Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Amendment No. 2 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 2, To List and Trade Two Series of Active Proxy Portfolio Shares Issued by the American Century ETF Trust Under Proposed NYSE Arca Rule 8.601-E
| Citation | 85 FR 19519 |
| Record Number | 2020-07227 |
| Published date | 07 April 2020 |
| Section | Notices |
| Court | Securities And Exchange Commission |
Federal Register, Volume 85 Issue 67 (Tuesday, April 7, 2020)
[Federal Register Volume 85, Number 67 (Tuesday, April 7, 2020)]
[Notices]
[Pages 19519-19526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07227]
[[Page 19519]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88534; File No. SR-NYSEArca-2019-96]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Amendment No. 2 and Order Instituting Proceedings To Determine
Whether To Approve or Disapprove a Proposed Rule Change, as Modified by
Amendment No. 2, To List and Trade Two Series of Active Proxy Portfolio
Shares Issued by the American Century ETF Trust Under Proposed NYSE
Arca Rule 8.601-E
April 1, 2020.
I. Introduction
On December 23, 2019, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to list and trade the following under proposed
NYSE Arca Rule 8.601-E (Active Proxy Portfolio Shares): American
Century Mid Cap Growth Impact ETF and American Century Sustainable
Equity ETF (``Funds'').\3\ The proposed rule change was published for
comment in the Federal Register on January 3, 2020.\4\ On February 13,
2020, pursuant to Section 19(b)(2) of the Exchange Act,\5\ the
Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\6\ On March 31, 2020, the Exchange filed Amendment No. 2 to the
proposed rule change, which replaced and superseded the proposed rule
change as originally filed.\7\ The Commission has received no comments
on the proposed rule change. The Commission is publishing this notice
and order to solicit comments on the proposed rule change, as modified
by Amendment No. 2, from interested persons and to institute
proceedings pursuant to Section 19(b)(2)(B) of the Act \8\ to determine
whether to approve or disapprove the proposed rule change, as modified
by Amendment No. 2.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ The Exchange originally proposed to adopt NYSE Arca Rule
8.602-E to permit the Exchange to list and trade Actively Managed
Solution Shares, and to list and trade shares of the Funds under
proposed Exchange Rule 8.602-E. In Amendment No. 2, the Exchange
removed the proposal to adopt proposed NYSE Arca Rule 8.602-E and
revised the proposal to seek to list and trade shares of the Funds
under proposed NYSE Arca Rule 8.601-E (Active Proxy Portfolio
Shares). See Amendment No. 2, infra note 7. See also Amendment 2 to
SR-NYSEArca-2019-95 (proposing to adopt NYSE Arca Rule 8.601-E to
list and trade Active Proxy Portfolio Shares, available on the
Commission's website at https://www.sec.gov/comments/sr-nysearca-2019-95/srnysearca201995.htm).
\4\ See Securities Exchange Act Release No. 87867 (Dec. 30,
2019), 85 FR 394 (``Notice'').
\5\ 15 U.S.C. 78s(b)(2).
\6\ See Securities Exchange Act Release No. 88198, 85 FR 9833
(Feb. 20, 2020). The Commission designated April 2, 2020, as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
\7\ Amendment No. 1 to the proposed rule change was filed on
March 26, 2020 and subsequently withdrawn on March 31, 2020.
Amendment No. 2 is available on the Commission's website at https://www.sec.gov/.
\8\ 15 U.S.C. 78s(b)(2)(B).
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II. The Exchange's Description of the Proposed Rule Change, as Modified
by Amendment No. 2
The Exchange proposes to list and trade shares of the following
under proposed NYSE Arca Rule 8.601-E (Active Proxy Portfolio Shares):
American Century Mid Cap Growth Impact ETF and American Century
Sustainable Equity ETF. This Amendment No. 2 to SR-NYSEArca-2019-96
replaces SR-NYSEArca-2019-96 as originally filed and supersedes such
filing in its entirety. The Exchange has withdrawn Amendment No. 1 to
SR-NYSEArca-2019-96.
The proposed change is available on the Exchange's website at
www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
III. 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange has proposed to add new 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.\9\ Proposed Commentary 02 to Rule 8.601-
E would require the Exchange to file separate proposals under Section
19(b) of the Act before listing and trading any series of Active Proxy
Portfolio Shares on the Exchange. Therefore, the Exchange is submitting
this proposal in order to list and trade shares (``Shares'') of Active
Proxy Portfolio Shares of the American Century Mid Cap Growth Impact
ETF and American Century Sustainable Equity ETF (each a ``Fund'' and,
collectively, the ``Funds'') under proposed Rule 8.601-E.
