78890 Federal Register / Vol. 85, No. 235 / Monday, December 7, 2020 / Notices 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Proxy Portfolio Shares’’ means ‘‘a 

security that: (A) Represents an interest in an 

investment company registered under the 

Investment Company Act of 1940 (‘‘Investment 

Company’’) organized as an open- end management 

investment company, that invests in a portfolio of 

securities selected by the Investment Company’s 

investment adviser consistent with the Investment 

Company’s investment objectives and policies; (B) 

is issued in a specified aggregate minimum number 

in return for a deposit of a specified Proxy Basket 

and/or a cash amount with a value equal to the next 

determined net asset value; (C) when aggregated in 

the same specified minimum number, may be 

redeemed at a holder’s request, which holder will 

be paid specified Proxy Basket and/or a cash 

amount with a value equal to the next determined 

net asset value; and (D) the portfolio holdings for 

which are disclosed within at least 60 days 

following the end of every fiscal quarter.’’ 

4See Securities and Exchange Act Release No. 

34–89110 (June 22, 2020), 85 FR 38461 (June 26, 

2020) (SR–NASDAQ–2020–032) (the ‘‘Rule 

Proposal’’). The Rule Proposal was effective upon 

filing pursuant to Section 19(b)(3)(A)(iii) of the Act 

and Rule 19b–4(f)(6) thereunder and became 

operative 30 calendar days following the filing date 

of June 11, 2020. 

5See Nasdaq Rule 5605(b) (Independent 

Directors); Nasdaq Rule 5605(d) (Compensation 

Committee); Nasdaq Rule 5605(e) (Independent 

Director Oversight of Director Nominations); and 

Nasdaq Rule 5610 (Codes of Conduct). 

6Nasdaq Rule 5615(a)(6)(B) states: ‘‘For the 

purposes of this Rule 5600 Series only, the term 

‘‘Derivative Securities’’ is defined as the following: 

Exchange Traded Fund Shares (Rule 5704), 

Portfolio Depository Receipts and Index Fund 

Shares (Rule 5705); Equity Index-Linked Securities 

(Rule 5710(k)(i)), Commodity-Linked Securities 

(Rule 5710(k)(ii)), Fixed Income Index-Linked 

Securities (5710(k)(iii)), Futures-Linked Securities 

(5710(k)(iv)), Multifactor Index-Linked Securities 

(5710(k)(v)), Index-Linked Exchangeable Notes 

(Rule 5711(a)), Equity Gold Shares (Rule 5711(b)), 

Trust Certificates (Rule 5711(c)), Commodity-Based 

Trust Shares (Rule 5711(d)), Currency Trust Shares 

(Rule 5711(e)), Commodity Index Trust Shares 

(Rule 5711(f)), Commodity Futures Trust Shares 

(Rule 5711(g)), Partnership Units (Rule 5711(h)), 

Managed Trust Securities (Rule 5711(j)), SEEDS 

(Rule 5715), Trust Issued Receipts (Rule 5720), 

Managed Fund Shares (Rule 5735), and NextShares 

(Rule 5745). Derivative Securities are subject to 

certain exemptions to the Rule 5600 Series as 

described in Rule 5615(a)(6).’’ 

7 17 CFR 240.10A–3. 

8 15 U.S.C. 80a–31. 

Resolution of litigation claims; and 

Other matters relating to enforcement 

proceedings; and 

Disclosure of non-public information. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting agenda items that 

may consist of adjudicatory, 

examination, litigation, or regulatory 

matters. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information; please contact 

Vanessa A. Countryman from the Office 

of the Secretary at (202) 551–5400. 

Dated: December 2, 2020. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2020–26892 Filed 12–3–20; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90542; File No. SR– 

NASDAQ–2020–078] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Exempt 

Proxy Portfolio Shares From Certain 

Governance Requirements and Include 

Proxy Portfolio Shares to the List of 

Products Covered Under Nasdaq Rule 

4120 (Limit Up-Limit Down Plan and 

Trading Halts) 

December 1, 2020. 

