83 FR 51722 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change to FINRA Rule 6710 To Modify the Dissemination Protocols for Agency Debt Securities
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 198 (October 12, 2018)
Federal Register Volume 83, Issue 198 (October 12, 2018)
| Page Range | 51722-51724 | |
| FR Document | 2018-22203 |
[Federal Register Volume 83, Number 198 (Friday, October 12, 2018)] [Notices] [Pages 51722-51724] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-22203] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-84374; File No. SR-FINRA-2018-032] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change to FINRA Rule 6710 To Modify the Dissemination Protocols for Agency Debt Securities October 5, 2018. I. Introduction On August 16, 2018, the Financial Industry Regulatory Authority, Inc. (``FINRA'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to modify the dissemination protocols for Agency Debt Securities. The proposed rule change was published for comment in the Federal Register on August 23, 2018.\3\ The Commission received no comment letters on the proposed rule [[Page 51723]] change. This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 83882 (August 17, 2018), 83 FR 42732 (``Notice''). --------------------------------------------------------------------------- II. Description of the Proposal Under FINRA's rules, each member firm is required to report to the Trade Reporting and Compliance Engine (``TRACE'') transactions in TRACE-Eligible Securities,\4\ including securities that meet the definition of ``Agency Debt Security.'' \5\ Currently, for disseminated reports of transactions in Agency Debt Securities, FINRA displays either the entire notional size (volume) of the transaction or a capped amount, depending on whether the security is Investment Grade,\6\ Non- Investment Grade,\7\ or unrated.\8\ For Agency Debt Securities that are Investment Grade or unrated, FINRA disseminates the entire notional size for transactions of $5 million or less in par value traded, but a capped size--``$5MM+''--for transactions exceeding $5 million in par value traded; for transactions in Agency Debt Securities that are Non- Investment Grade, FINRA disseminates the entire notional size for transactions of $1 million or less in par value traded but a capped size-- ``1MM+''--for transactions exceeding $1 million in par value traded.\9\ --------------------------------------------------------------------------- \4\ See FINRA Rule 6710(a) (defining ``TRACE-Eligible Security''). \5\ FINRA Rule 6710(l) generally defines ``Agency Debt Security'' to mean a debt security (i) issued or guaranteed by an Agency as defined in paragraph (k); (ii) issued or guaranteed by a Government-Sponsored Enterprise as defined in paragraph (n); or (iii) issued by a trust or other entity that was established or sponsored by a Government-Sponsored Enterprise for the purpose of issuing debt securities, where such enterprise provides collateral to the trust or other entity or retains a material net economic interest in the reference tranches associated with the securities issued by the trust or other entity. \6\ FINRA Rule 6710(h) defines ``Investment Grade'' to mean ``a TRACE-Eligible Security that, if rated by only one nationally recognized statistical rating organization (``NRSRO''), is rated in one of the four highest generic rating categories; or if rated by more than one NRSRO, is rated in one of the four highest generic rating categories by all or a majority of such NRSROs; provided that if the NRSROs assign ratings that are evenly divided between (i) the four highest generic ratings and (ii) ratings lower than the four highest generic ratings, FINRA will classify the TRACE-Eligible Security as Non-Investment Grade for purposes of TRACE. If a TRACE- Eligible Security is unrated, for purposes of TRACE, FINRA may classify the TRACE-Eligible Security as an Investment Grade security. FINRA will classify an unrated Agency Debt Security as defined in [Rule 6710(l)] as an Investment Grade security for purposes of the dissemination of transaction volume.'' \7\ FINRA Rule 6710(i) defines ``Non-Investment Grade'' to mean ``a TRACE-Eligible Security that, if rated by only one NRSRO, is rated lower than one of the four highest generic rating categories; or if rated by more than one NRSRO, is rated lower than one of the four highest generic rating categories by all or a majority of such NRSROs. Except as provided in [Rule 6710(h)], if a TRACE-Eligible Security is unrated, FINRA may classify the TRACE-Eligible Security as a Non-Investment Grade security.'' \8\ See Notice, 83 FR at 42732. \9\ See Securities Exchange Act Release No. 59733 (April 8, 2009), 74 FR 17709, 17712 (April 16, 2009) (SR-FINRA-2009-010) (Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto To Expand TRACE To Include Agency Debt Securities and Primary Market Transactions). --------------------------------------------------------------------------- FINRA has proposed to apply the $5 million dissemination cap to transactions in all Agency Debt Securities, regardless of whether the security is Investment Grade, Non-Investment Grade, or unrated. FINRA has stated that, when adopting the original dissemination caps for Agency Debt Securities, it believed that unrated Agency Debt Securities should default to the $5 million dissemination cap due to factors such as that they trade more consistently with Investment Grade securities that are subject to the $5 million dissemination cap.