I. Introduction

On December 2, 2015, NYSE Arca, Inc. (“Exchange” or “NYSE Arca”) 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 proposal to change a representation the Exchange made in support of a prior proposed rule change. The proposed rule change was published for comment in the Federal Register on December 21, 2015.^[3] The Commission received no comments on the proposed rule change. This order approves the proposed rule change.

II. The Exchange's Description of the Proposed Rule Change

A. The Prior Proposal

The Commission approved the listing and trading on the Exchange of shares (“Shares”) of the WisdomTree Put Write Strategy Fund (“Fund”) under NYSE Arca Equities Rule 5.2(j)(3), which governs the listing and trading of Investment Company Units.^[4] The Exchange filed that proposed rule change because the Fund and the Shares did not meet all of the “generic” listing requirements of Commentary .01(a)(A) to NYSE Arca Equities Rule 5.2(j)(3), applicable to the listing of Investment Company Units based upon an index of “US Component Stocks.” ^[5] The Exchange represented that the Shares would conform to the initial and continued listing criteria under NYSE Arca Equities Rules 5.2(j)(3) and 5.5(g)(2), except that the underlying index, the CBOE S&P 500 Put Write Index (the “Index”), would not meet the requirements of NYSE Arca Equities Rule 5.2(j)(3), Commentary .01(a)(A)(1)-(5). The Exchange, however, also represented that the Index would (1) include a minimum of 20 components, and therefore (2) meet the numerical requirements of NYSE Arca Equities Rule 5.2(j)(3), Commentary .01(a)(A)(4), which requires a minimum of 13 index or portfolio components.

The Exchange has not listed or commenced trading in the Shares.^[6]

B. The Instant Proposed Rule Change

The Exchange submitted this proposal to correct two representations made in support of its prior proposal to list and trade the Shares. Specifically, the Exchange seeks to strike its representations that the Index will (1) include a minimum of 20 components; and (2) meet the numerical requirements of NYSE Arca Equities Rule 5.2(j)(3), Commentary .01(a)(A)(4). At any given time, the Index consists of one component, an “SPX Put.” ^[7] Additionally, NYSE Arca clarifies that the Commentary is inapplicable because the Index contains options components.^[8]

The Exchange asserts that the deletion of its prior representations would not adversely affect investors or the public interest, because the Index is based on CBOE-traded puts on the S&P 500, which are highly liquid.^[9] The Exchange further estimates that, on the launch date, the Fund would hold approximately $2.5-$5.0 million in cash and cash equivalents. The Exchange also believes that sufficient protections are in place to protect against market manipulation of the Fund's Shares and SPX Puts because: (i) Trading in the Shares and the underlying Fund instruments are subject to the federal securities laws and to the Exchange's, CBOE's, and the Financial Industry Regulatory Authority's rules and surveillance programs, which are designed to detect violations; (ii) assets in the portfolio—which will primarily be short-term U.S. Treasury bills ^[10] and SPX Puts—will be acquired in extremely liquid and highly regulated markets; and (iii) the exchange-traded fund creation/redemption and arbitrage mechanisms are tied to the large pool of liquidity of each of the Fund's underlying investments.

The Exchange represents that trading in the Shares will be subject to the existing trading surveillances and 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. Furthermore, the Financial Industry ( printed page 6917) Regulatory Authority (“FINRA”), on behalf of the Exchange, or the regulatory staff of the Exchange, will communicate as needed regarding trading in the Shares and SPX Index options with other markets and other entities that are members of the Intermarket Surveillance Group (“ISG”), and FINRA, on behalf of the Exchange, or the regulatory staff of the Exchange, may obtain trading information regarding trading in the portfolio securities from these markets and other entities. In addition, the regulatory staff of the Exchange may obtain information regarding trading in the portfolio securities from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.

III. Discussion and Commission's Findings

After careful review, the Commission finds that the exchange's proposal is consistent with the requirements of Section 6 of the Act ^[11] and the rules and regulations thereunder applicable to a national securities exchange.^[12] In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,^[13] which requires, among other things, that the Exchange's rules be 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 a national market system, and, in general, to protect investors and the public interest.

The Commission believes that it would be difficult to manipulate the price of the Shares by manipulating the prices of its underlying assets. The Fund's portfolio will comprise cash, short-term U.S. Treasury bills, and SPX Puts.^[14] The Exchange contends that neither short-term Treasury securities nor SPX Puts are readily susceptible to market manipulation due to the deep liquidity in^[15] and extensive oversight of those markets.^[16] With respect to SPX Puts, specifically, the Exchange has provided data demonstrating that the average daily trading volume (through expiration) of recent SPX Puts compares favorably to the average daily trading volumes of at-the-money put options on other major indexes and is, in fact, higher than that of at-the-money puts on the Russell 2000 index.^[17]

For these reasons, the Commission believes that it would be difficult to manipulate the price of the Shares by manipulating the prices of its underlying assets. The Commission also notes that, except as discussed above, all other representations made in support of the Prior Release remain unchanged.

For the foregoing reasons, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act ^[18] and the rules and regulations thereunder applicable to a national securities exchange.

IV. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the Act,^[19] that the proposed rule change (SR-NYSEArca-2015-113), be, and it hereby is, approved.