Notice2023-22039
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To List and Trade Shares of the American Century Focused Dynamic Growth ETF and the American Century Focused Large Cap Value 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
October 4, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 191 (Wednesday, October 4, 2023)</title>
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[Federal Register Volume 88, Number 191 (Wednesday, October 4, 2023)]
[Notices]
[Pages 68684-68692]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-22039]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 3498663; File No. SR-NYSEARCA-2023-67]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To List and Trade
Shares of the American Century Focused Dynamic Growth ETF and the
American Century Focused Large Cap Value ETF Under NYSE Arca Rule
8.601-E (Active Proxy Portfolio Shares)
September 29, 2023.
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 September 28, 2023, 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 American
Century Focused Dynamic Growth ETF and the American Century Focused
Large Cap Value 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 the American Century
Focused Dynamic Growth ETF and the American Century Focused Large Cap
Value ETF (each a ``Fund'' and, collectively, the ``Funds'') under Rule
8.601-E.\5\
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\4\ See Securities Exchange Act Release No. 89185 (June 29,
2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95). Rule 8.601-
E(c)(1) provides that ``[t]he term ``Active Proxy Portfolio Share''
means a security that (a) is issued by an investment company
registered under the Investment Company Act of 1940 (``Investment
Company'') organized as an open-end management investment company
that invests in a portfolio of securities selected by the Investment
Company's investment adviser consistent with the Investment
Company's investment objectives and policies; (b) is issued in a
specified minimum number of shares, or multiples thereof, in return
for a deposit by the purchaser of the Proxy Portfolio 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.
\5\ Pursuant to Commission approval, the Funds are currently
listed on Cboe BZX Exchange, Inc. (``BZX'') and utilize the
Precidian ActiveShares methodology (the ``Precidian Model''). See
Securities Exchange Act Release No. 88175 (February 12, 2020), 85 FR
9494 (February 19, 2020) (SR-CboeBZX-2019-057) (Notice of Filing of
Amendment No. 2 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 2 thereto, To
List and Trade Shares of the American Century Focused Dynamic Growth
ETF and American Century Focused Large Cap Value ETF Under BZX Rule
14.11(k)).
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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 \6\ and for which a ``Disclosed Portfolio'' is
required to be disseminated at least once daily,\7\ the portfolio for
an issue of
[[Page 68685]]
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'').\8\ 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,\9\ 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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\6\ 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).
\7\ 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.
\8\ 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>.
\9\ ``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 \10\ and noticed for
immediate effectiveness \11\ 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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\10\ 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); 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);
91266 (March 5, 2021), 86 FR 13930 (March 11, 2021) (SR-NYSEArca-
2020-104) (Order Approving a Proposed Rule Change, as Modified by
Amendment No. 2, To List and Trade Shares of the Stance Equity ESG
Large Cap Core ETF Under NYSE Arca Rule 8.601-E).
\11\ See, e.g., 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); 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); 94486 (March 22, 2022), 87 FR 17351 (March 28,
2022) (SR-NYSEArca-2022-14) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change to List and Trade Shares of
the Columbia Seligman Semiconductor and Technology ETF Under NYSE
Arca Rule 8.601 (Active Proxy Portfolio Shares); 94908 (May 13,
2022), 87 FR 30524 (May 19, 2022) (SR-NYSEArca-2022-28) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to List
and Trade Shares of the Principal Real Estate Active Opportunities
ETF Under NYSE Arca Rule 8.601 (Active Proxy Portfolio Shares));
94902 (May 12, 2022), 87 FR 30286 (May 18, 2022) (SR-NYSEArca-2022-
29) (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)); and 97645 (June 2, 2023),
88 FR 37588 (SR-NYSEArca-2023-38) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To List and Trade Shares of
the Natixis Loomis Sayles Focused Growth ETF Under NYSE Arca Rule
8.601-E (Active Proxy Portfolio Shares)).
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The Shares of each Fund will be issued by American Century ETF
Trust (the ``Trust''), a statutory trust organized under the laws of
the State of Delaware and registered with the Commission as an open-end
management investment company.\12\ American Century Investment
Management, Inc. will be the investment adviser to each Fund (the
``Adviser''). Foreside Fund Services, LLC will serve as the distributor
(the ``Distributor'') of each of the Fund's Shares.
