Notice2023-05915
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade the Shares of the Breakwave Tanker Shipping ETF
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
March 23, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 56 (Thursday, March 23, 2023)</title>
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[Federal Register Volume 88, Number 56 (Thursday, March 23, 2023)]
[Notices]
[Pages 17632-17636]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-05915]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97158; File No. SR-NYSEARCA-2022-61]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To
List and Trade the Shares of the Breakwave Tanker Shipping ETF
March 17, 2023.
I. Introduction
On September 13, 2022, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission''), pursuant
[[Page 17633]]
to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (``Act''
or ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ a proposed rule
change to list and trade shares (``Shares'') of the Breakwave Tanker
Shipping ETF (``Fund'') under NYSE Arca Rule 8.200-E, Commentary .02.
The proposed rule change was published for comment in the Federal
Register on September 27, 2022.\4\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ See Securities Exchange Act Release No. 95853 (Sept. 21,
2022), 87 FR 58552 (``Notice'').
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On November 2, 2022, pursuant to Section 19(b)(2) of the Act,\5\
the Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\6\ On December 8, 2022, the Commission instituted proceedings
under Section 19(b)(2)(B) of the Exchange Act \7\ to determine whether
to approve or disapprove the proposed rule change.\8\ On March 6, 2023,
the Exchange filed Amendment No. 1, which amended and replaced the
proposed rule change in its entirety.\9\ The Commission has received no
comments on the proposed rule change. The Commission is approving the
proposed rule change, as modified by Amendment No. 1.
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\5\ 15 U.S.C. 78s(b)(2).
\6\ See Securities Exchange Act Release No. 96213, 87 FR 67513
(Nov. 8, 2022).
\7\ 15 U.S.C. 78s(b)(2)(B).
\8\ See Securities Exchange Act Release No. 96469, 87 FR 76524
(Dec. 14, 2022).
\9\ In Amendment No. 1, the Exchange: (1) clarified information
regarding the markets for Freight Futures (as defined herein) and
exchange-traded options on Freight Futures; (2) clarified the
correlation between the Benchmark Portfolio (as defined herein) and
the Fund's portfolio and the adjustments and rebalancing of the
Fund's portfolio; (3) provided additional background information on
the freight futures markets, generally, and additional supporting
information on the liquidity of the Freight Futures markets,
specifically; (4) clarified the types of instruments and other
holdings in which the Fund will not invest; (5) expanded its
description of the surveillance applicable to the Shares, Freight
Futures, and exchange-listed options on Freight Futures; (6) added a
representation that, prior to the commencement of trading of the
Shares, it will inform its ETP Holders (as defined herein) in an
Information Bulletin of the special characteristics and risks
associated with trading the Shares, among other information; and (7)
made other technical amendments. Because the amendment does not
materially alter the substance of the proposed rule change or raise
unique or novel regulatory issues, it is not subject to notice and
comment. Amendment No. 1 is available on the Commission's website
at: <a href="https://www.sec.gov/comments/sr-nysearca-2022-61/srnysearca202261-20158810-326900.pdf">https://www.sec.gov/comments/sr-nysearca-2022-61/srnysearca202261-20158810-326900.pdf</a>.
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II. Exchange's Description of the Proposed Rule Change, as Modified by
Amendment No. 1
As described in more detail in Amendment No 1 to the proposed rule
change,\10\ the Exchange proposes to list and trade the Shares of the
Fund under NYSE Arca Rule 8.200-E, Commentary .02, which governs the
listing and trading of Trust Issued Receipts on the Exchange. The Fund
will be a series of ETF Managers Group Commodity Trust I (``Trust),\11\
and the Fund and the Trust will be managed and controlled by their
sponsor and investment manager, ETF Managers Capital LLC
(``Sponsor'').\12\
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\10\ See id. Additional information about the tanker freight
industry, including tanker vessel supply, demand for seaborne oil
transportation, calculation of NAV (as defined herein),
dissemination of IFV (as defined herein), creation and redemption of
Shares, general availability of information, trading halts, trading
rules, surveillance, and information bulletin, among other things,
can be found in the proposed rule change, as modified by Amendment
No. 1.
\11\ The Exchange states that on July 1, 2022, the Trust
submitted to the Commission on a confidential basis its draft
registration statement on Form S-1 (``Registration Statement'')
under the Securities Act of 1933.
