82 FR 21573 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the IQ Municipal Insured ETF; IQ Municipal Short Duration ETF; and IQ Municipal Intermediate ETF Under NYSE Arca Equities Rule 8.600
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 88 (May 9, 2017)
Federal Register Volume 82, Issue 88 (May 9, 2017)
| Page Range | 21573-21581 | |
| FR Document | 2017-09311 |
[Federal Register Volume 82, Number 88 (Tuesday, May 9, 2017)] [Notices] [Pages 21573-21581] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-09311] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80584; File No. SR-NYSEArca-2017-44] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the IQ Municipal Insured ETF; IQ Municipal Short Duration ETF; and IQ Municipal Intermediate ETF Under NYSE Arca Equities Rule 8.600 May 3, 2017. Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that, on April 20, 2017, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange Commission (``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. --------------------------------------------------------------------------- \1\ 15 U.S.C.78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- [[Page 21574]] 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 IQ Municipal Insured ETF; IQ Municipal Short Duration ETF; and IQ Municipal Intermediate ETF (each a ``Fund'' and, collectively, the ``Funds'') under NYSE Arca Equities Rule 8.600 (``Managed Fund Shares''). The proposed 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 each Fund under NYSE Arca Equities Rule 8.600,\4\ which governs the listing and trading of Managed Fund Shares.\5\ The Shares will be offered by the IndexIQ Active ETF Trust (the ``Trust''), which is registered with the Commission as an open-end management investment company.\6\ Each Fund is a series of the Trust. --------------------------------------------------------------------------- \4\ The Securities and Exchange Commission (``Commission'') has approved for Exchange listing and trading shares of actively managed funds of the [sic] that principally hold municipal bonds. See, e.g., Securities Exchange Act Release Nos. 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); 79293 (November 10, 2016), 81 FR 81189 (November 17, 2016) (SR- NYSEArca-2016-107) (order approving listing and trading of shares of Cumberland Municipal Bond ETF under Rule 8.600). 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). \5\ 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. \6\ The Trust is registered under the 1940 Act. On February 24, 2017, the Trust filed with the Commission 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 Funds (File Nos. 333-183489 and 811-22739) (``Registration Statement''). The description of the operation of the Trust and the Funds 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. 30198 (September 10, 2012) (File No. 812-13956) (``Exemptive Order''). --------------------------------------------------------------------------- The investment adviser to each Fund will be IndexIQ Advisors LLC (the ``Adviser''). MacKay Shields LLC will be each Fund's sub-adviser (Subadviser). ALPS Distributors, Inc. Inc. [sic] will serve as the distributor (the ``Distributor'') of each Fund's Shares on an agency basis. The Bank of New York Mellon (``BNY Mellon'') will serve as each Fund's Administrator, Custodian, Transfer Agent and Securities Lending Agent. 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 or Subadviser is not a registered broker-dealer but is affiliated with a broker-dealer. The Adviser and Subadviser have implemented a ``fire wall'' with respect to such broker-dealer affiliate regarding access to information concerning the composition of and/or changes to each Fund's portfolio. In the event (a) the Adviser or Subadviser becomes registered as a broker-dealer or newly affiliated with a broker-dealer, or (b) any new adviser or sub-adviser to a Fund is a registered broker- dealer or becomes affiliated with a broker-dealer, the applicable adviser or sub-adviser will implement and maintain a fire wall with respect to its relevant personnel or broker-dealer affiliate regarding access to information concerning the composition and/or changes to a Fund's portfolio, and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding such portfolio. --------------------------------------------------------------------------- \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 Subadviser 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. --------------------------------------------------------------------------- IQ Municipal Insured ETF According to the Registration Statement, the Fund will seek current income exempt from federal income tax. The Fund, under normal market conditions,\8\ will invest at least 80% of its assets in municipal bonds (``Municipal Bonds'', as described below) that are covered by insurance policies that guarantee the timely [[Page 21575]] payment of principal and interest. The Fund generally will maintain a dollar-weighted average duration within plus or minus two years of the dollar-weighted average duration of the S&P Municipal Bond Insured Index.\9\ --------------------------------------------------------------------------- \8\ The term ``under normal market conditions'' as used herein includes, but is not limited to, the absence of adverse market, economic, political or other conditions, including extreme volatility or trading halts in the fixed income markets or the financial markets generally; operational issues (e.g., systems 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. On a temporary basis, including for defensive purposes, during the initial invest-up period (i.e., the six-week period following the commencement of trading of Shares on the Exchange) and during periods of high cash inflows or outflows (i.e., rolling periods of seven calendar days during which inflows or outflows of cash, in the aggregate, exceed 10% of a Fund's net assets as of the opening of business on the first day of such periods), a Fund may depart from its principal investment strategies; for example, it may hold a higher than normal proportion of its assets in cash. During such periods, a Fund may not be able to achieve its investment objectives. A Fund may adopt a defensive strategy when the Adviser believes securities in which a Fund normally invests have elevated risks due to political or economic factors and in other extraordinary circumstances. \9\ Municipal bonds are issued by or on behalf of the District of Columbia, states, territories, commonwealths and possessions of the United States and their political subdivisions and agencies, authorities and instrumentalities. Municipal securities, which may be issued in various forms, including bonds and notes, are issued to obtain funds for various public purposes. --------------------------------------------------------------------------- For [sic] Fund, as well as the IQ Municipal Short Duration ETF and IQ Intermediate ETF which are discussed below, the Subadviser's investment process will begin with an assessment of macro factors that may impact the municipal bond market, as well as other regulatory, tax, governmental, and technical factors that may impact the municipal bond market. Following the assessment of these factors, the Subadviser will develop an investment strategy to position a Fund among various sectors of the municipal bond market and different states. The Subadviser then will employ a fundamental, ``bottom-up'' credit research analysis to select individual Municipal Bonds. Municipal Bonds For purposes of this filing, the term ``Municipal Bonds'' as applied to each of the Funds includes the following:Municipal lease obligations (and certificates of participation in such obligations); municipal general obligation bonds (including industrial development bonds issued pursuant to federal tax law), which are issued for either project or enterprise financings in which the bond issuer pledges to the bondholders the revenues generated by the operating projects financed from the proceeds of the bond issuance; limited obligation bonds, which are payable only from the revenues derived from a particular facility or class of facilities or, in some cases from the proceeds of a special excise or other specific revenue source; municipal revenue bonds (which are typically secured by revenues generated by the issuer), including revenue anticipation notes; municipal bond anticipation notes (which are normally issued to provide interim financial assistance until long-term financing can be arranged); Municipal Bonds that feature credit enhancements, such as lines of credit, letters of credit, municipal bond insurance, and standby bond purchase agreements; 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; taxable municipal bonds, including Build America Bonds; municipal notes; municipal cash equivalents; private activity bonds (including without limitation industrial development bonds); pre-refunded and escrowed to maturity bonds; and securities issued by entities whose underlying assets are Municipal Bonds (i.e., tender option bond (TOB) trusts and custodial receipts trusts and 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 more than 25% of its total assets in Municipal Bonds that are related in such a way that an economic, business or political development or change affecting one such security could also affect the other securities. However, the Fund's investments will be diversified among a minimum of ten different sectors of the Municipal Bond market. The Fund's investments in Municipal Bonds will include investments in state and local (e.g., county, city, town) and authority-issued Municipal Bonds relating to such sectors as the following: State general obligation; local general obligation; education; hospital; housing; industrial development revenue (IDR)/ pollution control revenue (PCR); power; resource recovery; transportation; water/sewer; leasing; special tax; and pre-refunded bonds. The Fund's investments will be diversified among at least 15 different states, with no more than 30% of the Fund's securities invested in municipal securities from a single state. Under normal market conditions, no security (excluding Treasury securities) will represent more than 25% of the weight of the portfolio, and the five highest weighed securities will not, in the aggregate, account for more than 50% of the weight of the Fund. No Municipal Bond held by the Fund will exceed 5% of the weight of the Fund's portfolio and no single Municipal Bond issuer will account for more than 8% of the weight of the Fund's portfolio. The Fund will hold Municipal Bonds of a minimum of 25 non-affiliated issuers.\10\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- Other Investments With respect to each of the Funds, while a Fund, under normal market conditions, will invest at least 80% of its assets in Municipal Bonds, as described above, a Fund may invest its remaining assets in other assets and financial instruments, as described below. A Fund may invest in shares of exchange-traded funds (``ETFs'') and money market funds,\11\ and may invest directly and indirectly in: Fixed rate and floating rate U.S. government securities, including bills, notes and bonds differing as to maturity and rates of interest, which are either issued or guaranteed by the U.S. Treasury or by U.S. government agencies or instrumentalities (``U.S. Government Securities''); repurchase agreements; commercial paper; and may purchase securities on a when-issued basis or for settlement at a future date (forward commitment), if a Fund holds sufficient liquid assets to meet the purchase price (collectively, ``Other Investments''). --------------------------------------------------------------------------- \11\ For purposes of this filing, ETFs 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). The ETFs all will be listed and traded in the U.S. on registered exchanges. --------------------------------------------------------------------------- IQ Municipal Short Duration ETF According to the Registration Statement, the Fund will seek current income exempt from federal income tax. The Fund, under normal market conditions, will invest at least 80% of its assets in Municipal Bonds. The Fund generally will maintain a dollar-weighted average portfolio duration of three years or less. The Fund may invest more than 25% of its total assets in Municipal Bonds that are related in such a way that an economic, business or political development or change affecting one such security could also affect the other securities. However, the Fund's investments will be diversified