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\12\ The Trust is registered under the 1940 Act. On June 18,
2018, the Trust filed a registration statement on Form N-1A relating
to the Funds (File No. 811-23305) (the ``Registration Statement'').
The Commission issued an order granting exemptive relief to the
Trust (``Exemptive Order'') under the 1940 Act on May 12, 2020
(Investment Company Act Release No. 33862). The Exemptive Order was
granted with respect to the Trust's application for exemptive relief
(the ``Application'') (Investment Company Act Release No. 33841)
(File No. 812-15082). Each Fund's final, definitive prospectus,
dated as of January 1, 2023, was filed pursuant to Rule 485B of the
Securities Act of 1933, and contains the current methodology of each
Fund (the ``Final Prospectus''). A supplement to the Final
Prospectus containing the change to the methodology used by each
Fund from the Precidian Model to the NYSE AMS proxy portfolio
methodology, as described herein, was filed on August 22, 2023,
pursuant to Rule 497(e) of the Securities Act of 1933 (the
``Supplement''). Pursuant to the Supplement, the change to the
methodology will be implemented effective October 23, 2023. As part
of the transition, effective October 23, 2023, the listing exchange
for the Funds will change from BZX to the Exchange. Investments made
by the Funds will comply with the conditions set forth in the
Application and the Exemptive Order. The description of each Fund
and the Shares contained herein are based on the Registration
Statement, the Final Prospectus and the Supplement. The Exchange
will not commence trading in the Shares of each Fund until the
Supplement 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
[[Page 68686]]
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.\13\ 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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\13\ 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 Adviser and its 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 Adviser is not registered as a broker-dealer but is affiliated
with a broker-dealer. The Adviser has implemented and will maintain a
``fire wall'' with respect to such broker-dealer affiliate 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.
In the event (a) the Adviser 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 Adviser or each Fund who makes decisions
pertaining to each Fund's Actual Portfolio, Proxy Portfolio, or Custom
Basket, as applicable, or has access to non-public information
regarding each 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 each 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 each Fund, who has access to non-public information regarding each
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 each 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 each Fund's Actual Portfolio, Proxy
Portfolio, and/or Custom Basket, as applicable.
Description of the Funds
According to the Registration Statement, the Adviser will identify
a Proxy Portfolio for each Fund that is designed to replicate the daily
performance of each Fund's Actual Portfolio and will only include
securities and investments in which each Fund may invest. While each
Fund's Proxy Portfolio and Actual Portfolio will hold some of the same
securities, the Proxy Portfolio and Actual Portfolio may not include
identical securities.
The composition of the Proxy Portfolio will be published on the
Funds' website (<a href="http://www.americancenturyetfs.com">www.americancenturyetfs.com</a>) each Business Day before
the commencement of trading of each Fund's Shares. The Funds' website
will include the following information for each portfolio holding in
the 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
Adviser will not make intra-day changes to the Proxy Portfolio except
to correct errors in the published Proxy Portfolio.
Each Fund will, at the end of each trading day, calculate the
percentage weight overlap between the holdings of its Proxy Portfolio
and the Actual Portfolio (the ``Proxy Overlap'') that formed the basis
for each Fund's calculation of NAV at the end of the prior Business Day
by taking the lesser weight of each asset held in common between the
Actual Portfolio and the Proxy Portfolio and adding the totals.
Each 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
[[Page 68687]]
Application and Exemptive Order.\14\ Any foreign common stocks held by
each 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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\14\ Pursuant to the Application and Exemptive Order, the
permissible investments for each Fund include only the following
instruments: exchange-traded funds, exchange-traded notes, exchange-
traded common stocks, exchange-traded preferred stocks, exchange-
traded American Depositary Receipts, exchange-traded real estate
investment trusts, exchange-traded commodity pools, exchange-traded
metal trusts, exchange-traded currency trusts and exchange-traded
futures that trade contemporaneously with each Fund's shares. In
addition, each Fund 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, neither Fund 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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American Century Focused Dynamic Growth ETF
According to the Registration Statement, the Fund's investment
objective is long-term capital growth. The Fund will, under Normal
Market Conditions,\15\ invest primarily in U.S. exchange-listed equity
securities. The Adviser looks for stocks of companies it believes will
increase in value over time. In implementing this strategy, the Adviser
makes investment decisions based primarily on its analysis of
individual companies, rather than on broad economic forecasts.