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\9\ See Amendment 2 to SR-NYSEArca-2019-95, relating to listing
and trading on the Exchange of shares of the Natixis ETF Trust,
filed on March 31, 2020. See also, Securities Exchange Act Release
No. 87866 (December 30, 2019), 85 FR 357 (January 3, 2020) (SR-
NYSEArca-2019-95). Proposed Rule 8.601-E(c)(1) provides that the
term ``Active Proxy Portfolio Share'' means a security that (a) is
issued by a investment company registered under the Investment
Company Act of 1940 (``Investment Company'') organized as an open-
end management investment company that invests in a portfolio of
securities selected by the Investment Company's investment adviser
consistent with the Investment Company's investment objectives and
policies; (b) is issued in a specified minimum number of shares, or
multiples thereof, in return for a deposit by the purchaser of the
Proxy Portfolio and/or cash with a value equal to the next
determined net asset value (``NAV''); (c) when aggregated in the
same specified minimum number of Active Proxy Portfolio Shares, or
multiples thereof, may be redeemed at a holder's request in return
for a transfer of the Proxy Portfolio and/or cash to the holder by
the issuer with a value equal to the next determined NAV; and (d)
the portfolio holdings for which are disclosed within at least 60
days following the end of every fiscal quarter.
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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 \10\ and for which a ``Disclosed
[[Page 19520]]
Portfolio'' is required to be disseminated at least once daily,\11\ the
portfolio for an issue of Active Proxy Portfolio Shares will be
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 1940 Act.\12\ 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 with a value equal to
the next-determined NAV.
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\10\ 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).
\11\ 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.
\12\ 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 fund's Statement of Additional Information, its Shareholder
Reports, its Form N-CSR, filed twice a year, and its Form N-CEN,
filed annually. A fund's statement of additional information
(``SAI'') and Shareholder Reports are 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 www.sec.gov.
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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.
In this regard, with respect to the Funds, the Funds will utilize a
proxy portfolio methodology--the ``NYSE Proxy Portfolio Methodology''--
that would allow market participants to assess the intraday value and
associated risk of a Fund's Actual Portfolio and thereby facilitate the
purchase and sale of Shares by investors in the secondary market at
prices that do not vary materially from their NAV.\13\ The NYSE Proxy
Portfolio Methodology would utilize creation of a Proxy Portfolio for
hedging and arbitrage purposes.
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\13\ The NYSE Proxy Portfolio Methodology is owned by the NYSE
Group, Inc. and licensed for use by the Funds. NYSE Group, Inc. is
not affiliated with the Funds, Adviser or Distributor. Not all
series of Active Proxy Portfolio Shares will utilize the NYSE Proxy
Portfolio Methodology.
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The Exchange, after consulting with various Lead Market Makers that
trade exchange-traded funds (``ETFs'') on the Exchange, believes that
market makers will be able to make efficient and liquid markets priced
near the NAV in light of the daily Proxy Portfolio dissemination.
Market makers employ market making techniques such as ``statistical
arbitrage,'' including correlation hedging, beta hedging, and
dispersion trading, which is currently used throughout the financial
services industry, to make efficient markets in exchange-traded
products.\14\ These techniques should permit market makers to make
efficient markets in an issue of Active Proxy Portfolio Shares without
precise knowledge of a fund's underlying portfolio.
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\14\ Statistical arbitrage enables a trader to construct an
accurate proxy for another instrument, allowing it to hedge the
other instrument or buy or sell the instrument when it is cheap or
expensive in relation to the proxy. Statistical analysis permits
traders to discover correlations based purely on trading data
without regard to other fundamental drivers. These correlations are
a function of differentials, over time, between one instrument or
group of instruments and one or more other instruments. Once the
nature of these price deviations have been quantified, a universe of
securities is searched in an effort to, in the case of a hedging
strategy, minimize the differential. Once a suitable hedging proxy
has been identified, a trader can minimize portfolio risk by
executing the hedging basket. The trader then can monitor the
performance of this hedge throughout the trade period making
correction where warranted. In the case of correlation hedging, the
analysis seeks to find a proxy that matches the pricing behavior of
a fund. In the case of beta hedging, the analysis seeks to determine
the relationship between the price movement over time of a fund and
that of another stock. Dispersion trading is a hedged strategy
designed to take advantage of relative value differences in implied
volatilities between an index and the component stocks of that
index.
