trade will then be disseminated to member firms and market data services via an FTP file to be created for exchange-traded managed funds and confirmed to the member firms participating in the trade to supplement the previously provided information to include final pricing.\22\ After the pricing is finalized, Nasdaq will deliver the Share trading data to NSCC for clearance and settlement, following the same processes used for the clearance and settlement of trades in other exchange-traded securities. --------------------------------------------------------------------------- \22\ File Transfer Protocol (``FTP'') is a standard network protocol used to transfer computer files on the Internet. Nasdaq will arrange for the daily dissemination of an FTP file with executed Share trades to member firms and market data services. --------------------------------------------------------------------------- Availability of Information Prior to the commencement of market trading in Shares, the Funds will be required to establish and maintain a public Web site through which its current prospectus may be downloaded.\23\ In addition, a separate [[Page 16079]] Web site (www.nextshares.com) will include additional information concerning the Funds updated on a daily basis, including the prior business day's NAV, and the following trading information for such business day expressed as premiums/discounts to NAV: (a) Intraday high, low, average, and closing prices of Shares in Exchange trading; (b) the midpoint of the highest bid and lowest offer prices as of the close of Exchange trading, expressed as a premium/discount to NAV (the ``Closing Bid/Ask Midpoint''); and (c) the spread between highest bid and lowest offer prices as of the close of Exchange trading (the ``Closing Bid/Ask Spread.''). The www.nextshares.com Web site will also contain charts showing the frequency distribution and range of values of trading prices, Closing Bid/Ask Midpoints, and Closing Bid/Ask Spreads over time. --------------------------------------------------------------------------- \23\ See footnote 18. --------------------------------------------------------------------------- The Composition File will be disseminated through the NSCC before the open of trading in Shares on each business day and also will be made available to the public each day on a free Web site as noted above.\24\ Consistent with the disclosure requirements that apply to traditional open-end investment companies, a complete list of current Fund portfolio positions will be made available at least once each calendar quarter, with a reporting lag of not more than 60 days. Funds may provide more frequent disclosures of portfolio positions at their discretion. --------------------------------------------------------------------------- \24\ See footnote 13. --------------------------------------------------------------------------- Reports of Share transactions will be disseminated to the market and delivered to the member firms participating in the trade contemporaneous with execution. Once a Fund's daily NAV has been calculated and disseminated, Nasdaq will price each Share trade entered into during the day at the Fund's NAV plus/minus the trade's executed premium/discount. Using the final trade price, each executed Share trade will then be disseminated to member firms and market data services via an FTP file to be created for exchange-traded managed funds and confirmed to the member firms participating in the trade to supplement the previously provided information to include final pricing. Information regarding NAV-based trading prices, best bids and offers for Shares, and volume of Shares traded will be continuously available on a real-time basis throughout each trading day on brokers' computer screens and other electronic services. Initial and Continued Listing Shares will conform to the initial and continued listing criteria as set forth under Nasdaq Rule 5745. A minimum of 50,000 Shares and no less than two Creation Units of each Fund 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 (on each business day that the New York Stock Exchange is open for trading) and provided to Nasdaq via the Mutual Fund Quotation Service (``MFQS'') by the fund accounting agent. As soon as the NAV is entered into MFQS, Nasdaq will disseminate the value to market participants and market data vendors via the Mutual Fund Dissemination Service (``MFDS'') so all firms will receive the NAV per share at the same time. The Reporting Authority \25\ also will ensure that the Composition File will implement and maintain, or be subject to, procedures designed to prevent the use and dissemination of material non-public information regarding each Fund's portfolio positions and changes in the positions. --------------------------------------------------------------------------- \25\ See Nasdaq Rule 5745(c)(4). --------------------------------------------------------------------------- For each Fund, an estimated value of an individual Share, defined in Nasdaq Rule 5745(c)(2) as the ``Intraday Indicative Value,'' will be calculated and disseminated at intervals of not more than 15 minutes throughout the Regular Market Session \26\ when Shares trade on the Exchange. The Exchange will obtain a representation from the issuer of the Shares that the IIV will be calculated on an intraday basis and provided to Nasdaq for dissemination via the Nasdaq Global Index Service (``GIDS''). --------------------------------------------------------------------------- \26\ See Nasdaq Rule 4120(b)(4) (describing the three trading sessions on the Exchange: (1) Pre-Market Session from 4 a.m. to 9:30 a.m. E.T.; (2) Regular Market Session from 9:30 a.m. to 4 p.m. or 4:15 p.m. E.T.; and (3) Post-Market Session from 4 p.m. or 4:15 p.m. to 8 p.m. E.T.). --------------------------------------------------------------------------- The IIV will be based on current information regarding the value of the securities and other assets held by a Fund.