among a minimum of ten different sectors of the municipal bond market. The Fund's investments will be diversified among at least 15 different states, with no more than 30% of the Fund's securities invested in municipal securities from a single state. Under normal market [[Page 21576]] conditions, no security (excluding Treasury securities) will represent more than 25% of the weight of the portfolio, and the five highest weighed securities will not, in the aggregate, account for more than 50% of the weight of the Fund. No Municipal Bond held by the Fund will exceed 5% of the weight of the Fund's portfolio and no single Municipal Bond issuer will account for more than 8% of the weight of the Fund's portfolio. The Fund will hold Municipal Bonds of a minimum of 25 non- affiliated issuers. While the Fund, under normal market conditions, will invest at least 80% of its assets in Municipal Bonds, the Fund may invest its remaining assets in Other Investments. IQ Municipal Intermediate ETF According to the Registration Statement, the Fund will seek current income exempt from federal income tax. The Fund, under normal market conditions, will invest at least 80% of its assets in Municipal Bonds. The Fund generally will maintain a dollar-weighted average duration within plus or minus two years of the dollar-weighted average duration of the S&P Municipal Bond Intermediate Index. The Fund may invest more than 25% of its total assets in Municipal Bonds that are related in such a way that an economic, business or political development or change affecting one such security could also affect the other securities. However, the Fund's investments will be diversified among a minimum of ten different sectors of the municipal bond market. The Fund's investments will be diversified among at least 15 different states, with no more than 30% of the Fund's securities invested in municipal securities from a single state. Under normal market conditions, no security (excluding Treasury securities) will represent more than 25% of the weight of the portfolio, and the five highest weighed securities will not, in the aggregate, account for more than 50% of the weight of the Fund. No Municipal Bond held by the Fund will exceed 5% of the weight of the Fund's portfolio and no single Municipal Bond issuer will account for more than 8% of the weight of the Fund's portfolio. The Fund will hold Municipal Bonds of a minimum of 25 non-affiliated issuers. While the Fund, under normal market conditions, will invest at least 80% of its assets in Municipal Bonds, the Fund may invest its remaining assets in Other Investments. Determination of Net Asset Value (``NAV'') According to the Registration Statement, the NAV of the Shares for a Fund will be equal to a Fund's total assets minus the Fund's total liabilities divided by the total number of Shares outstanding. Interest and investment income on the Trust's assets accrue daily and are included in a Fund's total assets. Expenses and fees (including investment advisory, management, administration and distribution fees, if any) accrue daily and are included in the Fund's total liabilities. The NAV is calculated by the Administrator and Custodian and determined each business day as of the close of the NYSE Arca Core Trading Session (ordinarily 4:00 p.m. Eastern time). A Fund typically will value fixed-income portfolio securities, including Municipal Bonds, using last available bid prices or current market quotations provided by dealers or prices (including evaluated prices) supplied by a Fund's approved independent third-party pricing services. Pricing services may use matrix pricing or valuation models that utilize certain inputs and assumptions to derive values. An amortized cost method of valuation may be used with respect to debt obligations with sixty days or less remaining to maturity unless the Adviser determines in good faith that such method does not represent fair value. Generally, trading in U.S. Government Securities, money market funds, and certain fixed-income securities is substantially completed each day at various times prior to the close of business on the NYSE. The values of such securities used in computing the NAV of the Fund will be determined as of such times. The value of any ETFs held by the Fund is based on such securities' closing price on local markets, when available. The value of a money market fund held by a Fund will be based on the NAV of the money market fund. When market quotations or prices are not readily available or are deemed unreliable or not representative of an investment's fair value, investments are valued using fair value pricing as determined in good faith by the Adviser under procedures established by and under the general supervision and responsibility of the Trust's Board of Trustees. Indicative Intra-Day Value The approximate value of each Fund's investments on a per-Share basis, the Indicative Intra-Day Value (``IIV'') will be disseminated by the Exchange or one or more major market data vendors every 15 seconds during the Exchange's Core Trading Session (ordinarily 9:30 a.m. to 4:00 p.m., Eastern Time). The IIV should not be viewed as a ``real- time'' update of NAV because the IIV may not be calculated in the same manner as NAV, which is computed once per day. An independent third party calculator will calculate the IIV for each Fund during the Exchange's Core Trading Session by dividing the ``Estimated Fund Value'' as of the time of the calculation by the total number of outstanding Shares of that Fund. ``Estimated Fund Value'' is the sum of the estimated amount of cash held in a Fund's portfolio, the estimated amount of accrued interest owed 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 Trust's Web site. Purchase and Redemption of Creation Units Creation of Shares According to the Registration Statement, the Trust will issue and sell Shares of a Fund only in Creation Units of at least 50,000 Shares on a continuous basis through the Distributor, at their NAV next determined after receipt, on any business day (that is, any day on which the New York Stock Exchange (``NYSE'') is open for business.), for an order received in proper form. The consideration for purchase of a Creation Unit of a Fund generally will consist of an in-kind deposit of a designated portfolio of securities--the Deposit Securities--per each Creation Unit constituting a substantial replication, or a representation, of the securities included in a Fund's portfolio and an amount of cash--the ``Cash Component.'' 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 a 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. 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 [[Page 21577]] Fund Deposit (based on information at the end of the previous business day) for a Fund. In addition to the list of names and numbers of securities constituting the current Deposit Securities of a Fund Deposit, the Administrator, through the 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 a Fund. To be eligible to place orders to create a Creation Unit of a 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 the NSCC (the ``Clearing Process''), a clearing agency that is registered with the Commission; or (ii) a DTC Participant, and, in each case, must have executed an agreement (``Participant Agreement'') with the Trust, the Distributor and the Administrator with respect to creations and redemptions of Creation Units. A Participating Party and DTC Participant are collectively referred to as an ``Authorized Participant.'' All orders to create Creation Units must be placed for one or more Creation Unit size aggregations of at least 50,000 Shares. All orders to create Creation Units, whether through the Clearing Process (through a Participating Party) or outside the Clearing Process (through a DTC Participant), must be received by the Distributor no later than 3:00 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 a Fund as next determined on such date after receipt of the order in proper form. Redemption of Shares 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. Orders to redeem Creation Units must be received by the Administrator not later than 3:00 Eastern Time. With respect to each Fund, the Administrator, through the 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 designated portfolio of securities (``Fund Securities'') per each Creation Unit that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form (as defined below) on that day. Fund Securities received on redemption may not be identical to Deposit Securities which are applicable to creations of Creation Units. Unless cash redemptions are available or specified for a Fund, the redemption proceeds for a Creation Unit generally will consist of Fund 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 Fund Securities (the ``Cash Redemption Amount''), less a redemption transaction fee. In the event that the Fund 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. The redemption proceeds for a Creation Unit of a Fund will consist solely of cash in an amount equal to the NAV of the Shares being redeemed, as next determined after receipt of a request in proper form less a redemption transaction fee. If it is not possible to effect deliveries of the Fund 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 a Fund may, in its sole discretion, permit. In either case, the investor will receive a cash payment equal to the NAV of its Shares based on the NAV of Shares of a Fund next determined after the redemption request is received in proper form. A Fund may also, in its sole discretion, upon request of a shareholder, provide such redeemer a portfolio of securities which differs from the exact composition of a Fund Securities but does not differ in NAV. Availability of Information Each Fund will disclose on the Funds' Web site (www.iqetfs.com) at the start of each business day the identities and quantities of the securities and other assets held by each Fund that will form the basis of the Fund's calculation of its net asset value (``NAV'') on that business day. The portfolio holdings so disclosed will be based on information as of the close of business on the prior business day and/ or trades that have been completed prior to the opening of business on that business day and that are expected to settle on the business day. Online disclosure of such holdings is publicly available at no charge. The Web site for the Funds will contain the following information, on a per-Share basis, for each Fund: (1) The prior business day's NAV; (2) the reported midpoint of the bid-ask spread at the time of NAV calculation (the ``Bid-Ask Price''); (3) a calculation of the premium or discount of the Bid-Ask Price against such NAV; and (4) data in chart format displaying the frequency distribution of discounts and premiums of the Bid-Ask Price against the NAV, within appropriate ranges, for each of the four previous calendar quarters (or for the life of a Fund if, shorter). In addition, on each business day, before the commencement of trading in Shares on the NYSE Arca, each Fund will disclose on its Web site the identities and quantities of the portfolio securities and other assets held by each Fund that will form the basis for the calculation of NAV at the end of the business day. On a daily basis, the Funds will disclose the information required under NYSE Arca Equities Rule 8.600 (c)(2) to the extent applicable. Each Fund's portfolio holdings will be disclosed on the Funds' Web site daily after the close of trading on the Exchange and prior to the opening of trading on the Exchange the following day. Information regarding the extent and frequency with which market prices of Shares have tracked the relevant Fund's NAV for the most recently completed calendar year and the quarters since that year will be available without charge on the Funds' Web site. The approximate value of a Fund's investments on a per-Share basis, the IIV, will be disseminated every 15 seconds during the Exchange Core Trading Session (ordinarily 9:30 a.m. to 4:00 p.m., Eastern Time). Investors can also obtain each Fund's Statement of Additional Information (``SAI''), shareholder reports, Form N-CSR and Form N-SAR, filed twice a year. The Funds' 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 publicly available. Quotation and last sale information for the Shares and will be available via the Consolidated Tape Association [[Page 21578]] (``CTA'') high-speed line, and from the national securities exchange [sic] on which they are listed. Quotation information from brokers and dealers or pricing services will be available for Municipal Bonds and Other Investments. Price information for money market funds will be available from the applicable investment company's Web site and from market data vendors. Pricing information regarding Municipal Bonds and Other Investments will generally be available through nationally recognized data service providers through subscription agreements. 