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The Exchange understands that traders use statistical analysis to
derive correlations between different sets of instruments to identify
opportunities to buy or sell one set of instruments when it is
mispriced relative to the others. For Active Proxy Portfolio Shares,
market makers may use the knowledge of a fund's means of achieving its
investment objective, as described in the applicable fund registration
statement, to manage a market maker's quoting risk in connection with
trading shares of a fund. Market makers can then conduct statistical
arbitrage between Proxy Portfolio and shares of a fund, buying and
selling one against the other over the course of the trading day. They
will evaluate how the Proxy Portfolio performed in comparison to the
price of a fund's shares, and use that analysis as well as knowledge of
risk metrics, such as volatility and turnover, to provide a more
efficient hedge.
Market makers have indicated to the Exchange that there will be
sufficient data to run a statistical analysis which will lead to
spreads being tightened substantially around NAV of a fund's shares.
This is similar to certain other existing exchange traded products (for
example, ETFs that invest in foreign securities that do not trade
during U.S. trading hours), in which spreads may be generally wider in
the early days of trading and then narrow as market makers gain more
confidence in their real-time hedges.
Description of the Funds and the Trust
The Funds will be series of the American Century ETF Trust
(``Trust''), which will be registered with the Commission as an open-
end management investment company.\15\
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\15\ The Trust is registered under the 1940 Act. On January 24,
2020, the Trust filed a registration statement on Form N-1A under
the Securities Act of 1933 and the 1940 Act for the Funds (File Nos.
333-221045 and 811-23305) (``Registration Statement''). The Trust
also filed an application for an order under Section 6(c) of the
1940 Act for exemptions from various provisions of the 1940 Act and
rules thereunder (File No. 812-15082), dated December 11, 2019
(``American Century Application'' or ``Application''). The Shares
will not be listed on the Exchange until an order (``American
Century Exemptive Order'') under the 1940 Act has been issued by the
Commission with respect to the Application. The American Century
Application states that the exemptive relief requested by the Trust
will apply to funds of the Trust that comply with the terms and
conditions of the American Century Exemptive Order and the order
issued to Natixis ETF Trust II. With respect to the Natixis ETF
Trust II, see Seventh 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 (File No. 812-14870)
(October 21, 2019 (``Natixis Application''); the Commission notice
regarding the Natixis Application (Investment Company Release No.
33684 (File No. 812-14870) November 14, 2019); and the Commission
order under the 1940 Act granting the exemptions requested in the
Natixis Application (Investment Company Act Release No. 33711
(December 10, 2019)) (``Natixis Exemptive Order''). The American
Century Application incorporates the Natixis Exemptive Order by
reference. Investments made by the Funds will comply with the
conditions set forth in the American Century Application, American
Century Exemptive Order and Natixis Exemptive Order. The description
of the operation of the Trust and the Funds herein is based, in
part, on the Registration Statement and the American Century
Application.
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[[Page 19521]]
American Century Investment Management, Inc. (``Adviser'') will be
the investment adviser to the Funds. Foreside Fund Services, LLC will
act as the distributor and principal underwriter (``Distributor'') for
the Funds.
Proposed 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 and/or Proxy Portfolio. Any
person related to the investment adviser or Investment Company who
makes decisions pertaining to the Investment Company's portfolio
composition or has access to non-public information regarding the
Investment Company's Actual Portfolio or changes thereto or the Proxy
Portfolio must be subject to procedures reasonably designed to prevent
the use and dissemination of material non-public information regarding
the Actual Portfolio or changes thereto or the Proxy Portfolio.\16\
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\16\ The text of proposed Commentary .04 to NYSE Arca Rule
8.601-E is included in Amendment 2 to SR-NYSEArca-2019-95. See note
9, supra.
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Proposed Commentary .04 is similar to Commentary .03(a)(i) and
(iii) to NYSE Arca Rule 5.2-E(j)(3); however, Commentary .03(a) 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.\17\ Commentary .04 is also similar to
Commentary .06 to Rule 8.600-E related to Managed Fund Shares, except
that proposed Commentary .04 relates to establishment and maintenance
of a ``fire wall'' between the investment adviser and the broker-dealer
applicable to an Investment Company's Actual Portfolio and/or Proxy
Portfolio, and not just to the underlying portfolio, as is the case
with Managed Fund Shares. 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 a Fund's portfolio.
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\17\ 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 the event (a) the Adviser or any sub-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 the portfolio, and will be subject to procedures
designed to prevent the use and dissemination of material non-public
information regarding such portfolio.