\27\ The purpose of the IIVs is to enable investors to estimate the next-determined NAV so they can determine the number of Shares to buy or sell if they want to transact in an approximate dollar amount (e.g., if an investor wants to acquire approximately $5,000 of a Fund, how many Shares should the investor buy?).\28\ --------------------------------------------------------------------------- \27\ IIVs disseminated throughout each trading day would be based on the same portfolio as used to calculate that day's NAV. Funds will reflect purchases and sales of portfolio positions in their NAV the next business day after trades are executed. \28\ Because, in NAV-Based Trading, prices of executed trades are not determined until the reference NAV is calculated, buyers and sellers of Shares during the trading day will not know the final value of their purchases and sales until the end of the trading day. A Fund's Registration Statement, Web site and any advertising or marketing materials will include prominent disclosure of this fact. Although IIVs may provide useful estimates of the value of intraday trades, they cannot be used to calculate with precision the dollar value of the Shares to be bought or sold. --------------------------------------------------------------------------- The Adviser is not a registered broker-dealer, although it is affiliated with a broker-dealer. The Adviser has implemented a fire wall with respect to its broker-dealer affiliate regarding access to information concerning the composition and/or changes to each Fund's portfolio. In the future event that (a) the Adviser registers as a broker-dealer or becomes newly affiliated with a broker-dealer, or (b) any new adviser or a sub-adviser to a Fund is a registered broker- dealer or becomes affiliated with a broker-dealer, it will implement a fire wall with respect to its relevant personnel and/or such broker- dealer affiliate, if applicable, regarding access to information concerning the composition and/or changes to the relevant Fund's portfolio and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding such portfolio. Trading Halts The Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in Shares. Nasdaq will halt trading in Shares under the conditions specified in Nasdaq Rule 4120 and in Nasdaq Rule 5745(d)(2)(C). Additionally, Nasdaq may cease trading Shares if other unusual conditions or circumstances exist which, in the opinion of Nasdaq, make further dealings on Nasdaq detrimental to the maintenance of a fair and orderly market. To manage the risk of a non-regulatory Share trading halt, Nasdaq has in place back-up processes and procedures to ensure orderly trading. Because, in NAV-Based Trading, all trade execution prices are linked to end-of-day NAV, buyers and sellers of Shares should be less exposed to risk of loss due to intraday trading halts than buyers and sellers of conventional exchange-traded funds (``ETFs'') and other exchange-traded securities. Trading Rules Nasdaq deems Shares to be equity securities, thus rendering trading in Shares to be subject to Nasdaq's existing rules governing the trading of equity [[Page 16080]] securities. Nasdaq will allow trading in Shares from 9:30 a.m. until 4:00 p.m. E.T. Every order to trade Shares of the Funds is subject to the proxy price protection threshold of plus/minus $1.00, which determines the lower and upper threshold for the life of the order and whereby the order will be cancelled at any point if it exceeds $101.00 or falls below $99.00, the established thresholds.\29\ With certain exceptions, each order also must contain the applicable order attributes, including routing instructions and time-in-force information, as described in Nasdaq Rule 4703.\30\ --------------------------------------------------------------------------- \29\ See Nasdaq Rule 5745(h). \30\ See Nasdaq Rule 5745(b)(6). --------------------------------------------------------------------------- Surveillance The Exchange represents that trading in Shares will be subject to the existing trading surveillances, administered by both Nasdaq and the Financial Industry Regulatory Authority, Inc. (``FINRA'') on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.\31\ The Exchange represents that these procedures are adequate to properly monitor trading of Shares on the Exchange and to deter and detect violations of Exchange rules and applicable federal securities laws. --------------------------------------------------------------------------- \31\ FINRA provides surveillance of 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. FINRA, on behalf of the Exchange, will communicate as needed with other markets and other entities that are members of the Intermarket Surveillance Group (``ISG'') \32\ regarding trading in Shares, and in exchange-traded securities and instruments held by the Funds (to the extent such exchange-traded securities and instruments are known through the publication of the Composition File and periodic public disclosures of a Fund's portfolio holdings), and FINRA may obtain trading information regarding such trading from other markets and other entities. --------------------------------------------------------------------------- \32\ For a list of the current members of ISG, see www.isgportal.org. The Exchange notes that not all components of a Fund's portfolio may trade on markets that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. --------------------------------------------------------------------------- In addition, the Exchange may obtain information regarding trading in Shares, and in exchange-traded