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 or other information providers.\12\ --------------------------------------------------------------------------- \12\ 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. --------------------------------------------------------------------------- Investment Restrictions Each Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment) deemed illiquid by the Adviser, consistent with Commission guidance. Each 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 a 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.\13\ --------------------------------------------------------------------------- \13\ 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 Securities Act). --------------------------------------------------------------------------- Each Fund's investments will be consistent with its investment goal and will not be used to provide multiple returns of a benchmark or to produce leveraged returns. Each Fund may invest more than 25% of its total assets in municipal bonds that are related in such a way that an economic, business or political development or change affecting one such security could also affect the other securities. However, a Fund's investments will be diversified among a minimum of ten different sectors of the municipal bond market. A Fund's investments will be diversified among at least 15 different states, with no more than 30% of a Fund's securities invested in municipal securities from a single state. Under normal market conditions, no security (excluding Treasury securities) will represent more than 25% of the weight of the portfolio, and the five highest weighed securities will not, in the aggregate, account for more than 50% of the weight of the Fund. No Municipal Bond held by the Fund will exceed 5% of the weight of the Fund's portfolio and no single Municipal Bond issuer will account for more than 8% of the weight of the Fund's portfolio. The Fund will hold Municipal Bonds of a minimum of 25 non- affiliated issuers. Application of Generic Listing Requirements The Exchange is submitting this proposed rule change because the portfolios for the Funds will not meet all of the ``generic'' listing requirements of Commentary .01 to NYSE Arca Equities Rule 8.600 applicable to the listing of Managed Fund Shares. Each Fund's portfolio will meet all such requirements except for those set forth in Commentary .01(b)(1).\14\ --------------------------------------------------------------------------- \14\ Commentary .01(b)(1) to NYSE Arca Equities Rule 8.600 provides that components that in the aggregate account for at least 75% of the fixed income weight of the portfolio each shall have a minimum original principal amount outstanding of $100 million or more. --------------------------------------------------------------------------- The Exchange believes that it is appropriate and in the public interest to approve listing and trading of Shares of the Funds on the Exchange notwithstanding that the Funds would not meet the requirements of Commentary .01(b)(1) to Rule 8.600 in that the Funds' investments in municipal securities will be well-diversified. The Exchange believes that permitting Fund Shares to be listed and traded on the Exchange notwithstanding that less than 75% of the weight of a Fund's portfolio may consist of components with less than $100 million minimum original principal amount outstanding would provide the Funds with greater ability to select from a broad range of Municipal Bonds, as described above, that would support a Fund's investment goal. The Exchange believes that, notwithstanding that each Fund's portfolio may not satisfy Commentary .01(b)(1) to Rule 8.600, the Funds' portfolios will not be susceptible to manipulation. As noted above, the Funds' investments will be diversified among a minimum of ten different sectors of the municipal bond market. The Funds' investments will be diversified among at least 15 different states, with no more than 30% of a Fund's securities invested in municipal securities from a single state. Additionally, no Municipal Bond held by a Fund will exceed 5% of the weight of the Fund's portfolio and no single Municipal Bond issuer will account for more than 8% of the weight of a Fund's portfolio. A Fund will hold Municipal Bonds of a minimum of 25 non-affiliated issuers. The Exchange notes that, other than Commentary .01(b)(1) to Rule 8.600, each Fund's portfolio will meet all other requirements of Rule 8.600. 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 a Fund.\15\ Trading in Shares of a 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. --------------------------------------------------------------------------- \15\ See NYSE Arca Equities Rule 7.12. --------------------------------------------------------------------------- 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 (Early, 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, 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. [[Page 21579]] The Shares of each Fund 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 a Fund's portfolio. The Exchange represents that, for initial and/or continued listing, a Fund will be in compliance with Rule 10A-3 \16\ 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 will be made available to all market participants at the same time. Each Fund's investments will be consistent with a Fund's investment goal and will not be used to enhance leverage. --------------------------------------------------------------------------- \16\ 17 CFR 240.10A-3. --------------------------------------------------------------------------- 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.\17\ --------------------------------------------------------------------------- \17\ FINRA conducts cross-market surveillances on behalf of the Exchange pursuant to a regulatory services agreement. The Exchange is responsible for FINRA's performance under this regulatory services agreement. --------------------------------------------------------------------------- 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.\18\ --------------------------------------------------------------------------- \18\ 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. --------------------------------------------------------------------------- The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares and ETFs with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in the Shares and ETFs from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and ETFs 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 a 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) or (c) [sic] the applicability of Exchange listing rules specified in this rule filing shall constitute continued listing requirements for listing the Shares of a Fund on the Exchange. The issuer has represented to the Exchange that it will advise the Exchange of any failure by a 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 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 each 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) \19\ 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. --------------------------------------------------------------------------- \19\ 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. The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in the Shares from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares from markets and other entities that are members of ISG or with which the [[Page 21580]] 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 a 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. Each Fund may not purchase illiquid assets if, in the aggregate, more than 15% of its net assets would be invested in illiquid assets. The Adviser is not registered as a broker-dealer but is affiliated with a broker-dealer and will implement and maintain a fire wall with respect to each of its relevant personnel or broker-dealer affiliate regarding access to information concerning the composition and/or changes to the portfolios. The Exchange believes that it is appropriate and in the public interest to approve listing and trading of Shares of the Funds on the Exchange notwithstanding that the Funds would not meet the requirements of Commentary .01(b)(1) to Rule 8.600 in that the Funds' investments in municipal securities will be well-diversified. As noted above, the Funds' investments will be diversified among a minimum of ten different sectors of the municipal bond market. The Funds' investments will be diversified among at least 15 different states, with no more than 30% of a Fund's securities invested in municipal securities from a single state. Additionally, no Municipal Bond held by a Fund will exceed 5% of the weight of the Fund's portfolio and no single Municipal Bond issuer will account for more than 8% of the weight of a Fund's portfolio. A Fund will hold Municipal Bonds of a minimum of 25 non-affiliated issuers. The Exchange notes that, other than Commentary .01(b)(1) to Rule 8.600, each Fund's portfolio will meet all other requirements of Rule 8.600. The Exchange believes that permitting Fund Shares to be listed and traded on the Exchange notwithstanding that less than 75% of the weight of a Fund's portfolio may consist of components with less than $100 million minimum original principal amount outstanding would provide the Funds with greater ability to select from a broad range of municipal securities, as described above, that would support a Fund's investment goal. 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 each Fund and the Shares, thereby promoting market transparency. Quotation and last sale information for the Shares and ETFs will be available via the CTA high- speed line, and from the national securities exchange [sic] on which they are listed. 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 Funds 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 Funds may be halted. In addition, as noted above, investors will have ready access to information regarding the Funds' 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 investors and the public interest in that it will facilitate the listing and trading of additional types of actively-managed exchange-traded products that principally hold 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 each Fund's holdings, IIV, 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 additional types of actively-managed exchange-traded products that principally hold 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-2017-44 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSEArca-2017-44. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the [[Page 21581]] 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-NYSEArca-2017-44 and should be submitted on or before May 30, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ --------------------------------------------------------------------------- \20\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-09311 Filed 5-8-17; 8:45 am] BILLING CODE P
![Federal Register / Vol. 82, No. 88 / Tuesday, May 9, 2017 / Notices 21573
ADAMS
Title Date Accession No.
STPNOC letter to NRC, Submittal of GSI–191 Chemical Effects Test Reports ............................................... 02/27/2014 ML14072A075
(package)
NRC Letter to STPNOC, Request for Additional Information, Round 1 ............................................................ 04/15/2014 ML14087A075
NUREG–0713, Volume 34, Occupational Radiation Exposure at Commercial Nuclear Power Reactors and 04/2014 ML14126A597
Other Facilities 2012: Forty-Fifth Annual Report.
STPNOC letter to NRC, Second Submittal of CASA Grande Source Code for STP’s Risk-Informed GSI– 05/15/2014 ML14149A354
191 Licensing Application.
STPNOC letter to NRC, First Set of Responses to April, 2014, Requests for Additional Information Regard- 05/22/2014 ML14149A439
ing STP Risk-Informed GSl–191 Licensing Application—Revised. (package)
STPNOC letter to NRC, Second Set of Responses to April, 2014, Requests for Additional Information Re- 06/25/2014 ML14178A467
garding STP Risk-Informed GSI–191 Licensing Application. (package)
STPNOC letter to NRC, Third Set of Responses to April, 2014, Requests for Additional Information Re- 07/15/2014 ML14202A045
garding STP Risk-Informed GSI–191 Licensing Application.
