82 FR 37936 - Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Supplementary Material .01 and .02 to NYSE American Rule 5.2E(j)(3) To Provide for the Inclusion of Cash in an Index Underlying a Series of Investment Company Units

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 155 (August 14, 2017)

Page Range		37936-37939
FR Document		2017-17045
Federal Register, Volume 82 Issue 155 (Monday, August 14, 2017)
[Federal Register Volume 82, Number 155 (Monday, August 14, 2017)]
[Notices]
[Pages 37936-37939]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-17045]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81340; File No. SR-NYSEAMER-2017-03]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Supplementary Material .01 and .02 to NYSE American Rule 5.2E(j)(3) To 
Provide for the Inclusion of Cash in an Index Underlying a Series of 
Investment Company Units

August 8, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on July 27, 2017, NYSE American LLC (the ``Exchange'' or 
``NYSE American'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Supplementary Material .01 and .02 
to NYSE American Rule 5.2E(j)(3) to provide for the inclusion of cash 
in an index underlying a series of Investment Company Units, which 
amendments conform to amendments to NYSE Arca Equities Rule 5.2(j)(3) 
previously approved by the Commission. The proposed rule change is 
available on the Exchange's Web site at www.nyse.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes (1) to amend Supplementary Material .01 and 
.02 to NYSE American Rule 5.2E(j)(3) to provide for the inclusion of 
cash in an index underlying a series of Investment Company Units 
(``Units''), which amendments conform to amendments to NYSE Arca 
Equities Rule 5.2(j)(3) previously approved by the Commission.\4\
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    \4\ See Securities Exchange Act Release No. 80777 (May 25, 2017) 
(SR-NYSEArca-2017-30) (order approving amendments to Commentary .01 
and Commentary .02 to NYSE Arca Equities Rule 5.2(j)(3) to provide 
for the inclusion of cash in an index underlying a series of 
Investment Company Units).
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Amendments to NYSE American Rule 5.2E(j)(3)
    NYSE American Rule 5.2E(j)(3) permits the trading of Units pursuant 
to unlisted trading privileges (``UTP''). The Exchange proposes to 
amend Commentaries .01 and .02 to NYSE American Rule 5.2E(j)(3) to 
permit trading of Units based on an index or portfolio that includes 
cash as a component. While Units, like mutual funds, will generally 
hold an amount of cash, NYSE American Rule 5.2E(j)(3) currently 
provides that components of an index or portfolio underlying a series 
of Units consist of securities--namely, US Component Stocks, Non-US 
Component Stocks, Fixed Income Securities or a combination thereof. As 
described below, the proposed amendments to Supplementary Material .01 
and .02 to Rule 5.2E(j)(3) would

[[Page 37937]]