\10\ FINRA has further stated that it is not aware of the existence of any Non- Investment Grade Agency Debt Securities other than credit risk transfer securities (``CRTs''), a type of Agency Debt Security issued by Fannie Mae (``Fannie'') and Freddie Mac (``Freddie'').\11\ Based on FINRA's experience with CRTs and in consultation with Fannie and Freddie, FINRA believes that it is appropriate to disseminate Non-Investment Grade CRTs with the $5 million dissemination cap. Because CRTs are the only type of Agency Debt Security rated less than Investment Grade, FINRA is proposing to simplify the dissemination structure by applying the $5 million cap to all Agency Debt Securities irrespective of rating.\12\ --------------------------------------------------------------------------- \10\ See Notice, 83 FR at 42732. \11\ See id. \12\ See id. at 42733. In support of the proposal, FINRA provided statistics about the trade count and notional volume traded for Investment Grade, Non-Investment Grade, and unrated Agency Debt Securities indicating that, for both metrics, transactions in Non- Investment Grade Agency Debt Securities currently account for only a small percentage of transactions in Agency Debt Securities. See id. --------------------------------------------------------------------------- FINRA has stated that it will announce the effective date of the rule change in a Regulatory Notice to be published no later than 60 days following a Commission approval, and the effective date will be no later than 120 days following publication of that Regulatory Notice.\13\ --------------------------------------------------------------------------- \13\ See id. --------------------------------------------------------------------------- III. Discussion and Commission Findings After careful consideration, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association.\14\ In particular, the Commission finds that the proposed rule change is consistent with Section 15A(b)(6) of the Act,\15\ which requires, among other things, that FINRA rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. The Commission believes that the proposal is reasonably designed to simplify the dissemination protocols for transactions in Agency Debt Securities by instituting a uniform $5 million dissemination cap, regardless of whether the security is Investment Grade, Non-Investment Grade, or unrated. The Commission received no comments that objected to the proposed rule change and notes that FINRA consulted with Fannie and Freddie before submitting the proposal. --------------------------------------------------------------------------- \14\ In approving this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \15\ 15 U.S.C. 78o-3(b)(6). --------------------------------------------------------------------------- Pursuant to Section 19(b)(5) of the Act,\16\ the Commission consulted with and considered the views of the Treasury Department in determining to approve the proposed rule change. The Treasury Department indicated its support for the proposal.\17\ Pursuant to Section 19(b)(6) of the Act,\18\ the Commission has considered the sufficiency and appropriateness of existing laws and rules applicable to government securities brokers, government securities dealers, and their associated persons in approving the proposal. As discussed above, by applying the $5 million dissemination cap to all Agency Debt Securities regardless of rating, the rule change will simplify the dissemination protocols for transactions in Agency Debt Securities. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78s(b)(5) (providing that the Commission ``shall consult with and consider the views of the Secretary of the Treasury prior to approving a proposed rule filed by a registered securities association that primarily concerns conduct related to transactions in government securities, except where the Commission determines that an emergency exists requiring expeditious or summary action and publishes its reasons therefor''). \17\ Telephone conversation with Treasury Department staff and Brett Redfearn, Director, Division of Trading and Markets, et al., on October 2, 2018. \18\ 15 U.S.C. 78s(b)(6). --------------------------------------------------------------------------- IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\19\ that the proposed rule change (SR-FINRA-2018-032) is approved. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78s(b)(2). \20\ 17 CFR 200.30-3(a)(12). [[Page 51724]] --------------------------------------------------------------------------- For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-22203 Filed 10-11-18; 8:45 am] BILLING CODE 8011-01-P
![51722 Federal Register / Vol. 83, No. 198 / Friday, October 12, 2018 / Notices
FINRA qualification examinations are C. Self-Regulatory Organization’s Commission and any person, other than
not designed to provide information Statement on Comments on the those that may be withheld from the
beyond demonstration of basic Proposed Rule Change Received From public in accordance with the
proficiency. For these reasons, Members, Participants, or Others provisions of 5 U.S.C. 552, will be
comparisons of test scores across Written comments were neither available for website viewing and
candidates may not be appropriate.12 solicited nor received. printing in the Commission’s Public
Reference Room, 100 F Street NE,