NRC letter to STPNOC, Request for Additional Information, Round 2 ............................................................. 03/03/2015 ML14357A171
STPNOC letter to NRC, Submittal of Updated CASA Grande Input for STP’s Risk-Informed GSI–191 Li- 03/10/2015 ML15072A092
censing Application.
STPNOC letter to NRC, Description of Revised Risk-Informed Methodology and Responses to Round 2 03/25/2015 ML15091A440
Requests for Additional Information Regarding STP Risk-Informed GSI–191 Licensing Application.
STPNOC letter to NRC, Supplement 2 to STP Pilot Submittal and Requests for Exemptions and License 08/20/2015 ML15246A125
Amendment for a Risk-Informed Approach to Address Generic Safety Issue (GSI)–191 and Respond to (package)
Generic Letter (GL) 2004–02.
NRC letter to STPNOC, Request for Additional Information, Round 3 (without Risk) ...................................... 04/11/2016 ML16082A507
NRC letter to STPNOC, Request of Additional Information, Round 3 (Risk) .................................................... 05/26/2016 ML16125A290
STPNOC letter to NRC, First Set of Responses to April 11, 2016, Requests for Additional Information Re- 05/11/2016 ML16154A117
garding STP Risk-Informed GSl–191 Licensing Application.
STPNOC letter to NRC, Applicability of Application Supplement 1 Correspondence to Supplement 2 Re- 06/09/2016 ML16176A148
garding STP Risk-Informed GSI–191 Licensing Application.
STPNOC letter to NRC, Second Set of Responses to April 11, 2016, Requests for Additional Information 06/16/2016 ML16196A241
Regarding STP Risk-Informed GSI–191 Licensing Application.
STPNOC letter to NRC, Third Set of Responses to April 11, 2016, Requests for Additional Information Re- 07/18/2016 ML16209A226
garding STP Risk-Informed GSI–191 Licensing Application—Part A.
STPNOC letter to NRC, Third Set of Responses to April 11, 2016, Requests for Additional Information Re- 07/21/2016 ML16229A189
garding STP Risk-Informed GSI–191 Licensing Application—Part B.
STPNOC letter to NRC, Third Set of Responses to April 11, 2016, Requests for Additional Information Re- 07/21/2016 ML16230A232
garding STP Risk-Informed GSI–191 Licensing Application—Part C.
STPNOC letter to NRC, Third Set of Responses to April 11, 2016, Requests for Additional Information Re- 07/28/2016 ML16221A393
garding STP Risk-Informed GSI–191 Licensing Application—Part D.
STPNOC letter to NRC, Third Set of Responses to April 11, 2016, Requests for Additional Information Re- 09/12/2016 ML16272A162
garding STP Risk-Informed GSI–191 Licensing Application—Part E.
STPNOC letter to NRC, Supplement 3 to Revised Pilot Submittal and Requests for Exemptions and Li- 10/20/2016 ML16302A015
cense Amendment for a Risk-Informed Approach to Address Generic Safety Issue (GSl)–191 and Re-
spond to Generic Letter (GL) 2004–02.
STPNOC letter to NRC, Response to Request for Additional Information Regarding Sensitivity Studies for 11/9/2016 ML16321A407
STPNOC Risk-Informed Pilot GSl–191 Application.
STPNOC letter to NRC, Revised Applicability Matrix for Response to Request for Additional Information 12/7/2016 ML16365A006
Questions APLA–1a and APLA–1b Regarding STP Risk-Informed GSl–191 Licensing Application.
STPNOC letter to NRC, Response to Request for Additional Information on Revised Applicability Matrix for 01/19/2017 ML17025A123
Questions Regarding Risk-Informed GSI–191 Licensing Application.
Dated at Rockville, Maryland, this 2nd day SECURITIES AND EXCHANGE (‘‘Act’’) 2 and Rule 19b–4 thereunder,3
of May, 2017. COMMISSION notice is hereby given that, on April 20,
For the Nuclear Regulatory Commission. 2017, NYSE Arca, Inc. (‘‘Exchange’’ or
Robert J. Pascarelli, [Release No. 34–80584; File No. SR– ‘‘NYSE Arca’’) filed with the Securities
Chief, Plant Licensing Branch IV, Division NYSEArca–2017–44] and Exchange Commission
of Operating Reactor Licensing, Office of (‘‘Commission’’) the proposed rule
Nuclear Reactor Regulation. Self-Regulatory Organizations; NYSE change as described in Items I and II
[FR Doc. 2017–09369 Filed 5–8–17; 8:45 am] Arca, Inc.; Notice of Filing of Proposed below, which Items have been prepared
BILLING CODE 7590–01–P Rule Change To List and Trade Shares by the self-regulatory organization. The
of the IQ Municipal Insured ETF; IQ Commission is publishing this notice to
Municipal Short Duration ETF; and IQ solicit comments on the proposed rule
Municipal Intermediate ETF Under change from interested persons.
mstockstill on DSK30JT082PROD with NOTICES
NYSE Arca Equities Rule 8.600
May 3, 2017.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
2 15 U.S.C. 78a.
1 15 U.S.C.78s(b)(1). 3 17 CFR 240.19b–4.
VerDate Sep<11>2014 18:19 May 08, 2017 Jkt 241001 PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 E:\FR\FM\09MYN1.SGM 09MYN1](https://thefederalregister.org/doc/82_FR_21661/page/1.svg)
![21574 Federal Register / Vol. 82, No. 88 / Tuesday, May 9, 2017 / Notices
I. Self-Regulatory Organization’s be offered by the IndexIQ Active ETF Commentary .06 further requires that
Statement of the Terms of Substance of Trust (the ‘‘Trust’’), which is registered personnel who make decisions on the
the Proposed Rule Change with the Commission as an open-end open-end fund’s portfolio composition
The Exchange proposes to list and management investment company.6 must be subject to procedures designed
trade shares of the IQ Municipal Insured Each Fund is a series of the Trust. to prevent the use and dissemination of
ETF; IQ Municipal Short Duration ETF; The investment adviser to each Fund material nonpublic information
and IQ Municipal Intermediate ETF will be IndexIQ Advisors LLC (the regarding the open-end fund’s portfolio.
(each a ‘‘Fund’’ and, collectively, the ‘‘Adviser’’). MacKay Shields LLC will be The Adviser or Subadviser is not a
‘‘Funds’’) under NYSE Arca Equities each Fund’s sub-adviser (Subadviser). registered broker-dealer but is affiliated
Rule 8.600 (‘‘Managed Fund Shares’’). ALPS Distributors, Inc. Inc. [sic] will with a broker-dealer. The Adviser and
The proposed change is available on the serve as the distributor (the Subadviser have implemented a ‘‘fire
Exchange’s Web site at www.nyse.com, ‘‘Distributor’’) of each Fund’s Shares on wall’’ with respect to such broker-dealer
at the principal office of the Exchange, an agency basis. The Bank of New York affiliate regarding access to information
and at the Commission’s Public Mellon (‘‘BNY Mellon’’) will serve as concerning the composition of and/or
Reference Room. each Fund’s Administrator, Custodian, changes to each Fund’s portfolio. In the
Transfer Agent and Securities Lending event (a) the Adviser or Subadviser
II. Self-Regulatory Organization’s Agent. becomes registered as a broker-dealer or
Statement of the Purpose of, and Commentary .06 to Rule 8.600 newly affiliated with a broker-dealer, or
Statutory Basis for, the Proposed Rule provides that, if the investment adviser (b) any new adviser or sub-adviser to a
Change to the investment company issuing Fund is a registered broker-dealer or
In its filing with the Commission, the Managed Fund Shares is affiliated with becomes affiliated with a broker-dealer,
self-regulatory organization included a broker-dealer, such investment adviser the applicable adviser or sub-adviser
statements concerning the purpose of, shall erect a ‘‘fire wall’’ between the will implement and maintain a fire wall
and basis for, the proposed rule change investment adviser and the broker- with respect to its relevant personnel or
and discussed any comments it received dealer with respect to access to broker-dealer affiliate regarding access
on the proposed rule change. The text information concerning the composition to information concerning the
of those statements may be examined at and/or changes to such investment composition and/or changes to a Fund’s
the places specified in Item IV below. company portfolio.7 In addition, portfolio, and will be subject to
The Exchange has prepared summaries, procedures designed to prevent the use
set forth in sections A, B, and C below, Investment Company Units, listed and traded on and dissemination of material non-
the Exchange under NYSE Arca Equities Rule public information regarding such
of the most significant parts of such 5.2(j)(3), seeks to provide investment results that
statements. correspond generally to the price and yield portfolio.
performance of a specific foreign or domestic stock
A. Self-Regulatory Organization’s index, fixed income securities index or combination
IQ Municipal Insured ETF
Statement of the Purpose of, and the thereof. According to the Registration
Statutory Basis for, the Proposed Rule 6 The Trust is registered under the 1940 Act. On
Statement, the Fund will seek current
Change February 24, 2017, the Trust filed with the
Commission its registration statement on Form N–
income exempt from federal income tax.