Pursuant to 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 November 

19, 2020, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the 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 proposes to provide an 

exemption from certain governance 

requirements, as well as to include 

Proxy Portfolio Shares (listed on the 

Exchange pursuant to Nasdaq Rule 

5750) to the list of products covered 

under Nasdaq Rule 4120 (Limit UpLimit Down Plan and Trading Halts). 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, 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 

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 

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 recently adopted 

Nasdaq Rule 5750, which relates to the 

listing and trading of Proxy Portfolio 

Shares 3 on the Exchange.4 Nasdaq 

proposes to amend the definition of 

‘‘Derivative Securities’’ under Nasdaq 

Rule 5615(a)(6)(B) as well as certain 

portions of Nasdaq Rule 4120 to include 

and apply to a series of Proxy Portfolio 

Shares listed on the Exchange pursuant 

to Nasdaq Rule 5750. 

Nasdaq notes that the proposed rule 

change, as discussed below, results from 

the Exchange proposing to make 

conforming changes to its corporate 

governance requirements in order to 

accommodate the listing of Proxy 

Portfolio Shares. This will subject Proxy 

Portfolio Shares to the same corporate 

governance requirements as other 

exchange-traded products listed on the 

Exchange. 

Currently, Nasdaq Rule 5615(a)(5) 

provides management investment 

companies exemptions to certain 

corporate governance requirements.5

Nasdaq Rule 5615(a)(5) also provides 

that management investment companies 

that are Derivative Securities (as defined 

in Nasdaq Rule 5615(a)(6)(B)) 6 are also 

exempt from the additional 

requirements of Nasdaq Rule 5600 as 

outlined in Nasdaq Rule 5615(a)(6)(A). 

In addition to the exemptions found in 

Nasdaq Rule 5615(a)(5), Nasdaq Rule 

5615(a)(6)(A) also includes exemptions 

from the audit committee requirements 

in Nasdaq Rule 5605(c), except for the 

applicable requirements of SEC Rule 

10A–3.7

Index Fund Shares, Managed Fund 

Shares and Exchange Traded Fund 

Shares are all considered Derivative 

Securities and, therefore, exempt from 

the audit committee requirements set 

forth in Nasdaq Rule 5605(c). They are 

exempted from such requirements 

because they are otherwise subject to 

the accounting and auditing 

requirements of the Investment 

Company Act of 1940 (the ‘‘1940 Act’’), 

including Section 32(a).8

Proxy Portfolio Shares are also subject 

to the accounting and auditing 

requirements under the 1940 Act and 

are so similarly situated as Index Fund 

Shares, Managed Fund Shares and 

Exchange Traded Fund Shares, that the 

Exchange believes Proxy Portfolio 

Shares should be subject to, and exempt 

from, the same corporate governance 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 85, No. 235 / Monday, December 7, 2020 / Notices 78891 

9See Securities and Exchange Act Release No. 

34–86072 (June 10, 2019), 84 FR 27816 (June 14, 

2020) (SR–NASDAQ–2019–039). 

10See Securities and Exchange Act Release No. 

34–89185 (June 29, 2020), 85 FR 40328 (July 6, 

2020) (SR–NYSEArca–2019–95). 

11 15 U.S.C. 78f(b). 

12 15 U.S.C. 78f(b)(5). 13Supra note 5. 

requirements associated with listing on 

the Exchange. Thus, Nasdaq is 

proposing to make a change to amend 

Nasdaq Rule 5615(a)(6)(B) to add Proxy 

Portfolio Shares to the definition of 

Derivative Securities. Nasdaq Rule 

5615(a)(5) allows management 

investment companies that are 

considered Derivative Securities to be 

subject to the exemptions from the audit 

committee requirements in Nasdaq Rule 

5605(c) (except for the applicable 

requirements of SEC Rule 10A–3) 

included in Nasdaq Rule 5615(a)(6)(A). 