permit inclusion of cash as an index or portfolio component.
    Currently, Supplementary Material .01(a)(A) to NYSE American Rule 
5.2E(j)(3) provides that an underlying index or portfolio of US 
Component Stocks \5\ must meet specified criteria. The Exchange 
proposes to amend Supplementary Material .01(a)(A) to provide that the 
components of an index or portfolio underlying a series of Units may 
also include cash. In addition, the percentage weighting criteria in 
Supplementary Material .01(a)(A)(1) through (4) each would be amended 
to make clear that such criteria would be applied only to the US 
Component Stocks portion of an index or portfolio. For example, in 
applying the criteria in proposed Supplementary Material 
.01(a)(A)(1),\6\ if 85% of the weight of an index consists of US 
Component Stocks and 15% of the index weight is cash, the requirement 
that component stocks (excluding Exchange Traded Products) that in the 
aggregate account for at least 90% of the weight of the US Component 
Stocks portion of the index or portfolio (excluding such Exchange 
Traded Products) each will have a minimum market value of $75 million 
minimum would be applied only to the 85% portion consisting of US 
Component Stocks.
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    \5\ Rule 5.2E(j)(3) defines ``US Component Stock'' as an equity 
security that is registered under Sections 12(b) or 12(g) of the Act 
or an American Depositary Receipt, the underlying equity security of 
which is registered under Sections 12(b) or 12(g) of the Act.
    \6\ Supplementary Material .01(a)(A)(1) provides that component 
stocks (excluding Units and securities defined in Section 2 of Rule 
8E, collectively, ``Exchange Traded Products'') that in the 
aggregate account for at least 90% of the weight of the US Component 
Stocks portion of the index or portfolio (excluding such Exchange 
Traded Products) each shall have a minimum market value of at least 
$75 million.
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    Supplementary Material .01 (a)(B) to NYSE American Rule 5.2E(j)(3), 
which relates to international or global indexes or portfolios, would 
be amended to provide that components of an index or portfolio 
underlying a series of Units may consist of (a) only Non-US Component 
Stocks, (b) Non-US Component Stocks and cash, (c) both US Component 
Stocks and Non-US Component Stocks, or (d) US Component Stocks, Non-US 
Component Stocks and cash. In addition, the percentage weighting 
criteria in Supplementary Material .01(a)(B)(1) through (4) each would 
be amended to make clear that such criteria would be applied only to 
the combined US and Non-US Component Stocks portions of an index or 
portfolio.
    Supplementary Material .02 to NYSE American Rule 5.2E(j)(3) 
provides generic criteria applicable to trading of Units whose 
underlying index or portfolio includes Fixed Income Securities.\7\ 
Currently, Commentary .02(a)(1) provides that an underlying index or 
portfolio must consist of Fixed Income Securities. The Exchange 
proposes to amend Commentary .02(a)(1) to provide that the index or 
portfolio may also include cash. In addition, the percentage weighting 
criteria in Supplementary Material .02(a)(2), (a)(4) and (a)(6) each 
would be amended to make clear that such criteria would be applied only 
to the Fixed Income Securities portion of an index or portfolio. For 
example, in applying the criteria in proposed Supplementary Material 
.02(a)(2),\8\ if 90% of the weight of an index or portfolio consists of 
Fixed Income Securities and 10% of the index weight is cash, the 
requirement that Fixed Income Security components accounting for at 
least 75% of the Fixed Income Securities portion of the weight of the 
index or portfolio each will have a minimum original principal amount 
outstanding of $100 million would be applied only to the 90% portion 