Management of the Fund is based on the belief that, over the long term,
stock price movements follow growth in earnings, revenues and/or cash
flow. The Adviser uses a variety of analytical research tools and
techniques to identify the stocks of companies that meet the Fund's
investment criteria. In addition to investing primarily in U.S.
exchange-listed equity securities, the Fund may also invest in
exchange-traded funds, exchange-listed ADRs, U.S. exchange-listed
equity futures contracts, and U.S. exchange-listed equity index futures
contracts. The Fund may also hold cash and cash equivalents without
limitation.
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\15\ The term ``Normal Market Conditions'' includes, but is not
limited to, the absence of trading halts in the applicable financial
markets generally; operational issues (e.g., systems failure)
causing dissemination of inaccurate market information; or force
majeure type events such as natural or manmade disaster, act of God,
armed conflict, act of terrorism, riot or labor disruption or any
similar intervening circumstance.
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American Century Focused Large Cap Value ETF
According to the Registration Statement, the Fund's investment
objective is long-term capital growth. The Fund will, under Normal
Market Conditions, invest primarily in U.S. exchange-listed equity
securities. The Adviser looks for stocks of companies whose stock price
may not reflect the company's value. The Adviser attempts to purchase
the stocks of these undervalued companies and hold each stock until the
price has increased to, or is higher than, a level the Adviser believes
more accurately reflects the fair value of the company. The Adviser may
sell stocks from the Fund's portfolio if it believes a stock no longer
meets its valuation criteria, if a stock's risk parameters outweigh its
return opportunity, more attractive alternatives are identified, or
specific events alter a stock's prospects. In addition to investing
primarily in U.S. exchange-listed equity securities, the Fund may also
invest in exchange-traded funds, exchange-listed ADRs, U.S. exchange-
listed equity futures contracts, and U.S. exchange-listed equity index
futures contracts. The Fund may also hold cash and cash equivalents
without limitation.
Investment Restrictions
Shares of each Fund will conform to the initial and continued
listing criteria under Rule 8.601-E. Each Fund's 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.\16\
---------------------------------------------------------------------------
\16\ See supra, note 14.
---------------------------------------------------------------------------
Each Fund's investments, including derivatives, will be consistent
with its 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 each Fund's primary broad-based securities benchmark index (as
defined in Form N-1A).\17\
---------------------------------------------------------------------------
\17\ Each Fund's broad-based securities benchmark index is
identified in its current Registration Statement.
---------------------------------------------------------------------------
Purchases and Redemptions
According to the Registration Statement, the Trust will issue and
sell Shares of each Fund only in specified minimum size ``Creation
Units'' on a continuous basis through the Distributor at their NAV next
determined after receipt of an order, on any Business Day, 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. Eastern Time (``E.T.''). A Creation Unit will generally consist of
at least 5,000 Shares.
According to the Registration Statement, Shares of each Fund will
be purchased and redeemed in Creation Units. Creation Units will
generally be purchased in-kind through the deposit of a designated
portfolio of securities (the ``Deposit Securities''), which will
typically replicate the Proxy Portfolio, plus the ``Cash Component,''
which is an amount equal to the difference between the NAV of each
Fund's shares (per Creation Unit) and the market value of the Deposit
Securities or ``Cash Deposit'' (as defined below), as applicable. The
Cash Component serves the function of compensating for any differences
between the NAV per Creation Unit and the market value of the Deposit
Securities or Cash Deposit, as applicable. The Cash Deposit is a ``cash
in lieu'' amount that the Trust may permit or require 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 the Proxy Portfolio, except to the extent that a
Fund requires purchases and redemptions to be made entirely or in part
on a cash basis. Together, the Deposit Securities or Cash Deposit, as
applicable, and the Cash Component constitute the ``Fund Deposit,''
which represents the minimum initial and subsequent investment amount
for a Creation Unit of each Fund.
