Notice2022-10618
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To List and Trade Shares of the IQ Winslow Large Cap Growth ETF and IQ Winslow Focused Large Cap Growth ETF Under NYSE Arca Rule 8.601-E (Active Proxy Portfolio Shares)
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
May 18, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 96 (Wednesday, May 18, 2022)</title>
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[Federal Register Volume 87, Number 96 (Wednesday, May 18, 2022)]
[Notices]
[Pages 30286-30294]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-10618]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94902; File No. SR-NYSEArca-2022-29]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To List and Trade
Shares of the IQ Winslow Large Cap Growth ETF and IQ Winslow Focused
Large Cap Growth ETF Under NYSE Arca Rule 8.601-E (Active Proxy
Portfolio Shares)
May 12, 2022.
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 May 5, 2022, NYSE Arca, Inc. (``NYSE Arca'' or ``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 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 list and trade shares of the following
under NYSE Arca Rule 8.601-E: IQ Winslow
[[Page 30287]]
Large Cap Growth ETF and IQ Winslow Focused Large Cap Growth 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 has 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. Therefore, the Exchange is submitting this proposal in
order to list and trade shares (``Shares'') of Active Proxy Portfolio
Shares of the IQ Winslow Large Cap Growth ETF and IQ Winslow Focused
Large Cap Growth ETF (each a ``Fund'' and, collectively, the ``Funds'')
under Rule 8.601-E.
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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 or Custom
Basket, as applicable, 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 or Custom Basket, as applicable, 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.''
Rule 8.601-E(c)(4) provides that the term ``Custom Basket'' means a
portfolio of securities that is different from the Proxy Portfolio
and is otherwise consistent with the exemptive relief issued
pursuant to the Investment Company Act of 1940 applicable to a
series of Active Proxy Portfolio Shares.
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Key Features of Active Proxy Portfolio Shares
While funds issuing Active Proxy Portfolio Shares will be actively-
managed and, to that extent, will be similar to Managed Fund Shares,
Active Proxy Portfolio Shares differ from Managed Fund Shares in the
following important respects. First, in contrast to Managed Fund
Shares, which are actively-managed funds listed and traded under NYSE
Arca Rule 8.600-E \5\ and for which a ``Disclosed Portfolio'' is
required to be disseminated at least once daily,\6\ the portfolio for
an issue of Active Proxy Portfolio Shares will be publicly disclosed
within at least 60 days following the end of every fiscal quarter in
accordance with normal disclosure requirements otherwise applicable to
open-end management investment companies registered under the
Investment Company Act of 1940 (the ``1940 Act'').\7\ The composition
of the portfolio of an issue of Active Proxy Portfolio Shares would not
be available at commencement of Exchange listing and trading. Second,
in connection with the creation and redemption of Active Proxy
Portfolio Shares, such creation or redemption may be exchanged for a
Proxy Portfolio or Custom Basket, as applicable, and/or cash with a
value equal to the next-determined NAV. A series of Active Proxy
Portfolio Shares will disclose the Proxy Portfolio on a daily basis,
which, as described above, is designed to track closely the daily
performance of the Actual Portfolio of a series of Active Proxy
Portfolio Shares, instead of the actual holdings of the Investment
Company, as provided by a series of Managed Fund Shares. As set forth
in NYSE Arca Rule 8.601-E(d)(2)(B)(ii), for Active Proxy Portfolio
Shares using a Custom Basket, each Business Day,\8\ before the opening
of trading in the Core Trading Session (as defined in NYSE Arca Rule
7.34-E (a)), the Investment Company shall make publicly available on
its website the composition of any Custom Basket transacted on the
previous Business Day, except a Custom Basket that differs from the
applicable Proxy Portfolio only with respect to cash.
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\5\ The Commission has previously approved listing and trading
on the Exchange of a number of issues of Managed Fund Shares under
NYSE Arca Rule 8.600-E. See, e.g., Securities Exchange Act Release
Nos. 57801 (May 8, 2008), 73 FR 27878 (May 14, 2008) (SR-NYSEArca-
2008-31) (order approving Exchange listing and trading of twelve
actively-managed funds of the WisdomTree Trust); 60460 (August 7,
2009), 74 FR 41468 (August 17, 2009) (SR-NYSEArca-2009-55) (order
approving listing of Dent Tactical ETF); 63076 (October 12, 2010),
75 FR 63874 (October 18, 2010) (SR-NYSEArca-2010-79) (order
approving Exchange listing and trading of Cambria Global Tactical
ETF); 63802 (January 31, 2011), 76 FR 6503 (February 4, 2011) (SR-
NYSEArca-2010-118) (order approving Exchange listing and trading of
the SiM Dynamic Allocation Diversified Income ETF and SiM Dynamic
Allocation Growth Income ETF). The Commission also has approved a
proposed rule change relating to generic listing standards for
Managed Fund Shares. See Securities Exchange Act Release No. 78397
(July 22, 2016), 81 FR 49320 (July 27, 2016) (SR-NYSEArca-2015-110)
(amending NYSE Arca Equities Rule 8.600 to adopt generic listing
standards for Managed Fund Shares).
\6\ NYSE Arca Rule 8.600-E(c)(2) defines the term ``Disclosed
Portfolio'' as the identities and quantities of the securities and
other assets held by the Investment Company that will form the basis
for the Investment Company's calculation of net asset value at the
end of the business day. NYSE Arca Rule 8.600-E(d)(2)(B)(i) requires
that the Disclosed Portfolio will be disseminated at least once
daily and will be made available to all market participants at the
same time.