The Funds
According to the Application, the Funds may hold only ``Permissible
Investments.'' In this regard, the Funds will utilize a proxy portfolio
methodology--the ``NYSE Proxy Portfolio Methodology''--that would allow
market participants to assess the intraday value and associated risk of
a Fund's Actual Portfolio and thereby facilitate the purchase and sale
of Shares of a Fund by investors in the secondary market at prices that
do not vary materially from their NAV.\18\ The NYSE Proxy Portfolio
Methodology would utilize creation of a Proxy Portfolio for hedging and
arbitrage purposes.
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\18\ The NYSE Proxy Portfolio Methodology is owned by the NYSE
Group, Inc. and licensed for use by the Fund. NYSE Group, Inc. is
not affiliated with the Fund, Adviser or Distributor. Not all series
of Active Proxy Portfolio Shares will utilize the NYSE Proxy
Portfolio Methodology.
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American Century Mid Cap Growth Impact ETF
The Fund will seek long-term capital growth. The Fund's holdings
will conform to the permissible investments as set forth in the
American Century Application and the holdings will be consistent with
all requirements in the American Century Application and American
Century Exemptive Order.\19\
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\19\ Pursuant to the American Century Application, the
permissible investments for a Fund are the ``Permissible
Investments'' set forth in the Natixis Application and Natixis
Exemptive Order which are the following: Exchange-traded funds
(``ETFs''), exchange-traded notes (``ETNs''), exchange-traded common
stocks, common stocks listed on a foreign exchange (``foreign common
stocks'') that trade on such exchange contemporaneously with the
exchange-traded Shares, preferred stocks, exchange-traded American
Depositary Receipts (``ADRs''), 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 Fund Shares, as well as
cash and cash equivalents (short-term U.S. Treasury securities,
government money market funds, and repurchase agreements).
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American Century Sustainable Equity ETF
The Fund will seek long-term capital growth, with income as a
secondary objective. The Fund's holdings will conform to the
permissible investments as set forth in the American Century
Application and the holdings will be consistent with all requirements
in the American Century Application and American Century Exemptive
Order.\20\
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\20\ See note 19, supra.
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Creations and Redemptions of Shares
According to the Application, the Creation Basket will be based on
the Proxy Portfolio, which is designed to approximate the value and
performance of the Actual Portfolio. All Creation Basket instruments
will be valued in the same manner as they are valued for purposes of
calculating a Fund's NAV, and such valuation will be made in the same
manner regardless of the identity of the purchaser or redeemer.
Further, the total consideration paid for the purchase or redemption of
a Creation Unit of Shares will be based on the NAV of such Fund, as
calculated in accordance with the policies and procedures set forth in
its Registration Statement.
As with the Proxy Portfolio, the Creation Basket will mask a Fund's
Actual Portfolio from full disclosure while at the same time maximizing
benefits of the ETF structure to shareholders. In particular, the
Adviser believes that the ability of a Fund to take deposits and make
redemptions in-kind may aid in achieving a Fund's
[[Page 19522]]
investment objectives by allowing it to be more fully invested,
minimizing cash drag, and reducing flow-related trading costs. In-kind
transactions may also increase a Fund's tax efficiency and promote
efficient secondary market trading in Shares.
According to the Application, the Trust will offer, issue and sell
Shares of each Fund to investors only in Creation Units through the
Distributor on a continuous basis at the NAV per Share next determined
after an order in proper form is received. The NAV of each Fund is
expected to be determined as of 4:00 p.m. E.T. on each Business Day.
The Trust will sell and redeem Creation Units of each Fund only on a
Business Day. Creation Units of the Funds may be purchased and/or
redeemed entirely for cash, as permissible under the procedures
described below.
In order to keep costs low and permit each Fund to be as fully
invested as possible, Shares will be purchased and redeemed in Creation
Units and generally on an in-kind basis. Accordingly, except where the
purchase or redemption will include cash under the circumstances
specified below, purchasers will be required to purchase Creation Units
by making an in-kind deposit of specified instruments (``Deposit
Instruments''), and shareholders redeeming their Shares will receive an
in-kind transfer of specified instruments (``Redemption Instruments'').
The names and quantities of the instruments that constitute the Deposit
Instruments and the Redemption Instruments for a Fund (collectively,
the ``Creation Basket'') will be the same as the Fund's Proxy
Portfolio, except to the extent purchases and redemptions are made
entirely or in part on a cash basis.
If there is a difference between the NAV attributable to a Creation
Unit and the aggregate market value of the Creation Basket exchanged
for the Creation Unit, the party conveying instruments with the lower
value will also pay to the other an amount in cash equal to that
difference (the ``Cash Amount'').