Creation Units of each Fund may be purchased and/or redeemed
entirely or partially for cash in the Trust's discretion. When full or
partial cash purchases or redemptions of Creation Units are available
or specified for a Fund, they will be effected in essentially the same
manner as in-kind purchases or redemptions thereof.\18\
---------------------------------------------------------------------------
\18\ The Adviser 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 (as defined below) placing trades with each
Fund on that day.
---------------------------------------------------------------------------
The identity and number of shares comprising a Creation Unit may
change from time to time. Each Fund, through the National Securities
Clearing Corporation (the ``NSCC''), will make available on each
Business Day, immediately prior to the opening of business on the
Exchange, the list of the names and the required number of shares of
each Deposit Security or the required amount of Cash Deposit, as
[[Page 68688]]
applicable, to be included in the Fund Deposit. 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, who may engage
in creation or redemption transactions directly with each Fund.\19\
Orders to purchase or redeem Creation Units will be accepted until the
``Order Cut-Off Time,'' generally 2:00 p.m. E.T., on each Business Day
in order to receive the NAV of Shares of each Fund on that Business
Day. The date on which an order to purchase or redeem Creation Units is
placed is referred to as 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.
---------------------------------------------------------------------------
\19\ According to the Registration Statement, an ``Authorized
Participant'' is (i) a broker-dealer or other participant in the
clearing process through the Continuous Net Settlement System of the
NSCC or (ii) a DTC Participant, that has executed an AP Agreement
with the Distributor.
---------------------------------------------------------------------------
Availability of Information
The Funds' website (<a href="http://www.americancentiryetfs.com">www.americancentiryetfs.com</a>) will include a
form of the prospectus for each Fund 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 ``Mid-Point of the Bid/Ask Price at Close''; \20\ and (3) a
calculation of the premium/discount of such Closing Price or Mid-Point
of the Bid/Ask Price at Close against such NAV.\21\ The Adviser 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 will also disclose the information required
under Rule 8.601-E(c)(3).\22\ The Funds' website and information will
be publicly available at no charge.
---------------------------------------------------------------------------
\20\ The records relating to Bid/Ask Prices will be retained by
each Fund or its service providers. 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 of each Fund is the official closing
price on the Exchange.
\21\ 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.
\22\ 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.
---------------------------------------------------------------------------
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 of each Fund on each Business Day.
The website will also include information relating to the Proxy
Overlap, as discussed above. With respect to each Custom Basket
utilized by each Fund, 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 Proxy Portfolio only with respect to cash.
Typical mutual fund-style annual, semi-annual and quarterly
disclosures contained in each Fund's Commission filings will be
provided on the Funds' website on a current basis.\23\ 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.
---------------------------------------------------------------------------
\23\ See note 8, supra.
---------------------------------------------------------------------------
Investors can also obtain each Fund's 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, each Fund must comply with
Regulation Fair Disclosure, which prohibits selective disclosure of any
material non-public information.
Information regarding the market price of Shares of each Fund and
trading volume in Shares of each Fund, 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 of each Fund will be published daily
in the financial section of newspapers.
Quotation and last sale information for the Shares of each Fund 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 each Fund.\24\ Trading in Shares of each 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 of each Fund inadvisable. Trading in the Shares
of each Fund will be subject to NYSE Arca Rule 8.601-E(d)(2)(D), which
sets forth circumstances under which Shares of each Fund will be
halted.
---------------------------------------------------------------------------
\24\ 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;
[[Page 68689]]
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 of each Fund to be equity securities,
thus rendering trading in the Shares of each Fund subject to the
Exchange's existing rules governing the trading of equity securities.
Shares of each Fund 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 of each Fund 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 of each Fund
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 of each Fund, 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 of each Fund
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.\25\ The Exchange represents that these procedures are adequate to
properly monitor Exchange trading of the Shares of each Fund in all
trading sessions and to deter and detect violations of Exchange rules
and federal securities laws applicable to trading on the Exchange.
---------------------------------------------------------------------------
\25\ 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.
---------------------------------------------------------------------------
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 of each Fund 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.\26\
---------------------------------------------------------------------------
\26\ For a list of the current members of ISG, see
<a href="http://www.isgportal.org">www.isgportal.org</a>.