consisting of Fixed Income Securities.
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    \7\ As defined in Supplementary Material .02 to NYSE American 
Rule 5.2E(j)(3), Fixed Income Securities are debt securities that 
are notes, bonds, debentures or evidence of indebtedness that 
include, but are not limited to, U.S. Department of Treasury 
securities (``Treasury Securities''), government-sponsored entity 
securities (``GSE Securities''), municipal securities, trust 
preferred securities, supranational debt and debt of a foreign 
country or a subdivision thereof.
    \8\ Supplementary Material .02(a)(2) provides that Fixed Income 
Security components that in aggregate account for at least 75% of 
the Fixed Income Securities portion of the weight of the index or 
portfolio each shall have a minimum original principal amount 
outstanding of $100 million or more.
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    The Exchange notes that the Commission has previously approved NYSE 
Arca rules allowing portfolios held by issues of Managed Fund Shares 
(actively-managed exchange-traded funds) under Commentary .01 to NYSE 
Arca Equities Rule 8.600 to include cash.\9\ Like the provision in 
Supplementary Material .01(c) to Exchange Rule 8.600E (which is similar 
to Commentary .01(c) to NYSE Arca Equities Rule 8.600), which states 
that there is no limit to cash holdings by an issue of Managed Fund 
Shares traded under Supplementary Material .01 to Exchange Rule 8.600E, 
there is no proposed limit to the weighting of cash in an index 
underlying a series of Units. The Exchange believes this is appropriate 
in that cash does not, in itself, impose investment or market risk.
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    \9\ See Commentary .01(c) to NYSE Arca Equities Rule 8.600.
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    The Exchange also proposes to make a non-substantive change to 
Supplementary Material .02 to Exchange Rule 5.2E(j)(3) to change 
``shall'' to ``will'' in one place to conform to other usages in Rule 
5.2E(j)(3).
    The Exchange believes the proposed amendments, by permitting 
inclusion of cash as a component of indexes underlying series of Units, 
would provide issuers of Units with additional choice in indexes 
permitted to underlie Units that are permitted to trade on the Exchange 
pursuant to the Rule 19b-4(e), which would enhance competition among 
market participants, to the benefit of investors and the marketplace. 
In addition, the proposed amendments would provide investors with 
greater ability to hold Units based on underlying indexes that may 
accord more closely with an investor's assessment of market risk, in 
that some investors may view cash as a desirable component of an 
underlying index under certain market conditions.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \10\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest.
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    \10\ 15 U.S.C. 78f(b)(5).
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    The proposed rule changes are designed to perfect the mechanism of 
a free and open market and, in general, to protect investors and the 
public interest. The basis under the Exchange Act for this proposed 
rule change is the requirement under Section 6(b)(5) 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.
    With respect to the proposed amendments to Supplementary Material 
.01(a)(B)(1) through (4) to Rule 5.2E(j)(3), as described above, the 
percentage weighting criteria in Supplementary Material .01(a)(B)(1) 
through (4) to Rule 5.2E(j)(3) each would be amended to make clear that 
such criteria would be applied only to the combined US and Non-US 
Component Stocks portions of an index or portfolio. The percentage 
weighting criteria in Supplementary Material