Index Fund Shares, Managed Fund 

Shares and Exchange Traded Fund 

Shares are all considered Derivative 

Securities and, therefore, exempt from 

the annual meeting requirements set 

forth in Nasdaq Rule 5620(a). They are 

exempted from such requirements 

because they are securities issued by an 

open-end investment company 

registered under the 1940 Act that are 

available for creation and redemption 

on a continuous basis, and require 

dissemination of a relevant portfolio 

value at regular intervals. These 

requirements provide important 

investor protections and ensure that the 

net asset value and the market price 

remain closely tied to one another while 

maintaining a liquid market for the 

security. These protections, along with 

the disclosure documents regularly 

received by investors, allow 

shareholders of Index Fund Shares, 

Managed Fund Shares and Exchange 

Traded Fund Shares to value their 

holdings on an ongoing basis and lessen 

the need for shareholders to directly 

deal with management at an annual 

meeting.9

Thus, Nasdaq is proposing to amend 

Nasdaq Rule 5615(a)(6)(B) to add Proxy 

Portfolio Shares to the definition of 

Derivative Securities. Nasdaq Rule 

5615(a)(5) allows management 

investment companies that are 

considered Derivative Securities to be 

subject to the exemptions in Nasdaq 

Rule 5615(a)(6)(A), which includes the 

exemption from the annual meeting 

requirements in Nasdaq Rule 5620(a). 

The Exchange notes that the proposed 

changes would result in rules that are 

substantially similar to that of NYSE 

Arca, Inc.10

Nasdaq is also proposing to amend 

Nasdaq Rule 4120(a)(9) to include Proxy 

Portfolio Shares in the list of securities 

that Nasdaq will have discretion to halt 

trading in if ‘‘(A) trading in underlying 

securities comprising the index or 

portfolio applicable to that series has 

been halted in the primary market(s), (B) 

the extent to which trading has ceased 

in securities underlying the index or 

portfolio, or (C) the presence of other 

unusual conditions or circumstances 

detrimental to the maintenance of a fair 

and orderly market.’’ Nasdaq believes 

change this is appropriate because it 

will subject Proxy Portfolio Shares to 

the same halt requirements as other 

Nasdaq listed securities that derive 

value from an index or portfolio of 

underlying securities. 

Additionally, Nasdaq is proposing to 

amend Nasdaq Rule 4120(a)(10) to 

specify that Nasdaq will halt trading in 

a series of Proxy Portfolio Shares if the 

net asset value, Proxy Basket, or Fund 

Portfolio are not being disseminated to 

market participants at the same time. 

Nasdaq believes this change is 

appropriate because it will subject 

Proxy Portfolio Shares to the same halt 

requirements as other Nasdaq listed 

securities that are required to publish 

similar values on a regular basis. 

Nasdaq is also proposing to add Proxy 

Portfolio Shares to the definition of 

‘‘Derivative Securities Products’’ as 

found in Nasdaq Rule 4120(b)(4)(A). 

Nasdaq believes change this is 

appropriate because it will specify the 

Proxy Portfolio Shares are subject to the 

requirements of Nasdaq Rule 

4120(a)(10). 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,11 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,12

in particular, in that it is consistent with 

the Section 6(b)(5) requirements that the 

rules of an 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. 

The Exchange believes that the 

proposed change to amend Nasdaq Rule 

5615(a)(6)(B) to include Proxy Portfolio 

Shares in the definition of Derivative 

Securities (along with Index Fund 

Shares, Managed Fund Shares and 

Exchange Traded Fund Shares, among 

others), and thereby exempting Proxy 

Portfolio Shares from the audit 

committee requirements in Nasdaq Rule 

5605(c) (except for the applicable 

requirements of SEC Rule 10A–3) and 

the annual meeting requirements in 

Nasdaq Rule 5620(a), is consistent with 

the Act because it is meant only to 

subject Proxy Portfolio Shares to the 

same corporate governance 

requirements currently applicable to the 

very similar product structures of Index 

Fund Shares, Managed Fund Shares and 

Exchange Traded Fund Shares. The 

Exchange believes that this will promote 

just and equitable principles of trade, 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest. 