securities and instruments held by the Funds (to the extent such exchange-traded securities and instruments are known through the publication of the Composition File and periodic public disclosures of a Fund's portfolio holdings), from markets and other entities that are members of ISG, which includes securities and futures exchanges, or with which the Exchange has in place a comprehensive surveillance sharing agreement. In addition, the Exchange also has a general policy prohibiting the distribution of material non-public information by its employees. Information Circular Prior to the commencement of trading in a Fund, the Exchange will inform its members in an Information Circular of the special characteristics and risks associated with trading the Shares. Specifically, the Information Circular will discuss the following: (1) The procedures for purchases and redemptions of Shares in Creation Units (and noting that Shares are not individually redeemable); (2) Nasdaq Rule 2111A, which imposes suitability obligations on Nasdaq members with respect to recommending transactions in Shares to customers; (3) how information regarding the IIV and Composition File is disseminated; (4) the requirement that members deliver a prospectus to investors purchasing Shares prior to or concurrently with the confirmation of a transaction; and (5) information regarding NAV-Based Trading protocols. As noted above, all orders to buy or sell Shares that are not executed on the day the order is submitted will be automatically cancelled as of the close of trading on such day. The Information Circular will discuss the effect of this characteristic on existing order types. The Information Circular also will identify the specific Nasdaq data feeds from which intraday Share prices in proxy price format may be obtained. In addition, the Information Circular will advise members, prior to the commencement of trading, of the prospectus delivery requirements applicable to the Funds. Members purchasing Shares from a Fund for resale to investors will deliver a summary prospectus to such investors. The Information Circular will also discuss any exemptive, no-action and interpretive relief granted by the Commission from any rules under the Act. The Information Circular also will reference that the Funds are subject to various fees and expenses described in the Registration Statements. The Information Circular will also disclose the trading hours of the Shares and the applicable NAV calculation time for the Shares. The Information Circular will disclose that information about the Shares will be publicly available at www.nextshares.com. Information regarding the Funds' trading protocols will be disseminated to Nasdaq members in accordance with current processes for newly listed products. Nasdaq intends to provide its members with a detailed explanation of NAV-Based Trading through a Trading Alert issued prior to the commencement of trading in Shares on the Exchange. Continued Listing Representations All statements and representations made in this filing regarding (a) the description of the Funds' portfolios, (b) limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange rules and surveillance procedures shall constitute continued listing requirements for listing the Shares of the Funds on the Exchange. The issuer has represented to the Exchange that it will advise the Exchange of any failure by any 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 a Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under Nasdaq Rule 5800, et seq. 2. Statutory Basis Nasdaq believes that the proposal is consistent with Section 6(b) of the Act,\33\ in general, and Section 6(b)(5) of the Act,\34\ in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. --------------------------------------------------------------------------- \33\ 15 U.S.C. 78f(b). \34\ 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 [[Page 16081]] would be listed and traded on the Exchange pursuant to the initial and continued listing criteria in Nasdaq Rule 5745. The Exchange believes that its surveillance procedures are adequate to properly monitor the trading of Shares on Nasdaq and to deter and detect violations of Exchange rules and the applicable federal securities laws. The Adviser is not registered as a broker-dealer, but it is affiliated with a broker-dealer. The Adviser has implemented a ``fire wall'' between the Adviser and its broker-dealer affiliate with respect to access to information concerning the composition and/or changes to each Fund's portfolio holdings. The Exchange 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, to the extent necessary. The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest. The Exchange will obtain a representation from each issuer of Shares that the NAV per Share will be calculated on each business day that the New York Stock Exchange is open for trading and that the NAV will be made available to all market participants at the same time. In addition, a large amount of information would be publicly available regarding the Funds and the Shares, thereby promoting market transparency. Prior to the commencement of market trading in Shares, the Funds will be required to establish and maintain a public Web site through which its current prospectus may be downloaded.