1. Purpose 1A under the Securities Act of 1933 (15 U.S.C. 77a) The Fund, under normal market
(‘‘Securities Act’’), and under the 1940 Act relating conditions,8 will invest at least 80% of
The Exchange proposes to list and to the Funds (File Nos. 333–183489 and 811–22739) its assets in municipal bonds
trade shares (‘‘Shares’’) of each Fund (‘‘Registration Statement’’). The description of the (‘‘Municipal Bonds’’, as described
under NYSE Arca Equities Rule 8.600,4 operation of the Trust and the Funds herein is
based, in part, on the Registration Statement. In below) that are covered by insurance
which governs the listing and trading of addition, the Commission has issued an order policies that guarantee the timely
Managed Fund Shares.5 The Shares will granting certain exemptive relief to the Trust under
the 1940 Act. See Investment Company Act Release administering the policies and procedures adopted
4 The Securities and Exchange Commission No. 30198 (September 10, 2012) (File No. 812– under subparagraph (i) above.
(‘‘Commission’’) has approved for Exchange listing 13956) (‘‘Exemptive Order’’). 8 The term ‘‘under normal market conditions’’ as
and trading shares of actively managed funds of the 7 An investment adviser to an open-end fund is
used herein includes, but is not limited to, the
[sic] that principally hold municipal bonds. See, required to be registered under the Investment absence of adverse market, economic, political or
e.g., Securities Exchange Act Release Nos. 60981 Advisers Act of 1940 (the ‘‘Advisers Act’’). As a other conditions, including extreme volatility or
(November 10, 2009), 74 FR 59594 (November 18, result, the Adviser and Subadviser and their related trading halts in the fixed income markets or the
2009) (SR–NYSEArca–2009–79) (order approving personnel are subject to the provisions of Rule financial markets generally; operational issues (e.g.,
listing and trading of shares of the PIMCO Short- 204A–1 under the Advisers Act relating to codes of systems failure) causing dissemination of inaccurate
Term Municipal Bond Strategy Fund and PIMCO ethics. This Rule requires investment advisers to market information; or force majeure type events
Intermediate Municipal Bond Strategy Fund); 79293 adopt a code of ethics that reflects the fiduciary such as natural or man-made disaster, act of God,
(November 10, 2016), 81 FR 81189 (November 17, nature of the relationship to clients as well as armed conflict, act of terrorism, riot or labor
2016) (SR–NYSEArca–2016–107) (order approving compliance with other applicable securities laws. disruption or any similar intervening circumstance.
listing and trading of shares of Cumberland Accordingly, procedures designed to prevent the On a temporary basis, including for defensive
Municipal Bond ETF under Rule 8.600). The communication and misuse of non-public purposes, during the initial invest-up period (i.e.,
Commission also has approved listing and trading information by an investment adviser must be the six-week period following the commencement
on the Exchange of shares of the SPDR Nuveen S&P consistent with Rule 204A–1 under the Advisers of trading of Shares on the Exchange) and during
High Yield Municipal Bond Fund under Act. In addition, Rule 206(4)–7 under the Advisers periods of high cash inflows or outflows (i.e.,
Commentary .02 of NYSE Arca Equities Rule Act makes it unlawful for an investment adviser to rolling periods of seven calendar days during which
5.2(j)(3). See Securities Exchange Act Release No. provide investment advice to clients unless such inflows or outflows of cash, in the aggregate, exceed
63881 (February 9, 2011), 76 FR 9065 (February 16, investment adviser has (i) adopted and 10% of a Fund’s net assets as of the opening of
2011) (SR–NYSEArca–2010–120). implemented written policies and procedures business on the first day of such periods), a Fund
mstockstill on DSK30JT082PROD with NOTICES
5 A Managed Fund Share is a security that reasonably designed to prevent violation, by the may depart from its principal investment strategies;
represents an interest in an investment company investment adviser and its supervised persons, of for example, it may hold a higher than normal
registered under the Investment Company Act of the Advisers Act and the Commission rules adopted proportion of its assets in cash. During such
1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as thereunder; (ii) implemented, at a minimum, an periods, a Fund may not be able to achieve its
an open-end investment company or similar entity annual review regarding the adequacy of the investment objectives. A Fund may adopt a
that invests in a portfolio of securities selected by policies and procedures established pursuant to defensive strategy when the Adviser believes
its investment adviser consistent with its subparagraph (i) above and the effectiveness of their securities in which a Fund normally invests have
investment objectives and policies. In contrast, an implementation; and (iii) designated an individual elevated risks due to political or economic factors
open-end investment company that issues (who is a supervised person) responsible for and in other extraordinary circumstances.
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payment of principal and interest. The • discount bonds (which may be hold Municipal Bonds of a minimum of
Fund generally will maintain a dollar- originally issued at a discount to par 25 non-affiliated issuers.10
weighted average duration within plus value or sold at market price below par
Other Investments
or minus two years of the dollar- value);
weighted average duration of the S&P • premium bonds, which are sold at With respect to each of the Funds,
Municipal Bond Insured Index.9 a premium to par value; while a Fund, under normal market
For [sic] Fund, as well as the IQ conditions, will invest at least 80% of
• zero coupon bonds, which are its assets in Municipal Bonds, as
Municipal Short Duration ETF and IQ
issued at an original issue discount, described above, a Fund may invest its
Intermediate ETF which are discussed
with the full value, including accrued remaining assets in other assets and
below, the Subadviser’s investment
interest, paid at maturity; financial instruments, as described
process will begin with an assessment of
macro factors that may impact the • taxable municipal bonds, including below.
municipal bond market, as well as other Build America Bonds; A Fund may invest in shares of
regulatory, tax, governmental, and • municipal notes; exchange-traded funds (‘‘ETFs’’) and
technical factors that may impact the • municipal cash equivalents; money market funds,11 and may invest
municipal bond market. Following the • private activity bonds (including directly and indirectly in: Fixed rate
assessment of these factors, the without limitation industrial and floating rate U.S. government
Subadviser will develop an investment development bonds); securities, including bills, notes and
strategy to position a Fund among bonds differing as to maturity and rates
various sectors of the municipal bond • pre-refunded and escrowed to of interest, which are either issued or
market and different states. The maturity bonds; and guaranteed by the U.S. Treasury or by
Subadviser then will employ a • securities issued by entities whose U.S. government agencies or
fundamental, ‘‘bottom-up’’ credit underlying assets are Municipal Bonds instrumentalities (‘‘U.S. Government
research analysis to select individual (i.e., tender option bond (TOB) trusts Securities’’); repurchase agreements;
Municipal Bonds. and custodial receipts trusts and commercial paper; and may purchase
variable rate demand notes (VRDNs) securities on a when-issued basis or for
Municipal Bonds that pay interest monthly or quarterly settlement at a future date (forward
For purposes of this filing, the term based on a floating rate that is reset commitment), if a Fund holds sufficient
‘‘Municipal Bonds’’ as applied to each daily or weekly based on an index of liquid assets to meet the purchase price
of the Funds includes the following: short-term municipal rates). (collectively, ‘‘Other Investments’’).
• Municipal lease obligations (and The Fund may invest more than 25%
certificates of participation in such IQ Municipal Short Duration ETF
of its total assets in Municipal Bonds
obligations); that are related in such a way that an According to the Registration
• municipal general obligation bonds economic, business or political Statement, the Fund will seek current
(including industrial development development or change affecting one income exempt from federal income tax.
bonds issued pursuant to federal tax such security could also affect the other The Fund, under normal market
law), which are issued for either project securities. However, the Fund’s conditions, will invest at least 80% of
or enterprise financings in which the investments will be diversified among a its assets in Municipal Bonds. The Fund
bond issuer pledges to the bondholders minimum of ten different sectors of the generally will maintain a dollar-
the revenues generated by the operating Municipal Bond market. The Fund’s weighted average portfolio duration of
projects financed from the proceeds of investments in Municipal Bonds will three years or less.
the bond issuance; include investments in state and local The Fund may invest more than 25%
• limited obligation bonds, which are (e.g., county, city, town) and authority- of its total assets in Municipal Bonds
payable only from the revenues derived issued Municipal Bonds relating to such that are related in such a way that an
from a particular facility or class of sectors as the following: State general economic, business or political
facilities or, in some cases from the obligation; local general obligation; development or change affecting one
proceeds of a special excise or other education; hospital; housing; industrial such security could also affect the other
specific revenue source; development revenue (IDR)/pollution securities. However, the Fund’s
• municipal revenue bonds (which control revenue (PCR); power; resource investments will be diversified among a
are typically secured by revenues recovery; transportation; water/sewer; minimum of ten different sectors of the
generated by the issuer), including leasing; special tax; and pre-refunded municipal bond market. The Fund’s
revenue anticipation notes; bonds. The Fund’s investments will be investments will be diversified among at
• municipal bond anticipation notes diversified among at least 15 different least 15 different states, with no more
(which are normally issued to provide states, with no more than 30% of the than 30% of the Fund’s securities
interim financial assistance until long- Fund’s securities invested in municipal invested in municipal securities from a
term financing can be arranged); securities from a single state. Under single state. Under normal market
• Municipal Bonds that feature credit normal market conditions, no security
enhancements, such as lines of credit, (excluding Treasury securities) will
10 For purposes of this restriction, each state and
letters of credit, municipal bond each separate political subdivision, agency,
represent more than 25% of the weight authority, or instrumentality of such state, each
insurance, and standby bond purchase of the portfolio, and the five highest multi-state agency or authority, and each guarantor,
agreements; weighed securities will not, in the if any, will be treated as separate issuers of
mstockstill on DSK30JT082PROD with NOTICES
aggregate, account for more than 50% of Municipal Bonds.
