Notice2025-06252
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Reflect an Amendment to the Application and Exemptive Order Governing the Fidelity Women's Leadership ETF and Fidelity Sustainability U.S. Equity 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
April 14, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 70 (Monday, April 14, 2025)</title>
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[Federal Register Volume 90, Number 70 (Monday, April 14, 2025)]
[Notices]
[Pages 15604-15607]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-06252]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102786; File No. SR-NYSEARCA-2025-28]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Reflect an
Amendment to the Application and Exemptive Order Governing the Fidelity
Women's Leadership ETF and Fidelity Sustainability U.S. Equity ETF
April 8, 2025.
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 April 4, 2025, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``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 reflect an amendment to the Application
and Exemptive Order governing the Fidelity Women's Leadership ETF and
Fidelity Sustainability U.S. Equity ETF that are listed and traded on
the Exchange under NYSE Arca Rule 8.601-E. The proposed rule change is
available on the Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
[[Page 15605]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange adopted NYSE Arca Rule 8.601-E for the purpose of
permitting the listing and trading, or trading pursuant to unlisted
trading privileges (``UTP''), of Active Proxy Portfolio Shares, which
are securities issued by an actively managed open-end investment
management company.\4\ Commentary .01 to Rule 8.601-E requires the
Exchange to file separate proposals under Section 19(b) of the Act
before listing and trading any series of Active Proxy Portfolio Shares
on the Exchange. Pursuant to this provision, the Exchange submitted a
proposal to list and trade shares (``Shares'') of Active Proxy
Portfolio Shares of the Fidelity Women's Leadership ETF and Fidelity
Sustainability U.S. Equity ETF \5\ (each, a ``Fund'' and, together, the
``Funds'') on the Exchange under NYSE Arca Rule 8.601-E. The Exchange
proposes to reflect an amendment to the Prior Application and Prior
Exemptive Order (as defined below) governing the listing and trading of
the Funds, as follows.
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\4\ See Securities Exchange Act Release No. 89185 (June 29,
2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95). Rule 8.601-
E(c)(1) provides that ``[t]he term ``Active Proxy Portfolio Share''
means a security that (a) is issued by a investment company
registered under the Investment Company Act of 1940 (``Investment
Company'') organized as an openend 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.''
\5\ On April 14, 2021, the Commission published the notice of
filing and immediate effectiveness relating to the listing and
trading of shares of the Fidelity Women's Leadership ETF and
Fidelity Sustainability U.S. Equity ETF. See Securities Exchange Act
Release No. 91514 (April 8, 2021), 86 FR 19657 (April 14, 2021) (SR-
NYSEArca-2021-23) (``Notice'').
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Fidelity Covington Trust, Fidelity Management & Research Company
LLC, and Fidelity Distributors Company LLC (the ``Applicants'') \6\
filed an amended and restated application for an order under Section
6(c) of the 1940 Act for exemptions from various provisions of the 1940
Act and rules thereunder (the ``Prior Application'').\7\ On December
10, 2019, the Commission issued an order, as subsequently amended on
August 5, 2021 (the ``Prior Exemptive Order''), under the 1940 Act
granting the exemptions requested in the Prior Application.\8\ The
Prior Application and Prior Exemptive Order are applicable to the
Funds.
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\6\ The original applicants were Fidelity Beach Street Trust,
Fidelity Management & Research Company, FMR Co., Inc., and Fidelity
Distributors Corporation. On January 1, 2020, each of FMR Co., Inc.
and certain other Fidelity investment adviser entities merged with
and into Fidelity Management & Research Company. Thereafter,
Fidelity Management & Research Company redomiciled as a Delaware
limited liability company and was renamed Fidelity Management &
Research Company LLC. FMR Co., Inc. no longer exists and is thus no
longer an applicant. On January 1, 2020, Fidelity Distributors
Corporation merged with and into Fidelity Investments Institutional
Services Company, Inc. (``FIISC''). FIISC thereafter redomiciled as
a Delaware limited liability company and was renamed Fidelity
Distributors Company LLC. Fidelity Distributors Corporation also no
longer exists and is no longer an applicant. Finally, the Funds have
since been registered with the Commission as series of Fidelity
Covington Trust. Fidelity Beach Street Trust has agreed to be
removed as an applicant from the Application.