Each Fund will adopt and implement policies and procedures
regarding the composition of its Creation Baskets. The policies and
procedures will set forth detailed parameters for the construction and
acceptance of baskets in compliance with the terms and conditions of
the American Century Exemptive Order and that are in the best interests
of a Fund and its shareholders, including the process for any revisions
to or deviations from those parameters.
A Fund that normally issues and redeems Creation Units in kind may
require purchases and redemptions to be made entirely or in part on a
cash basis. In such an instance, the Fund will announce, before the
open of trading in the Core Trading Session (normally, 9:30 a.m. to
4:00 p.m., E.T.) on a given Business Day, that all purchases, all
redemptions, or all purchases and redemptions on that day will be made
wholly or partly in cash. A Fund may also determine, upon receiving a
purchase or redemption order from an Authorized Participant, to have
the purchase or redemption, as applicable, be made entirely or in part
in cash. Each Business Day, before the open of trading on the Exchange,
a Fund will cause to be published through the National Securities
Clearing Corporation (``NSCC'') the names and quantities of the
instruments comprising the Creation Basket, as well as the estimated
Cash Amount (if any), for that day. The published Creation Basket will
apply until a new Creation Basket is announced on the following
Business Day, and there will be no intra-day changes to the Creation
Basket except to correct errors in the published Creation Basket.
All orders to purchase Creation Units must be placed with the
Distributor by or through an Authorized Participant, which is either:
(1) A ``participating party'' (i.e., a broker or other participant), in
the Continuous Net Settlement (``CNS'') System of the NSCC, a clearing
agency registered with the Commission and affiliated with the
Depository Trust Company (``DTC''), or (2) a DTC Participant, which in
any case has executed a participant agreement with the Distributor and
the transfer agent.
Timing and Transmission of Purchase Orders
All orders to purchase (or redeem) Creation Units, whether using
the NSCC Process or the DTC Process, must be received by the
Distributor no later than the NAV calculation time (``NAV Calculation
Time''), generally 4:00 p.m. E.T. on the date the order is placed
(``Transmittal Date'') in order for the purchaser (or redeemer) to
receive the NAV determined on the Transmittal Date. In the case of
custom orders, the order must be received by the Distributor
sufficiently in advance of the NAV Calculation Time in order to help
ensure that the Fund has an opportunity to purchase the missing
securities with the cash in lieu amounts or to sell securities to
generate the cash in lieu amounts prior to the NAV Calculation Time. On
days when the Exchange closes earlier than normal, a Fund may require
custom orders to be placed earlier in the day.
Availability of Information
The Funds' website will include on a daily basis, per Share for
each Fund, the prior Business Day's NAV and the Closing Price or Bid/
Ask Price, and a calculation of the premium/discount of the Closing
Price or Bid/Ask Price against such NAV.\21\ Each Fund's website also
will disclose the information required under proposed Rule 8.601-E
(c)(3).\22\
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\21\ The ``premium/discount'' refers to the premium or discount
to NAV at the end of a trading day and will be calculated based on
the last Bid/Ask Price or the Closing Price on a given trading day.
The ``Closing Price'' of Shares is the official closing price of the
Shares on the Fund's Exchange. 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 such 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.
\22\ See note 9, supra. Proposed 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 Investment Company
Act of 1940 applicable to such series, including the following, to
the extent applicable:
(i) Ticker symbol;
(ii) CUSIP or other identifier;
(iii) Description of holding;
(iv) Quantity of each security or other asset held; and
(v) Percentage weighting of the holding in the portfolio.
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The Proxy Portfolio holdings (including the identity and quantity
of investments in the Proxy Portfolio) will be publicly available on
the Funds' website before the commencement of trading in Shares on each
Business Day.
Typical mutual fund-style annual, semi-annual and quarterly
disclosures contained in the Funds' Commission filings will be provided
on the Funds' website on a current basis. \23\ Thus, each Fund will
publish the portfolio contents of its Actual Portfolio on a periodic
basis.
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\23\ See note 12, supra.
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Investors can obtain a Fund's prospectus, statement of additional
information (``SAI''), Shareholder Reports, Form N-CSR, N-PORT and Form
N-CEN filed with the Commission. The prospectus, SAI and Shareholder
Reports are available free upon request from the Trust, 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.