\7\ A mutual fund is required to file with the Commission its
complete portfolio schedules for the second and fourth fiscal
quarters on Form N-CSR under the 1940 Act. Information reported on
Form N-PORT for the third month of a fund's fiscal quarter will be
made publicly available 60 days after the end of a fund's fiscal
quarter. Form N-PORT requires reporting of a fund's complete
portfolio holdings on a position-by-position basis on a quarterly
basis within 60 days after fiscal quarter end. Investors can obtain
a series of Active Proxy Portfolio Shares' Statement of Additional
Information (``SAI''), its Shareholder Reports, its Form N-CSR,
filed twice a year, and its Form N-CEN, filed annually. A series of
Active Proxy Portfolio Shares' SAI and Shareholder Reports will be
available free upon request from the Investment Company, and those
documents and the Form N-PORT, Form N-CSR, and Form N-CEN may be
viewed on-screen or downloaded from the Commission's website at
<a href="http://www.sec.gov">www.sec.gov</a>.
\8\ ``Business Day'' is defined to mean any day that the
Exchange is open, including any day when the Fund satisfies
redemption requests as required by Section 22(e) of the 1940 Act.
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The Commission has previously approved \9\ and noticed for
immediate
[[Page 30288]]
effectiveness \10\ the listing and trading on the Exchange of series of
Active Proxy Portfolio Shares under NYSE Arca Rule 8.601-E.
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\9\ See Securities Exchange Act Release Nos. 89185 (June 29,
2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95) (Notice of
Filing of Amendment No. 6 and Order Granting Accelerated Approval of
a Proposed Rule Change, as Modified by Amendment No. 6, to Adopt
NYSE Arca Rule 8.601-E to Permit the Listing and Trading of Active
Proxy Portfolio Shares and To List and Trade Shares of the Natixis
U.S. Equity Opportunities ETF Under Proposed NYSE Arca Rule 8.601-E)
(the ``Natixis Order''); 89192 (June 30, 2020), 85 FR 40699 (July 7,
2020) (SR-NYSEArca-2019-96) (Notice of Filing of Amendment No. 5 and
Order Granting Accelerated Approval of a Proposed Rule Change, as
Modified by Amendment No. 5, to List and Trade Two Series of Active
Proxy Portfolio Shares Issued by the American Century ETF Trust
under NYSE Arca Rule 8.601-E); 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); 89438
(July 31, 2020), 85 FR 47821 (August 6, 2020) (SR-NYSEArca-2020-51)
(Order Granting Approval of a Proposed Rule Change, as Modified by
Amendment No. 2, to List and Trade Shares of Natixis Vaughan Nelson
Select ETF and Natixis Vaughan Nelson MidCap ETF under NYSE Arca
Rule 8.601-E). See also Securities Exchange Act Release Nos. 88887
(May 15, 2020), 85 FR 30990 (May 21, 2020) (SR-CboeBZX-2019-107)
(Notice of Filing of Amendment No. 5 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified by Amendment No. 5,
to Adopt Rule 14.11(m), Tracking Fund Shares, and to List and Trade
Shares of the Fidelity Blue Chip Value ETF, Fidelity Blue Chip
Growth ETF, and Fidelity New Millennium ETF).
\10\ See Securities Exchange Act Release Nos. 92104 (June 3,
2021), 86 FR 30635 (June 9, 2021) (NYSEArca-2021-46) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to List
and Trade Shares of the Nuveen Santa Barbara Dividend Growth ETF,
Nuveen Small Cap Select ETF, and Nuveen Winslow Large-Cap Growth ESG
ETF Under NYSE Arca Rule 8.601-E (Active Proxy Portfolio Shares);
92958 (September 13, 2021), 86 FR 51933 (September 17, 2021)
(NYSEArca-2021-77) (Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To List and Trade Shares of the Nuveen Growth
Opportunities ETF Under NYSE Arca Rule 8.601-E (Active Proxy
Portfolio Shares); and 93264 (October 6, 2021), 86 FR 56989 (October
13, 2021) (SR-NYSEArca-2021-84) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To List and Trade Shares of
the Schwab Ariel ESG ETF Under NYSE Arca Rule 8.601-E (Active Proxy
Portfolio Shares).
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The Shares of the Funds will be issued by the IndexIQ Active ETF
Trust (the ``Trust''), which is organized as a statutory trust under
the laws of the state of Delaware and registered with the Commission as
an open-end management investment company.\11\ IndexIQ Advisors LLC
will be the investment advisor to the Funds (the ``Advisor''). Winslow
Capital Management, LLC will be the sub-advisor (the ``Sub-Advisor'')
for the Funds. The Bank of New York Mellon will serve as the Funds'
custodian (the ``Custodian'') and transfer agent. ALPS Distributors,
Inc. will act as the distributor (the ``Distributor'') for the Funds.
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\11\ The Trust is registered under the 1940 Act. On December 29,
2021 the Trust filed a registration statement on Form N-1A under the
1940 Act relating to the Funds (File No. 811-22379) (the
``Registration Statement''). The 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-
15294), dated December 29, 2021 and amended on March 14, 2022 (the
``Application''). See Investment Company Act Release No. 34554
(April 4, 2022). On April 29, 2022, the Commission issued an order
(the ``Exemptive Order'') under the 1940 Act granting the exemptions
requested in the Application (Investment Company Act Release No.
34574, April 29, 2022). Investments made by the Funds will comply
with the conditions set forth in the Application and the Exemptive
Order. The description of the operation of the Funds herein is
based, in part, on the Registration Statement, Application, and
Exemptive Order. The Exchange will not commence trading in Shares of
the Funds until the Registration Statement is effective.