\35\ In addition, a separate Web site (www.nextshares.com) will display additional information concerning the Funds updated on a daily basis, including the prior business day's NAV, and the following trading information for such business day expressed as premiums/discounts to NAV: (a) Intraday high, low, average and closing prices of Shares in Exchange trading; (b) the Closing Bid/Ask Midpoint; and (c) the Closing Bid/Ask Spread. --------------------------------------------------------------------------- \35\ See footnote 18. --------------------------------------------------------------------------- The www.nextshares.com Web site will also contain charts showing the frequency distribution and range of values of trading prices, Closing Bid/Ask Midpoints, and Closing Bid/Ask Spreads over time. The Composition File will be disseminated through the NSCC before the open of trading in Shares on each business day and also will be made available to the public each day on a free Web site, as noted above.\36\ The Exchange will obtain a representation from the issuer of the Shares that the IIV will be calculated and disseminated on an intraday basis at intervals of not more than 15 minutes during trading on the Exchange and provided to Nasdaq for dissemination via GIDS. A complete list of current portfolio positions for the Funds will be made available at least once each calendar quarter, with a reporting lag of not more than 60 days. Funds may provide more frequent disclosures of portfolio positions at their discretion. --------------------------------------------------------------------------- \36\ See footnote 13. --------------------------------------------------------------------------- Transactions in Shares will be reported to the Consolidated Tape at the time of execution in proxy price format and will be disseminated to member firms and market data services through Nasdaq's trading service and market data interfaces, as defined above. Once each Fund's daily NAV has been calculated and the final price of its intraday Share trades has been determined, Nasdaq will deliver a confirmation with final pricing to the transacting parties. At the end of the day, Nasdaq will also post a newly created FTP file with the final transaction data for the trading and market data services. The Exchange expects that information regarding NAV-based trading prices and volumes of Shares traded will be continuously available on a real-time basis throughout each trading day on brokers' computer screens and other electronic services. Because Shares will trade at prices based on the next-determined NAV, investors will be able to buy and sell individual Shares at a known premium or discount to NAV that they can limit by using limit orders at the time of order entry. Trading in Shares will be subject to Nasdaq Rules 5745(d)(2)(B) and (C), which provide for the suspension of trading or trading halts under certain circumstances, including if, in the view of the Exchange, trading in Shares becomes inadvisable. The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of the Funds, which seek to provide investors with access to a broad range of actively managed investment strategies in a structure that offers the cost and tax efficiencies and shareholder protections of ETFs, while removing the requirement for daily portfolio holdings disclosure to ensure a tight relationship between market trading prices and NAV. For the above reasons, Nasdaq believes the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. In fact, the Exchange believes that the introduction of the Funds would promote competition by making available to investors a broad range of actively managed investment strategies in a structure that offers the cost and tax efficiencies and shareholder protections of ETFs, while removing the requirement for daily portfolio holdings disclosure to ensure a tight relationship between market trading prices and NAV. Moreover, the Exchange believes that the proposed method of Share trading would provide investors with transparency of trading costs, and the ability to control trading costs using limit orders, that is not available for conventionally traded ETFs. These developments could significantly enhance competition to the benefit of the markets and investors. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action 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: [[Page 16082]] Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NASDAQ-2017-029 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NASDAQ-2017-029. 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 also will 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-NASDAQ-2017-029 and should be submitted on or before April 21, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\37\ --------------------------------------------------------------------------- \37\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-06333 Filed 3-30-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 61 / Friday, March 31, 2017 / Notices 16075
ADDRESSES: You may submit comments the NRC’s PDR, Room O1–F21, One course of conducting business for the
by any of the following methods: White Flint North, 11555 Rockville NRC.
• Federal Rulemaking Web site: Go to Pike, Rockville, Maryland 20852. 7. The estimated number of annual
http://www.regulations.gov and search • NRC’s Clearance Officer: A copy of responses: 100.
for Docket ID NRC–2016–0203. Address the collection of information and related 8. The estimated number of annual
questions about NRC dockets to Carol instructions may be obtained without respondents: 100.
Gallagher; telephone: 301–415–3463; charge by contacting NRC’s Clearance 9. The estimated number of hours
email: Carol.Gallagher@nrc.gov. For Officer, David Cullison, Office of the needed annually to comply with the
technical questions, contact the Chief Information Officer, U.S. Nuclear information collection requirement or
individual listed in the FOR FURTHER Regulatory Commission, Washington, request: 100 (1 hour per form).
INFORMATION CONTACT section of this DC 20555–0001; telephone: 301–415–
10. Abstract: Consultants, contractors,
document. 2084; email: INFOCOLLECTS.Resource@
• Mail comments to: David Cullison, and those invited by the NRC to travel
NRC.GOV.