9 Municipal bonds are issued by or on behalf of 11 For purposes of this filing, ETFs include
the District of Columbia, states, territories,
the weight of the Fund. No Municipal Investment Company Units (as described in NYSE
commonwealths and possessions of the United Bond held by the Fund will exceed 5% Arca Equities Rule 5.2(j)(3)); Portfolio Depositary
States and their political subdivisions and agencies, of the weight of the Fund’s portfolio and Receipts (as described in NYSE Arca Equities Rule
authorities and instrumentalities. Municipal no single Municipal Bond issuer will 8.100); and Managed Fund Shares (as described in
securities, which may be issued in various forms, NYSE Arca Equities Rule 8.600). The ETFs all will
including bonds and notes, are issued to obtain
account for more than 8% of the weight be listed and traded in the U.S. on registered
funds for various public purposes. of the Fund’s portfolio. The Fund will exchanges.
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![21578 Federal Register / Vol. 82, No. 88 / Tuesday, May 9, 2017 / Notices
(‘‘CTA’’) high-speed line, and from the Each Fund’s investments will be would provide the Funds with greater
national securities exchange [sic] on consistent with its investment goal and ability to select from a broad range of
which they are listed. will not be used to provide multiple Municipal Bonds, as described above,
Quotation information from brokers returns of a benchmark or to produce that would support a Fund’s investment
and dealers or pricing services will be leveraged returns. goal.
available for Municipal Bonds and Each Fund may invest more than 25% The Exchange believes that,
Other Investments. Price information for of its total assets in municipal bonds notwithstanding that each Fund’s
money market funds will be available that are related in such a way that an portfolio may not satisfy Commentary
from the applicable investment economic, business or political .01(b)(1) to Rule 8.600, the Funds’
company’s Web site and from market development or change affecting one portfolios will not be susceptible to
data vendors. Pricing information such security could also affect the other manipulation. As noted above, the
regarding Municipal Bonds and Other securities. However, a Fund’s Funds’ investments will be diversified
Investments will generally be available investments will be diversified among a among a minimum of ten different
through nationally recognized data minimum of ten different sectors of the sectors of the municipal bond market.
service providers through subscription municipal bond market. A Fund’s The Funds’ investments will be
agreements. In addition, the IIV (which investments will be diversified among at diversified among at least 15 different
is the Portfolio Indicative Value, as least 15 different states, with no more states, with no more than 30% of a
defined in NYSE Arca Equities Rule than 30% of a Fund’s securities invested Fund’s securities invested in municipal
8.600(c)(3)), will be widely in municipal securities from a single securities from a single state.
disseminated at least every 15 seconds state. Under normal market conditions, Additionally, no Municipal Bond held
during the Core Trading Session by one no security (excluding Treasury by a Fund will exceed 5% of the weight
or more major market data vendors or securities) will represent more than of the Fund’s portfolio and no single
other information providers.12 25% of the weight of the portfolio, and Municipal Bond issuer will account for
the five highest weighed securities will more than 8% of the weight of a Fund’s
Investment Restrictions
not, in the aggregate, account for more portfolio. A Fund will hold Municipal
Each Fund may hold up to an than 50% of the weight of the Fund. No Bonds of a minimum of 25 non-
aggregate amount of 15% of its net Municipal Bond held by the Fund will affiliated issuers. The Exchange notes
assets in illiquid assets (calculated at exceed 5% of the weight of the Fund’s that, other than Commentary .01(b)(1) to
the time of investment) deemed illiquid portfolio and no single Municipal Bond Rule 8.600, each Fund’s portfolio will
by the Adviser, consistent with issuer will account for more than 8% of meet all other requirements of Rule
Commission guidance. Each Fund will the weight of the Fund’s portfolio. The 8.600.
monitor its portfolio liquidity on an Fund will hold Municipal Bonds of a
ongoing basis to determine whether, in Trading Halts
minimum of 25 non-affiliated issuers.
light of current circumstances, an With respect to trading halts, the
adequate level of liquidity is being Application of Generic Listing Exchange may consider all relevant
maintained, and will consider taking Requirements factors in exercising its discretion to
appropriate steps in order to maintain The Exchange is submitting this halt or suspend trading in the Shares of
adequate liquidity if, through a change proposed rule change because the a Fund.15 Trading in Shares of a Fund
in values, net assets, or other portfolios for the Funds will not meet will be halted if the circuit breaker
circumstances, more than 15% of a all of the ‘‘generic’’ listing requirements parameters in NYSE Arca Equities Rule
Fund’s net assets are held in illiquid of Commentary .01 to NYSE Arca 7.12 have been reached. Trading also
assets. Illiquid assets include securities Equities Rule 8.600 applicable to the may be halted because of market
subject to contractual or other listing of Managed Fund Shares. Each conditions or for reasons that, in the
restrictions on resale and other Fund’s portfolio will meet all such view of the Exchange, make trading in
instruments that lack readily available requirements except for those set forth the Shares inadvisable.
markets as determined in accordance in Commentary .01(b)(1).14
with Commission staff guidance.13 The Exchange believes that it is Trading Rules
appropriate and in the public interest to The Exchange deems the Shares to be
12 Currently, it is the Exchange’s understanding
approve listing and trading of Shares of equity securities, thus rendering trading
that several major market data vendors display and/ the Funds on the Exchange in the Shares subject to the Exchange’s
or make widely available IIVs taken from CTA or
other data feeds. notwithstanding that the Funds would existing rules governing the trading of
13 The Commission has stated that long-standing not meet the requirements of equity securities. Shares will trade on
Commission guidelines have required open-end Commentary .01(b)(1) to Rule 8.600 in the NYSE Arca Marketplace from 4 a.m.
funds to hold no more than 15% of their net assets that the Funds’ investments in to 8 p.m., Eastern Time in accordance
in illiquid securities and other illiquid assets. See
Investment Company Act Release No. 28193 (March municipal securities will be well- with NYSE Arca Equities Rule 7.34
11, 2008), 73 FR 14618 (March 18, 2008), footnote diversified. (Early, Core, and Late Trading Sessions).
34. See also, Investment Company Act Release No. The Exchange believes that permitting The Exchange has appropriate rules to
5847 (October 21, 1969), 35 FR 19989 (December Fund Shares to be listed and traded on facilitate transactions in the Shares
31, 1970) (Statement Regarding ‘‘Restricted
Securities’’); Investment Company Act Release No.
the Exchange notwithstanding that less during all trading sessions. As provided
18612 (March 12, 1992), 57 FR 9828 (March 20, than 75% of the weight of a Fund’s in NYSE Arca Equities Rule 7.6, the
1992) (Revisions of Guidelines to Form N–1A). A portfolio may consist of components minimum price variation (‘‘MPV’’) for
fund’s portfolio security is illiquid if it cannot be with less than $100 million minimum quoting and entry of orders in equity
mstockstill on DSK30JT082PROD with NOTICES
disposed of in the ordinary course of business
within seven days at approximately the value original principal amount outstanding securities traded on the NYSE Arca
ascribed to it by the fund. See Investment Company Marketplace is $0.01, with the exception
Act Release No. 14983 (March 12, 1986), 51 FR 14 Commentary .01(b)(1) to NYSE Arca Equities
of securities that are priced less than
9773 (March 21, 1986) (adopting amendments to Rule 8.600 provides that components that in the $1.00 for which the MPV for order entry
Rule 2a–7 under the 1940 Act); Investment aggregate account for at least 75% of the fixed
Company Act Release No. 17452 (April 23, 1990), income weight of the portfolio each shall have a is $0.0001.
55 FR 17933 (April 30, 1990) (adopting Rule 144A minimum original principal amount outstanding of
under the Securities Act). $100 million or more. 15 See NYSE Arca Equities Rule 7.12.
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![Federal Register / Vol. 82, No. 88 / Tuesday, May 9, 2017 / Notices 21579
The Shares of each Fund will conform The Exchange or FINRA, on behalf of which imposes a duty of due diligence
to the initial and continued listing the Exchange, or both, will on its Equity Trading Permit Holders to
criteria under NYSE Arca Equities Rule communicate as needed regarding learn the essential facts relating to every
8.600. Consistent with NYSE Arca trading in the Shares and ETFs with customer prior to trading the Shares; (3)
Equities Rule 8.600(d)(2)(B)(ii), the other markets and other entities that are the risks involved in trading the Shares
Adviser will implement and maintain, members of the ISG, and the Exchange during the Opening and Late Trading
or be subject to, procedures designed to or FINRA, on behalf of the Exchange, or Sessions when an updated IIV will not
prevent the use and dissemination of both, may obtain trading information be calculated or publicly disseminated;
material non-public information regarding trading in the Shares and (4) how information regarding the IIV
regarding the actual components of a ETFs from such markets and other and the Disclosed Portfolio is
Fund’s portfolio. The Exchange entities. In addition, the Exchange may disseminated; (5) the requirement that
represents that, for initial and/or obtain information regarding trading in Equity Trading Permit Holders deliver a
continued listing, a Fund will be in the Shares and ETFs from markets and prospectus to investors purchasing
compliance with Rule 10A–3 16 under other entities that are members of ISG or newly issued Shares prior to or
the Act, as provided by NYSE Arca with which the Exchange has in place concurrently with the confirmation of a
Equities Rule 5.3. A minimum of a comprehensive surveillance sharing transaction; and (6) trading information.
