Federal Register / Vol. 85, No. 236 / Tuesday, December 8, 2020 / Notices 79049 

3See Securities Exchange Act Release No. 88987 

(June 2, 2020), 85 FR 34774. Comments on the 

proposed rule change can be found at: https://

www.sec.gov/comments/sr-nasdaq-2020-028/ 

srnasdaq2020028.htm. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 89344, 

85 FR 44951 (July 24, 2020). The Commission 

designated September 6, 2020 as the date by which 

the Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

approve or disapprove, the proposed rule change. 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 89739, 

85 FR 55708 (September 9, 2020). 

8Amendment No. 1 is available at https://

www.sec.gov/comments/sr-nasdaq-2020-028/ 

srnasdaq2020028.htm. 

9 15 U.S.C. 78s(b)(2). 

10 Id. 

11 17 CFR 200.30–3(a)(57). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Cboe Options Rule 6.9 (the ‘‘Cboe Rule’’); 

see also Securities Exchange Act Release Nos. 

87340 (October 17, 2019), 84 FR 56877 (October 23, 

2019) (SR–CBOE–2019–048) (Order Approving on 

an Accelerated Basis a Proposed Rule Change, as 

Modified by Amendment Nos. 2 and 3, to Adopt 

Rule 6.9 (In-Kind Exchange of Options Positions 

and ETF Shares)); and 88786 (April 30, 2020), 85 

FR 26998 (May 6, 2020) (SR–CBOE–2020–042) 

(Notice of Filing and Immediate Effectiveness of a 

Proposed Rule Change To Amend Rule 6.9 To 

Permit In-Kind Transfers of Positions Off of the 

Exchange in Connection With Unit Investment 

Trusts (‘‘UITs’’)). See also CboeBZX Rule 20.12; 

Securities Exchange Act Release No. 89313 (July 14, 

2020), 85 FR 43907 (July 20, 2020) (SR–CboeBZX– 

2020–054) (immediately effective filing for, among 

other things, in-kind transfers of Funds and UITs). 

See also Nasdaq PHLX Rule 1059; Securities 

Exchange Act Release Nos. 87768 (December 17, 

2019), 84 FR 70605 (December 23, 2019) (SR–Phlx– 

2019–53) (immediately effective filing to adopt new 

Rule 1059 to allow in-kind transfers of Funds). The 

new Phlx rule does not extend to allowing for inkind transfers of UITs, thus the Exchange focuses 

on Cboe and its affiliates in this filing. 

an applicant or listed company based on 

considerations related to the company’s 

auditor or when a company’s business 

is principally administered in a 

jurisdiction that has secrecy laws, 

blocking statutes, national security laws, 

or other laws or regulations restricting 

access to information by regulators of 

U.S.-listed companies in such 

jurisdiction. The proposed rule change 

was published for comment in the 

Federal Register on June 8, 2020.3 On 

July 20, 2020, pursuant to Section 

19(b)(2) of the Act,4 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.5 On September 2, 2020, the 

Commission instituted proceedings 

under Section 19(b)(2)(B) of the Act 6 to 

determine whether to approve or 

disapprove the proposed rule change.7

On November 6, 2020, the Exchange 

filed Amendment No. 1 to the proposed 

rule change, which replaced and 

superseded the proposed rule change as 

originally filed.8

Section 19(b)(2) of the Act 9 provides 

that, after initiating disapproval 

proceedings, the Commission shall issue 

an order approving or disapproving the 

proposed rule change not later than 180 

days after the date of publication of 

notice of filing of the proposed rule 

change. The Commission may extend 

the period for issuing an order 

approving or disapproving the proposed 

rule change, however, by not more than 

60 days if the Commission determines 

that a longer period is appropriate and 

publishes the reasons for such 

determination. The date of publication 

of notice of filing of the proposed rule 

change was June 8, 2020. December 5, 

2020 is 180 days from that date, and 

February 3, 2021 is 240 days from that 

date. 

The Commission finds it appropriate 

to designate a longer period within 

which to issue an order approving or 

disapproving the proposed rule change 

so that it has sufficient time to consider 

this proposed rule change. Accordingly, 

the Commission, pursuant to Section 

19(b)(2) of the Act,10 designates 

February 3, 2021, as the date by which 

the Commission shall either approve or 

disapprove the proposed rule change, as 

modified by Amendment No. 1 (File No. 

SR–NASDAQ–2020–028). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–26898 Filed 12–7–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90552; File No. SR– 

NYSEArca–2020–102] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Adopt New Rule 

6.78A–O Regarding In-Kind Exchanges 

of Options Positions in Connection 

With Exchange-Traded Fund Shares 

and Unit Investment Trust Interests 

December 2, 2020. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on November 

24, 2020, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to adopt new 

Rule 6.78A–O regarding in-kind 

exchanges of options positions and 

exchange-traded fund shares and unit 

investment trust interests. 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 Exchange proposes to adopt Rule 

6.78A–O regarding in-kind exchanges of 

options positions and exchange-traded 

fund (‘‘Fund’’) shares and unit 

investment trust (‘‘UIT’’) interests. This 

is a competitive filing that is 

substantively identical to rules in place 

on Cboe and its affiliated exchange Cboe 

BZX, except the Exchange proposes to 

add a provision allowing it to request 

information from OTP Holders and OTP 

Firms that utilize the new rule.4

Currently, in general, Funds and UITs 

can effect in-kind transfers with respect 

to equity securities and fixed-income 

securities. The in-kind process is the 

means by which assets may be added to 

or removed from Funds and UITs. 