Office of the Chief Information Officer, (e.g., prospective employees) must file
Mail Stop: T–5 F53, U.S. Nuclear B. Submitting Comments travel vouchers and trip reports in order
Regulatory Commission, Washington, Please include Docket ID NRC–2016– to be reimbursed for their travel
DC 20555–0001. 0203 in the subject line of your expenses. The information collected
For additional direction on obtaining comment submission, in order to ensure includes the name, address, social
information and submitting comments, that the NRC is able to make your security number, and the amount to be
see ‘‘Obtaining Information and comment submission available to the reimbursed. Travel expenses that are
Submitting Comments’’ in the public in this docket. reimbursed are confined to those
SUPPLEMENTARY INFORMATION section of The NRC cautions you not to include expenses essential to the transaction of
this document. identifying or contact information in official business for an approved trip.
FOR FURTHER INFORMATION CONTACT: comment submissions that you do not III. Specific Requests for Comments
David Cullison, Office of the Chief want to be publicly disclosed in your
comment submission. The NRC will The NRC is seeking comments that
Information Officer, U.S. Nuclear
post all comment submissions at http:// address the following questions:
Regulatory Commission, Washington,
DC 20555–0001; telephone: 301–415– www.regulations.gov as well as enter the 1. Is the proposed collection of
2084; email: INFOCOLLECTS.Resource@ comment submissions into ADAMS, information necessary for the NRC to
NRC.GOV. and the NRC does not routinely edit properly perform its functions? Does the
comment submissions to remove information have practical utility?
SUPPLEMENTARY INFORMATION:
identifying or contact information. 2. Is the estimate of the burden of the
I. Obtaining Information and If you are requesting or aggregating information collection accurate?
Submitting Comments comments from other persons for 3. Is there a way to enhance the
A. Obtaining Information submission to the NRC, then you should quality, utility, and clarity of the
inform those persons not to include information to be collected?
Please refer to Docket ID NRC–2016– identifying or contact information that 4. How can the burden of the
0203 when contacting the NRC about they do not want to be publicly information collection on respondents
the availability of information for this disclosed in their comment submission. be minimized, including the use of
action. You may obtain publicly- Your request should state that the NRC automated collection techniques or
available information related to this does not routinely edit comment other forms of information technology?
action by any of the following methods: submissions to remove such information
• Federal rulemaking Web site: Go to before making the comment
Dated at Rockville, Maryland, this 27th day
http://www.regulations.gov and search of March 2017.
submissions available to the public or
for Docket ID NRC–2016–0203. A copy For the Nuclear Regulatory Commission.
entering the comment into ADAMS.
of the collection of information and Dave Cullison,
related instructions may be obtained II. Background NRC Clearance Officer, Information
without charge by accessing Docket ID In accordance with the Paperwork Collection Branch, Office of the Chief
NRC–2016–0203 on this Web site. Reduction Act of 1995 (44 U.S.C. Information Officer.
• NRC’s Agencywide Documents Chapter 35), the NRC is requesting [FR Doc. 2017–06371 Filed 3–30–17; 8:45 am]
Access and Management System public comment on its intention to BILLING CODE 7590–01–P
(ADAMS): You may obtain publicly- request the OMB’s approval for the
available documents online in the information collection summarized
ADAMS Public Documents collection at below.
http://www.nrc.gov/reading-rm/ 1. The title of the information SECURITIES AND EXCHANGE
adams.html. To begin the search, select collection: NRC Form 64, ‘‘Travel COMMISSION
‘‘ADAMS Public Documents’’ and then Voucher’’ (Part 1); NRC Form 64A,
select ‘‘Begin Web-based ADAMS ‘‘Travel Voucher’’ (Part 2); and NRC [Release No. 34–80315; File No. SR–
Search.’’ For problems with ADAMS, Form 64B, ‘‘Optional Travel Voucher’’ NASDAQ–2017–029]
please contact the NRC’s Public (Part 2).
Document Room (PDR) reference staff at 2. OMB approval number: 3150–0192. Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
sradovich on DSK3GMQ082PROD with NOTICES
1–800–397–4209, 301–415–4737, or by 3. Type of submission: Extension.
email to pdr.resource@nrc.gov. A copy 4. The form number, if applicable: Filing of Proposed Rule Change To
of the collection of information and NRC Form 64, 64A and 64B. List and Trade Exchange-Traded
related instructions may be obtained 5. How often the collection is required Managed Funds
without charge by accessing ADAMS or requested: On occasion.