Nevertheless, to the extent that test III. Date of Effectiveness of the Washington, DC 20549, on official
scores are used by individuals and Proposed Rule Change and Timing for business days between the hours of 10
others today, restricting the information Commission Action a.m. and 3 p.m. Copies of such filing
may impose certain costs. For The foregoing rule change has become also will be available for inspection and
individuals, these costs can vary from effective pursuant to Section 19(b)(3)(A) copying at the principal office of
time and effort to differentiate of the Act 13 and paragraph (f)(1) of Rule FINRA. All comments received will be
themselves, to direct monetary costs if 19b–4 thereunder.14 At any time within posted without change. Persons
a test score would have improved their 60 days of the filing of the proposed rule submitting comments are cautioned that
compensation or position. Regardless of change, the Commission summarily may we do not redact or edit personal
its predictive ability, where parties temporarily suspend such rule change if identifying information from comment
today rely on the details of passing it appears to the Commission that such submissions. You should submit only
scores to make decisions and would action is necessary or appropriate in the information that you wish to make
make a different judgment in the public interest, for the protection of available publicly. All submissions
absence of such information, the change investors, or otherwise in furtherance of should refer to File Number SR–FINRA–
may result in an economic transfer away the purposes of the Act. If the 2018–036 and should be submitted on
from high-scoring individuals towards Commission takes such action, the or before November 2, 2018.
others. Commission shall institute proceedings For the Commission, by the Division of
to determine whether the proposed rule Trading and Markets, pursuant to delegated
Impact on Other Users of the should be approved or disapproved. authority.15
Information
IV. Solicitation of Comments Eduardo A. Aleman,
The economic impact to others is Interested persons are invited to Assistant Secretary.
fundamentally related to the extent to submit written data, views and [FR Doc. 2018–22205 Filed 10–11–18; 8:45 am]
which candidates share passing score arguments concerning the foregoing, BILLING CODE 8011–01–P
information with current or prospective including whether the proposed rule
employers and the reliability of such change is consistent with the Act.
scores as a signal in the contexts for Comments may be submitted by any of SECURITIES AND EXCHANGE
which they are being used. the following methods: COMMISSION
In situations where passing scores are Electronic Comments
misleading and cause users to make [Release No. 34–84374; File No. SR–FINRA–
• Use the Commission’s internet 2018–032]
inefficient or ineffective decisions, the comment form (http://www.sec.gov/
elimination of this information may lead rules/sro.shtml); or Self-Regulatory Organizations;
to benefits through better decision • Send an email to rule-comments@ Financial Industry Regulatory
making. In situations where passing sec.gov. Please include File Number SR– Authority, Inc.; Order Approving
scores are not misleading but are FINRA–2018–036 on the subject line. Proposed Rule Change to FINRA Rule
uninformative, they add noise to the 6710 To Modify the Dissemination
Paper Comments
decision-making process. However, Protocols for Agency Debt Securities
noisy information should not cause • Send paper comments in triplicate
consistent bias in the aggregate. Finally, to Secretary, Securities and Exchange October 5, 2018.
in situations where passing scores are Commission, 100 F Street NE,
Washington, DC 20549–1090. I. Introduction
viewed as providing valuable
information in decision making, the All submissions should refer to File On August 16, 2018, the Financial
elimination of this information may Number SR–FINRA–2018–036. This file Industry Regulatory Authority, Inc.
result in the need for an alternative number should be included on the (‘‘FINRA’’) filed with the Securities and
process and, in turn, result in additional subject line if email is used. To help the Exchange Commission (‘‘Commission’’),
costs. Commission process and review your pursuant to Section 19(b)(1) of the
comments more efficiently, please use Securities Exchange Act of 1934
only one method. The Commission will (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
(available at: http://www.finra.org/industry/chief- post all comments on the Commission’s proposed rule change to modify the
economist). internet website (http://www.sec.gov/ dissemination protocols for Agency
12 The Standard for Educational and rules/sro.shtml). Copies of the Debt Securities. The proposed rule
Psychological Testing published by the American submission, all subsequent change was published for comment in
Education Research Association, American amendments, all written statements the Federal Register on August 23,
khammond on DSK30JT082PROD with NOTICES
Psychological Association, and National Council on with respect to the proposed rule
Measurement in Education have established that
2018.3 The Commission received no
change that are filed with the comment letters on the proposed rule
‘‘[i]f validity for some common or likely
interpretation for a given use has not been
Commission, and all written
evaluated, or if such an interpretation is communications relating to the 15 17 CFR 200.30–3(a)(12).