\12\ The Sponsor is registered with the Commodity Futures
Trading Commission (``CFTC'') as a commodity pool operator and is a
member of the National Futures Association. Breakwave Advisors LLC
(``Breakwave'') is registered as a commodity trading advisor with
the CFTC and will serve as the Fund's commodity trading advisor.
ETFMG Financial LLC will be the Fund's distributor, and US Bancorp
Fund Services LLC will be the Fund's administrator and transfer
agent (``Administrator'' and ``Transfer Agent'').
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According to the Exchange, the Fund's investment objective will be
to provide investors with exposure to the daily change in the price of
tanker freight futures,\13\ before expenses and liabilities of the
Fund, by tracking the performance of a portfolio (``Benchmark
Portfolio'') consisting of positions in the three-month strip of the
nearest calendar quarter of futures contracts on specified indexes
(individually, ``Reference Index'') that measure prices for shipping
crude oil (``Freight Futures'').\14\ Each Reference Index is published
each U.K. business day by the London-based Baltic Exchange \15\ and
measures the charter rate for shipping crude oil in a specific size
category of cargo ship and for a specific route. The two Reference
Indexes are: (1) the TD3C Index: Persian Gulf to China 270,000 metric
tons cargo (Very Large Crude Carrier or VLCC tankers); and (2) the TD20
Index: West Africa to Europe, 130,000 metric tons cargo (Suezmax
tankers).\16\ The value of each of the TD3C Index and TD20 Index is
disseminated daily at 4:00 p.m., London Time by the Baltic
Exchange.\17\ Such Reference Index information also is publicly
available and widely disseminated by Reuters, Bloomberg, and/or other
major market data vendors. Freight Futures reflect market expectations
for the future cost of transporting crude oil.\18\
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\13\ According to the Exchange, freight futures contracts mainly
exist for dry bulk and tanker freight rates. The Fund's exposure
will be to tanker (not dry bulk) freight futures.
\14\ According to the Exchange, Freight Futures are primarily
traded through broker members of the Forward Freight Agreement
Brokers Association (``FFABA''). Members of the FFABA must be
members of the Baltic Exchange and must be regulated by the
Financial Conduct Authority if resident in the U.K., or if not
resident in the U.K., by an equivalent body if required by the
authorities in the jurisdiction. Freight Futures are quoted in U.S.
dollars per metric ton, with a minimum lot size of 1,000 metric
tons. One lot represents freight costs to transport in U.S. dollars.
The nominal value of a contract is simply the product of lots and
Freight Futures prices.
\15\ The Baltic Exchange, which is a wholly-owned subsidiary of
the Singapore Exchange, is a membership organization and an
independent source of maritime market information for the trading
and settlement of physical and derivative shipping contracts.
\16\ The Reference Indexes are published by the Baltic
Exchange's subsidiary company, Baltic Exchange Information Services
Ltd (``Baltic''), which publishes a wide range of market reports,
fixture lists, and market rate indicators on a daily and (in some
cases) weekly basis. The Baltic indices, which include the Reference
Indexes, are an assessment of the price of moving the major raw
materials by sea. The indices are based on assessments of the cost
of transporting various bulk cargoes, both wet (e.g., crude oil and
oil products) and dry (e.g., coal and iron ore), made by leading
shipbroking houses located around the world on a per ton and daily
hire basis. The information is collated and published by the Baltic
Exchange. Procedures relating to administration of the Baltic
indices are set forth in ``The Baltic Exchange, Guide to Market
Benchmarks'' November 2016, including production methods,
calculation, confidentiality and transparency, duties of panelists,
code of conduct, audits, and quality control.
\17\ Freight futures, including tanker Freight Futures, settle
monthly over the arithmetic average of spot index assessments in the
contract month for the relevant underlying product, rounded to three
decimal places. The daily Reference Index publication, against which
Freight Futures settle, is published by the Baltic Exchange.
\18\ Generally, Freight Futures trade from approximately 3:00
a.m. Eastern Time (``E.T.'') to approximately 1:00 p.m. E.T. The
great majority of trading volume occurs during London business
hours, from approximately 4:00 a.m. E.T. time to approximately 12:00
p.m. E.T. Some limited trading takes place during Asian business
hours as well (12:00 a.m. to 3:00 a.m. E.T.). The final closing
prices for settlement are published daily around 12:30 p.m. E.T.