6. Who will be required or asked to March 27, 2017.
Accession number ML17012A320.
• NRC’s PDR: You may examine and respond: Contractors, consultants and Pursuant to Section 19(b)(1) of the
purchase copies of public documents at invited NRC travelers who travel in the Securities Exchange Act of 1934
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![Federal Register / Vol. 82, No. 61 / Friday, March 31, 2017 / Notices 16077
(‘‘RBI’’). The Adviser selects companies Composition File converting the Composition File to or
which it believes are currently As defined in Nasdaq Rule 5745(c)(3), from the desired portfolio holdings. The
undervalued and have the potential to the Composition File is the specified transaction fee is determined daily and
benefit from domestic and global portfolio of securities and/or cash that a will be limited to amounts determined
reinvestment and development of Fund will accept as a deposit in issuing by the Adviser to be appropriate to
physical assets, including roads, a Creation Unit of Shares, and the defray the expenses that a Fund incurs
bridges, and other infrastructure-related specified portfolio of securities and/or in connection with the purchase or
industries. cash that a Fund will deliver in a redemption of Creation Units.
The purpose of transaction fees is to
Creations and Redemptions of Shares redemption of a Creation Unit of Shares.
protect a Fund’s existing shareholders
The Composition File will be
Shares will be issued and redeemed from the dilutive costs associated with
disseminated through the NSCC once
on a daily basis for each Fund at the the purchase and redemption of
each business day before the open of
next-determined net asset value Creation Units. Transaction fees will
trading in Shares on such day and also
(‘‘NAV’’) 10 in specified blocks of Shares differ among Funds and may vary over
will be made available to the public
called ‘‘Creation Units.’’ A Creation Unit time for a given Fund depending on the
each day on a free Web site.13 Because
will consist of at least 25,000 Shares. estimated trading costs for its portfolio
the Funds seek to preserve the positions and Composition File,
Creation Units may be purchased and confidentiality of their current portfolio
redeemed by or through ‘‘Authorized processing costs and other
trading program, a Fund’s Composition considerations. Funds that specify
Participants.’’ 11 Purchases and sales of File generally will not be a pro rata
Shares in amounts less than a Creation greater amounts of cash in their
reflection of the Fund’s investment Composition File may impose higher
Unit may be effected only in the positions. Each security included in the
secondary market, as described below, transaction fees.
Composition File will be a current In addition, Funds that include in
and not directly with a Fund. holding of a Fund, but the Composition their Composition File instruments that
The creation and redemption process File generally will not include all of the clear through DTC may impose higher
for Funds may be effected ‘‘in kind,’’ in securities in the Fund’s portfolio or transaction fees than Funds with a
cash, or in a combination of securities match the weightings of the included Composition File consists [sic] solely of
and cash. Creation ‘‘in kind’’ means that securities in the portfolio. Securities instruments that clear through NSCC,
an Authorized Participant—usually a that the Adviser is in the process of because DTC may charge more than
brokerage house or large institutional acquiring for a Fund generally will not NSCC in connection with Creation Unit
investor— purchases the Creation Unit be represented in the Fund’s transactions.15 The transaction fees
with a basket of securities equal in value Composition File until their purchase applicable to each Fund’s purchases and
to the aggregate NAV of the Shares in has been completed. Similarly, redemptions on a given business day
the Creation Unit. When an Authorized securities that are held in a Fund’s will be disseminated through the NSCC
Participant redeems a Creation Unit in portfolio but in the process of being sold prior to the open of market trading on
kind, it receives a basket of securities may not be removed from its that day and also will be made available
equal in value to the aggregate NAV of Composition File until the sale program to the public each day on a free Web
the Shares in the Creation Unit.12 is substantially completed. Funds site.16 In all cases, the transaction fees
creating and redeeming Shares in kind will be limited in accordance with the
10 As with other registered open-end investment
will use cash amounts to supplement requirements of the Commission
companies, NAV generally will be calculated daily the in-kind transactions to the extent
Monday through Friday as of the close of regular applicable to open-end management
trading on the New York Stock Exchange, normally necessary to ensure that Creation Units investment companies offering
4:00 p.m. Eastern Time (‘‘E.T.’’). NAV will be are purchased and redeemed at NAV. redeemable securities.