The Exchange further believes that the 

proposed changes to Nasdaq Rule 

4120(a)(9), Nasdaq Rule 4120(a)(10), and 

Nasdaq Rule 4120(b)(4)(A) are 

consistent with the Act because it is 

meant only to subject Proxy Portfolio 

Shares to the same halt requirements 

currently applicable to the very similar 

product structures of Index Fund 

Shares, Managed Fund Shares and 

Exchange Traded Fund Shares. Nasdaq 

believes that this too will promote just 

and equitable principles of trade, 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest. 

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. To the 

contrary, the Exchange believes that the 

proposed rule change would promote 

both intermarket and intramarket 

competition by providing Proxy 

Portfolio Shares the same exemptions as 

management investment companies 

from certain corporate governance 

requirements 13 the audit committee 

requirements set forth in Nasdaq Rule 

5605(c) (except for the applicable 

requirements of SEC Rule 10A–3) and 

the annual meeting requirements of 

Nasdaq Rule 5620(a). This is consistent 

with the exemptions provided to Index 

Fund Shares, Managed Fund Shares, 

and Exchange Traded Fund Shares. 

Additionally, the Exchange believes 

that the proposed changes to Nasdaq 

Rule 4120(a)(9), Nasdaq Rule 

4120(a)(10), and Nasdaq Rule 

4120(b)(4)(A) will not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act because these 

only serve to subject Proxy Portfolio 


khammond on DSKJM1Z7X2PROD with NOTICES
78892 Federal Register / Vol. 85, No. 235 / Monday, December 7, 2020 / Notices 

14 15 U.S.C. 78s(b)(3)(A). 

15 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

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

give the Commission 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 filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5Capitalized terms not defined herein are defined 

in the Rules, available at http://www.dtcc.com/∼/ 

media/Files/Downloads/legal/rules/nscc_rules.pdf. 

Shares to the same halt requirements 

currently applicable to the similar 

product structures of Index Fund 

Shares, Managed Fund Shares and 

Exchange Traded Fund Shares. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

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 from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 14 and Rule 19b– 

4(f)(6) thereunder.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. 

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– 

NASDAQ–2020–078 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–NASDAQ–2020–078. 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–NASDAQ–2020–078 and 

should be submitted on or before 

December 28, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–26784 Filed 12–4–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90543; File No. SR–NSCC– 

2020–018] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change, as Modified by 

Amendment No. 1, To Amend the Fee 

Structure 

December 1, 2020. 

Pursuant to 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 November 

16, 2020, National Securities Clearing 

Corporation (‘‘NSCC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change. On November 30, 2020, NSCC 

filed Amendment No. 1 to the proposed 

rule change, which revised a portion of 

the rule text and corresponding 

description in the notice relating to 

NSCC’s current policy regarding the 

issuance of rebates to Participants. 

NSCC filed the proposed rule change, as 

modified by Amendment No. 1, 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(2) thereunder.4

The proposed rule change, as modified 

by Amendment No. 1, is described in 

Items I, II, and III below, which Items 

have been prepared primarily by NSCC. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change, as modified by 

Amendment No. 1, from interested 

persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change, as Modified by 

Amendment No. 1 

The proposed rule change, as 

modified by Amendment No. 1, consists 

of amendments to Addendum A (Fee 

Structure) of the NSCC Rules & 

Procedures (‘‘Rules’’) 5 in order to (i) 

modify the Clearing Fund Maintenance 

Fee (‘‘Maintenance Fee’’), (ii) modify the 

‘‘value out of the net’’ component of the 

Clearance Activity Fee, and (iii) replace 

the description currently under the 

heading ‘‘NSCC Pricing Policy’’ with a 

description of NSCC’s current policy 

regarding the issuance of rebates to 

Members, as described in greater detail 

below. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change, as Modified by 

Amendment No. 1 

In its filing with the Commission, the 

clearing agency included statements 

concerning the purpose of and basis for 

the proposed rule change, as modified 

by Amendment No. 1, and discussed 

any comments it received on the 

proposed rule change, as modified by 

Amendment No. 1. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

clearing agency has prepared 


khammond on DSKJM1Z7X2PROD with NOTICES