Final cash settlement occurs the first business day following the
expiry day.
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The Fund will seek to achieve its objective by purchasing Freight
Futures. The Fund also may hold exchange-traded options on Freight
Futures. Currently, the exclusive markets for Freight Futures and
options on Freight Futures are ICE Futures Europe (``ICE'') and the
Chicago Mercantile Exchange (``CME''). The applicable exchange acts as
a counterparty for each member for
[[Page 17634]]
clearing purposes. The Fund's investments in Freight Futures will be
cleared by ICE and/or CME.\19\
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\19\ The Exchange represents that CME and ICE are members of the
Intermarket Surveillance Group (``ISG'').
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According to the Exchange, although freight derivatives have been
used in the shipping industry for more than 30 years, freight futures
(including tanker Freight Futures) have been clearing on exchanges
since 2005. In addition, the Exchange represents that the liquidity of
tanker Freight Futures (clean and dirty) has been increasing, in lot
terms, over the last five years.\20\ For example, in 2021,
approximately 560,000 lots in Freight Futures traded. As of 2022, open
interest in Freight Futures stood at approximately 145,000 lots across
all asset classes representing an estimated value of more than $2
billion. Of such open interest in 2022, TD3C contracts accounted for
approximately 50% in lots of all tanker Freight Futures.
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\20\ Tanker Freight Futures are quoted in U.S. Dollars per
metric ton, with a minimum lot size of 1,000 metric tons. One lot
represents freight costs to transport in U.S. Dollars. The nominal
value of a contract is simply the product of lots and Freight
Futures prices. There are futures contracts of up to 72 consecutive
months, starting with the current month, available for trading for
each vessel class.
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The Fund will invest substantially all of its assets in Freight
Futures constituting the Benchmark Portfolio, and at any given time,
the average maturity of the futures held by the Fund will be
approximately 50 to 70 days. The Fund's portfolio will be traded with a
view to reflecting the performance of the Benchmark Portfolio, whether
the Benchmark Portfolio is rising, falling, or flat over any particular
period. The Benchmark Portfolio, which is maintained by Breakwave and
will be rebalanced annually, will hold long positions in Freight
Futures corresponding to the TD3C Index and TD20 Index. The Benchmark
Portfolio's initial allocation will be approximately 90% TD3C contracts
and 10% TD20 contracts, based on contract value, not number of lots.
The Benchmark Portfolio will consist of positions in the three-month
strip of the nearest calendar quarter of Freight Futures and roll them
constantly to the next calendar quarter. The three-month strip of each
of the four-calendar quarters are January, February, and March (Q1);
April, May, and June (Q2); July, August, and September (Q3); and
October, November, and December (Q4). The Benchmark Portfolio will hold
all positions to maturity and settle them in cash. During any given
calendar quarter, the Benchmark Portfolio will progressively increase
its position to the next calendar quarter three-month strip, thus
maintaining constant long exposure to the Freight Futures market as
positions mature.
To track the Benchmark Portfolio, the Fund will attempt to roll
positions in the nearby calendar quarter, on a pro rata basis. For
example, if the Fund was currently holding the Q1 calendar quarter
comprising the January, February and March monthly contracts, each week
in the month of February, the Fund will attempt to purchase Q2
contracts in an amount equal to approximately one quarter of the
expiring February positions. As a result, by the end of February, the
Fund would have rolled the February position to Q2 freight contracts,
leaving the Fund with March and Q2 contracts. At the end of March, the
Fund will have completed the roll and will then hold only Q2 exposure
comprising April, May, and June monthly contracts.
During the month of December of each year, the Fund will rebalance
its portfolio in order to bring the allocation of assets back to the
initial allocation levels (i.e., 90% and 10% in accordance with the
Benchmark Portfolio construction). Given each asset's individual price
movements during the year, such percentages might deviate from the
targeted allocation. To maintain the correlation between the Fund and
the change in the Benchmark Portfolio with regard to the performance of
near-dated versus longer-dated futures (i.e., based on contract
duration), the Sponsor may adjust the Fund's portfolio of investments
on a daily basis in response to creation and redemption orders or
otherwise as required. For example, if needed, the Fund will sell
current month Freight Futures and buy next calendar quarter futures to
maintain a balance in terms of average duration, but also sell TD3C
futures and buy TD20 futures to maintain the initial allocation levels
(i.e., 90%; 10%). The Sponsor anticipates that the Fund's Freight
Futures positions will be held to expiration and settle in cash against
the respective Reference Index as published by the Baltic Exchange and
ICE or CME. Because Freight Futures contracts are cash settled, the
Fund need not close out of existing contracts. Rather, it will hold
such contracts to expiration and apply the above methodology in order
acquire the nearby calendar contract.