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Commentary .04 to NYSE Arca Rule 8.601-E provides that, if the
investment adviser to the Investment Company issuing Active Proxy
Portfolio Shares is registered as a broker-dealer or is affiliated with
a broker-dealer, such investment adviser will erect and maintain a
``fire wall'' between the investment adviser and personnel of the
broker-dealer or broker-dealer affiliate, as applicable, with respect
to access to information concerning the composition and/or changes to
such Investment Company's Actual Portfolio, Proxy Portfolio, and/or
Custom Basket, as applicable. Any person related to the investment
adviser or Investment Company who makes decisions pertaining to the
Investment Company's Actual Portfolio, Proxy Portfolio, and/or Custom
Basket, as applicable, or has access to non-public information
regarding the Investment Company's Actual Portfolio, Proxy Portfolio,
and/or Custom Basket, as applicable, or changes thereto must be subject
to procedures reasonably designed to prevent the use and dissemination
of material non-public information regarding the Actual Portfolio,
Proxy Portfolio, and/or Custom Basket, as applicable, or changes
thereto. Commentary .04 is similar to Commentary .03(a)(i) and (iii) to
NYSE Arca Rule 5.2-E(j)(3); however, Commentary .04, in connection with
the establishment of a ``fire wall'' between the investment adviser and
the broker-dealer, reflects the applicable open-end fund's portfolio,
not an underlying benchmark index, as is the case with index-based
funds.\12\ Commentary .04 is also similar to Commentary .06 to Rule
8.600-E related to Managed Fund Shares, except that Commentary .04
relates to establishment and maintenance of a ``fire wall'' between the
investment adviser and personnel of the broker-dealer or broker-dealer
affiliate, as applicable, applicable to an Investment Company's Actual
Portfolio, Proxy Portfolio, and/or Custom Basket, as applicable, or
changes thereto, and not just to the underlying portfolio, as is the
case with Managed Fund Shares.
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\12\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Advisor and Sub-Advisor and their related
personnel will be subject to the provisions of Rule 204A-1 under the
Advisers Act relating to codes of ethics. This Rule requires
investment advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as well as
compliance with other applicable securities laws. Accordingly,
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under
the Advisers Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such investment adviser
has (i) adopted and implemented written policies and procedures
reasonably designed to prevent violations, by the investment adviser
and its supervised persons, of the Advisers Act and the Commission
rules adopted thereunder; (ii) implemented, at a minimum, an annual
review regarding the adequacy of the policies and procedures
established pursuant to subparagraph (i) above and the effectiveness
of their implementation; and (iii) designated an individual (who is
a supervised person) responsible for administering the policies and
procedures adopted under subparagraph (i) above.
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In addition, Commentary .05 to Rule 8.601-E provides that any
person or entity, including a custodian, Reporting Authority,
distributor, or administrator, who has access to non-public information
regarding the Investment Company's Actual Portfolio, Proxy Portfolio,
or Custom Basket, as applicable, or changes thereto, must be subject to
procedures reasonably designed to prevent the use and dissemination of
material non-public information regarding the applicable Investment
Company Actual Portfolio, Proxy Portfolio, or Custom Basket, as
applicable, or changes thereto. Moreover, if any such person or entity
is registered as a broker-dealer or affiliated with a broker-dealer,
such person or entity will erect and maintain a ``fire wall'' between
the person or entity and the broker-dealer with respect to access to
information concerning the composition and/or changes to such
Investment Company Actual Portfolio, Proxy Portfolio, or Custom Basket,
as applicable.
The Advisor and Sub-Advisor are not registered as broker-dealers
but are affiliated with broker-dealers. The Advisor and Sub-Advisor
have implemented and will maintain a ``fire wall'' with respect to such
broker-dealer affiliates regarding access to information concerning the
composition of and/or changes to each Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable.
[[Page 30289]]
In the event (a) the Advisor or Sub-Advisor becomes registered as a
broker-dealer or becomes newly affiliated with a broker-dealer, or (b)
any new adviser or sub-adviser is a registered broker-dealer, or
becomes affiliated with a broker-dealer, it will implement and maintain
a ``fire wall'' with respect to its relevant personnel or its broker-
dealer affiliate regarding access to information concerning the
composition and/or changes to each Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable, and will be subject to
procedures designed to prevent the use and dissemination of material
non-public information regarding each Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable, or changes thereto. Any
person related to the Advisor, Sub-Advisor, or the Funds who makes
decisions pertaining to a Fund's Actual Portfolio, Proxy Portfolio, or
Custom Basket, as applicable, or has access to non-public information
regarding a Fund's Actual Portfolio, Proxy Portfolio, and/or Custom
Basket, as applicable, or changes thereto are subject to procedures
reasonably designed to prevent the use and dissemination of material
non-public information regarding a Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable or changes thereto.
In addition, any person or entity, including any service provider
for the Funds, who has access to non-public information regarding a
Fund's Actual Portfolio, Proxy Portfolio, and/or Custom Basket, as
applicable, or changes thereto, will be subject to procedures
reasonably designed to prevent the use and dissemination of material
non-public information regarding a Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable, or changes thereto.
Moreover, if any such person or entity is registered as a broker-dealer
or affiliated with a broker-dealer, such person or entity has erected
and will maintain a ``fire wall'' between the person or entity and the
broker-dealer with respect to access to information concerning the
composition and/or changes to a Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable.