[[Page 37938]]

.02(a)(2), (a)(4) and (a)(6) to Rule 5.2E(j)(3) each would be amended 
to make clear that such criteria would be applied only to the Fixed 
Income Securities portion of an index or portfolio. Such applications 
of the proposed amendments would assure that the weighting requirements 
in Supplementary Material .01 and .02 would continue to be applied only 
to securities in an index or portfolio, and would not be diluted as a 
result of inclusion of a cash component. In addition, the addition of 
cash as a permitted component of indexes underlying Units traded on the 
Exchange pursuant to Rule 19b-4(e) does not raise regulatory issues 
because cash does not, in itself, impose investment or market risk and 
is not susceptible to manipulation. The non-substantive change to 
Supplementary Material .02 to Exchange Rule 5.2E(j)(3) to change 
``shall'' to ``will'' conforms to other usages in Rule 5.2E(j)(3).
    The Exchange believes these proposed amendments, by permitting 
inclusion of cash as a component of indexes underlying series of Units, 
would provide issuers of Units with additional choice in indexes 
permitted to underlie Units that are permitted to trade on the Exchange 
pursuant to UTP, which would enhance competition among market 
participants, to the benefit of investors and the marketplace. In 
addition, the proposed amendments would provide investors with greater 
ability to hold Units based on underlying indexes that may accord more 
closely with an investor's assessment of market risk.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange believes the 
proposed rule change will enhance intermarket competition by allowing 
trading on the Exchange pursuant to UTP of the above-described 
securities pursuant to rules that have been previously approved by the 
Commission for NYSE Arca, Inc.

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

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

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii)T \13\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. As noted above, the 
Exchange believes that the proposed rule change would provide 
additional choices to issuers of Units and investors in Units. The 
Exchange also noted that the amendments it is proposing to Rule 
5.2E(j)(3) conform to amendments to NYSE Arca Equities Rule 5.2(j)(3) 
that the Commission previously approved,\14\ and that this proposed 
rule change may enhance competition between the exchanges. The 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Therefore, the Commission hereby waives the 30-day operative delay and 
designates the proposed rule change to be operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ See supra note 4.
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEAMER-2017-03 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-NYSEAMER-2017-03. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEAMER-2017-03 and should 
be submitted on or before September 5, 2017.