When establishing positions in Freight Futures, the Fund will be
required to deposit initial margin with a value of approximately 10% to
40% of the notional value of each Freight Futures position at the time
it is established. These margin requirements are established and
subject to change from time to time by the relevant exchanges, clearing
houses, or the Fund's futures commission merchant (``FCM''). On a daily
basis, the Fund will be obligated to pay, or entitled to receive,
variation margin in an amount equal to the change in the daily
settlement level of its overall Freight Futures positions. Any assets
not required to be posted as margin with the FCM will be held at the
Fund's custodian in cash or cash equivalents.\21\ Like other investors
in Freight Futures, the Fund will place purchase orders for Freight
Futures with an execution broker. The broker will identify a selling
counterparty and, simultaneously with the completion of the
transaction, will submit the block traded Freight Futures to the
relevant exchange or clearing house for clearing, thereby completing
and creating a cleared futures transaction. If the exchange or clearing
house does not accept the transaction for any reason, the transaction
will be considered null and void and of no legal effect.
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\21\ The Fund will hold cash or cash equivalents, such as U.S.
Treasuries or other high credit quality, short-term fixed-income or
similar securities for direct investment or as collateral for the
U.S. Treasuries and for other liquidity purposes, and to meet
redemptions that may be necessary on an ongoing basis.
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The Exchange represents that not more than 10% of the net assets of
the Fund in the aggregate invested in Freight Futures and exchange-
traded options on Freight Futures will consist of Freight Futures and
exchange-traded options on Freight Futures whose principal market is
not a member of the ISG or is a market with which the Exchange does not
have in place a comprehensive surveillance sharing agreement
(``CSSA''). In addition, while the Fund maintains the right to invest
in other maturities of Freight Futures, if such strategy is deemed
necessary, according to the Exchange, the Benchmark Portfolio will not
include, and the Fund will not invest in, swaps or other over-the-
counter derivative instruments.
III. Discussion and Commission Findings
After careful review, the Commission finds that the Exchange's
proposal to list and trade the Shares is consistent with the Exchange
Act and the rules and regulations thereunder applicable to a national
securities exchange.\22\ In particular, the Commission finds that the
proposed rule change, as modified by Amendment No. 1, is consistent
with: (1) Section 6(b)(5) of the Exchange
[[Page 17635]]
Act,\23\ which requires, among other things, that the Exchange's rules
be designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest; and (2) Section 11A(a)(1)(C)(iii) of the Exchange
Act,\24\ which sets forth Congress' finding that it is in the public
interest and appropriate for the protection of investors and the
maintenance of fair and orderly markets to assure the availability to
brokers, dealers, and investors of information with respect to
quotations for and transactions in securities.
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\22\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\23\ 15 U.S.C. 78f(b)(5).
\24\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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As stated in the proposal, the Fund will seek to achieve its
objective by purchasing Freight Futures (and exchange-traded options on
Freight Futures) that are cleared through major exchanges and,
currently, the exclusive markets for Freight Futures (and options on
Freight Futures) are ICE and CME, both of which are members of ISG and
are regulated in the U.S. by the CFTC.\25\ The Exchange further states
that, although freight derivatives have been used in the shipping
industry for more than 30 years, freight futures (including tanker
Freight Futures) have been clearing on exchanges since 2005. In
summary, Freight Futures are cleared on well-established, regulated
markets that are members of the ISG.\26\ The Commission finds that the
Exchange will be able to obtain and share surveillance information with
a significant regulated market in Freight Futures.
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\25\ See supra note 19.
\26\ See supra notes 19-20 and accompanying text.
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To be listed and traded on the Exchange, the Shares must comply
with the requirements of NYSE Arca Rule 8.200-E, Commentary .02 thereto
on an initial and continuing basis. 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.