Description of the Funds
According to the Registration Statement, the Advisor will identify
a Proxy Portfolio for each Fund, which is designed to recreate the
daily performance of each Fund's Actual Portfolio through a factor
model analysis of the Fund's Actual Portfolio and will only include
securities and investments in which a Fund may invest. However, while
the Proxy Portfolio and the Actual Portfolio will likely hold some or
many of the same securities, the Proxy Portfolio and a Fund's Actual
Portfolio may not include identical securities. The composition of each
Fund's Proxy Portfolio will be published on the Funds' website
(<a href="http://newyorklifeinvestments.com">newyorklifeinvestments.com</a>) each Business Day and will include the
following information for each portfolio holding in each Fund's Proxy
Portfolio: (1) Ticker symbol; (2) CUSIP or other identifier; (3)
description of holding; (4) quantity of each security or other asset
held; and (5) percentage weight of the holding in the Proxy Portfolio.
The Proxy Portfolio will be reconstituted daily, and the Advisor will
not make intra-day changes to the Proxy Portfolio except to correct
errors in the published Proxy Portfolio.
At the end of each trading day, each Fund will calculate the
percentage weight overlap between its Proxy Portfolio and Actual
Portfolio (the ``Proxy Overlap'') and the standard deviation over the
past three months of the daily proxy spread (i.e., the difference, in
percentage terms, between the Proxy Portfolio per share NAV and that of
the Actual Portfolio at the end of the trading day) (the ``Tracking
Error'') and publish such information on the Funds' website before the
opening of trading each Business Day.
IQ Winslow Large Cap Growth ETF
The Fund's holdings will conform to the permissible investments as
set forth in the Application and Exemptive Order, and the holdings will
be consistent with all requirements in the Application and Exemptive
Order.\13\ Any foreign common stocks held by the Fund will be traded on
an exchange that is a member of the Intermarket Surveillance Group
(``ISG'') or with which the Exchange has in place a comprehensive
surveillance sharing agreement.
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\13\ Pursuant to the Application and Exemptive Order, the
permissible investments for the Funds include only the following
instruments: ETFs traded on a U.S. exchange; exchange-traded notes
(``ETNs'') traded on a U.S. exchange; U.S. exchange-traded common
stocks; common stocks listed on a foreign exchange that trade on
such exchange contemporaneously with the Shares (``foreign common
stocks'') in the Exchange's Core Trading Session (normally, 9:30
a.m. to 4:00 p.m. Eastern time (``E.T.'')); U.S. exchange-traded
preferred stocks; U.S. exchange-traded American Depositary Receipts
(``ADRs''); U.S. exchange-traded real estate investment trusts; U.S.
exchange-traded commodity pools; U.S. exchange-traded metals trusts;
U.S. exchange-traded currency trusts; and U.S. exchange-traded
futures that trade contemporaneously with the Funds' Shares. In
addition, the Funds may hold cash and cash equivalents (short-term
U.S. Treasury securities, government money market funds, and
repurchase agreements). Pursuant to the Application and Exemptive
Order, the Funds will not hold short positions or invest in
derivatives other than U.S. exchange-traded futures, will not borrow
for investment purposes, and will not purchase any securities that
are illiquid investments at the time of purchase.
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According to the Registration Statement, the Fund's investment
objective is long-term growth of capital. The Fund will, under normal
circumstances, invest at least 80% of its assets in large
capitalization companies.\14\ The Fund will typically invest in
domestic securities but is permitted to invest up to 20% of its net
assets in depositary receipts issued by a trust (including ADRs) of
foreign securities and in common stocks listed on a foreign exchange
that trade on such exchange contemporaneously with the Shares. The Fund
will invest in companies that the Sub-Advisor believes will provide an
opportunity for achieving superior portfolio returns (i.e., returns in
excess of the returns of the average stock ETF or mutual fund) over the
long term or have the potential for above-average future earnings and
cash flow growth with management focused on shareholder value.
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\14\ According to the Registration Statement, large
capitalization companies are companies having a market
capitalization in excess of $4 billion at the time of purchase.
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IQ Winslow Focused Large Cap Growth ETF
The Fund's holdings will conform to the permissible investments as
set forth in the Application and Exemptive Order, and the holdings will
be consistent with all requirements in the Application and Exemptive
Order.\15\ Any foreign common stocks held by the Fund will be traded on
an exchange that is a member of the ISG or with which the Exchange has
in place a comprehensive surveillance sharing agreement.
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\15\ See note 13, supra.
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According to the Registration Statement, the Fund's investment
objective is long-term capital growth. The Fund will, under normal
circumstances, invest at least 80% of its assets in large
capitalization companies.\16\ The Fund will typically invest in
domestic securities but is permitted to invest up to 20% of its net
assets in depositary receipts issued by a trust (including ADRs) of
foreign securities and in common stocks listed on a foreign exchange
that trade on such exchange contemporaneously with the Shares. The Fund
will normally invest in a limited number of issuers and hold a core
position of between 25 and 35
[[Page 30290]]
securities. The Fund will invest in companies that the Sub-Advisor
believes will provide an opportunity for achieving superior portfolio
returns (i.e., returns in excess of the returns of the average stock
ETF or mutual fund) over the long term or have the potential for above-
average future earnings and cash flow growth with management focused on
shareholder value.
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\16\ See note 14, supra.
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Investment Restrictions
The Shares of the Funds will conform to the initial and continued
listing criteria under Rule 8.601-E. The Funds' holdings will be
limited to and consistent with permissible holdings as described in the
Application and Exemptive Order and all requirements in the Application
and Exemptive Order.\17\
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\17\ See note 13, supra.
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The Funds' investments, including derivatives, will be consistent
with their investment objectives and will not be used to enhance
leverage (although certain derivatives and other investments may result
in leverage). That is, each Fund's investments will not be used to seek
performance that is the multiple or inverse multiple (e.g., 2X or -3X)
of such Fund's primary broad-based securities benchmark index (as
defined in Form N-1A).\18\
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\18\ Each Fund's broad-based securities benchmark index will be
identified in a future amendment to its Registration Statement
following the Funds' first full calendar year of performance.