[[Page 37939]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Eduardo A. Aleman,
Assistant Secretary.
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    \16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2017-17045 Filed 8-11-17; 8:45 am]
 BILLING CODE 8011-01-P
37936 Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Notices

19(b)(3)(A) 38 of the Act and (http://dtcc.com/legal/sec-rule- proposed rule change is available on the
subparagraphs (f)(2) 39 and (f)(4) 40 of filings.aspx). All comments received Exchange’s Web site at www.nyse.com,
Rule 19b–4 thereunder. At any time will be posted without change; the at the principal office of the Exchange,
within 60 days of the filing of the Commission does not edit personal and at the Commission’s Public
proposed rule change, the Commission identifying information from Reference Room.
summarily may temporarily suspend submissions. You should submit only
information that you wish to make II. Self-Regulatory Organization’s
such rule change if it appears to the
available publicly. All submissions Statement of the Purpose of, and
Commission that such action is
should refer to File Number SR–NSCC– Statutory Basis for, the Proposed Rule
necessary or appropriate in the public
2017–011 and should be submitted on Change
interest, for the protection of investors,
or otherwise in furtherance of the or before September 5, 2017. In its filing with the Commission, the
purposes of the Act. For the Commission, by the Division of self-regulatory organization included
Trading and Markets, pursuant to delegated statements concerning the purpose of,
IV. Solicitation of Comments
authority.41 and basis for, the proposed rule change
Interested persons are invited to Eduardo A. Aleman, and discussed any comments it received
submit written data, views and Assistant Secretary. on the proposed rule change. The text
arguments concerning the foregoing, [FR Doc. 2017–17044 Filed 8–11–17; 8:45 am] of those statements may be examined at
including whether the proposed rule the places specified in Item IV below.
BILLING CODE 8011–01–P
change is consistent with the Act. The Exchange has prepared summaries,
Comments may be submitted by any of set forth in sections A, B, and C below,
the following methods: SECURITIES AND EXCHANGE of the most significant parts of such
Electronic Comments COMMISSION statements.
• Use the Commission’s Internet [Release No. 34–81340; File No. SR– A. Self-Regulatory Organization’s
comment form (http://www.sec.gov/ NYSEAMER–2017–03] Statement of the Purpose of, and the
rules/sro.shtml); or Statutory Basis for, the Proposed Rule
• Send an email to rule-comments@ Self-Regulatory Organizations; NYSE Change
sec.gov. Please include File Number SR– American LLC; Notice of Filing and
Immediate Effectiveness of Proposed 1. Purpose
NSCC–2017–011 on the subject line.
Rule Change To Amend The Exchange proposes (1) to amend
Paper Comments Supplementary Material .01 and .02 to Supplementary Material .01 and .02 to
• Send paper comments in triplicate NYSE American Rule 5.2E(j)(3) To NYSE American Rule 5.2E(j)(3) to
to Secretary, Securities and Exchange Provide for the Inclusion of Cash in an provide for the inclusion of cash in an
Commission, 100 F Street NE., Index Underlying a Series of index underlying a series of Investment
Washington, DC 20549–1090. Investment Company Units Company Units (‘‘Units’’), which
All submissions should refer to File August 8, 2017. amendments conform to amendments to
Number SR–NSCC–2017–011. This file Pursuant to Section 19(b)(1) 1 of the NYSE Arca Equities Rule 5.2(j)(3)
number should be included on the Securities Exchange Act of 1934 (the previously approved by the
subject line if email is used. To help the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 Commission.4
Commission process and review your notice is hereby given that, on July 27, Amendments to NYSE American Rule
comments more efficiently, please use 2017, NYSE American LLC (the 5.2E(j)(3)
only one method. The Commission will ‘‘Exchange’’ or ‘‘NYSE American’’) filed
post all comments on the Commission’s with the Securities and Exchange NYSE American Rule 5.2E(j)(3)
Internet Web site (http://www.sec.gov/ Commission (the ‘‘Commission’’) the permits the trading of Units pursuant to
rules/sro.shtml). Copies of the proposed rule change as described in unlisted trading privileges (‘‘UTP’’). The
submission, all subsequent Items I and II below, which Items have Exchange proposes to amend
amendments, all written statements been prepared by the self-regulatory Commentaries .01 and .02 to NYSE
with respect to the proposed rule organization. The Commission is American Rule 5.2E(j)(3) to permit
change that are filed with the publishing this notice to solicit trading of Units based on an index or
Commission, and all written comments on the proposed rule change portfolio that includes cash as a
communications relating to the from interested persons. component. While Units, like mutual
proposed rule change between the funds, will generally hold an amount of
Commission and any person, other than I. Self-Regulatory Organization’s cash, NYSE American Rule 5.2E(j)(3)
those that may be withheld from the Statement of the Terms of Substance of currently provides that components of
public in accordance with the the Proposed Rule Change an index or portfolio underlying a series
provisions of 5 U.S.C. 552, will be The Exchange proposes to amend of Units consist of securities—namely,
available for Web site viewing and Supplementary Material .01 and .02 to US Component Stocks, Non-US
printing in the Commission’s Public NYSE American Rule 5.2E(j)(3) to Component Stocks, Fixed Income
Reference Room, 100 F Street NE., provide for the inclusion of cash in an Securities or a combination thereof. As
Washington, DC 20549 on official index underlying a series of Investment described below, the proposed
business days between the hours of Company Units, which amendments amendments to Supplementary Material
sradovich on DSK3GMQ082PROD with NOTICES

