Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 66813 

3The requested relief would apply to direct sales 

of shares in Creation Units by a Fund to a Fund of 

Funds and redemptions of those shares. Applicants, 

moreover, are not seeking relief from section 17(a) 

for, and the requested relief will not apply to, 

transactions where a Fund could be deemed an 

Affiliated Person, or a Second-Tier Affiliate, of a 

Fund of Funds because an Adviser or an entity 

controlling, controlled by or under common control 

with an Adviser provides investment advisory 

services to that Fund of Funds. 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

take place at negotiated prices, not at a 

current offering price described in a 

Fund’s prospectus, and not at a price 

based on NAV. Applicants state that (a) 

secondary market trading in shares does 

not involve a Fund as a party and will 

not result in dilution of an investment 

in shares, and (b) to the extent different 

prices exist during a given trading day, 

or from day to day, such variances occur 

as a result of third-party market forces, 

such as supply and demand. Therefore, 

applicants assert that secondary market 

transactions in shares will not lead to 

discrimination or preferential treatment 

among purchasers. Finally, applicants 

represent that share market prices will 

be disciplined by arbitrage 

opportunities, which should prevent 

shares from trading at a material 

discount or premium from NAV. 

6. With respect to Funds that effect 

creations and redemptions of Creation 

Units in kind and that are based on 

certain Underlying Indexes that include 

foreign securities, applicants request 

relief from the requirement imposed by 

section 22(e) in order to allow such 

Funds to pay redemption proceeds 

within fifteen calendar days following 

the tender of Creation Units for 

redemption. Applicants assert that the 

requested relief would not be 

inconsistent with the spirit and intent of 

section 22(e) to prevent unreasonable, 

undisclosed or unforeseen delays in the 

actual payment of redemption proceeds. 

7. Applicants request an exemption to 

permit Funds of Funds to acquire Fund 

shares beyond the limits of section 

12(d)(1)(A) of the Act; and the Funds, 

and any principal underwriter for the 

Funds, and/or any broker or dealer 

registered under the Exchange Act, to 

sell shares to Funds of Funds beyond 

the limits of section 12(d)(1)(B) of the 

Act. The application’s terms and 

conditions are designed to, among other 

things, help prevent any potential (i) 

undue influence over a Fund through 

control or voting power, or in 

connection with certain services, 

transactions, and underwritings, (ii) 

excessive layering of fees, and (iii) 

overly complex fund structures, which 

are the concerns underlying the limits 

in sections 12(d)(1)(A) and (B) of the 

Act. 

8. Applicants request an exemption 

from sections 17(a)(1) and 17(a)(2) of the 

Act to permit persons that are Affiliated 

Persons, or Second Tier Affiliates, of the 

Funds, solely by virtue of certain 

ownership interests, to effectuate 

purchases and redemptions in-kind. The 

deposit procedures for in-kind 

purchases of Creation Units and the 

redemption procedures for in-kind 

redemptions of Creation Units will be 

the same for all purchases and 

redemptions, and Deposit Instruments 

and Redemption Instruments will be 

valued in the same manner as those 

investment positions currently held by 

the Funds. Applicants also seek relief 

from the prohibitions on affiliated 

transactions in section 17(a) to permit a 

Fund to sell its shares to and redeem its 

shares from a Fund of Funds, and to 

engage in the accompanying in-kind 

transactions with the Fund of Funds.3

The purchase of Creation Units by a 

Fund of Funds directly from a Fund will 

be accomplished in accordance with the 

policies of the Fund of Funds and will 

be based on the NAVs of the Funds. 

9. Applicants also request relief to 

permit a Feeder Fund to acquire shares 

of another registered investment 

company managed by the Adviser 

having substantially the same 

investment objectives as the Feeder 

Fund (‘‘Master Fund’’) beyond the 

limitations in section 12(d)(1)(A) and 

permit the Master Fund, and any 

principal underwriter for the Master 

Fund, to sell shares of the Master Fund 

to the Feeder Fund beyond the 

limitations in section 12(d)(1)(B). 

10. Section 6(c) of the Act permits the 

Commission to exempt any persons or 

transactions from any provision of the 

Act if such exemption is necessary or 

appropriate in the public interest and 

consistent with the protection of 

investors and the purposes fairly 

intended by the policy and provisions of 

the Act. Section 12(d)(1)(J) of the Act 

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities, or transactions, from 

any provision of section 12(d)(1) if the 

exemption is consistent with the public 

interest and the protection of investors. 