calculated by dividing a Fund’s net asset value by The Composition File also may consist
the number of Shares outstanding. Information entirely of cash, in which case it will NAV-Based Trading
regarding the valuation of investments in
calculating a Fund’s NAV will be contained in the not include any of the securities in a Because Shares will be listed and
Registration Statement for its Shares. Fund’s portfolio.14 traded on the Exchange, Shares will be
11 ‘‘Authorized Participants’’ will be either: (1) available for purchase and sale on an
‘‘Participating parties,’’ i.e., brokers or other Transaction Fees
intraday basis. Shares will be purchased
participants in the Continuous Net Settlement All persons purchasing or redeeming
System (‘‘CNS System’’) of the National Securities
and sold in the secondary market at
Clearing Corporation (‘‘NSCC’’), a clearing agency Creation Units of a Fund are expected prices directly linked to a Fund’s next-
registered with the Commission and affiliated with to incur a transaction fee to cover the determined NAV using a new trading
the Depository Trust Company (‘‘DTC’’), or (2) DTC estimated cost to that Fund of protocol called ‘‘NAV-Based
participants, which in either case have executed processing the transaction, including
participant agreements with the Funds’ distributor
Trading.’’ 17 All bids, offers, and
and transfer agent regarding the creation and the costs of clearance and settlement
redemption of Creation Units. Investors will not charged to it by NSCC or DTC, and the 15 Authorized Participants that participate in the
have to be Authorized Participants in order to estimated trading costs (i.e., brokerage CNS System of the NSCC are expected to be able
transact in Creation Units, but must place an order to use the enhanced NSCC/CNS process for
commissions, bid-ask spread, and effecting in-kind purchases and redemptions of
through and make appropriate arrangements with
an Authorized Participant for such transactions. market impact) to be incurred in ETFs (the ‘‘NSCC Process’’) to purchase and redeem
12 In compliance with Nasdaq Rule 5745(b)(5), Creation Units of Funds that limit the composition
which applies to Shares based on an international 13 The free Web site containing the Composition of their baskets to include only NSCC Process-
or global portfolio, the Trust’s application for File will be www.nextshares.com. eligible instruments (generally domestic equity
sradovich on DSK3GMQ082PROD with NOTICES
exemptive relief under the Investment Company 14 In determining whether a Fund will issue or securities and cash). Because the NSCC Process is
Act states that the Funds will comply with the redeem Creation Units entirely on a cash basis, the generally more efficient than the DTC clearing
federal securities laws in accepting securities for key consideration will be the benefit that would process, NSCC is likely to charge a Fund less than
deposits and satisfying redemptions with securities, accrue to the Fund and its investors. For instance, DTC to settle purchases and redemptions of
including that the securities accepted for deposits in bond transactions, the Adviser may be able to Creation Units.
16 The free Web site will be www.nextshares.com.
and the securities used to satisfy redemption obtain better execution for a Fund than Authorized
requests are sold in transactions that would be Participants because of the Adviser’s size, 17 Aspects of NAV-Based Trading are protected
exempt from registration under the Securities Act experience and potentially stronger relationships in intellectual property subject to issued and pending
of 1933, as amended (15 U.S.C. 77a). the fixed-income markets. Continued
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![16082 Federal Register / Vol. 82, No. 61 / Friday, March 31, 2017 / Notices
Electronic Comments SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
COMMISSION Statement of the Purpose of, and the
• Use the Commission’s Internet Statutory Basis for, the Proposed Rule
comment form (http://www.sec.gov/ [Release No. 34–80313; File No. SR–NYSE– Change
rules/sro.shtml); or 2017–12]
1. Purpose
• Send an email to rule-comments@
sec.gov. Please include File Number SR– Self-Regulatory Organizations; New The Exchange proposes to amend
NASDAQ–2017–029 on the subject line. York Stock Exchange LLC; Notice of Section 102.01B of the Manual to
Filing of Proposed Rule Change To modify the provisions relating to the
Paper Comments Amend Section 102.01B of the NYSE qualification of companies listing
Listed Company Manual To Modify the without a prior Exchange Act
• Send paper comments in triplicate Requirements That Apply to registration.