Quotation and last-sale information regarding the Shares will be
disseminated through the facilities of the Consolidated Tape
Association. The intraday, closing prices, and settlement prices of the
Freight Futures will be readily available from the applicable futures
exchange websites, automated quotation systems, published or other
public sources, or major market data vendors. Complete real-time data
for Freight Futures is available by subscription through on-line
information services. Trading prices for the Freight Futures and
exchange-traded options on Freight Futures will be disseminated by one
or more major market data vendors during the NYSE Arca Core Trading
Session of 9:30 a.m. to 4:00 p.m. E.T. CME and ICE provide on a daily
basis transaction volumes, transaction prices, and open interest on
their respective websites. Daily settlement prices and historical
settlement prices are available through a subscription service to the
Baltic Exchange, ICE, and CME; however, these exchanges provide the
daily settlement price change of Freight Futures on their respective
websites. Certain Freight Futures brokers provide real time pricing
information to the general public either through their websites or
through data vendors, such as Bloomberg or Reuters. Most Freight
Futures brokers provide, upon request, individual electronic screens
that market participants can use to transact, place orders, or only
monitor Freight Futures market price levels.
In addition, the Fund's website will display the applicable end of
day closing net asset value (``NAV''). The daily holdings of the Fund
will be disclosed on the Fund's website before 9:30 a.m. E.T. each day.
The Fund's website disclosure of portfolio holdings will include, as
applicable: (1) the composite value of the total portfolio; (2) the
quantity and type of each holding (including the ticker symbol,
maturity date, or other identifier, if any) and other descriptive
information including, in the case of an option, its strike price; (3)
the percentage weighting of each holding in the Fund's portfolio; (4)
the number of Freight Futures contracts and the value of each Freight
Futures (in U.S. dollars); (5) the type (including maturity, ticker
symbol, or other identifier) and value of each Treasury security and
cash equivalent; and (6) the amount of cash held in the Fund's
portfolio.
The daily closing Benchmark Portfolio level and the percentage
change in the daily closing level for the Benchmark Portfolio will be
publicly available from one or more major market data vendors. The
intraday value of the Benchmark Portfolio, updated every 15 seconds,
will be available through major market data vendors during those times
that the hours trading in Freight Futures overlap with trading hours on
NYSE Arca (i.e., between 9:00 a.m. and 1:00 p.m. E.T.). The indicative
fund value (``IFV''), which will be calculated by using the prior day's
closing NAV per Share of the Fund as a base and updating that value
throughout the trading day to reflect changes in the most recently
reported trade price for the futures and/or options held by the Fund,
will be disseminated on a per Share basis every 15 seconds during
regular NYSE Arca Core Trading Session hours of 9:30 a.m. E.T. to 4:00
p.m. E.T.\27\ The Administrator will calculate the NAV of the Fund on
each NYSE Arca trading day. The NAV for a particular trading day will
be released after 4:00 p.m. E.T., and the NAV for the Shares will be
disseminated daily to all market participants at the same time.
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\27\ The Exchange represents that the customary trading hours of
Freight Futures trading are 3:00 a.m. E.T. to 1:00 p.m. E.T. This
means that there is a gap in time at the end of each day during
which the Fund's Shares will be traded on the NYSE Arca, but real-
time trading prices for contracts are not available. During such
gaps in time the IFV will be calculated based on the end of day
price of such contracts from the Baltic Exchange's, CME's, and ICE's
immediately preceding settlement prices.
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The Commission also believes that the proposal to list and trade
the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately and
to prevent trading when a reasonable degree of transparency cannot be
assured. If the Exchange becomes aware that the NAV with respect to the
Shares is not disseminated to all market participants at the same time,
it will halt trading in the Shares until such time as the NAV is
available to all market participants. Further, the Exchange may halt
trading during the day in which an interruption to the dissemination of
the IFV or the intraday value of the Benchmark Portfolio occurs; if the
interruption to the dissemination of the IFV or the value of the
Benchmark Portfolio persists past the trading day in which it occurred,
the Exchange will halt trading no later than the beginning of the
trading day following the interruption. Trading in Shares of the 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. The Exchange states that it has a
general policy prohibiting the distribution of material, non-public
information by its employees. Moreover, trading of the Shares will be
subject to NYSE Arca Rule 8.200-E, Commentary .02(e), which sets forth
certain restrictions on Equity Trading Permit holders (``ETP Holders'')
acting as registered Market Makers in Trust
[[Page 17636]]
Issued Receipts to facilitate surveillance.