Updated price information for U.S. exchange-listed equity
securities is available through major market data
[[Page 19523]]
vendors or securities exchanges trading such securities. Quotation and
last sale information for the Shares, ETFs, ETNs, U.S. exchange-traded
common stocks, preferred stocks and ADRs will be available via the
Consolidated Tape Association (``CTA'') high-speed line. Price
information for cash equivalents is available through major market data
vendors
Investment Restrictions
The Shares of the Funds will conform to the initial and continued
listing criteria under proposed Rule 8.601-E. The Funds' holdings will
be limited to and consistent with Permissible Investments as described
above.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of a Fund.\24\ Trading in Shares of a Fund will
be halted if the circuit breaker parameters in NYSE Arca Rule 7.12-E
have been reached. Trading also may be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. Trading in the Shares will be
subject to proposed NYSE Arca Rule 8.601-E(D), which sets forth
circumstances under which Shares of a Fund will be halted.
---------------------------------------------------------------------------
\24\ See NYSE Arca Rule 7.12-E.
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Specifically, proposed 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 portfolio; or (b) whether other unusual
conditions or circumstances detrimental to the maintenance of a fair
and orderly market are present. In addition, upon notification to the
Exchange by the issuer of a series of Active Proxy Portfolio Shares,
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. The
issuer has represented to the Exchange that it will provide the
Exchange with prompt notification upon the existence of any such
condition or set of conditions.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace in all trading sessions in accordance with
NYSE Arca Rule 7.34-E(a). As provided in NYSE Arca Rule 7.6-E, the
minimum price variation (``MPV'') for quoting and entry of orders in
equity securities traded on the NYSE Arca Marketplace is $0.01, with
the exception of securities that are priced less than $1.00 for which
the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing
criteria under NYSE Arca Rule 8.601-E.
The Exchange deems the Shares to be equity securities, thus
rendering trading n the Shares subject to the Exchange's existing rules
governing the trading of equity securities. The Exchange has
appropriate rules to facilitate trading in the Shares during all
trading sessions.
Surveillance
The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances, administered by the Exchange, as
well as cross-market surveillances administered by FINRA on behalf of
the Exchange, which are designed to detect violations of Exchange rules
and applicable federal securities laws.\25\ The Exchange represents
that these procedures are adequate to properly monitor Exchange trading
of the Shares in all trading sessions and to deter and detect
violations of Exchange rules and federal securities laws applicable to
trading on the Exchange.
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\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.
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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, exchange-traded
equity securities, and E-mini S&P 500 futures contracts 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 financial
instruments from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in such securities
and financial 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\
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\26\ For a list of the current members of ISG, see
www.isgportal.org.
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In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Proposed Commentary .03 to NYSE Arca Rule 8.601-E provides that the
Exchange will implement and maintain written surveillance procedures
for Active Proxy Portfolio Shares. As part of these surveillance
procedures, the Investment Company's investment adviser will, upon
request by the Exchange or FINRA, on behalf of the Exchange, make
available to the Exchange or FINRA the daily portfolio holdings of each
series of Active Proxy Portfolio Shares. The Exchange believes that the
ability to access the information on an as needed basis will provide it
with sufficient information to perform the necessary regulatory
functions associated with listing and trading series of Active Proxy
Portfolio Shares on the Exchange, including the ability to monitor
compliance with the initial and continued listing requirements as well
as the ability to surveil for manipulation of Active Proxy Portfolio
Shares.
The Exchange will utilize its existing procedures to monitor issuer
compliance with the requirements of proposed 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 proposed Commentary .01 to Rule 8.601-E would require 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
[[Page 19524]]
represent that they 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.
With respect to the Funds, all statements and representations made
in this filing regarding (a) the description of the portfolio or
reference asset, (b) limitations on portfolio holdings or reference
assets, or (c) the applicability of Exchange listing rules specified in
this rule filing shall constitute continued listing requirements for
listing the Shares on the Exchange. The issuer has represented to the
Exchange 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).
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
Equity Trading Permit (``ETP'') Holders in an Information Bulletin
(``Bulletin'') of the special characteristics and risks associated with
trading the Shares. Specifically, the Bulletin will discuss the
following: (1) The procedures for purchases and redemptions of Shares;
(2) NYSE Arca Rule 9.2-E(a), which imposes a duty of due diligence on
its ETP Holders to learn the essential facts relating to every customer
prior to trading the Shares; (4) how information regarding the Proxy
Portfolio will be disseminated; (5) the requirement that ETP Holders
deliver a prospectus to investors purchasing newly issued Shares prior
to or concurrently with the confirmation of a transaction; and (6)
trading information.
In addition, the Bulletin will reference that a Fund is subject to
various fees and expenses described in the applicable registration
statement. The Bulletin will discuss any exemptive, no-action, and
interpretive relief granted by the Commission from any rules under the
Act. The Bulletin will also disclose that the NAV for the Shares will
be calculated after 4:00 p.m., E.T. each trading day.