10:00 a.m. and 3:00 p.m. Copies of the conform to amendments to NYSE Arca .01 and .02 to Rule 5.2E(j)(3) would
filing also will be available for Equities Rule 5.2(j)(3) previously
inspection and copying at the principal approved by the Commission. The 4 See Securities Exchange Act Release No. 80777

office of NSCC and on DTCC’s Web site (May 25, 2017) (SR–NYSEArca–2017–30) (order
41 17
approving amendments to Commentary .01 and
CFR 200.30–3(a)(12). Commentary .02 to NYSE Arca Equities Rule
38 15 U.S.C 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1). 5.2(j)(3) to provide for the inclusion of cash in an
39 17 CFR 240.19b–4(f)(2). 2 15 U.S.C. 78a.
index underlying a series of Investment Company
40 17 CFR 240.19b–4(f)(4). 3 17 CFR 240.19b–4. Units).

VerDate Sep<11>2014 16:45 Aug 11, 2017 Jkt 241001 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 E:\FR\FM\14AUN1.SGM 14AUN1
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Notices 37937

permit inclusion of cash as an index or generic criteria applicable to trading of The Exchange also proposes to make
portfolio component. Units whose underlying index or a non-substantive change to
Currently, Supplementary Material portfolio includes Fixed Income Supplementary Material .02 to Exchange
.01(a)(A) to NYSE American Rule Securities.7 Currently, Commentary Rule 5.2E(j)(3) to change ‘‘shall’’ to
5.2E(j)(3) provides that an underlying .02(a)(1) provides that an underlying ‘‘will’’ in one place to conform to other
index or portfolio of US Component index or portfolio must consist of Fixed usages in Rule 5.2E(j)(3).
Stocks 5 must meet specified criteria. Income Securities. The Exchange The Exchange believes the proposed
The Exchange proposes to amend proposes to amend Commentary amendments, by permitting inclusion of
Supplementary Material .01(a)(A) to .02(a)(1) to provide that the index or cash as a component of indexes
provide that the components of an index portfolio may also include cash. In underlying series of Units, would
or portfolio underlying a series of Units addition, the percentage weighting provide issuers of Units with additional
may also include cash. In addition, the criteria in Supplementary Material choice in indexes permitted to underlie
percentage weighting criteria in .02(a)(2), (a)(4) and (a)(6) each would be Units that are permitted to trade on the
Supplementary Material .01(a)(A)(1) amended to make clear that such criteria Exchange pursuant to the Rule 19b–4(e),
through (4) each would be amended to would be applied only to the Fixed which would enhance competition
make clear that such criteria would be Income Securities portion of an index or among market participants, to the
applied only to the US Component portfolio. For example, in applying the benefit of investors and the marketplace.
Stocks portion of an index or portfolio. criteria in proposed Supplementary In addition, the proposed amendments
For example, in applying the criteria in Material .02(a)(2),8 if 90% of the weight would provide investors with greater
proposed Supplementary Material of an index or portfolio consists of Fixed ability to hold Units based on
.01(a)(A)(1),6 if 85% of the weight of an underlying indexes that may accord
Income Securities and 10% of the index
index consists of US Component Stocks more closely with an investor’s
weight is cash, the requirement that
and 15% of the index weight is cash, the assessment of market risk, in that some
Fixed Income Security components
requirement that component stocks investors may view cash as a desirable
accounting for at least 75% of the Fixed
(excluding Exchange Traded Products) component of an underlying index
Income Securities portion of the weight
that in the aggregate account for at least under certain market conditions.
of the index or portfolio each will have
90% of the weight of the US Component
a minimum original principal amount 2. Statutory Basis
Stocks portion of the index or portfolio
outstanding of $100 million would be The basis under the Act for this
(excluding such Exchange Traded
applied only to the 90% portion proposed rule change is the requirement
Products) each will have a minimum
consisting of Fixed Income Securities. under Section 6(b)(5) 10 that an
market value of $75 million minimum
would be applied only to the 85% The Exchange notes that the exchange have rules that are designed to