\7\ See File No. 812-14364, dated November 8, 2019.
\8\ See Investment Company Act Release No. 33712 (December 10,
2019); Investment Company Act Release No. 34350 (August 5, 2021).
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Under the Prior Exemptive Order, the Funds are required to daily
publish a basket of securities and cash that, while different from the
Fund's portfolio, is designed to closely track its daily performance
(``Tracking Basket''). Further, under the Prior Exemptive Order, a Fund
is permitted to invest only in certain enumerated instruments (``Prior
Order Investments'').\9\ As set forth in the Notice, investments made
by the Fidelity Women's Leadership ETF and Fidelity Sustainability U.S.
Equity ETF will comply with the conditions set forth in the Prior
Exemptive Order.\10\
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\9\ Pursuant to the Prior Application and Prior Exemptive Order,
the permissible investments for the Funds include only the following
instruments: ETFs, exchange-traded notes, exchange-traded common
stocks, common stocks listed on a foreign exchange that trade on
such exchange contemporaneously with the Shares (``foreign common
stocks''), exchange-traded preferred stocks, exchange-traded
American Depositary Receipts, exchange-traded real estate investment
trusts, exchange-traded commodity pools, exchange-traded metals
trusts, exchange-traded currency trusts, and exchange-traded futures
that trade contemporaneously with the Shares, as well as cash and
cash equivalents, i.e., short-term U.S. Treasury securities,
government money market funds, and repurchase agreements. With the
exception of foreign common stocks and cash and cash equivalents,
all holdings of the Funds will be listed on a U.S. national
securities exchange. The Funds will not short positions, will not
borrow for investment purposes, and will not purchase any securities
that are illiquid investments at the time of purchase. See Notice,
86 FR at 19659, n. 12.
\10\ See Notice, 86 FR at 19659, n. 12 & 13.
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On July 30, 2024, as amended on November 22, 2024, January 16, 2025
and February 24, 2025, the Applicants sought to amend the Prior
Exemptive Order (the ``Updated Application'') to permit a Fund to
invest in securities and instruments in addition to Prior Order
Investments, including but not limited to fixed income securities,
foreign investments that do not trade contemporaneously with Shares,
and derivatives (``Amended Order Investments'').\11\ As proposed, each
Fund's portfolio would be invested in two sleeves. A Fund will invest
the first sleeve solely in Prior Order investments for which the Fund
will disclose a Tracking Basket designed to track closely the daily
performance of the sleeve (the ``Semi-Transparent Sleeve''). A Fund
will invest the second sleeve solely in Amended Order Investments and
will publicly disclose all such investments daily in accordance with
the requirements of rule 6c-11(c) under the 1940 Act (the ``Fully-
Transparent Sleeve''). Applicants represented that the Funds do not
intend to use Amended Order Investments to hedge or otherwise offset
exposure to Prior Order Investments.\12\
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\11\ See File No. 812-15606, dated February 24, 2025. The Funds
sought the same investment flexibility to choose its investments as
ETFs relying on Rule 6c-11 under the Act (``Rule 6c-11'') subject to
the same portfolio holdings disclosure requirements as Rule 6c-11
ETFs with respect to Amended Order Investments. See id. The Funds
are not able to operate in reliance on Rule 6c-11 under the Amended
Order because they do not and will not disclose all of their
portfolio holdings daily as required by the rule. See id., n.7. See
also Rule 6c-11(c)(1)(i) (requiring an ETF to disclose prominently
on its website, publicly available and free of charge, the portfolio
holdings that will form the basis for the Fund's calculation of per
share NAV).
\12\ See id.