Section 17(b) of the Act authorizes the 

Commission to grant an order 

permitting a transaction otherwise 

prohibited by section 17(a) if it finds 

that (a) the terms of the proposed 

transaction are fair and reasonable and 

do not involve overreaching on the part 

of any person concerned; (b) the 

proposed transaction is consistent with 

the policies of each registered 

investment company involved; and (c) 

the proposed transaction is consistent 

with the general purposes of the Act. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–27995 Filed 12–26–18; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84865; File No. SR– 

PEARL–2018–26] 

Self-Regulatory Organizations: Notice 

of Filing and Immediate Effectiveness 

of a Proposed Rule Change by MIAX 

PEARL, LLC To Amend Exchange Rule 

510, Minimum Price Variations and 

Minimum Trading Increments To 

Extend the Penny Pilot Program 

December 19, 2018. 

Pursuant to the provisions of Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on December 13, 2018, MIAX PEARL, 

LLC (‘‘MIAX PEARL’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend Exchange Rule 510, Minimum 

Price Variations and Minimum Trading 

Increments, Interpretations and Policies 

.01, to extend the pilot program for the 

quoting and trading of certain options in 

pennies. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal 

office, 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 

Exchange 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 these 

statements may be examined at the 


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66814 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 

3See Securities Exchange Act Release Nos. 55154 

(January 23, 2007), 72 FR 4743 (February 1, 2007) 

(SR–CBOE–2006–92); 55161 (January 24, 2007), 72 

FR 4754 (February 1, 2007) (SR–ISE–2006–62); 

54886 (December 6, 2006), 71 FR 74979 (December 

13, 2006) (SR–Phlx–2006–74); 54590 (October 12, 

2006), 71 FR 61525 (October 18, 2006) (SR– 

NYSEArca–2006–73); and 54741 (November 9, 

2006), 71 FR 67176 (November 20, 2006) (SR– 

Amex–2006–106). 

4See Securities Exchange Act Release No. 83517 

(June 25, 2018), 83 FR 30792 (June 29, 2018) (SR– 

PEARL–2018–14) (extending the Penny Pilot 

Program from June 30, 2018 to December 31, 2018). 

5The month immediately preceding a 

replacement class’s addition to the Pilot Program 

(i.e., December) is not used for purposes of the sixmonth analysis. For example, a replacement added 

on the second trading day following January 1, 

2019, will be identified based on trading activity 

from June 1, 2018, through November 30, 2018. 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f)(6). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

12 17 CFR 240.19b–4(f)(6). 

13 17 CFR 240.19b–4(f)(6)(iii). 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects 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 is a participant in an 

industry-wide pilot program that 

provides for the quoting and trading of 

certain option classes in penny 

increments (the ‘‘Penny Pilot Program’’ 

or ‘‘Program’’). The Penny Pilot Program 

allows the quoting and trading of certain 

option classes in minimum increments 

of $0.01 for all series in such option 

classes with a price of less than $3.00; 

and in minimum increments of $0.05 for 

all series in such option classes with a 

price of $3.00 or higher. Options 

overlying the PowerShares QQQTM

(‘‘QQQ’’), SPDR® S&P 500® ETF 

(‘‘SPY’’), and iShares® Russell 2000 ETF 

(‘‘IWM’’), however, are quoted and 

traded in minimum increments of $0.01 

for all series regardless of the price. The 

Penny Pilot Program was initiated at the 

then existing option exchanges in 

January 2007 3 and currently includes 

more than 300 of the most active option 

classes. The Penny Pilot Program is 

currently scheduled to expire on 

December 31, 2018.4 The purpose of the 

proposed rule change is to extend the 

Penny Pilot Program in its current 

format through June 30, 2019. 

In addition to the extension of the 

Penny Pilot Program through June 30, 

2019, the Exchange proposes to extend 

one other date in the Rule. Currently, 

Interpretations and Policies .01 states 

that the Exchange will replace any 

Penny Pilot issues that have been 

delisted with the next most actively 

traded multiply listed option classes 

that are not yet included in the Penny 

Pilot Program, and that the replacement 

issues will be selected based on trading 

activity in the previous six months. 

Such option classes will be added to the 

Penny Pilot Program on the second 

trading day following July 1, 2018.5

Because this date has expired and the 

Exchange intends to continue this 

practice for the duration of the Penny 

Pilot Program, the Exchange is 

proposing to amend the Rule to reflect 

that such option classes will be added 

to the Penny Pilot Program on the 

second trading day following January 1, 

2019. 

The purpose of this provision is to 

reflect the new date on which 

replacement issues may be added to the 

Penny Pilot Program. 