inconsistent with available evidence, that fact proposed rule change between the 1 15 U.S.C. 78s(b)(1).
should be made clear and potential users should be 2 17 CFR 240.19b–4.
strongly cautioned about making unsupported 13 15 U.S.C. 78s(b)(3)(A). 3 See Securities Exchange Act Release No. 83882
interpretations.’’ 14 17 CFR 240.19b–4(f)(1). (August 17, 2018), 83 FR 42732 (‘‘Notice’’).
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![Federal Register / Vol. 83, No. 198 / Friday, October 12, 2018 / Notices 51723
change. This order approves the transactions exceeding $1 million in par a national securities association.14 In
proposed rule change. value traded.9 particular, the Commission finds that
FINRA has proposed to apply the $5 the proposed rule change is consistent
II. Description of the Proposal
million dissemination cap to with Section 15A(b)(6) of the Act,15
Under FINRA’s rules, each member transactions in all Agency Debt which requires, among other things, that
firm is required to report to the Trade Securities, regardless of whether the FINRA rules be designed to prevent
Reporting and Compliance Engine security is Investment Grade, Non- fraudulent and manipulative acts and
(‘‘TRACE’’) transactions in TRACE- Investment Grade, or unrated. FINRA practices, to promote just and equitable
Eligible Securities,4 including securities has stated that, when adopting the principles of trade, and, in general, to
that meet the definition of ‘‘Agency Debt original dissemination caps for Agency protect investors and the public interest.
Security.’’ 5 Currently, for disseminated Debt Securities, it believed that unrated The Commission believes that the
reports of transactions in Agency Debt Agency Debt Securities should default proposal is reasonably designed to
Securities, FINRA displays either the to the $5 million dissemination cap due simplify the dissemination protocols for
entire notional size (volume) of the to factors such as that they trade more transactions in Agency Debt Securities
transaction or a capped amount, consistently with Investment Grade by instituting a uniform $5 million
depending on whether the security is securities that are subject to the $5 dissemination cap, regardless of
Investment Grade,6 Non-Investment million dissemination cap.10 FINRA has whether the security is Investment
Grade,7 or unrated.8 For Agency Debt further stated that it is not aware of the Grade, Non-Investment Grade, or
Securities that are Investment Grade or existence of any Non-Investment Grade unrated. The Commission received no
unrated, FINRA disseminates the entire Agency Debt Securities other than credit comments that objected to the proposed
notional size for transactions of $5 risk transfer securities (‘‘CRTs’’), a type rule change and notes that FINRA
million or less in par value traded, but of Agency Debt Security issued by consulted with Fannie and Freddie
a capped size—‘‘$5MM+’’—for before submitting the proposal.
Fannie Mae (‘‘Fannie’’) and Freddie Mac
transactions exceeding $5 million in par Pursuant to Section 19(b)(5) of the
(‘‘Freddie’’).11 Based on FINRA’s
value traded; for transactions in Agency Act,16 the Commission consulted with
experience with CRTs and in
Debt Securities that are Non-Investment and considered the views of the
consultation with Fannie and Freddie,
Grade, FINRA disseminates the entire Treasury Department in determining to
FINRA believes that it is appropriate to
notional size for transactions of $1 approve the proposed rule change. The
disseminate Non-Investment Grade
million or less in par value traded but Treasury Department indicated its
CRTs with the $5 million dissemination
a capped size— ‘‘1MM+’’—for
cap. Because CRTs are the only type of support for the proposal.17 Pursuant to
4 See FINRA Rule 6710(a) (defining ‘‘TRACE-
Agency Debt Security rated less than Section 19(b)(6) of the Act,18 the
Eligible Security’’). Investment Grade, FINRA is proposing Commission has considered the
5 FINRA Rule 6710(l) generally defines ‘‘Agency to simplify the dissemination structure sufficiency and appropriateness of
Debt Security’’ to mean a debt security (i) issued or by applying the $5 million cap to all existing laws and rules applicable to
guaranteed by an Agency as defined in paragraph government securities brokers,
(k); (ii) issued or guaranteed by a Government-
Agency Debt Securities irrespective of
Sponsored Enterprise as defined in paragraph (n); rating.12 government securities dealers, and their
or (iii) issued by a trust or other entity that was FINRA has stated that it will associated persons in approving the
established or sponsored by a Government- announce the effective date of the rule proposal. As discussed above, by
Sponsored Enterprise for the purpose of issuing applying the $5 million dissemination
debt securities, where such enterprise provides change in a Regulatory Notice to be
collateral to the trust or other entity or retains a published no later than 60 days cap to all Agency Debt Securities
material net economic interest in the reference following a Commission approval, and regardless of rating, the rule change will
tranches associated with the securities issued by the the effective date will be no later than simplify the dissemination protocols for
trust or other entity.