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.
---------------------------------------------------------------------------
\27\ 15 U.S.C. 78f(b).
\28\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
With respect to the proposed listing and trading of Shares of the
Funds, the Exchange believes that the proposed rule change is designed
to prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in proposed NYSE Arca Rule
8.601-E. The Funds' investments will be consistent with its investment
objective and will not be used to enhance leverage.
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares, exchange-traded
equity securities, and E-mini S&P 500 futures contracts 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 financial
instruments from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in such securities
and financial instruments from markets and other entities that are
members of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.
The Exchange, after consulting with various Lead Market Makers that
trade ETFs on the Exchange, believes that market makers will be able to
make efficient and liquid markets priced near the NAV, and that market
makers have knowledge of a fund's means of achieving its investment
objective even without daily disclosure of a fund's underlying
portfolio. The Exchange believes that market makers will employ risk-
management techniques to make efficient markets in exchange traded
products.\29\ This ability should permit market makers to make
efficient markets in shares without knowledge of a fund's underlying
portfolio.
---------------------------------------------------------------------------
\29\ See note 14, supra.
---------------------------------------------------------------------------
The Exchange understands that traders use statistical analysis to
derive correlations between different sets of instruments to identify
opportunities to buy or sell one set of instruments when it is
mispriced relative to the others. For Active Proxy Portfolio Shares,
market makers utilizing statistical arbitrage use the knowledge of a
fund's means of achieving its investment objective, as described in the
applicable fund registration statement, as well as Proxy Portfolio to
manage a market maker's quoting risk in connection with trading fund
shares. Market makers will then conduct statistical arbitrage between
the Proxy Portfolio and shares of a fund, buying and selling one
against the other over the course of the trading day. Eventually, at
the end of each day, they will evaluate how the Proxy Portfolio
performed in comparison to the price of a fund's shares, and use that
analysis as well as knowledge of risk metrics, such as volatility and
turnover, to provide a more efficient hedge.
The Lead Market Makers also indicated that, as with some other new
exchange-traded products, spreads would tend to narrow as market makers
gain more confidence in the accuracy of their hedges and their ability
to adjust these hedges in real-time and gain an understanding of the
applicable market risk metrics such as volatility and turnover, and as
natural buyers and sellers enter the market. Other relevant factors
cited by Lead Market Makers were that a fund's investment objectives
are clearly disclosed in the applicable prospectus, the existence of
quarterly portfolio disclosure and the ability to create shares in
creation unit size.
The Funds will utilize the NYSE Proxy Portfolio Methodology that
would allow market participants to assess the intraday value and
associated risk of a Fund's Actual Portfolio and thereby facilitate the
purchase and sale of Shares by investors in the secondary market at
prices that do not vary materially from their NAV.
The daily dissemination of the identity and quantity of Proxy
Portfolio component investments, together with the right of Authorized
Participants to create and redeem each day at the NAV, will be
sufficient for market participants to value and trade shares in a
manner that will not lead to significant deviations between the Shares'
Bid/Ask Price and NAV.
The pricing efficiency with respect to trading a series of Active
Proxy Portfolio Shares will generally rest on the ability of market
participants to arbitrage between the shares and a fund's portfolio, in
addition to the ability of market participants to assess a fund's
underlying value accurately enough throughout the trading day in order
to hedge positions in shares effectively. Professional traders can buy
shares that
[[Page 19525]]
they perceive to be trading at a price less than that which will be
available at a subsequent time and sell shares they perceive to be
trading at a price higher than that which will be available at a
subsequent time. It is expected that, as part of their normal day-to-
day trading activity, market makers assigned to shares by the Exchange,
off-exchange market makers, firms that specialize in electronic
trading, hedge funds and other professionals specializing in short-
term, non-fundamental trading strategies will assume the risk of being
``long'' or ``short'' shares through such trading and will hedge such
risk wholly or partly by simultaneously taking positions in correlated
assets \30\ or by netting the exposure against other, offsetting
trading positions--much as such firms do with existing ETFs and other
equities. Disclosure of a fund's investment objective and principal
investment strategies in its prospectus and SAI should permit
professional investors to engage easily in this type of hedging
activity.
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\30\ Price correlation trading is used throughout the financial
industry. It is used to discover both trading opportunities to be
exploited, such as currency pairs and statistical arbitrage, as well
as for risk mitigation such as dispersion trading and beta hedging.