100,000 Shares will be outstanding at agreement. In addition, FINRA, on In addition, the Bulletin will
the commencement of trading on the behalf of the Exchange, is able to access, reference that each Fund is subject to
Exchange. The Exchange will obtain a as needed, trade information for certain various fees and expenses described in
representation from the issuer of the fixed income securities held by a Fund the Registration Statement. The Bulletin
Shares that the NAV per Share will be reported to FINRA’s Trade Reporting will discuss any exemptive, no-action,
calculated daily and that the NAV and and Compliance Engine (‘‘TRACE’’). and interpretive relief granted by the
the Disclosed Portfolio will be made FINRA also can access data obtained Commission from any rules under the
available to all market participants at from the Municipal Securities Act. The Bulletin will also disclose that
the same time. Each Fund’s investments Rulemaking Board (‘‘MSRB’’) relating to the NAV for the Shares will be
will be consistent with a Fund’s municipal bond trading activity for calculated after 4:00 p.m., Eastern Time
investment goal and will not be used to surveillance purposes in connection each trading day.
enhance leverage. with trading in the Shares. 2. Statutory Basis
In addition, the Exchange also has a
Surveillance general policy prohibiting the The basis under the Act for this
The Exchange represents that trading distribution of material, non-public proposed rule change is the requirement
in the Shares will be subject to the information by its employees. under Section 6(b)(5) 19 that an
existing trading surveillances, All statements and representations exchange have rules that are designed to
administered by the Financial Industry made in this filing regarding (a) the prevent fraudulent and manipulative
Regulatory Authority (‘‘FINRA’’) on description of the portfolio, (b) acts and practices, to promote just and
behalf of the Exchange, or by regulatory limitations on portfolio holdings or equitable principles of trade, to remove
staff of the Exchange, which are reference assets, or (c) or (c) [sic] the impediments to, and perfect the
designed to detect violations of applicability of Exchange listing rules mechanism of a free and open market
Exchange rules and applicable federal specified in this rule filing shall and, in general, to protect investors and
securities laws. The Exchange constitute continued listing the public interest.
represents that these procedures are requirements for listing the Shares of a The Exchange believes that the
adequate to properly monitor Exchange Fund on the Exchange. proposed rule change is designed to
trading of the Shares in all trading The issuer has represented to the prevent fraudulent and manipulative
sessions and to deter and detect Exchange that it will advise the acts and practices in that the Shares will
violations of Exchange rules and federal Exchange of any failure by a Fund to be listed and traded on the Exchange
securities laws applicable to trading on comply with the continued listing pursuant to the initial and continued
the Exchange.17 requirements, and, pursuant to its listing criteria in NYSE Arca Equities
The surveillances referred to above obligations under Section 19(g)(1) of the Rule 8.600. The Exchange has in place
generally focus on detecting securities Act, the Exchange will monitor for surveillance procedures that are
trading outside their normal patterns, compliance with the continued listing adequate to properly monitor trading in
which could be indicative of requirements. If a Fund is not in the Shares in all trading sessions and to
manipulative or other violative activity. compliance with the applicable listing deter and detect violations of Exchange
When such situations are detected, requirements, the Exchange will rules and applicable federal securities
surveillance analysis follows and commence delisting procedures under laws. The Exchange or FINRA, on behalf
investigations are opened, where NYSE Arca Equities Rule 5.5(m). of the Exchange, or both, will
appropriate, to review the behavior of communicate as needed regarding
all relevant parties for all relevant Information Bulletin trading in the Shares with other markets
trading violations.18 Prior to the commencement of and other entities that are members of
trading, the Exchange will inform its the ISG, and the Exchange or FINRA, on
16 17 CFR 240.10A–3. Equity Trading Permit Holders in an behalf of the Exchange, or both, may
17 FINRA conducts cross-market surveillances on Information Bulletin (‘‘Bulletin’’) of the obtain trading information regarding
behalf of the Exchange pursuant to a regulatory special characteristics and risks trading in the Shares from such markets
mstockstill on DSK30JT082PROD with NOTICES
services agreement. The Exchange is responsible for
FINRA’s performance under this regulatory services associated with trading the Shares. and other entities. In addition, the
agreement. Specifically, the Bulletin will discuss Exchange may obtain information
18 For a list of the current members of ISG, see the following: (1) The procedures for regarding trading in the Shares from
www.isgportal.org. The Exchange notes that not all purchases and redemptions of Shares in markets and other entities that are
components of the Disclosed Portfolio may trade on
markets that are members of ISG or with which the
Creation Unit aggregations (and that members of ISG or with which the
Exchange has in place a comprehensive Shares are not individually redeemable);
surveillance sharing agreement. (2) NYSE Arca Equities Rule 9.2(a), 19 15 U.S.C. 78f(b)(5).
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![21580 Federal Register / Vol. 82, No. 88 / Tuesday, May 9, 2017 / Notices
Exchange has in place a comprehensive of the Shares that the NAV per Share additional types of actively-managed
surveillance sharing agreement. In will be calculated daily and that the exchange-traded products that
addition, FINRA, on behalf of the NAV and the Disclosed Portfolio will be principally hold municipal bonds and
Exchange, is able to access, as needed, made available to all market that will enhance competition among
trade information for certain fixed participants at the same time. In market participants, to the benefit of
income securities held by a Fund addition, a large amount of information investors and the marketplace.
reported to TRACE. FINRA also can is publicly available regarding each
access data obtained from the MSRB Fund and the Shares, thereby promoting C. Self-Regulatory Organization’s
relating to municipal bond trading market transparency. Quotation and last Statement on Comments on the
activity for surveillance purposes in sale information for the Shares and Proposed Rule Change Received From
connection with trading in the Shares. ETFs will be available via the CTA high- Members, Participants, or Others
Each Fund may not purchase illiquid speed line, and from the national No written comments were solicited
assets if, in the aggregate, more than securities exchange [sic] on which they or received with respect to the proposed
15% of its net assets would be invested are listed. Prior to the commencement of rule change.
in illiquid assets. The Adviser is not trading, the Exchange will inform its
III. Date of Effectiveness of the
registered as a broker-dealer but is Equity Trading Permit Holders in an
Proposed Rule Change and Timing for
affiliated with a broker-dealer and will Information Bulletin of the special
Commission Action
implement and maintain a fire wall with characteristics and risks associated with
respect to each of its relevant personnel trading the Shares. Trading in Shares of Within 45 days of the date of
or broker-dealer affiliate regarding the Funds will be halted if the circuit publication of this notice in the Federal
access to information concerning the breaker parameters in NYSE Arca Register or within such longer period
composition and/or changes to the Equities Rule 7.12 have been reached or up to 90 days (i) as the Commission may
portfolios. because of market conditions or for designate if it finds such longer period
The Exchange believes that it is reasons that, in the view of the to be appropriate and publishes its
appropriate and in the public interest to Exchange, make trading in the Shares reasons for so finding or (ii) as to which
approve listing and trading of Shares of inadvisable. Trading in the Shares will the self-regulatory organization
the Funds on the Exchange be subject to NYSE Arca Equities Rule consents, the Commission will:
notwithstanding that the Funds would 8.600(d)(2)(D), which sets forth (A) by order approve or disapprove
not meet the requirements of circumstances under which Shares of such proposed rule change; or
Commentary .01(b)(1) to Rule 8.600 in the Funds may be halted. In addition, as (B) institute proceedings to determine
that the Funds’ investments in noted above, investors will have ready whether the proposed rule change
municipal securities will be well- access to information regarding the should be disapproved.
diversified. As noted above, the Funds’ Funds’ holdings, the IIV, the Disclosed IV. Solicitation of Comments
investments will be diversified among a Portfolio, and quotation and last sale
minimum of ten different sectors of the information for the Shares. Interested persons are invited to
municipal bond market. The Funds’ The proposed rule change is designed submit written data, views, and
investments will be diversified among at to perfect the mechanism of a free and arguments concerning the foregoing,
least 15 different states, with no more open market and, in general, to protect including whether the proposed rule
than 30% of a Fund’s securities invested investors and the public interest in that change is consistent with the Act.
in municipal securities from a single it will facilitate the listing and trading Comments may be submitted by any of
state. Additionally, no Municipal Bond of additional types of actively-managed the following methods:
held by a Fund will exceed 5% of the exchange-traded products that Electronic Comments
weight of the Fund’s portfolio and no principally hold municipal bonds and
single Municipal Bond issuer will that will enhance competition among • Use the Commission’s Internet
account for more than 8% of the weight market participants, to the benefit of comment form (http://www.sec.gov/
of a Fund’s portfolio. A Fund will hold investors and the marketplace. As noted rules/sro.shtml); or
Municipal Bonds of a minimum of 25 above, the Exchange has in place • Send an email to rule-comments@
non-affiliated issuers. The Exchange surveillance procedures relating to sec.gov. Please include File Number SR–
notes that, other than Commentary trading in the Shares and may obtain NYSEArca–2017–44 on the subject line.