portion consisting of US Component Commission has previously approved prevent fraudulent and manipulative
Stocks. NYSE Arca rules allowing portfolios acts and practices, to promote just and
Supplementary Material .01 (a)(B) to held by issues of Managed Fund Shares equitable principles of trade, to remove
NYSE American Rule 5.2E(j)(3), which (actively-managed exchange-traded impediments to, and perfect the
relates to international or global indexes funds) under Commentary .01 to NYSE mechanism of a free and open market
or portfolios, would be amended to Arca Equities Rule 8.600 to include and, in general, to protect investors and
provide that components of an index or cash.9 Like the provision in the public interest.
portfolio underlying a series of Units Supplementary Material .01(c) to The proposed rule changes are
may consist of (a) only Non-US Exchange Rule 8.600E (which is similar designed to perfect the mechanism of a
Component Stocks, (b) Non-US to Commentary .01(c) to NYSE Arca free and open market and, in general, to
Component Stocks and cash, (c) both US Equities Rule 8.600), which states that protect investors and the public interest.
Component Stocks and Non-US there is no limit to cash holdings by an The basis under the Exchange Act for
Component Stocks, or (d) US issue of Managed Fund Shares traded this proposed rule change is the
Component Stocks, Non-US Component under Supplementary Material .01 to requirement under Section 6(b)(5) that
Stocks and cash. In addition, the Exchange Rule 8.600E, there is no an exchange have rules that are
percentage weighting criteria in proposed limit to the weighting of cash designed to prevent fraudulent and
Supplementary Material .01(a)(B)(1) in an index underlying a series of Units. manipulative acts and practices, to
through (4) each would be amended to The Exchange believes this is promote just and equitable principles of
make clear that such criteria would be appropriate in that cash does not, in trade, to remove impediments to, and
applied only to the combined US and itself, impose investment or market risk. perfect the mechanism of a free and
Non-US Component Stocks portions of open market and, in general, to protect
an index or portfolio. 7 As defined in Supplementary Material .02 to investors and the public interest.
Supplementary Material .02 to NYSE NYSE American Rule 5.2E(j)(3), Fixed Income With respect to the proposed
American Rule 5.2E(j)(3) provides Securities are debt securities that are notes, bonds, amendments to Supplementary Material
debentures or evidence of indebtedness that .01(a)(B)(1) through (4) to Rule
include, but are not limited to, U.S. Department of
5 Rule 5.2E(j)(3) defines ‘‘US Component Stock’’
Treasury securities (‘‘Treasury Securities’’), 5.2E(j)(3), as described above, the
as an equity security that is registered under percentage weighting criteria in
Sections 12(b) or 12(g) of the Act or an American government-sponsored entity securities (‘‘GSE
Depositary Receipt, the underlying equity security Securities’’), municipal securities, trust preferred Supplementary Material .01(a)(B)(1)
of which is registered under Sections 12(b) or 12(g) securities, supranational debt and debt of a foreign through (4) to Rule 5.2E(j)(3) each
of the Act. country or a subdivision thereof.
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8 Supplementary Material .02(a)(2) provides that
would be amended to make clear that
6 Supplementary Material .01(a)(A)(1) provides
Fixed Income Security components that in such criteria would be applied only to
that component stocks (excluding Units and
securities defined in Section 2 of Rule 8E, aggregate account for at least 75% of the Fixed the combined US and Non-US
collectively, ‘‘Exchange Traded Products’’) that in Income Securities portion of the weight of the index Component Stocks portions of an index
the aggregate account for at least 90% of the weight or portfolio each shall have a minimum original
principal amount outstanding of $100 million or
or portfolio. The percentage weighting
of the US Component Stocks portion of the index
or portfolio (excluding such Exchange Traded more. criteria in Supplementary Material
Products) each shall have a minimum market value 9 See Commentary .01(c) to NYSE Arca Equities