---------------------------------------------------------------------------
The Adviser will make available daily to FINRA and the Exchange the
Actual Portfolio of the Fund, upon request, as necessary to assist with
the performance of the surveillances and investigations 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 applicable
to 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 each Fund, 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 of each Fund on the
Exchange. The Exchange will obtain a representation from the Trust,
prior to commencement of trading in the Shares of each Fund, that it
will advise the Exchange of any
[[Page 68690]]
failure by a 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. 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,\27\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\28\ 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.\29\
---------------------------------------------------------------------------
\27\ 15 U.S.C. 78f(b).
\28\ 15 U.S.C. 78f(b)(5).
\29\ The Exchange represents that, for initial and continued
listing, each Fund will be in compliance 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 each
Fund, the Exchange believes that the proposed rule change is designed
to prevent fraudulent and manipulative acts and practices in that the
Shares of each Fund will be listed and traded on the Exchange pursuant
to the initial and continued listing criteria in NYSE Arca Rule 8.601-
E.
Each 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.\30\
---------------------------------------------------------------------------
\30\ See note 14, supra.
---------------------------------------------------------------------------
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares of each Fund 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 of each Fund and underlying exchange-
traded instruments from such markets and other entities. In addition,
the Exchange may obtain information regarding trading in the Shares of
each Fund 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 a 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.
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 of each
Fund in a manner that will not lead to significant deviations between
the Shares of each Fund's Closing Price or Bid/Ask Price and NAV.
Each Fund's 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, each Fund's investments will not be used to seek
performance that is the multiple or inverse multiple (e.g., 2X or -3X)
of a Fund's 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, Actual Portfolio and/or Custom Basket, as applicable,
for each Fund will be made available to all market participants at the
same time. Investors can obtain each Fund's SAI, shareholder reports,
and its Form N-CSR, Form N-PORT, and Form N-CEN. Each Fund's SAI and
shareholder reports will be available free upon request, 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 applicable
to 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 each Fund, the Adviser will make available
daily to FINRA and the Exchange the portfolio holdings of each Fund
upon request as necessary to facilitate the performance of the
surveillances and investigations 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 of each Fund 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 each Fund, a large amount of
information will be publicly available regarding each Fund and the
Shares of each Fund, thereby promoting market transparency.
Quotation and last sale information for the Shares of each Fund 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 Funds' website will include a form of the prospectus that may
be
[[Page 68691]]
downloaded, and additional data relating to NAV and other applicable
quantitative information, updated on a daily basis. Trading in Shares
of each Fund 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 of each Fund inadvisable. Trading in the Shares of each Fund
will be subject to NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth
circumstances under which Shares of each 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 of
each Fund. 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 of each Fund on each Business Day.
The Shares of each Fund will conform to the initial and continued
listing criteria under Rule 8.601-E.\31\
---------------------------------------------------------------------------
\31\ See note 4, supra.
---------------------------------------------------------------------------
Each 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.\32\ Any foreign common stocks held by a 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.
---------------------------------------------------------------------------
\32\ See note 14, 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 Adviser, prior to commencement of trading in
the Shares of each Fund, that it will advise the Exchange of any
failure by a 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. 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).
As noted above, the Exchange has in place surveillance procedures
relating to trading in the Shares of each Fund 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 of each Fund.
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.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \33\ and Rule 19b-4(f)(6) thereunder.\34\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------
\33\ 15 U.S.C. 78s(b)(3)(A)(iii).
\34\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
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) \35\ 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 Funds,\36\
and this proposal 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.\37\
---------------------------------------------------------------------------
\35\ 17 CFR 240.19b-4(f)(6)(iii).
\36\ See supra notes 10 and 11.
\37\ 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#5e2c2b323b733d3133333b302a2d1e2d3b3d70393128"><span class="__cf_email__" data-cfemail="384a4d545d155b5755555d564c4b784b5d5b165f574e">[email protected]</span></a>. Please include
file number
SR-NYSEARCA-2023-67 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-2023-67. 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the submission, all subsequent
[[Page 68692]]
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 a.m. and 3 p.m. Copies of the
filing also will be available for inspection and copying at the
principal office of the Exchange. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection. All submissions should refer to file number
SR-NYSEARCA-2023-67 and should be submitted on or before October 25,
2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
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\38\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-22039 Filed 10-3-23; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on October 4, 2023.
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.