Proposed Rule 6.78A–O, like the Cboe 

Rule, would allow positions in options 

listed on the Exchange to be transferred 

off the Exchange by an OTP Holder or 

OTP Firm (collectively, ‘‘OTP Holders’’) 

in connection with transactions (1) to 


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79050 Federal Register / Vol. 85, No. 236 / Tuesday, December 8, 2020 / Notices 

5The Exchange is proposing that, for purposes of 

proposed Rule 6.78A–O, the term ‘‘authorized 

participant’’ would be defined as an entity that has 

a written agreement with the issuer of Fund Shares 

or one of its service providers, which allows the 

authorized participant to place orders for the 

purchase and redemption of creation units (i.e., 

specified numbers of Fund Shares). While an 

authorized participant may be an OTP Holder and 

directly effect transactions in options on the 

Exchange, an authorized participant that is not an 

OTP Holder may effect transactions in options on 

the Exchange through an OTP Holder on its behalf. 6The Exchange proposes that, for purposes of 

proposed Rule 6.78A–O, any issuer of Fund Shares 

would be registered with the Commission as an 

open-end management investment company under 

the Investment Company Act of 1940 (the ‘‘1940 

Act’’). 7A Fund Share is a share or other security traded 

on a national securities exchange and defined as an 

NMS stock, as set forth in in Rule 600(b)(47) of 

Regulation NMS, which includes open-end 

management investment companies registered with 

the Commission. See Rule 5.3–O(g). 8The Exchange proposes that, for purposes of 

proposed Rule 6.78A, any issuer of UIT units would 

be a trust registered with the Commission as a unit 

investment trust under the 1940 Act. 

9See supra note 4. See proposed Rule 6.78A–O(a) 

(providing that positions in options listed on the 

Exchange may be transferred off the Exchange by 

a OTP Holder or OTP Firm to effect creations and 

redemptions in Funds or UITs on an in-kind basis; 

‘‘provided, however, that such OTP Holder or OTP 

Firm comply with the requirements of paragraph (b) 

of this Rule’’). 

10See proposed Rule 6.78A–O(b). The Exchange 

anticipates informing OTP Holders of the notice 

requirements via Trader Update. 

11See supra note 4 (regarding Cboe and Phlx 

rules). 

12See supra note 5. The term ‘‘authorized 

participant’’ is specific and narrowly defined. As 

noted in the Investment Company Act Release No. 

33140 (June 28, 2018), 83 FR 37332 (July 31, 2018) 

(the ‘‘Proposed ETF Rule Release’’), the requirement 

that only authorized participants of a Fund may 

purchase creation units from (or sell creation units 

to) a Fund ‘‘is designed to preserve an orderly 

creation unit issuance and redemption process 

between [Funds] and authorized participants.’’ 

Furthermore, an ‘‘orderly creation unit issuance and 

redemption process is of central importance to the 

arbitrage mechanism.’’ See Proposed ETF Rule 

Release at 83 FR 37348. 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(5). 

15See supra note 4. 

16See supra note 4. 

purchase or redeem ‘‘creation units’’ of 

Fund Shares between an ‘‘authorized 

participant’’ 5 and the issuer 6 of such 

Fund Shares 7 or (2) to create or redeem 

units of a UIT between a broker-dealer 

and the issuer 8 of such UIT units, 

which transfers would occur at the price 

used to calculate the net asset value 

(‘‘NAV’’) of such Fund Shares or UIT 

units, respectively. Allowing the 

Exchange to permit off-Exchange 

transfers of options positions in 

connection with the creation and 

redemption process would enable the 

Exchange to compete with other options 

exchanges that allow such transfers.9

However, the Exchange believes it is 

appropriate to include in proposed Rule 

6.78A–O the requirement that OTP 

Holders that engage in such transfers 

‘‘must, upon request of the Exchange, 

provide to the Exchange information 

relating to the transfers in a form and 

manner prescribed by the Exchange.’’ 10

The Exchange believes that this 

proposed provision, which is not in the 

Cboe Rule (nor is it in Phlx Rule 1059), 

would help ensure that OTP Holders 

keep accurate books and records relating 

to such transfers for review by the 

Exchange, which is to the benefit of all 

market participants.11

The Exchange’s proposal mirrors the 

Cboe Rule in that it applies solely in the 

context of transfers of options positions 

effected in connection with transactions 

to purchase or redeem creation units of 

Fund Shares between Funds and 

authorized participants,12 and units of 

UITs between UITs and sponsors. 