6 FINRA Rule 6710(h) defines ‘‘Investment 120 days following publication of that transactions in Agency Debt Securities.
Grade’’ to mean ‘‘a TRACE-Eligible Security that, if Regulatory Notice.13 IV. Conclusion
rated by only one nationally recognized statistical
rating organization (‘‘NRSRO’’), is rated in one of III. Discussion and Commission It is therefore ordered, pursuant to
the four highest generic rating categories; or if rated Findings Section 19(b)(2) of the Act,19 that the
by more than one NRSRO, is rated in one of the four
highest generic rating categories by all or a majority After careful consideration, the proposed rule change (SR–FINRA–
of such NRSROs; provided that if the NRSROs Commission finds that the proposed 2018–032) is approved.
assign ratings that are evenly divided between (i) rule change is consistent with the
the four highest generic ratings and (ii) ratings 14 In approving this proposal, the Commission has
lower than the four highest generic ratings, FINRA requirements of the Act and the rules
considered the proposed rule’s impact on
will classify the TRACE-Eligible Security as Non- and regulations thereunder applicable to efficiency, competition, and capital formation. See
Investment Grade for purposes of TRACE. If a 15 U.S.C. 78c(f).
TRACE-Eligible Security is unrated, for purposes of 9 See Securities Exchange Act Release No. 59733 15 15 U.S.C. 78o–3(b)(6).
TRACE, FINRA may classify the TRACE-Eligible
(April 8, 2009), 74 FR 17709, 17712 (April 16, 2009) 16 15 U.S.C. 78s(b)(5) (providing that the
Security as an Investment Grade security. FINRA
(SR–FINRA–2009–010) (Notice of Filing of Commission ‘‘shall consult with and consider the
will classify an unrated Agency Debt Security as
defined in [Rule 6710(l)] as an Investment Grade Proposed Rule Change and Amendment No. 1 views of the Secretary of the Treasury prior to
security for purposes of the dissemination of Thereto To Expand TRACE To Include Agency Debt approving a proposed rule filed by a registered
transaction volume.’’ Securities and Primary Market Transactions). securities association that primarily concerns
7 FINRA Rule 6710(i) defines ‘‘Non-Investment
10 See Notice, 83 FR at 42732. conduct related to transactions in government
11 See id. securities, except where the Commission
Grade’’ to mean ‘‘a TRACE-Eligible Security that, if
12 See id. at 42733. In support of the proposal, determines that an emergency exists requiring
rated by only one NRSRO, is rated lower than one
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FINRA provided statistics about the trade count and expeditious or summary action and publishes its
of the four highest generic rating categories; or if
notional volume traded for Investment Grade, Non- reasons therefor’’).
rated by more than one NRSRO, is rated lower than 17 Telephone conversation with Treasury
one of the four highest generic rating categories by Investment Grade, and unrated Agency Debt
all or a majority of such NRSROs. Except as Securities indicating that, for both metrics, Department staff and Brett Redfearn, Director,
provided in [Rule 6710(h)], if a TRACE-Eligible transactions in Non-Investment Grade Agency Debt Division of Trading and Markets, et al., on October
Security is unrated, FINRA may classify the Securities currently account for only a small 2, 2018.
18 15 U.S.C. 78s(b)(6).
TRACE-Eligible Security as a Non-Investment Grade percentage of transactions in Agency Debt
security.’’ Securities. See id. 19 15 U.S.C. 78s(b)(2).