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Purchases and Redemptions
According to the Registration Statement, the Trust will issue and
sell Shares of the Funds only in specified minimum size ``Creation
Units'' on a continuous basis on any Business Day through the
Distributor at their NAV next determined after receipt of an order in
proper form. The NAV of each Fund's Shares will be calculated each
Business Day as of the close of regular trading on the Exchange,
ordinarily 4:00 p.m. E.T. A Creation Unit will consist of at least
10,000 Shares.
According to the Registration Statement, Shares of the Funds will
be purchased and redeemed in Creation Units. Creation Units will
typically be purchased in-kind through the deposit of a designated
portfolio of securities constituting a representation of the Fund's
portfolio (the ``Deposit Securities'') together with the deposit of a
specified cash payment (the ``Cash Component'') (collectively, the
``Fund Deposit''). The Cash Component serves to compensate for any
differences between the NAV per Creation Unit and the ``Deposit
Amount,'' which is an amount equal to the market value of the Deposit
Securities. In addition, the Trust may permit or require the
substitution of an amount of cash (the ``cash in lieu'' amount) to be
added to the Cash Component to replace any Deposit Security. The names
and quantities of the instruments that constitute the Deposit
Securities will be the same as a Fund's Proxy Portfolio, except to the
extent purchases and redemptions are made entirely or in part on a cash
basis. Creation Units will typically be redeemed in exchange for ``Fund
Securities'' (which may not be identical to the Deposit Securities) and
a ``Cash Redemption Amount,'' which represents the difference between
the NAV of the Shares being redeemed and the value of the Fund
Securities.
Creation Units of the Funds may be purchased and/or redeemed
entirely or partially for cash in the Advisor's or Sub-Advisor's
discretion. When full or partial cash purchases or redemptions of
Creation Units are available or specified for the Funds, they will be
effected in essentially the same manner as in-kind purchases or
redemptions thereof. The Funds may determine, upon receiving a purchase
or redemption order from an Authorized Participant,\19\ to have the
purchase or redemption, as applicable, be made entirely or in part in
cash.\20\
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\19\ According to the Registration Statement, an ``Authorized
Participant'' is an institution that may engage in creation and
redemption transactions directly with the Funds.
\20\ The Advisor represents that, to the extent the Trust
effects the creation or redemption of Shares in cash on any given
day, such transactions will be effected in the same manner for all
Authorized Participants placing trades with the Funds on that day.
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The identity and number of shares of the Deposit Securities
required for a Fund Deposit may change from time to time. Each Business
Day, prior to the opening of business on the Exchange, the Custodian
will make available, through the National Securities Clearing
Corporation, the names and quantities of each Deposit Security to be
included in the Fund Deposit, as well as the estimated Cash Component.
The published Fund Deposit will apply until such time as the next-
announced composition of the Deposit Securities is made available, and
there will be no intra-day changes except to correct errors in the
published Fund Deposit. The Fund Deposit will be published each
Business Day regardless of whether a Fund decides to issue or redeem
Creation Units entirely or in part on a cash basis. The identity of the
Fund Securities that will be applicable to redemption requests received
in proper form on a Business Day will also be made available prior to
the opening of business on the Exchange on each Business Day.
All orders to purchase or redeem Creation Units must be placed with
the Distributor by or through an Authorized Participant. Orders to
purchase or redeem Creation Units will be accepted until the ``Order
Time,'' generally 3:00 p.m. E.T. The date on which an order to purchase
or redeem Creation Units is placed is referred to as the ``Transmittal
Date.'' All Creation Unit orders must be received by the Distributor no
later than the Order Time in order to receive the NAV determined on the
Transmittal Date. When the Exchange closes earlier than normal, a Fund
may require orders for Creation Units to be placed earlier in the
Business Day.
Availability of Information
The Funds' website (<a href="http://newyorklifeinvestments.com">newyorklifeinvestments.com</a>), which will be
publicly available prior to the public offering of Shares, will include
a form of the prospectus for the Funds that may be downloaded. The
Funds' website will include on a daily basis, per Share for each Fund:
(1) The prior Business Day's NAV; (2) the prior Business Day's
``Closing Price'' or ``Bid/Ask Price''; \21\ and (3) a calculation of
the premium/discount of such Closing Price or Bid/Ask Price against
such NAV.\22\ The Advisor has represented that the Funds' website will
also provide: (1) Any other information regarding premiums/discounts as
may be required for other ETFs under Rule 6c-11 under the 1940 Act, as
amended, and (2) any information regarding the bid/ask spread for each
Fund as may be required for other ETFs under Rule 6c-11 under the 1940
Act, as amended. The Funds' website also will disclose the information
required under Rule 8.601-E(c)(3).\23\ The website and information will
be publicly available at no charge.
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\21\ The ``Bid/Ask Price'' is the midpoint of the highest bid
and lowest offer based upon the National Best Bid and Offer as of
the time of calculation of each Fund's NAV. The ``National Best Bid
and Offer'' is the current national best bid and national best offer
as disseminated by the Consolidated Quotation System or UTP Plan
Securities Information Processor. The ``Closing Price'' of Shares is
the official closing price of the Shares on the Exchange.
\22\ The ``premium/discount'' refers to the premium or discount
to the NAV at the end of a trading day and will be calculated based
on the last Bid/Ask Price on a given trading day.
