Notice2021-24620
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Reflect a Modification to the Permitted Components of the Tracking Baskets of the Putnam Focused Large Cap Growth ETF, Putnam Focused Large Cap Value ETF, Putnam Sustainable Future ETF, and Putnam Sustainable Leaders ETF
Primary source
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Published
November 12, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 216 (Friday, November 12, 2021)</title>
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[Federal Register Volume 86, Number 216 (Friday, November 12, 2021)]
[Notices]
[Pages 62855-62858]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-24620]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93528; File No. SR-NYSEArca-2021-93]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Reflect a
Modification to the Permitted Components of the Tracking Baskets of the
Putnam Focused Large Cap Growth ETF, Putnam Focused Large Cap Value
ETF, Putnam Sustainable Future ETF, and Putnam Sustainable Leaders ETF
November 5, 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 October 29, 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 Putnam Focused Large Cap Growth ETF,
Putnam Focused Large Cap Value ETF, Putnam Sustainable Future ETF, and
Putnam Sustainable Leaders ETF, which are listed and traded on the
Exchange under NYSE Arca Rule 8.601-E. 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
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\
[[Page 62856]]
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 a proposal to list and trade
shares (``Shares'') of Active Proxy Portfolio Shares of the Putnam
Focused Large Cap Growth ETF, Putnam Focused Large Cap Value ETF,
Putnam Sustainable Future ETF, and Putnam Sustainable Leaders ETF \5\
(each a ``Fund'' and, collectively, the ``Funds'') on the Exchange
under NYSE Arca Rule 8.601-E. The Shares are listed and traded on the
Exchange pursuant to their listing rule.\6\
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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 a 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 May 13, 2021, the Commission published the notice of
filing and immediate effectiveness relating to the listing and
trading of shares of the Putnam Focused Large Cap Growth ETF, Putnam
Focused Large Cap Value ETF, Putnam Sustainable Future ETF, and
Putnam Sustainable Leaders ETF. See Securities Exchange Act Release
No. 91895 (May 13, 2021), 86 FR 27126 (May 19, 2021) (SR-NYSEArca-
2021-39) (the ``Notice'').
\6\ See id. The Putnam ETF Trust filed an application for an
order under Section 6(c) of the 1940 Act for exemptions from various
provisions of the 1940 Act and rules thereunder (File No. 812-
15203), dated February 19, 2021 (the ``Application''). On May 10,
2021, the Commission issued an order (the ``Exemptive Order'') under
the 1940 Act granting the exemptions requested in the Application
(Investment Company Act Release No. 34266, May 10, 2021).
Investments made by the Funds will comply with the conditions set
forth in the Application and the Exemptive Order. See Notice, 86 FR
at 27127-28 n. 9.
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The Application and Exemptive Order incorporate by reference the
terms and conditions of the exemptive order granted to Fidelity Beach
Street Trust (``Beach Street''), Fidelity Management & Research Company
(``FMR''), Fidelity Distributors Corporation (``FDC''), as such order
may be amended from time to time, and the purpose of this filing is to
reflect an amendment to such relief, as described below.
The Fidelity Exemptive Relief
Beach Street, FMR, and FDC filed a ninth 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 Fidelity
Application'').\7\ On December 10, 2019, the Commission issued an order
(the ``Prior Fidelity Exemptive Order'') under the 1940 Act granting
the exemptions requested in the Prior Fidelity Application.\8\ The
Exchange previously submitted a proposal to list and trade shares of
Active Proxy Portfolio Shares of the Fidelity Women's Leadership ETF
and Fidelity Sustainability U.S. Equity ETF (the ``Fidelity Funds''),
which are subject to the Prior Fidelity Exemptive Order.\9\
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\7\ See File No. 812-14364, dated November 8, 2019.
\8\ See Investment Company Act Release No. 33712, December 10,
2019.
\9\ On April 14, 2021, the Commission published the notice of
filing and immediate effectiveness relating to the listing and
trading of shares of the Fidelity Funds. See Securities Exchange Act
Release No. 91514 (April 8, 2021), 86 FR 19657 (April 14, 2021) (SR-
NYSEArca-2021-23) (the ``Fidelity Notice'').
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Under the Prior Fidelity Exemptive Order, the Fidelity Funds are
required to publish a basket of securities and cash that, while
different from a fund's portfolio, is designed to closely track its
daily performance (the ``Fidelity Proxy Portfolio''). The Prior
Fidelity Application stated that the Fidelity Proxy Portfolio is
comprised of (1) select recently disclosed portfolio holdings
(``Strategy Components''); (2) liquid ETFs that convey information
about the types of instruments in which the fund invests that are not
otherwise fully represented by Strategy Components (``Representative
ETFs''); and (3) cash and cash equivalents. As set forth in the
Fidelity Notice, investments made by the Fidelity Funds will comply
with the conditions set forth in the Prior Application and the Prior
Exemptive Order.\10\
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\10\ See Fidelity Notice, 86 FR at 19658, n. 8.