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On March 31, 2025, the Commission issued an amended exemptive order
(the ``Amended Exemptive Order'') that, among other things, requires
each Fund, to the extent it invests in Amended Order Investments, to
publish a new Tracking Basket that consists of two distinct portions:
(1) a first portion corresponding to the Semi-Transparent Sleeve; and
(2) a second portion corresponding to the Fully-Transparent
[[Page 15606]]
Sleeve that fully discloses all Amended Order Investments in a manner
consistent with Rule 6c-11(c)(1). Under the Amended Exemptive Order,
the ratio of the Fully-Transparent Sleeve portion of the Tracking
Basket to the total Tracking Basket will correspond to the ratio of the
Amended Order Investments to the ETF's aggregate portfolio holdings.
The ratio of the Semi-Transparent portion of the Tracking Basket to the
total Tracking Basket will correspond to the ratio of all investments
other than Amended Order Investments to the ETF's aggregate portfolio
holdings.\13\ All Amended Order Investments held by a Fund will be
included in the Fund's Tracking Basket in their actual weights (i.e.,
they will be fully disclosed).\14\
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\13\ See Investment Company Act Release No. 812-15606 (March 31,
2025).
\14\ See id.
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Except for the change noted above, all other representations made
in the respective rule filings remain unchanged and will continue to
constitute continuing listing requirements for the Funds. The Funds
will also continue to comply with the requirements of Rule 8.601-E.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\15\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\16\ 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.\17\
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
\17\ The Exchange represents that, for initial and continued
listing, the Fund will be in compliance with Rule 10A-3 under the
Act, as provided by NYSE Arca Rule 5.3-E.
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The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest. The proposed revision is intended to ensure that each
of the Funds will comply with the Updated Application and the Amended
Exemptive Order that permits the Funds to expand the universe of
instruments in which each Fund is permitted to invest. The proposed
rule change would permit the Funds to operate consistent with this
updated conditions in the Updated Application and the Amended Exemptive
Order. Except for the changes noted above, all other representations
made in the respective rule filings remain unchanged and as noted, will
continue to constitute continuing listing requirements for the Funds.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. As noted, the purpose of the
filing is to reflect an amendment to the Prior Exemptive Order
governing the listing and trading of these Funds. To the extent that
the proposed rule change would continue to permit listing and trading
of another type of actively-managed ETF that has characteristics
different from existing actively-managed and index ETFs, the Exchange
believes that the proposal would benefit investors by continuing to
promote competition among various ETF products.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\
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, 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. In addition, the Exchange provided the
Commission with written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of the
filing.\20\
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\18\ 15 U.S.C. 78s(b)(3)(A)(iii).
\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6)(iii).
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A proposed rule change filed under Rule 19b-4(f)(6) \21\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\22\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Exchange states that
the Funds are currently listed and traded on the Exchange, and that the
proposed rule change clarifies that the Funds will comply with the
conditions set forth in the Updated Application and the Amended
Exemptive Order to the extent that a Fund invests in Amended Order
Investments. The Exchange also states that the Funds will continue to
comply with the requirements of Rule 8.601-E, and that it believes that
the proposed rule change raises no novel regulatory issue. Based on the
foregoing, the Commission believes that waiver of the 30-day operative
delay for this proposed rule change 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.\23\
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\21\ 17 CFR 240.19b-4(f)(6).
\22\ 17 CFR 240.19b-4(f)(6)(iii).
\23\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of 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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \24\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\24\ 15 U.S.C. 78s(b)(2)(B).
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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#5321263f367e303c3e3e363d2720132036307d343c25"><span class="__cf_email__" data-cfemail="9ceee9f0f9b1fff3f1f1f9f2e8efdceff9ffb2fbf3ea">[email protected]</span></a>. Please include
file number SR-NYSEARCA-2025-28 on the subject line.
[[Page 15607]]
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-2025-28. 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 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-2025-28 and should
be submitted on or before May 5, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-06252 Filed 4-11-25; 8:45 am]
BILLING CODE 8011-01-P
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