Notice2021-15811
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Reflect an Amendment to the Application and Exemptive Order Governing Shares of Active Proxy Portfolio Shares Issued by T. Rowe Price Exchange-Traded Funds, Inc. Which Are Listed and Traded on the Exchange
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 26, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 140 (Monday, July 26, 2021)</title>
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[Federal Register Volume 86, Number 140 (Monday, July 26, 2021)]
[Notices]
[Pages 40102-40104]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-15811]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92449; File No. SR-NYSEArca-2021-61]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Reflect an
Amendment to the Application and Exemptive Order Governing Shares of
Active Proxy Portfolio Shares Issued by T. Rowe Price Exchange-Traded
Funds, Inc. Which Are Listed and Traded on the Exchange
July 20, 2021.
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 July 7, 2021, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') 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 Exchange. 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 reflect an amendment to the Application
and Exemptive Order governing the following funds, shares of which are
listed and traded on the Exchange under NYSE Arca Rule 8.601-E: T. Rowe
Price Blue Chip Growth ETF, T. Rowe Price Dividend Growth ETF, T. Rowe
Price Growth Stock ETF, T. Rowe Price Equity Income ETF, and T. Rowe
Price U.S. Equity Research ETF. The proposed rule change is available
on the Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, 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 adopted NYSE Arca Rule 8.601-E for the purpose of
permitting the listing and trading, or trading pursuant to unlisted
trading privileges (``UTP''), of Active Proxy Portfolio Shares, which
are securities issued by an actively managed open-end investment
management company.\4\ Commentary .01 to Rule 8.601-E requires the
Exchange to file separate proposals under Section 19(b) of the Act
before listing and trading any series of Active Proxy Portfolio Shares
on the Exchange. Pursuant to this provision, the Exchange submitted
proposals to list and trade shares (``Shares'') of Active Proxy
Portfolio Shares of the following Funds listed and traded on the
Exchange under NYSE Arca Rule 8.601-E: T. Rowe Price Blue Chip Growth
ETF, T. Rowe Price Dividend Growth ETF, T. Rowe Price Growth Stock ETF,
T. Rowe Price Equity Income ETF, and, separately, T. Rowe Price U.S.
Equity Research ETF \5\ (each, a ``Fund'' and, together, the
``Funds''). The Exchange proposes to reflect an amendment to the Prior
Exemptive Order (as defined below) governing the listing and trading of
these Funds filed by, among others, T. Rowe Price Exchange-Traded
Funds, Inc. (the ``Issuer''), as follows.
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\4\ See Securities Exchange Act Release No. 89185 (June 29,
2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95). Rule 8.601-
E(c)(1) provides that ``[t]he term ``Active Proxy Portfolio Share''
means a security that (a) is issued by an investment company
registered under the Investment Company Act of 1940 (``Investment
Company'') organized as an open-end management investment company
that invests in a portfolio of securities selected by the Investment
Company's investment adviser consistent with the Investment
Company's investment objectives and policies; (b) is issued in a
specified minimum number of shares, or multiples thereof, in return
for a deposit by the purchaser of the Proxy Portfolio and/or cash
with a value equal to the next determined net asset value (``NAV'');
(c) when aggregated in the same specified minimum number of Active
Proxy Portfolio Shares, or multiples thereof, may be redeemed at a
holder's request in return for the Proxy Portfolio and/or cash to
the holder by the issuer with a value equal to the next determined
NAV; and (d) the portfolio holdings for which are disclosed within
at least 60 days following the end of every fiscal quarter.'' Rule
8.601-E(c)(2) provides that ``[t]he term ``Actual Portfolio'' means
the identities and quantities of the securities and other assets
held by the Investment Company that shall form the basis for the
Investment Company's calculation of NAV at the end of the business
day.'' Rule 8.601-E(c)(3) provides that ``[t]he term ``Proxy
Portfolio'' means a specified portfolio of securities, other
financial instruments and/or cash designed to track closely the
daily performance of the Actual Portfolio of a series of Active
Proxy Portfolio Shares as provided in the exemptive relief pursuant
to the Investment Company Act of 1940 applicable to such series.''
\5\ On June 30, 2020, the Commission approved the proposed rule
change relating to the listing and trading of shares of T. Rowe
Price Blue Chip Growth ETF, T. Rowe Price Dividend Growth ETF, T.
Rowe Price Growth Stock ETF, T. Rowe Price Equity Income ETF. See
Securities Exchange Act Release No. 89191 (June 30, 2020), 85 FR
40358 (July 6, 2020) (SR-NYSEArca-2019-92) (Notice of Filing of
Amendment No. 3 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 3, to List and
Trade Four Series of Active Proxy Portfolio Shares Issued by T. Rowe
Price Exchange-Traded Funds, Inc. Under NYSE Arca Rule 8.601-E)
(``Approval Order'')). The Commission published the notice of filing
and immediate effectiveness relating to the rule change to list and
trade shares of the T. Rowe Price U.S. Equity Research ETF on March
15, 2021. See Securities Exchange Act Release No. 91322 (March 15,
2021), 86 FR 14980 (March 19, 2021) (SR-NYSEArca-2021-17) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating
to Listing and Trading of Shares of the T. Rowe Price U.S. Equity
Research ETF under NYSE Arca Rule 8.601-E (``Notice'')).
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The Issuer filed a seventh amended application for an order under
Section 6(c) of the 1940 Act for exemptions from various provisions of
the 1940 Act and rules thereunder (the ``Prior Application'').\6\ On
December 10, 2019, the Commission issued an order (the ``Prior
Exemptive Order'') under the 1940 Act granting the exemptions requested
in the Application.\7\
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\6\ See File No. 812-14214, dated October 16, 2019.