\23\ See note 4, supra. Rule 8.601-E (c)(3) provides that the
website for each series of Active Proxy Portfolio Shares shall
disclose the information regarding the Proxy Portfolio as provided
in the exemptive relief pursuant to the 1940 Act applicable to such
series, including the following, to the extent applicable:
(i) Ticker symbol;
(ii) CUSIP or other identifier;
(iii) Description of holding;
(iv) Quantity of each security or other asset held; and
(v) Percentage weighting of the holding in the portfolio.
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[[Page 30291]]
The identity and quantity of investments in the Proxy Portfolio for
each Fund will be publicly available on the Funds' website before the
commencement of trading in Shares on each Business Day. The website
will also include information relating to the Proxy Overlap and
Tracking Error for each Fund, as discussed above. With respect to each
Custom Basket utilized by the Funds, each Business Day, before the
opening of trading in the Core Trading Session (as defined in NYSE Arca
Rule 7.34-E (a)), the Funds' website will also include the composition
of any Custom Basket transacted on the previous business day, except a
Custom Basket that differs from the applicable Proxy Portfolio only
with respect to cash.
Typical mutual fund-style annual, semi-annual and quarterly
disclosures contained in the Funds' Commission filings will be provided
on the Funds' website on a current basis.\24\ Thus, each Fund will
publish the portfolio contents of its Actual Portfolio on a periodic
basis, and no less than 60 days after the end of every fiscal quarter.
---------------------------------------------------------------------------
\24\ See note 7, supra.
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Investors can also obtain the Funds' SAI, Shareholder Reports, Form
N-CSR, N-PORT, and Form N-CEN. The prospectus, SAI, and Shareholder
Reports are available free upon request, and those documents and the
Form N-CSR, N-PORT, and Form N-CEN may be viewed on-screen or
downloaded from the Commission's website. The Exchange also notes that
pursuant to the Application, the Funds must comply with Regulation Fair
Disclosure, which prohibits selective disclosure of any material non-
public information.
Information regarding the market price of Shares and trading volume
in Shares, will be continually available on a real-time basis
throughout the day on brokers' computer screens and other electronic
services. The previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers.
Quotation and last sale information for the Shares and U.S.
exchange-traded instruments (excluding futures contracts) will be
available via the Consolidated Tape Association (``CTA'') high-speed
line, from the exchanges on which such securities trade, or through
major market data vendors or subscription services. Quotation and last
sale information for futures contracts will be available from the
exchanges on which they trade. Intraday price information for all
exchange-traded instruments, which include all eligible instruments
except cash and cash equivalents, will be available from the exchanges
on which they trade, or through major market data vendors or
subscription services. Intraday price information for cash equivalents
is available through major market data vendors, subscription services
and/or pricing services.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of a Fund.\25\ Trading in Shares of a Fund will
be halted if the circuit breaker parameters in NYSE Arca Rule 7.12-E
have been reached. Trading also may be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. Trading in the Shares will be
subject to NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth
circumstances under which Shares of a Fund will be halted.
---------------------------------------------------------------------------
\25\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------
Specifically, Rule 8.601-E(d)(2)(D) provides that the Exchange may
consider all relevant factors in exercising its discretion to halt
trading in a series of Active Proxy Portfolio Shares. Trading may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the series of Active Proxy Portfolio
Shares inadvisable. These may include: (a) The extent to which trading
is not occurring in the securities and/or the financial instruments
composing the Proxy Portfolio and/or Actual Portfolio; or (b) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. If the Exchange
becomes aware that the NAV, Proxy Portfolio, or Actual Portfolio with
respect to a series of Active Proxy Portfolio Shares is not
disseminated to all market participants at the same time, the Exchange
shall halt trading in such series until such time as the NAV, Proxy
Portfolio, or Actual Portfolio is available to all market participants
at the same time.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace in all trading sessions in accordance with
NYSE Arca Rule 7.34-E(a). As provided in NYSE Arca Rule 7.6-E, the
minimum price variation (``MPV'') for quoting and entry of orders in
equity securities traded on the NYSE Arca Marketplace is $0.01, with
the exception of securities that are priced less than $1.00 for which
the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing
criteria under NYSE Arca Rule 8.601-E. The Exchange has appropriate
rules to facilitate trading in the Shares during all trading sessions.
A minimum of 100,000 Shares for each Fund will be outstanding at
the commencement of trading on the Exchange. In addition, pursuant to
Rule 8.601-E(d)(1)(B), the Exchange, prior to commencement of trading
in the Shares, will obtain a representation from the Trust that (i) the
NAV per Share of each Fund will be calculated daily, (ii) the NAV,
Proxy Portfolio, and the Actual Portfolio for each Fund will be made
publicly available to all market participants at the same time, and
(iii) the Trust and any person acting on behalf of the Trust will
comply with Regulation Fair Disclosure under the Act, including with
respect to any Custom Basket.
With respect to Active Proxy Portfolio Shares, all of the Exchange
member obligations relating to product description and prospectus
delivery requirements will continue to apply in accordance with
Exchange rules and federal securities laws, and the Exchange and the
Financial Industry Regulatory Authority, Inc. (``FINRA'') will continue
to monitor Exchange members for compliance with such requirements.
Surveillance
The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances, administered by the Exchange, as
well as cross-market surveillances administered by FINRA on behalf of
the Exchange, which are designed to detect violations of Exchange rules
and applicable federal securities laws.\26\ The Exchange represents
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 applicable to
trading on the Exchange.
---------------------------------------------------------------------------
\26\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
---------------------------------------------------------------------------
[[Page 30292]]
The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and underlying
exchange-traded instruments with other markets and other entities that
are members of the ISG, and the Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading information regarding trading
such securities and underlying exchange-traded instruments from such
markets and other entities. In addition, the Exchange may obtain
information regarding trading in such securities and underlying
exchange-traded instruments from markets and other entities that are
members of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.\27\
---------------------------------------------------------------------------
\27\ For a list of the current members of ISG, see
<a href="http://www.isgportal.org">www.isgportal.org</a>.