of at least $75 million. Rule 8.600. 10 15 U.S.C. 78f(b)(5).

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37938 Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Notices

.02(a)(2), (a)(4) and (a)(6) to Rule III. Date of Effectiveness of the Commission takes such action, the
5.2E(j)(3) each would be amended to Proposed Rule Change and Timing for Commission shall institute proceedings
make clear that such criteria would be Commission Action to determine whether the proposed rule
applied only to the Fixed Income Because the foregoing proposed rule change should be approved or
Securities portion of an index or change does not: (i) Significantly affect disapproved.
portfolio. Such applications of the the protection of investors or the public IV. Solicitation of Comments
proposed amendments would assure interest; (ii) impose any significant
Interested persons are invited to
that the weighting requirements in burden on competition; and (iii) become
submit written data, views, and
Supplementary Material .01 and .02 operative for 30 days from the date on
arguments concerning the foregoing,
would continue to be applied only to which it was filed, or such shorter time
including whether the proposed rule
securities in an index or portfolio, and as the Commission may designate, it has
change is consistent with the Act.
would not be diluted as a result of become effective pursuant to Section
Comments may be submitted by any of
inclusion of a cash component. In 19(b)(3)(A) of the Act 11 and Rule 19b–
the following methods:
addition, the addition of cash as a 4(f)(6) thereunder.12
permitted component of indexes A proposed rule change filed under Electronic Comments
Rule 19b–4(f)(6) normally does not • Use the Commission’s Internet
underlying Units traded on the
become operative prior to 30 days after comment form (http://www.sec.gov/
Exchange pursuant to Rule 19b–4(e) the date of filing. However, Rule 19b–
does not raise regulatory issues because rules/sro.shtml); or
4(f)(6)(iii)T 13 permits the Commission • Send an email to rule-comments@
cash does not, in itself, impose to designate a shorter time if such action
investment or market risk and is not sec.gov. Please include File Number SR–
is consistent with the protection of NYSEAMER–2017–03 on the subject
susceptible to manipulation. The non- investors and the public interest. The line.
substantive change to Supplementary Exchange has asked the Commission to
Material .02 to Exchange Rule 5.2E(j)(3) waive the 30-day operative delay so that Paper Comments
to change ‘‘shall’’ to ‘‘will’’ conforms to the proposal may become operative • Send paper comments in triplicate
other usages in Rule 5.2E(j)(3). immediately upon filing. As noted to Secretary, Securities and Exchange
The Exchange believes these proposed above, the Exchange believes that the Commission, 100 F Street NE.,
amendments, by permitting inclusion of proposed rule change would provide Washington, DC 20549–1090.
cash as a component of indexes additional choices to issuers of Units All submissions should refer to File
underlying series of Units, would and investors in Units. The Exchange Number SR–NYSEAMER–2017–03. This
also noted that the amendments it is file number should be included on the
provide issuers of Units with additional
proposing to Rule 5.2E(j)(3) conform to subject line if email is used. To help the
choice in indexes permitted to underlie amendments to NYSE Arca Equities
Units that are permitted to trade on the Commission process and review your
Rule 5.2(j)(3) that the Commission comments more efficiently, please use
Exchange pursuant to UTP, which previously approved,14 and that this
would enhance competition among only one method. The Commission will
proposed rule change may enhance post all comments on the Commission’s
market participants, to the benefit of competition between the exchanges. Internet Web site (http://www.sec.gov/
investors and the marketplace. In The Commission believes that waiver of rules/sro.shtml). Copies of the
addition, the proposed amendments the 30-day operative delay is consistent submission, all subsequent
would provide investors with greater with the protection of investors and the amendments, all written statements
ability to hold Units based on public interest. Therefore, the with respect to the proposed rule
underlying indexes that may accord Commission hereby waives the 30-day change that are filed with the
more closely with an investor’s operative delay and designates the Commission, and all written
assessment of market risk. proposed rule change to be operative communications relating to the
upon filing.15 proposed rule change between the
B. Self-Regulatory Organization’s At any time within 60 days of the
Statement on Burden on Competition Commission and any person, other than
filing of the proposed rule change, the those that may be withheld from the
The Exchange does not believe that Commission summarily may public in accordance with the
temporarily suspend such rule change if provisions of 5 U.S.C. 552, will be
the proposed rule change will impose
it appears to the Commission that such available for Web site viewing and
any burden on competition that is not
action is necessary or appropriate in the printing in the Commission’s Public
necessary or appropriate in furtherance
public interest, for the protection of Reference Room, 100 F Street NE.,
of the purpose of the Act. The Exchange investors, or otherwise in furtherance of
believes the proposed rule change will Washington, DC 20549, on official
the purposes of the Act. If the business days between the hours of
enhance intermarket competition by
allowing trading on the Exchange 11 15
10:00 a.m. and 3:00 p.m. Copies of such
U.S.C. 78s(b)(3)(A).
pursuant to UTP of the above-described 12 17
filing will also be available for
CFR 240.19b–4(f)(6). As required under Rule
securities pursuant to rules that have 19b–4(f)(6)(iii), the Exchange provided the inspection and copying at the principal
Commission with written notice of its intent to file office of the Exchange. All comments
been previously approved by the the proposed rule change, along with a brief received will be posted without change;
Commission for NYSE Arca, Inc. description and the text of the proposed rule the Commission does not edit personal
change, at least five business days prior to the date
identifying information from
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C. Self-Regulatory Organization’s of filing of the proposed rule change, or such
Statement on Comments on the shorter time as designated by the Commission. submissions. You should submit only
Proposed Rule Change Received From 13 17 CFR 240.19b–4(f)(6)(iii). information that you wish to make
Members, Participants, or Others
14 See supra note 4.
available publicly. All submissions
15 For purposes only of waiving the 30-day
should refer to File Number SR–
operative delay, the Commission has also
No written comments were solicited considered the proposed rule’s impact on
NYSEAMER–2017–03 and should be
or received with respect to the proposed efficiency, competition, and capital formation. See submitted on or before September 5,
rule change. 15 U.S.C. 78c(f). 2017.

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Document Created: 2018-10-24 11:50:35
Document Modified: 2018-10-24 11:50:35
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		82 FR 37936