These correlations are a function of differentials, over time,
between one or multiple securities pricing. Once the nature of these
price deviations have been quantified, a universe of securities is
searched in an effort to, in the case of a hedging strategy,
minimize the differential. Once a suitable hedging basket has been
identified, a trader can minimize portfolio risk by executing the
hedging basket. The trader then can monitor the performance of this
hedge throughout the trade period, making corrections where
warranted.
---------------------------------------------------------------------------
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest.
Investors can obtain a fund's SAI, shareholder reports, and its Form N-
CSR, Form N-PORT and Form N-CEN. A fund's SAI and shareholder reports
will be available free upon request from the applicable fund, 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. In addition,
with respect to each Fund, a large amount of information will be
publicly available regarding the Funds and the Shares, thereby
promoting market transparency. Quotation and last sale information for
the Shares will be available via the CTA high-speed line. The website
for the Funds will include a form of the prospectus for each Fund that
may be downloaded, and additional data relating to NAV and other
applicable quantitative information, updated on a daily basis.
Moreover, prior to the commencement of trading, the Exchange will
inform its ETP Holders in an Information Bulletin of the special
characteristics and risks associated with trading the Shares. Trading
in Shares of the Funds will be halted if the circuit breaker parameters
in NYSE Arca Rule 7.12-E have been reached or because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. In addition, as noted above,
investors will have ready access to the Proxy Portfolio and quotation
and last sale information for the Shares. The Shares will conform to
the initial and continued listing criteria under proposed Rule 8.601-
E.\31\
---------------------------------------------------------------------------
\31\ See Amendment 2 to SR-NYSEArca-2019-95, referenced in note
9, 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. As noted above, the Exchange has in
place surveillance procedures relating to trading in the Shares and may
obtain information via ISG from other exchanges that are members of ISG
or with which the Exchange has entered into a comprehensive
surveillance sharing agreement. In addition, as noted above, investors
will have ready access to information regarding quotation and last sale
information for the Shares.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes the
proposed rule change would permit listing and trading of another type
of actively-managed ETF that has 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.
IV. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEArca-2019-96, as Modified by Amendment No. 2, and Grounds for
Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act \32\ to determine whether the proposed
rule change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide comments
on the proposed rule change.
---------------------------------------------------------------------------
\32\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
Pursuant to Section 19(b)(2)(B) of the Exchange Act,\33\ the
Commission is providing notice of the grounds for disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis of the proposed rule change's consistency with
Section 6(b)(5) of the Exchange Act, which requires, among other
things, that the rules of a national securities exchange be ``designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, . . . to remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest.'' \34\
---------------------------------------------------------------------------
\33\ Id.
\34\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
III. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposed rule
change, as modified by Amendment No. 2, is consistent with Section
6(b)(5) or any other provision of the Exchange Act, or the rules and
regulations thereunder. Although there do not appear to be any issues
relevant to approval or disapproval that would be facilitated by an
oral presentation of views, data, and arguments, the Commission will
consider, pursuant to Rule 19b-4, any request for an
[[Page 19526]]
opportunity to make an oral presentation.\35\
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\35\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975),
grants the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------
Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change, as modified by
Amendment No. 2, should be approved or disapproved by April 28, 2020.
Any person who wishes to file a rebuttal to any other person's
submission must file that rebuttal by May 12, 2020.
The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in Amendment No. 2,\36\ and any other issues raised by the proposed
rule change, as modified by Amendment No. 2, under the Exchange Act. In
this regard, the Commission seeks commenters' views regarding whether
the Exchange's proposed rule to list and trade Active Proxy Portfolio
Shares, which are actively managed exchange-traded products for which
the portfolio holdings would be disclosed on a quarterly, rather than
daily, basis, is adequately designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and to protect investors and the public interest,
and is consistent with the maintenance of a fair and orderly market
under the Exchange Act. In particular, the Commission seeks commenters'
views regarding whether the Exchange's proposed listing rule provisions
as they relate to foreign securities are adequate to prevent fraud and
manipulation. In addition, the Commission seeks commenters' views
regarding whether the Exchange's proposed listing rule provisions are
adequate to prevent the use and dissemination of material non-public
information relating to the Funds.
---------------------------------------------------------------------------
\36\ See supra note 7.
---------------------------------------------------------------------------
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2019-96 on the subject line.
Paper Comments
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-2019-96. 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 (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2019-96 and should be submitted
on or before April 28, 2020. Rebuttal comments should be submitted by
May 12, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
---------------------------------------------------------------------------
\37\ 17 CFR 200.30-3(a)(57).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07227 Filed 4-6-20; 8:45 am]
BILLING CODE 8011-01-P