Under the proposal, the Exchange or the Financial Industry
Regulatory Authority (``FINRA''), on behalf of the Exchange, or both,
will communicate as needed regarding trading in the Shares, Freight
Futures, and exchange-traded options on Freight Futures 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, Freight Futures,
and exchange-traded options on Freight Futures from such markets and
other entities. In addition, the Exchange may obtain information
regarding trading in the Shares, Freight Futures, and options on
Freight Futures from markets and other entities that are members of ISG
or with which the Exchange has in place a CSSA.
In support of this proposal, the Exchange also represents that:
(1) The Shares will conform to the initial and continued listing
criteria under NYSE Arca Rule 8.200-E.
(2) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.
(3) 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, and 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.
(4) Prior to the commencement of trading, the Exchange will inform
its ETP Holders in an Information Bulletin of the special
characteristics and risks associated with trading the Shares.
Specifically, the Information Bulletin will discuss the following: (a)
the risks involved in trading the Shares during the Early and Late
Trading Sessions when an updated IFV will not be calculated or publicly
disseminated; (b) the procedures for purchases and redemptions of
Shares in creation baskets and redemption baskets (and that Shares are
not individually redeemable); (c) NYSE Arca Rule 9.2-E(a), which
imposes a duty of due diligence on its ETP Holders to learn the
essential facts relating to every customer prior to trading the Shares;
(d) how information regarding the IFV is disseminated; (e) how
information regarding portfolio holdings is disseminated; (f) the
requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to, or concurrently with, the
confirmation of a transaction; and (g) trading information.
(5) For initial and continued listing, the Funds will be in
compliance with Rule 10A-3 under the Act,\28\ as provided by NYSE Arca
Rule 5.3-E.
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\28\ 17 CFR 240.10A-3.
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(6) A minimum of 100,000 Shares will be outstanding at the
commencement of trading on the Exchange.
(7) The Fund will invest substantially all of its assets in Freight
Futures currently constituting the Benchmark Portfolio, and not more
than 10% of the net assets of the Fund in the aggregate invested in
Freight Futures and exchange-traded options on Freight Futures will
consist of Freight Futures and exchange-traded options on Freight
Futures whose principal market is not a member of the ISG or is a
market with which the Exchange does not have a CSSA.
(8) The Benchmark Portfolio will not include, and the Fund will not
invest in, swaps or other over-the-counter derivative instruments.
(9) Statements and representations made in this filing regarding
(a) the description of the Reference Indexes and portfolios, (b)
limitations on portfolio holdings or reference assets, or (c)
applicability of Exchange listing rules specified in this filing shall
constitute continued listing requirements for listing the Shares on the
Exchange.
(10) The Sponsor has represented to the Exchange that it will
advise the Exchange of any failure by the Fund 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.\29\ If the Fund is not in
compliance with the applicable listing requirements, the Exchange will
commence delisting procedures under NYSE Arca Rule 5.5-E(m).
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\29\ The Commission notes that certain other proposals for the
listing and trading of exchange-traded products include a
representation that the listing exchange will ``surveil'' for
compliance with the continued listing requirements. See, e.g.,
Securities Exchange Act Release No. 77620 (Apr. 14, 2016), 81 FR
23339 (Apr. 20, 2016) (SR-BATS-2015-124). In the context of this
representation, it is the Commission's view that ``monitor'' and
``surveil'' both mean ongoing oversight of the Fund's compliance
with the continued listing requirements. Therefore, the Commission
does not view ``monitor'' as a more or less stringent obligation
than ``surveil'' with respect to the continued listing requirements.
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This approval order is based on all of the Exchange's
representations and description of the Fund, including those set forth
above and in Amendment No. 1 to the proposed rule change.
For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendment No. 1, is consistent with
Sections 6(b)(5) and 11A(a)(1)(C)(iii) of the Act \30\ and the rules
and regulations thereunder applicable to a national securities
exchange.
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\30\ 15 U.S.C. 78f(b)(5) and 15 U.S.C. 78k-1(a)(1)(C)(iii).
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\31\ that the proposed rule change (SR-NYSEARCA-2022-61),
as modified by Amendment No. 1, be, and it hereby is, approved.
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\31\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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\32\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-05915 Filed 3-22-23; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on March 23, 2023.
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