8 See Notice, 83 FR at 42732. 13 See id. 20 17 CFR 200.30–3(a)(12).
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![51724 Federal Register / Vol. 83, No. 198 / Friday, October 12, 2018 / Notices
For the Commission, by the Division of The Exchange has prepared summaries, First Trust Advisors L.P. will be the
Trading and Markets, pursuant to delegated set forth in sections A, B, and C below, Fund’s investment adviser (‘‘Adviser’’).
authority.20 of the most significant parts of such First Trust Portfolios L.P. will be the
Eduardo A. Aleman, statements. Fund’s distributor. Brown Brothers
Assistant Secretary. Harriman & Co. will serve as custodian
A. Self-Regulatory Organization’s
[FR Doc. 2018–22203 Filed 10–11–18; 8:45 am] (‘‘Custodian’’) and transfer agent
Statement of the Purpose of, and the
BILLING CODE 8011–01–P (‘‘Transfer Agent’’) for the Fund.
Statutory Basis for, the Proposed Rule Commentary .06 to Rule 8.600–E
Change provides that, if the investment adviser
SECURITIES AND EXCHANGE 1. Purpose to the investment company issuing
COMMISSION The Exchange proposes to list and Managed Fund Shares is affiliated with
trade shares (‘‘Shares’’) of the First Trust a broker-dealer, such investment adviser
[Release No. 34–84379; File No. SR–
Short Duration Managed Municipal ETF shall erect and maintain a ‘‘fire wall’’
NYSEArca–2018–73]
(‘‘Fund’’) under NYSE Arca Rule 8.600– between the investment adviser and the
Self-Regulatory Organizations; NYSE E,4 which governs the listing and broker-dealer with respect to access to
Arca, Inc.; Notice of Filing and trading of Managed Fund Shares.5 The information concerning the composition
Immediate Effectiveness of Proposed Shares will be offered by First Trust and/or changes to such investment
Rule Change Relating To Listing and Exchange-Traded Fund III (the ‘‘Trust’’), company portfolio.7 In addition,
Trading of Shares of the First Trust which is registered with the Commentary .06 further requires that
Short Duration Managed Municipal ETF Commission as an open-end personnel who make decisions on the
Under NYSE Arca Rule 8.600–E management investment company.6 The open-end fund’s portfolio composition
Fund is a series of the Trust. must be subject to procedures designed
October 5, 2018. to prevent the use and dissemination of
Pursuant to Section 19(b)(1) 1 of the 4 The Securities and Exchange Commission material nonpublic information
Securities Exchange Act of 1934 (the (‘‘Commission’’) has approved Exchange listing and regarding the open-end fund’s portfolio.
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 trading shares of actively managed funds that The Adviser is not registered as a
notice is hereby given that, on October principally hold municipal bonds. See, e.g., broker-dealer but is affiliated with a
Securities Exchange Act Release Nos. 60981
3, 2018, NYSE Arca, Inc. (the (November 10, 2009), 74 FR 59594 (November 18, broker-dealer, and has implemented and
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with 2009) (SR–NYSEArca–2009–79) (order approving will maintain a ‘‘fire wall’’ with respect
the Securities and Exchange listing and trading of shares of the PIMCO Short- to such broker-dealer affiliate regarding
Commission (the ‘‘Commission’’) the Term Municipal Bond Strategy Fund and PIMCO access to information concerning the
Intermediate Municipal Bond Strategy Fund); 79293
proposed rule change as described in (November 10, 2016), 81 FR 81189 (November 17,
composition of and/or changes to the
Items I and II below, which Items have 2016) (SR–NYSEArca–2016–107) (order approving Fund’s portfolio. In addition, personnel
been prepared by the self-regulatory listing and trading of shares of Cumberland who make decisions on the Fund’s
organization. The Commission is Municipal Bond ETF under Rule 8.600); 80865 portfolio composition must be subject to
(June 6, 2017), 82 FR 26970 (June 12, 2017) (order
publishing this notice to solicit approving listing and trading of shares of the
procedures designed to prevent the use
comments on the proposed rule change Franklin Liberty Intermediate Municipal and dissemination of material, non-
from interested persons. Opportunities ETF and Franklin Liberty Municipal
Bond ETF under NYSE Arca Equities Rule 8.600); (‘‘Registration Statement’’). The description of the
I. Self-Regulatory Organization’s 80885 (June 8, 2017), 82 FR 27302 (June 14, 2017) operation of the Trust and the Fund herein is based,
Statement of the Terms of Substance of (order approving listing and trading of shares of the in part, on the Registration Statement. In addition,
IQ Municipal Insured ETF, IQ Municipal Short the Commission has issued an order granting
the Proposed Rule Change Duration ETF, and IQ Municipal Intermediate ETF certain exemptive relief to the Trust under the 1940
The Exchange proposes to list and under NYSE Arca Equities Rule 8.600); 82166 Act. See Investment Company Act Release No.