\7\ See Investment Company Act Release No. 33713, December 10,
2019.
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Under the Prior Exemptive Order, the Funds are required to publish
a basket of securities and cash that, while different from the Fund's
portfolio, is designed to closely track its daily performance (``Proxy
Portfolio''). The Prior Application stated that each Fund's Proxy
Portfolio will be determined such that at least 80% of its total assets
will overlap with the portfolio weightings of the Fund (the ``Portfolio
Overlap''). As set forth in the Approval Order and in the Notice,
investments made by the T. Rowe Price Blue Chip Growth ETF, T. Rowe
Price Dividend Growth ETF, T. Rowe Price Growth Stock ETF, T. Rowe
Price Equity Income ETF, and T. Rowe Price U.S. Equity Research ETF
will comply with the conditions set forth in the Prior Application and
the Prior Exemptive Order.\8\
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\8\ See Approval Order, 85 FR at 40360, n. 18; Notice, 86 FR at
14981, n.9.
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On February 4, 2021, as amended on March 30, 2021, the Issuer
sought to amend the Prior Exemptive Order to permit use of creation
baskets \9\ that
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include instruments that are not included, or are included with
different weightings, in the Funds' Proxy Portfolio (the ``Updated
Application'').\10\ In addition, the Updated Application noted that the
Portfolio Overlap may be less than 80%.
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\9\ As set forth in the Notice, Shares of the Funds are
purchased and redeemed in specified minimum size ``Creation Units''
and generally on an in-kind basis. Except where the purchase or
redemption includes cash under the circumstances specified in the
Notice, purchasers must purchase Creation Units by making an in-kind
deposit of specified instruments (``Deposit Instruments''), and
shareholders redeeming Shares will receive an in-kind transfer of
specified instruments (``Redemption Instruments''). The names and
quantities of the instruments that constitute the Deposit
Instruments and the Redemption Instruments for a Fund are known
collectively as a ``Creation Basket'' and are the same as a Fund's
designated Proxy Portfolio, except to the extent that a Fund
requires purchases and redemptions to be made entirely or in part on
a cash basis, as described below. See Notice, 86 FR at 14980.
\10\ See File No. 812-15197, dated March 30, 2021.
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On May 18, 2021, the Commission issued an amended order that, among
other things, permits each Fund's Portfolio Overlap to be less than 80%
(the ``Updated Exemptive Order'').\11\ Accordingly, investments made by
the T. Rowe Price Blue Chip Growth ETF, T. Rowe Price Dividend Growth
ETF, T. Rowe Price Growth Stock ETF, T. Rowe Price Equity Income ETF,
and T. Rowe Price U.S. Equity Research ETF will comply with this
condition of the Updated Application and the Updated Exemptive Order.
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\11\ See Investment Company Act Release No. 34272, May 18, 2021.
Although the Updated Exemptive Order permits the use of Creation
Baskets that include instruments that are not included, or are
included with different weightings, in a Fund's Proxy Portfolio,
that aspect of the Updated Exemptive Order is not part of this
proposed rule change.
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Except for the change noted above, all other representations made
in the respective rule filings remain unchanged and will continue to
constitute continuing listing requirements for the Funds. The Funds
will also continue to comply with the requirements of Rule 8.601-E.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\12\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\13\ in particular, in that it
is 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.\14\
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ The Exchange represents that, for initial and continued
listing, the Fund will be in compliance with Rule 10A-3 under the
Act, as provided by NYSE Arca Rule 5.3-E.
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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. The proposed revision is intended to reflect the
change in the Updated Application and the Updated Exemptive Order that
permits each of the Funds' Portfolio Overlap to be less than 80%. As
noted, the Approval Order and the Notice reflected that the Funds'
Portfolio Overlap would be at least 80%. The proposed rule change would
permit the Funds to operate consistent with this updated condition in
the Updated Application and the Updated Exemptive Order. Except for the
changes noted above, all other representations made in the respective
rule filings remain unchanged and, as noted, will continue to
constitute continuing listing requirements for the Funds.
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. As noted, the purpose of the
filing is to reflect an amendment to the Prior Exemptive Order
governing the listing and trading of these Funds. To the extent that
the proposed rule change would continue to permit listing and trading
of another type of actively-managed ETF that has characteristics
different from existing actively-managed and index ETFs, the Exchange
believes that the proposal would benefit investors by continuing to
promote competition among various ETF products.
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 \15\ and Rule 19b-
4(f)(6) thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \17\ 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
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The Exchange
states that the Funds will continue to comply with the requirements of
Rule 8.601-E and that waiver of the operative delay would allow the
Funds to operate in a manner consistent with the Updated Application
and Updated Exemptive Order. For these reasons, the Commission believes
that waiver of the 30-day operative delay is consistent with the
protection of investors and the public interest. Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposed rule change operative upon filing.\18\
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\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ 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.
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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#96e4e3faf3bbf5f9fbfbf3f8e2e5d6e5f3f5b8f1f9e0"><span class="__cf_email__" data-cfemail="6012150c054d030f0d0d050e1413201305034e070f16">[email protected]</span></a>. Please include
File Number SR-NYSEArca-2021-61 on the subject line.
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Paper Comments
<bullet> 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-2021-61. 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 website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2021-61 and should be submitted
on or before August 16, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-15811 Filed 7-23-21; 8:45 am]
BILLING CODE 8011-01-P
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