---------------------------------------------------------------------------
The Advisor will make available daily to FINRA and the Exchange the
Actual Portfolio of each Fund, upon request, in order to facilitate the
performance of the surveillances referred to above.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Commentary .03 to NYSE Arca Rule 8.601-E provides that the Exchange
will implement and maintain written surveillance procedures for Active
Proxy Portfolio Shares. As part of these surveillance procedures, the
Investment Company's investment adviser will, upon request by the
Exchange or FINRA, on behalf of the Exchange, make available to the
Exchange or FINRA the daily Actual Portfolio holdings of each series of
Active Proxy Portfolio Shares. The Exchange believes that the ability
to access the information on an as needed basis will provide it with
sufficient information to perform the necessary regulatory functions
associated with listing and trading series of Active Proxy Portfolio
Shares on the Exchange, including the ability to monitor compliance
with the initial and continued listing requirements as well as the
ability to surveil for manipulation of Active Proxy Portfolio Shares.
The Exchange will utilize its existing procedures to monitor issuer
compliance with the requirements of Rule 8.601-E. For example, the
Exchange will continue to use intraday alerts that will notify Exchange
personnel of trading activity throughout the day that may indicate that
unusual conditions or circumstances are present that could be
detrimental to the maintenance of a fair and orderly market. The
Exchange will require from the issuer of a series of Active Proxy
Portfolio Shares, upon initial listing and periodically thereafter, a
representation that it is in compliance with Rule 8.601-E. The Exchange
notes that Commentary .01 to Rule 8.601-E requires an issuer of Active
Proxy Portfolio Shares to notify the Exchange of any failure to comply
with the continued listing requirements of Rule 8.601-E. In addition,
the Exchange will require issuers to represent that they will notify
the Exchange of any failure to comply with the terms of applicable
exemptive and no-action relief. As part of its surveillance procedures,
the Exchange will rely on the foregoing procedures to become aware of
any non-compliance with the requirements of Rule 8.601-E.
With respect to the Funds, all statements and representations made
in this filing regarding (a) the description of the portfolio, (b)
limitations on portfolio holdings, or (c) the applicability of Exchange
listing rules specified in this rule filing shall constitute continued
listing requirements for listing the Shares on the Exchange. The
Exchange will obtain a representation from the Trust, prior to
commencement of trading in the Shares of the Funds, that it will advise
the Exchange of any failure by the Funds to comply with the continued
listing requirements, and, pursuant to its obligations under Section
19(g)(1) of the Act, the Exchange will monitor for compliance with the
continued listing requirements. If a Fund is not in compliance with the
applicable listing requirements, the Exchange will commence delisting
procedures under NYSE Arca Rule 5.5-E(m).
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\28\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\29\ 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.\30\
---------------------------------------------------------------------------
\28\ 15 U.S.C. 78f(b).
\29\ 15 U.S.C. 78f(b)(5).
\30\ The Exchange represents that, for initial and continued
listing, the Funds will be incompliance with Rule 10A-3 under the
Act, as provided by NYSE Arca Rule 5.3-E.
---------------------------------------------------------------------------
With respect to the proposed listing and trading of Shares of the
Funds, the Exchange believes that the proposed rule change is designed
to prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Rule 8.601-E.
The Funds' holdings will conform to the permissible investments as
set forth in the Application and Exemptive Order, and the holdings will
be consistent with all requirements in the Application and Exemptive
Order.\31\
---------------------------------------------------------------------------
\31\ See note 13, supra.
---------------------------------------------------------------------------
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and underlying
exchange-traded instruments with other markets and other entities that
are members of the ISG, and the Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading information regarding trading in
the Shares and underlying exchange-traded instruments from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Shares and underlying exchange-traded
instruments from markets and other entities that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement. Any foreign common stocks held by the Funds will be
traded on an exchange that is a member of the ISG or with which the
Exchange has in place a comprehensive surveillance sharing agreement.
The daily dissemination of the identity and quantity of Proxy
Portfolio component investments, together with the right of Authorized
Participants to create and redeem each day at the NAV, will be
sufficient for market participants to value and trade Shares in a
manner that will not lead to significant deviations between the Shares'
Closing Price or Bid/Ask Price and NAV.
The Funds' investments, including derivatives, will be consistent
with its investment objective and will not be used to enhance leverage
(although certain derivatives and other investments may result in
leverage). That is, the Funds' investments will not be used to seek
performance that is the multiple or inverse multiple (e.g., 2X or
[[Page 30293]]
-3X) of the Funds' primary broad-based securities benchmark index (as
defined in Form N-1A).
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation from the Trust that the
NAV per Share of each Fund will be calculated daily and that the NAV,
Proxy Portfolio, and Actual Portfolio for each Fund will be made
available to all market participants at the same time. Investors can
obtain the Funds' SAI, shareholder reports, and its Form N-CSR, Form N-
PORT, and Form N-CEN. The Funds' SAI and shareholder reports will be
available free upon request from the Funds, and those documents and the
Form N-CSR, Form N-PORT, and Form N-CEN may be viewed on-screen or
downloaded from the Commission's website.
Commentary .03 to NYSE Arca Rule 8.601-E provides that the Exchange
will implement and maintain written surveillance procedures for Active
Proxy Portfolio Shares. As part of these surveillance procedures, the
Investment Company's investment adviser will, upon request by the
Exchange or FINRA, on behalf of the Exchange, make available to the
Exchange or FINRA the daily portfolio holdings of each series of Active
Proxy Portfolio Shares. The Exchange believes that the ability to
access the information on an as needed basis will provide it with
sufficient information to perform the necessary regulatory functions
associated with listing and trading series of Active Proxy Portfolio
Shares on the Exchange, including the ability to monitor compliance
with the initial and continued listing requirements as well as the
ability to surveil for manipulation of Active Proxy Portfolio Shares.