.01(b)(1) to Rule 8.600, each Fund’s information via ISG from other Paper Comments
portfolio will meet all other exchanges that are members of ISG or
requirements of Rule 8.600. with which the Exchange has entered • Send paper comments in triplicate
The Exchange believes that permitting into a comprehensive surveillance to Secretary, Securities and Exchange
Fund Shares to be listed and traded on sharing agreement. In addition, as noted Commission, 100 F Street NE.,
the Exchange notwithstanding that less above, investors will have ready access Washington, DC 20549–1090.
than 75% of the weight of a Fund’s to information regarding each Fund’s All submissions should refer to File
portfolio may consist of components holdings, IIV, Disclosed Portfolio, and Number SR–NYSEArca–2017–44. This
with less than $100 million minimum quotation and last sale information for file number should be included on the
original principal amount outstanding the Shares. subject line if email is used. To help the
would provide the Funds with greater Commission process and review your
ability to select from a broad range of B. Self-Regulatory Organization’s comments more efficiently, please use
municipal securities, as described Statement on Burden on Competition only one method. The Commission will
mstockstill on DSK30JT082PROD with NOTICES
above, that would support a Fund’s The Exchange does not believe that post all comments on the Commission’s
investment goal. the proposed rule change will impose Internet Web site (http://www.sec.gov/
The proposed rule change is designed any burden on competition that is not rules/sro.shtml). Copies of the
to promote just and equitable principles necessary or appropriate in furtherance submission, all subsequent
of trade and to protect investors and the of the purpose of the Act. The Exchange amendments, all written statements
public interest in that the Exchange will notes that the proposed rule change will with respect to the proposed rule
obtain a representation from the issuer facilitate the listing and trading of change that are filed with the
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![Federal Register / Vol. 82, No. 88 / Tuesday, May 9, 2017 / Notices 21581
Commission, and all written I. Self-Regulatory Organization’s for Professional and Non-Professional
communications relating to the Statement of the Terms of Substance of Subscribers in Rules 7047(b)(4) and
proposed rule change between the the Proposed Rule Change (b)(5) cover the distribution of Derived
Commission and any person, other than The Exchange proposes to amend the Data from Nasdaq Basic.
those that may be withheld from the Exchange’s fees at Rule 7047 to clarify Nasdaq Basic
public in accordance with the the application of Nasdaq fees to
provisions of 5 U.S.C. 552, will be Derived Data in light of changing Nasdaq Basic provides best bid and
available for Web site viewing and industry practices. Specifically, the offer information from the Nasdaq
printing in the Commission’s Public proposed changes will: (i) Limit Market Center, as well as last sale
Reference Room, 100 F Street NE., application of the Derived Data transaction reports from both the
Washington, DC 20549 on official Distributor Fee for Nasdaq Basic in Rule Nasdaq Market Center and the FINRA/
business days between the hours of 7047(c)(2) only to those Distributors that Nasdaq Trade Reporting Facility
10:00 a.m. and 3:00 p.m. Copies of the both create and distribute Derived Data; (‘‘TRF’’). This is a subset of the ‘‘core’’
filing also will be available for (ii) clarify that the Nasdaq Basic per quotation and last sale data provided by
inspection and copying at the principal Subscriber user fees in Rules 7047(b)(1) securities information processors under
and (b)(2), and the distributor fee in the CQ/CT Plan and the UTP Plan. The
office of the Exchange. All comments
Rule 7047(c)(1), cover both Nasdaq data three components of Nasdaq Basic,
received will be posted without change;
feeds and Derived Data therefrom; and which may be purchased individually
the Commission does not edit personal
(iii) clarify that the enterprise licenses or in combination, are: (i) Nasdaq Basic
identifying information from for Nasdaq, which contains the best bid
for Professional and Non-Professional
submissions. You should submit only Subscribers in Rules 7047(b)(4) and and offer on the Nasdaq Market Center
information that you wish to make (b)(5) cover the distribution of Derived and last sale transaction reports for
available publicly. All submissions Data from Nasdaq Basic. The proposal is Nasdaq and the FINRA/Nasdaq TRF for
should refer to File Number SR– described in further detail below. Nasdaq-listed stocks; (ii) Nasdaq Basic
NYSEArca–2017–44 and should be The text of the proposed rule change for NYSE, which covers NYSE-listed
submitted on or before May 30, 2017. is available on the Exchange’s Web site stocks, and (iii) Nasdaq Basic for NYSE
For the Commission, by the Division of at http://nasdaq.cchwallstreet.com, at MKT, which provides data on stocks
Trading and Markets, pursuant to delegated the principal office of the Exchange, and listed on NYSE MKT and other listing
authority.20 at the Commission’s Public Reference venues whose quotes and trade reports
Eduardo A. Aleman, Room. are disseminated on Tape B.
Assistant Secretary. II. Self-Regulatory Organization’s Derived Data Distributor Fee
[FR Doc. 2017–09311 Filed 5–8–17; 8:45 am] Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule A Distributor 3 of Derived Data 4 from
BILLING CODE P
Change Nasdaq Basic may pay a $1,500 per
month fee to disseminate such data to
In its filing with the Commission, the an unlimited number of Non-
SECURITIES AND EXCHANGE Exchange included statements Professional Subscribers 5 under Rule
COMMISSION concerning the purpose of and basis for 7047(c)(2). If a Distributor elects not to
the proposed rule change and discussed pay the Derived Data Distributor Fee,
[Release No. 34–80585; File No. SR– any comments it received on the the Distributor must pay the per
NASDAQ–2017–041] proposed rule change. The text of these Subscriber charges for Non-
statements may be examined at the Professionals set forth in Rule
Self-Regulatory Organizations; The places specified in Item IV below. The 7047(b)(2). In either case, Distributors of
NASDAQ Stock Market LLC; Notice of Exchange has prepared summaries, set Derived Data must also pay the
Filing and Immediate Effectiveness of forth in sections A, B, and C below, of
Proposed Rule Change To Amend the the most significant aspects of such 3 A ‘‘Distributor’’ is ‘‘any entity that receives
Exchange’s Fees at Rule 7047 statements. NASDAQ Basic data directly from NASDAQ or
indirectly through another entity and then
May 3, 2017.
A. Self-Regulatory Organization’s distributes it to one or more Subscribers.’’ Nasdaq
Statement of the Purpose of, and Rule 7047(d)(1).
Pursuant to Section 19(b)(1) of the Statutory Basis for, the Proposed Rule 4 ‘‘Derived Data’’ is ‘‘pricing data or other
Securities Exchange Act of 1934 Change information that is created in whole or in part from
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 NASDAQ information; it cannot be reverse
1. Purpose engineered to recreate NASDAQ information, or be
notice is hereby given that on April 20, used to create other data that is recognizable as a
2017, The NASDAQ Stock Market LLC The purpose of the proposed rule reasonable substitute for NASDAQ information.’’
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the change is to clarify the application of Nasdaq Rule 7047(d)(5).
Securities and Exchange Commission Nasdaq fees to Derived Data in light of 5 A ‘‘Non-Professional Subscriber’’ is a natural
changing industry practices. person who is not (i) registered or qualified in any
(‘‘SEC’’ or ‘‘Commission’’) the proposed capacity with the Commission, the Commodity
rule change as described in Items I, II, Specifically, the proposed changes will: Futures Trading Commission, any state securities
and III below, which Items have been (i) Limit application of the Derived Data agency, any securities exchange or association, or
Distributor Fee for Nasdaq Basic in Rule (ii) any commodities or futures contract market or
prepared by the Exchange. The association; engaged as an ‘‘investment adviser’’ as
7047(c)(2) only to those Distributors that
mstockstill on DSK30JT082PROD with NOTICES
Commission is publishing this notice to that term is defined in Section 201(11) of the
both create and distribute Derived Data;
solicit comments on the proposed rule Investment Advisers Act of 1940 (whether or not
(ii) clarify that the Nasdaq Basic per registered or qualified under that Act); or (iii)
change from interested persons. Subscriber user fees in Rules 7047(b)(1) employed by a bank or other organization exempt
and (b)(2), and the distributor fee in from registration under federal or state securities
laws to perform functions that would require
20 17 CFR 200.30–3(a)(12). Rule 7047(c)(1), cover both Nasdaq data registration or qualification if such functions were
1 15 U.S.C. 78s(b)(1). feeds and Derived Data therefrom; and performed for an organization not so exempt.
2 17 CFR 240.19b–4. (iii) clarify that the enterprise licenses Nasdaq Rule 7047(d)(3)(A).
VerDate Sep<11>2014 18:19 May 08, 2017 Jkt 241001 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 E:\FR\FM\09MYN1.SGM 09MYN1](https://thefederalregister.org/doc/82_FR_21661/page/9.svg)
Document Created: 2018-11-08 08:41:18
Document Modified: 2018-11-08 08:41:18
| 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 21573 |
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