to Secretary, Securities and Exchange Companies That List Without a Prior Generally, the Exchange expects to
Commission, 100 F Street NE., Exchange Act Registration and That list companies in connection with a firm
Washington, DC 20549–1090. Are Not Listing in Connection With an commitment underwritten IPO, upon
Underwritten Initial Public Offering transfer from another market, or
All submissions should refer to File
pursuant to a spin-off. Companies
Number SR–NASDAQ–2017–029. This March 27, 2017. listing in connection with an IPO must
file number should be included on the Pursuant to Section 19(b)(1) 1 of the demonstrate that they have $40 million
subject line if email is used. To help the Securities Exchange Act of 1934 (the in market value of publicly-held shares,
Commission process and review your ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 while companies that are listing upon
comments more efficiently, please use notice is hereby given that, on March transfer from another exchange or the
only one method. The Commission will 13, 2017, New York Stock Exchange over-the counter market or pursuant to
post all comments on the Commission’s LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed a spin-off must demonstrate that they
Internet Web site (http://www.sec.gov/ with the Securities and Exchange have $100 million in market value of
rules/sro.shtml). Copies of the Commission (the ‘‘Commission’’) the publicly-held shares.
submission, all subsequent proposed rule change as described in Section 102.01B currently recognizes
amendments, all written statements Items I, II, and III below, which Items that some companies that have not
with respect to the proposed rule have been prepared by the self- previously had their common equity
change that are filed with the regulatory organization. The securities registered under the Exchange
Commission, and all written Commission is publishing this notice to Act, but which have sold common
communications relating to the solicit comments on the proposed rule equity securities in a private placement,
proposed rule change between the change from interested persons. may wish to list their common equity
Commission and any person, other than securities on the Exchange at the time
I. Self-Regulatory Organization’s
those that may be withheld from the of effectiveness of a registration
Statement of the Terms of Substance of
public in accordance with the statement filed solely for the purpose of
the Proposed Rule Change
provisions of 5 U.S.C. 552, will be allowing existing shareholders to sell
The Exchange proposes to amend their shares.4 Footnote (E) of Section
available for Web site viewing and Section 102.01B of the NYSE Listed 102.01B provides that the Exchange
printing in the Commission’s Public Company Manual (the ‘‘Manual’’) to will, on a case by case basis, exercise
Reference Room, 100 F Street NE., modify the provisions relating to the discretion to list such companies. In
Washington, DC 20549, on official qualification of companies listing exercising this discretion, Footnote (E)
business days between the hours of without a prior Exchange Act provides that the Exchange will
10:00 a.m. and 3:00 p.m. Copies of the registration. The proposed rule change determine that such company has met
filing also will be available for is available on the Exchange’s Web site the $100 million aggregate market value
inspection and copying at the principal at www.nyse.com, at the principal office of publicly-held shares requirement
office of the Exchange. All comments of the Exchange, and at the based on a combination of both (i) an
received will be posted without change; Commission’s Public Reference Room. independent third-party valuation (a
the Commission does not edit personal ‘‘Valuation’’) of the company and (ii) the
II. Self-Regulatory Organization’s
identifying information from most recent trading price for the
Statement of the Purpose of, and
submissions. You should submit only Statutory Basis for, the Proposed Rule company’s common stock in a trading
information that you wish to make Change system for unregistered securities
available publicly. All submissions operated by a national securities
should refer to File Number SR– In its filing with the Commission, the exchange or a registered broker-dealer (a
NASDAQ–2017–029 and should be self-regulatory organization included ‘‘Private Placement Market’’). The
submitted on or before April 21, 2017. statements concerning the purpose of, Exchange will attribute a market value
and basis for, the proposed rule change of publicly-held shares to the company
For the Commission, by the Division of and discussed any comments it received equal to the lesser of (i) the value
Trading and Markets, pursuant to delegated on the proposed rule change. The text calculable based on the Valuation and
authority.37 of those statements may be examined at (ii) the value calculable based on the
Eduardo A. Aleman, the places specified in Item IV below. most recent trading price in a Private
sradovich on DSK3GMQ082PROD with NOTICES
Assistant Secretary. The Exchange has prepared summaries, Placement Market.
[FR Doc. 2017–06333 Filed 3–30–17; 8:45 am] set forth in sections A, B, and C below, Any Valuation used for purposes of
BILLING CODE 8011–01–P
of the most significant parts of such Footnote (E) must be provided by an
statements. entity that has significant experience
and demonstrable competence in the
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a. 4 See NYSE Listed Company Manual, Section
37 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4. 102.01B, Footnote (E).
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Document Created: 2017-03-31 01:38:10
Document Modified: 2017-03-31 01:38:10
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 82 FR 16075 |
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