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On October 30, 2020, and as amended on April 2, 2021, June 11, 2021
and June 30, 2021, Beach Street, FMR, FDC, and Fidelity Covington Trust
sought to amend the Prior Fidelity Exemptive Order to, among other
things, permit the Fidelity Funds to include select securities from the
universe from which a fund's investments are selected such as a broad-
based market index in the fund's Proxy Portfolio.\11\ On August 5,
2021, the Commission issued an order granting the relief requested (the
``Updated Fidelity Exemptive Order'').\12\ The Exchange subsequently
submitted a proposal with respect to the listing and trading of the
Fidelity Funds to reflect the conditions set forth in the Updated
Fidelity Exemptive Order.\13\
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\11\ See File No. 812-15175.
\12\ See Investment Company Act Release No. 34350, August 5,
2021. Although the Updated Fidelity 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 Fidelity Exemptive Order is
not part of this proposed rule change.
\13\ See Securities Exchange Act Release No. 93108 (September
23, 2021), 86 FR 53993 (September 29, 2021), (SR-NYSEArca-2021-81).
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The Funds
As set forth in the Exchange's previous rule filing to list and
trade Shares of the Funds, under the Exemptive Order, the Funds are
required to publish a Tracking Basket \14\ of securities and cash that,
while different from a Fund's portfolio, is designed to closely track
its daily performance. Like the Fidelity Funds, the Tracking Basket for
each of the Funds will be comprised of Strategy Components,
Representative ETFs, and cash and cash equivalents.
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\14\ The Funds use the term ``Tracking Basket'' to mean the
Proxy Portfolio for purposes of Rule 8.601-E(c)(3). See Notice, 86
FR at 27128 n. 12.
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As set forth in the Notice, investments made by the Funds will
comply with the conditions set forth in the Application and the
Exemptive Order, which incorporate by reference the terms and
conditions of the exemptive order granted to Beach Street, FMR, and
FDC, as such order may be amended from time to time.\15\ Accordingly,
the Exchange proposes to update the listing rule for the Shares to
reflect the amendment of the Prior Fidelity Exemptive Order and the
updated conditions set forth in the Updated Fidelity Exemptive Order as
they relate to the Funds. Specifically, the Exchange proposes to
reflect the condition in the Updated Fidelity Exemptive Order that
permits the Funds to include select securities from the universe from
which a Fund's investments are selected such as a broad-based market
index in the Fund's Tracking Basket.
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\15\ See Notice, 86 FR at 27127-28 n. 9; Application at 2 n. 1;
Exemptive Order at 1 n. 1.
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Except for the change noted above, all other representations made
in the Exchange's previous rule filing to list and trade Shares of the
Funds 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,\16\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\17\ 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.\18\
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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
\18\ The Exchange represents that, for initial and continued
listing, the Funds 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
[[Page 62857]]
open market and, in general, to protect investors and the public
interest. The proposed revision is intended to allow the Funds to
comply with the Updated Fidelity Exemptive Order, which is incorporated
by reference in the Application and Exemptive Order. Specifically, the
proposed rule change would permit the Funds to include select
securities from the universe from which a Fund's investments are
selected such as a broad-based market index in such Fund's Tracking
Basket. The Exchange also believes that the proposed change is designed
to perfect the mechanism of a free and open market and, in general, to
protect investors and the public interest because it would permit each
Fund to make certain adjustments to the components of its Tracking
Basket, thereby continuing to promote competition among various ETF
products. 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 Fidelity Exemptive
Order, the terms and conditions of which are incorporated by reference
in the Application and Exemptive Order governing the listing and
trading of the Funds. To the extent that the proposed rule change would
continue to permit listing and trading of other types of actively-
managed ETF that have 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 \19\ and Rule 19b-
4(f)(6) thereunder.\20\
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and 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.
The Exchange satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \21\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\22\ the Commission
may 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 proposed
rule change may take effect upon filing. The Exchange states that the
proposed rule change raises no novel regulatory issues because the
proposed rule change would reflect an aspect of exemptive relief that
the Commission has already granted. The Exchange also notes that
similar proposals to amend the listing rules of other shares that NYSE
Arca also lists and trades pursuant to Rule 8.601-E currently are in
effect.\23\ 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 waives
the 30-day operative delay and designates the proposal operative upon
filing.\24\
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\21\ 17 CFR 240.19b-4(f)(6).
\22\ 17 CFR 240.19b-4(f)(6)(iii).
\23\ See Securities Exchange Act Release No. 92449 (July 20,
2021), 86 FR 40102 (July 26, 2021) (SR-NYSEArca-2021-61) and No.
93108 (September 23, 2021) (SR-NYSEArca-2021-81).
\24\ For purposes only of waiving the 30-day operative delay,
the Commission has 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
<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#5624233a337b35393b3b333822251625333578313920"><span class="__cf_email__" data-cfemail="93e1e6fff6bef0fcfefef6fde7e0d3e0f6f0bdf4fce5">[email protected]</span></a>. Please include
File Number SR-NYSEArca-2021-93 on the subject line.
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-2021-93. 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-2021-93 and should be submitted
on or before December 3, 2021.
[[Page 62858]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021-24620 Filed 11-10-21; 8:45 am]
BILLING CODE 8011-01-P
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