(November 29, 2017), 82 FR 57497 (December 5, 30029 (April 10, 2012) (File No. 812–13795)
trade shares of the First Trust Short 2017) (SR–NYSEArca–2017–90) (order approving (‘‘Exemptive Order’’).
Duration Managed Municipal ETF listing and trading of shares of the Hartford 7 An investment adviser to an open-end fund is
under NYSE Arca Rule 8.600–E Municipal Opportunities ETF Under NYSE Arca required to be registered under the Investment
(‘‘Managed Fund Shares’’). The Rule 8.600–E). The Commission also has approved Advisers Act of 1940 (the ‘‘Advisers Act’’). As a
listing and trading on the Exchange of shares of the result, the Adviser and its related personnel are
proposed rule change is available on the SPDR Nuveen S&P High Yield Municipal Bond subject to the provisions of Rule 204A–1 under the
Exchange’s website at www.nyse.com, at Fund under Commentary .02 of NYSE Arca Equities Advisers Act relating to codes of ethics. This Rule
the principal office of the Exchange, and Rule 5.2(j)(3). See Securities Exchange Act Release requires investment advisers to adopt a code of
at the Commission’s Public Reference No.63881 (February 9, 2011), 76 FR 9065 (February ethics that reflects the fiduciary nature of the
16, 2011) (SR–NYSEArca–2010–120). relationship to clients as well as compliance with
Room. 5 A Managed Fund Share is a security that
other applicable securities laws. Accordingly,
II. Self-Regulatory Organization’s represents an interest in an investment company procedures designed to prevent the communication
registered under the Investment Company Act of and misuse of non-public information by an
Statement of the Purpose of, and 1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as investment adviser must be consistent with Rule
Statutory Basis for, the Proposed Rule an open-end investment company or similar entity 204A–1 under the Advisers Act. In addition, Rule
Change that invests in a portfolio of securities selected by 206(4)–7 under the Advisers Act makes it unlawful
its investment adviser consistent with its for an investment adviser to provide investment
In its filing with the Commission, the investment objectives and policies. In contrast, an advice to clients unless such investment adviser has
self-regulatory organization included open-end investment company that issues (i) adopted and implemented written policies and
statements concerning the purpose of, Investment Company Units, listed and traded on procedures reasonably designed to prevent
the Exchange under NYSE Arca Rule 5.2–E(j)(3), violation, by the investment adviser and its
and basis for, the proposed rule change seeks to provide investment results that correspond supervised persons, of the Advisers Act and the
khammond on DSK30JT082PROD with NOTICES
and discussed any comments it received generally to the price and yield performance of a Commission rules adopted thereunder; (ii)
on the proposed rule change. The text specific foreign or domestic stock index, fixed implemented, at a minimum, an annual review
of those statements may be examined at income securities index or combination thereof. regarding the adequacy of the policies and
6 The Trust is registered under the 1940 Act. On procedures established pursuant to subparagraph (i)
the places specified in Item IV below.
August 17, 2018, the Trust filed with the above and the effectiveness of their
Commission its registration statement on Form N– implementation; and (iii) designated an individual
1 15 U.S.C. 78s(b)(1). 1A under the Securities Act of 1933 (15 U.S.C. 77a) (who is a supervised person) responsible for
2 15 U.S.C. 78a. (‘‘Securities Act’’), and under the 1940 Act relating administering the policies and procedures adopted
3 17 CFR 240.19b–4. to the Fund (File Nos. 333–176976 and 811–22245) under subparagraph (i) above.
VerDate Sep<11>2014 19:19 Oct 11, 2018 Jkt 247001 PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 E:\FR\FM\12OCN1.SGM 12OCN1](https://thefederalregister.org/doc/83_FR_51920/page/3.svg)
Document Created: 2018-10-13 10:09:47
Document Modified: 2018-10-13 10:09:47
| 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 | 83 FR 51722 |
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