2. Statutory Basis 

The Exchange believes that its 

proposed rule change is consistent with 

Section 6(b) of the Act 6 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act 7 in particular, in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

In particular, the proposed rule 

change, which extends the Penny Pilot 

Program for six months, allows the 

Exchange to continue to participate in a 

program that has been viewed as 

beneficial to traders, investors and 

public customers and viewed as 

successful by the other options 

exchanges participating in it. 

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. Specifically, 

the Exchange believes that, by extending 

the expiration of the Pilot Program, the 

proposed rule change will allow for 

further analysis of the Penny Pilot 

Program and a determination of how the 

Program should be structured in the 

future. In doing so, the proposed rule 

change will also serve to promote 

regulatory clarity and consistency, 

thereby reducing burdens on the 

marketplace, facilitating investor 

protection, and fostering a competitive 

environment. In addition, consistent 

with previous practices, the Exchange 

believes the other options exchanges 

will be filing similar extensions of the 

Penny Pilot Program. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

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) of the Act 8 and Rule 19b– 

4(f)(6) 9 thereunder. Because the 

foregoing proposed rule change does 

not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days after the date of 

the filing, 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 19(b)(3)(A) of the 

Act 10 and Rule 19b–4(f)(6) 11

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 12 normally does not 

become operative prior to 30 days after 

the date of filing. However, pursuant to 

Rule 19b–4(f)(6)(iii),13 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 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest because doing so will 

allow the Pilot Program to continue 

without interruption in a manner that is 

consistent with the Commission’s prior 

approval of the extension and expansion 


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Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 66815 

14See Securities Exchange Release No. 61061 

(November 24, 2009), 74 FR 62857 (December 1, 

2009) (SR–NYSEArca–2009–44). 

15For purposes only of waiving the operative 

delay for this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

16 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4An Investment Company Unit is a security that 

represents an interest in a registered investment 

company that holds securities comprising, or 

otherwise based on or representing an interest in, 

an index or portfolio of securities (or holds 

securities in another registered investment 

company that holds securities comprising, or 

otherwise based on or representing an interest in, 

an index or portfolio of securities). See NYSE Arca 

Rule 5.2–E(j)(3)(A). 

5The Commission issued notice of a proposed 

rule change to permit listing and trading of Shares 

of the Target Fund in Securities Exchange Act 

Release Nos. 68351 (December 4, 2012), 77 FR 

73500 (December 10, 2012) (SR–NYSEArca–2012– 

131) (Notice of Filing of Proposed Rule Change 

Relating to Listing and Trading of Shares of the 

Horizons S&P 500 Covered Call ETF, Horizons S&P 

Financial Select Sector Covered Call ETF, and 

Horizons S&P Energy Select Sector Covered Call 

ETF under NYSE Arca Equities Rule 5.2(j)(3)) 

(‘‘Prior Notice’’); 68708 (January 23, 2013), 78 FR 

6161 (January 29, 2013) (SR–NYSEArca–2012–131) 

(Order Approving Proposed Rule Change Relating 

to Listing and Trading of Shares of the Horizons 

S&P 500 Covered Call ETF, Horizons S&P Financial 

Select Sector Covered Call ETF, and Horizons S&P 

Continued 

of the Pilot Program.14 Accordingly, the 

Commission designates the proposed 

rule change as operative upon filing 

with the Commission.15

At any time within 60 days of the 

filing of the 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 

to determine whether the proposed rule 

should be approved or disapproved. 

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 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

PEARL–2018–26 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE, Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–PEARL–2018–26. 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 20549–1090, 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–PEARL–2018–26 and 

should be submitted on or before 

January 17, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–27997 Filed 12–26–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84872; File No. SR– 

NYSEArca–2018–92] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Reflecting Changes to 

Certain Representations Relating to 

the Horizons S&P 500 Covered Call 

ETF 

December 19, 2018. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on December 

6, 2018, NYSE Arca, Inc. (the 

‘‘Exchange’’ or ‘‘NYSE Arca’’) 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to reflect 

changes to certain representations made 

in the proposed rule changes previously 

filed with the Commission pursuant to 

Rule 19b–4 relating to the Horizons S&P 

500 Covered Call ETF (the ‘‘Target 

Fund’’). Shares of the Target Fund are 

currently listed and traded on the 

Exchange under NYSE Arca Rule 5.2– 

E(j)(3). The proposed rule 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. 

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 Commission has approved the 

listing and trading on the Exchange of 

shares (‘‘Shares’’) of the Target Fund, 

under NYSE Arca Rule 5.2–E(j)(3) 

(formerly NYSE Arca Equities Rule 

5.2(j)(3)), which governs the listing and 

trading of Investment Company Units.4

The Target Fund’s Shares are currently 

listed and traded on the Exchange under 

NYSE Arca Rule 5.2–E(j)(3).5 The Target 


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