With respect to the Funds, the Advisor will make available daily to
FINRA and the Exchange the portfolio holdings of each Fund upon request
in order to facilitate the performance of the surveillances referred to
above.
The Exchange will utilize its existing procedures to monitor
compliance with the requirements of Rule 8.601-E. For example, the
Exchange will continue to use intraday alerts that will notify Exchange
personnel of trading activity throughout the day that may indicate that
unusual conditions or circumstances are present that could be
detrimental to the maintenance of a fair and orderly market. The
Exchange will require from the Trust, upon initial listing and
periodically thereafter, a representation that it is in compliance with
Rule 8.601-E. The Exchange notes that Commentary .01 to Rule 8.601-E
requires the issuer of Shares to notify the Exchange of any failure to
comply with the continued listing requirements of Rule 8.601-E. In
addition, the Exchange will require the issuer to represent that it
will notify the Exchange of any failure to comply with the terms of
applicable exemptive and no-action relief. The Exchange will rely on
the foregoing procedures to become aware of any non-compliance with the
requirements of Rule 8.601-E.
In addition, with respect to the Funds, a large amount of
information will be publicly available regarding the Funds and the
Shares, thereby promoting market transparency.
Quotation and last sale information for the Shares and U.S.
exchange-traded instruments (excluding futures contracts) will be
available via the CTA high-speed line, from the exchanges on which such
securities trade, or through major market data vendors or subscription
services. Quotation and last sale information for futures contracts
will be available from the exchanges on which they trade. Intraday
price information for all exchange-traded instruments, which include
all eligible instruments except cash and cash equivalents, will be
available from the exchanges on which they trade, or through major
market data vendors or subscription services. Intraday price
information for cash equivalents is available through major market data
vendors, subscription services and/or pricing services.
The website for the Funds will include a form of the prospectus
that may be downloaded, and additional data relating to NAV and other
applicable quantitative information, updated on a daily basis. Trading
in Shares of the Funds will be halted if the circuit breaker parameters
in NYSE Arca Rule 7.12-E have been reached or because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. Trading in the Shares will be
subject to NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth
circumstances under which Shares of a Fund will be halted. In addition,
as noted above, investors will have ready access to the Proxy Portfolio
and quotation and last sale information for the Shares. The identity
and quantity of investments in the Proxy Portfolio will be publicly
available on the Funds' website before the commencement of trading in
Shares on each Business Day. The Shares will conform to the initial and
continued listing criteria under Rule 8.601-E.\32\
---------------------------------------------------------------------------
\32\ See note 4, supra.
---------------------------------------------------------------------------
The Funds' holdings will conform to the permissible investments as
set forth in the Application and Exemptive Order, and the holdings will
be consistent with all requirements in the Application and Exemptive
Order.\33\ Any foreign common stocks held by the Funds will be traded
on an exchange that is a member of the ISG or with which the Exchange
has in place a comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------
\33\ See note 13, supra.
---------------------------------------------------------------------------
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 in that it will facilitate the listing and trading of
an additional type of actively-managed exchange-traded product that
will enhance competition among market participants, to the benefit of
investors and the marketplace. The Exchange will obtain a
representation from the Advisor, prior to commencement of trading in
the Shares of the Funds, that it will advise the Exchange of any
failure by the Funds to comply with the continued listing requirements,
and, pursuant to its obligations under Section 19(g)(1) of the Act, the
Exchange will monitor for compliance with the continued listing
requirements. If the Funds are not in compliance with the applicable
listing requirements, the Exchange will commence delisting procedures
under NYSE Arca Rule 5.5-E(m).
As noted above, the Exchange has in place surveillance procedures
relating to trading in the Shares and may obtain information via ISG
from other exchanges that are members of ISG or with which the Exchange
has entered into a comprehensive surveillance sharing agreement. In
addition, as noted above, investors will have ready access to
information regarding quotation and last sale information for the
Shares.
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 purposes of the Act. The Exchange believes the
proposed rule change would permit listing and trading of additional
actively-managed ETFs that have characteristics different from existing
actively-managed and index ETFs and would introduce additional
competition among various ETF products to the benefit of investors.
[[Page 30294]]
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 \34\ and Rule 19b-
4(f)(6) thereunder.\35\
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\34\ 15 U.S.C. 78s(b)(3)(A).
\35\ 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 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) \36\ 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
notes that the Commission has approved and noticed for immediate
effectiveness proposed rule changes to permit listing and trading on
the Exchange of Active Proxy Portfolio Shares similar to the Fund.\37\
The proposed listing rule for the Fund raises no novel legal or
regulatory issues. Thus, 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.\38\
---------------------------------------------------------------------------
\36\ 17 CFR 240.19b-4(f)(6)(iii).
\37\ See supra notes 9 and 10.
\38\ 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).
---------------------------------------------------------------------------
At any time within 60 days of the filing of such 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#4634332a236b25292b2b232832350635232568212930"><span class="__cf_email__" data-cfemail="87f5f2ebe2aae4e8eaeae2e9f3f4c7f4e2e4a9e0e8f1">[email protected]</span></a>. Please include
File Number SR-NYSEArca-2022-29 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-2022-29. 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-2022-29 and should be submitted
on or before June 8, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\39\
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\39\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-10618 Filed 5-17-22; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on May 18, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.