Other than the transfers covered by 

the proposed rule, transactions 

involving options, whether held by a 

Fund or an authorized participant, or a 

UIT or a sponsor would be fully subject 

to all applicable trading Rules. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,13 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,14

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 regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in securities, 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 proposed Rule 

6.78A–O to permit off-Exchange 

transfers in connection with the in-kind 

Fund and UIT creation and redemption 

process would promote just and 

equitable principles of trade as it would 

permit Funds and UITs that invest in 

options traded on the Exchange to 

utilize the in-kind creation and 

redemption process that is available for 

Funds and UITs that invest in equities 

and fixed-income securities. 

The Exchange believes it is 

appropriate to require OTP Holders that 

engage in off-floor transfers as provided 

in proposed Rule 6.78A–O(a) to keep 

records of such transactions such that 

this information could be shared with 

the Exchange upon request. The 

Exchange believes this provision, which 

is not in the Cboe Rule, would prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade because the 

provision would help ensure that OTP 

Holders keep accurate books and 

records relating to such transfers for 

review by the Exchange, which is to the 

benefit of all market participants. 

Finally, this proposed rule change 

would align Exchange rules with that of 

other options exchanges, including Cboe 

and its affiliates, thereby allowing the 

Exchange to compete on equal footing.15

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 does not believe the proposed 

rule change will impose any burden on 

intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Utilizing the 

proposed exception would be voluntary. 

Proposed Rule 6.78A–O would provide 

market participants with a means to 

transfer positions as part of the creation 

and redemption process for Funds and 

UITs only under the circumstances 

specified. The proposed exception 

would enable all Funds and UITs that 

hold options to enjoy the benefits of inkind creations and redemptions already 

available to other Funds and UITs (and 

to pass these benefits along to 

investors). Use of the in-kind, offexchange transfer process in connection 

with creating and redeeming ETFs or 

UITs would be voluntary and would 

apply in the same manner to all entities 

that meet the definition of ‘‘authorized 

participant’’ or to all broker-dealers, 

respectively, that opt to invoke such 

process. 

The Exchange does not believe the 

proposed rule change will impose any 

burden on intermarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

As indicated above, the proposed rule 

change is intended to provide a limited 

circumstance in which options 

positions can be transferred off an 

exchange. The Exchange believes the 

requirement that OTP Holders have the 

ability to produce to the Exchange, upon 

request, documentation relating to offfloor transfers would benefit market 

participants as it would add 

transparency to such transfers and 

would not pose an undue burden on 

intermarket competition. 

Lastly, the Exchange notes that the 

proposed rule change is based on rules 

already in place on Cboe and its affiliate 

exchanges.16 As such, the Exchange 


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Federal Register / Vol. 85, No. 236 / Tuesday, December 8, 2020 / Notices 79051 

17 15 U.S.C. 78s(b)(3)(A). 

18 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. 

19 17 CFR 240.19b–4(f)(6). 

20 17 CFR 240.19b–4(f)(6)(iii). 

21For purposes only of waiving the 30-day 

operative delay, the Commission also has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b-4. 

3On November 19, 2020, FICC filed this proposed 

rule change as an advance notice (SR–FICC–2020– 

803) with the Commission pursuant to Section 

806(e)(1) of Title VIII of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act entitled the 

Payment, Clearing, and Settlement Supervision Act 

Continued 

believes that its proposal enhances fair 

competition between markets by 

providing for additional listing venues 

for Funds and UITs that hold options to 

utilize the in-kind transfers proposed 

herein. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

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 17 and Rule 19b– 

4(f)(6) thereunder.18

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 19 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 20

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has 

requested that the Commission waive 

the 30-day operative delay so that the 

proposed rule change may become 

operative upon filing. The Exchange 

states that waiver of the operative delay 

is consistent with the protection of 

investors and the public interest 

because it will ensure fair competition 

among the options exchanges by 

allowing the Exchange implement 

without delay proposed Rule 6.78A–O, 

which is substantially identical to Cboe 

Options Rule 6.9 and Cboe BZX Rule 

21.12, except that the Exchange’s 

proposed Rule 6.78A–O(b) is more 

restrictive in that it requires OTP 

Holders to provide to the Exchange 

information related to the transfers. For 

this reason, and because the proposal 

does not raise any novel regulatory 

issues, the Commission believes that 

waiver of the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. 

Accordingly, the Commission hereby 

waives the operative delay and 

designates the proposed rule change 

operative upon filing.21

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 

change 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– 

NYSEArca–2020–102 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–2020–102. 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–2020–102 and 

should be submitted on or before 

December 29, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–26896 Filed 12–7–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90551; File No. SR–FICC– 

2020–015) 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing of Proposed Rule Change To 

Include Same-Day Settling Trades in 

the Risk Management, Novation, 

Guarantee, and Settlement Services of 

the Government Securities Division’s 

Delivery-Versus-Payment Service, and 

Make Other Changes 

December 2, 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, Fixed Income Clearing 

Corporation (‘‘FICC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the clearing agency.3 The 


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