37560 Federal Register / Vol. 83, No. 148 / Wednesday, August 1, 2018 / Notices 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4A Managed Fund Share is a security that 

represents an interest in an investment company 

registered under the Investment Company Act of 

1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as 

an open-end investment company or similar entity 

that invests in a portfolio of securities selected by 

its investment adviser consistent with its 

investment objectives and policies. In contrast, an 

open-end investment company that issues 

Investment Company Units, listed and traded on 

the Exchange under NYSE Arca Rule 5.2–E(j)(3), 

seeks to provide investment results that correspond 

generally to the price and yield performance of a 

specific foreign or domestic stock index, fixed 

income securities index or combination thereof. 

5The Trust is registered under the 1940 Act. On 

May 29, 2018, the Trust filed with the Commission 

its registration statement on Form N–1A under the 

Securities Act of 1933 (15 U.S.C. 77a), and under 

the 1940 Act relating to the Fund (File Nos. 333– 

210186 and 811–23147) (‘‘Registration Statement’’). 

The description of the operation of the Trust and 

the Fund herein is based, in part, on the 

Registration Statement. In addition, the 

Commission has issued an order upon which the 

Trust may rely, granting certain exemptive relief 

under the 1940 Act. See Investment Company Act 

Release No. 30029 (April 10, 2012) (File No. 812– 

13795). 

6An 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 Sub-Adviser and their 

related personnel are 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 violation, 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. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83720; File No. SR– 

NYSEArca–2018–43] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Regarding Investments of 

the First Trust TCW Unconstrained 

Plus Bond ETF 

July 26, 2018. 

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 July 11, 

2018, NYSE Arca, Inc. (‘‘Exchange’’ or 

‘‘NYSE Arca’’) 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 certain 

changes regarding investments of the 

First Trust TCW Unconstrained Plus 

Bond ETF, shares of which are currently 

listed and traded on the Exchange under 

NYSE Arca Rule 8.600–E (‘‘Managed 

Fund Shares’’). 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. 

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 certain 

changes, described below under 

‘‘Application of Generic Listing 

Requirements’’, regarding investments 

of the First Trust TCW Unconstrained 

Plus Bond ETF (‘‘Fund’’), shares 

(‘‘Shares’’) of which are currently listed 

and traded on the Exchange under 

NYSE Arca Rule 8.600–E, which 

governs the listing and trading of 

Managed Fund Shares 4 on the 

Exchange. Shares of the Fund 

commenced trading on the Exchange on 

June 5, 2018 in accordance with the 

generic listing standards in Commentary 

.01 to NYSE Arca Rule 8.600–E. 

The Shares are offered by First Trust 

Exchange-Traded Fund VIII (the 

‘‘Trust’’), which is registered with the 

Commission as an open-end 

management investment company.5 The 

Fund is a series of the Trust. 

First Trust Advisors L.P. is the 

investment adviser (‘‘First Trust’’ or 

‘‘Adviser’’) to the Fund. TCW 

Investment Management Company LLC 

(‘‘TCW’’ or the ‘‘Sub-Adviser’’), serves 

as the Fund’s investment sub-adviser. 

First Trust Portfolios L.P. is the 

distributor (‘‘Distributor’’) for the Fund’s 

Shares. The Bank of New York Mellon 

acts as the administrator, custodian and 

transfer agent (‘‘Custodian’’ or ‘‘Transfer 

Agent’’) for the Fund. 

Commentary .06 to Rule 8.600–E 

provides that, if the investment adviser 

to the investment company issuing 

Managed Fund Shares is affiliated with 

a broker-dealer, such investment adviser 

shall erect and maintain a ‘‘fire wall’’ 

between the investment adviser and the 

broker-dealer with respect to access to 

information concerning the composition 

and/or changes to such investment 

company portfolio.6 In addition, 

Commentary .06 further requires that 

personnel who make decisions on the 

open-end fund’s portfolio composition 

must be subject to procedures designed 

to prevent the use and dissemination of 

material nonpublic information 

regarding the open-end fund’s portfolio. 

The Adviser and Sub-Adviser are not 

registered as broker-dealers. The 

Adviser is affiliated with First Trust 

Portfolios L.P., a broker-dealer, and has 

implemented and will maintain a fire 

wall with respect to its broker-dealer 

affiliate regarding access to information 

concerning the composition and/or 

changes to the portfolio. The SubAdviser is affiliated with multiple 

broker-dealers and has implemented 

and will maintain a fire wall with 

respect to its broker-dealer affiliates 

regarding access to information 

concerning the composition and/or 

changes to the portfolio. In the event (a) 

the Adviser or the Sub-Adviser becomes 

registered as a broker-dealer or 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 relevant personnel and any 

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 nonVerDate Sep<11>2014 20:07 Jul 31, 2018 Jkt 244001 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\01AUN1.SGM 01AUN1

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7The term ‘‘normal market conditions’’ [sic] The 

term ‘‘normal market conditions’’ is defined in 

NYSE Arca Rule 8.600–E(c)(5). On a temporary 

basis, including for defensive purposes, during the 

initial invest-up period (i.e., the six-week period 

following the commencement of trading of Shares 

on the Exchange) and during periods of high cash 

inflows or outflows (i.e., rolling periods of seven 

calendar days during which inflows or outflows of 

cash, in the aggregate, exceed 10% of the Fund’s net 

assets as of the opening of business on the first day 

of such periods), the Fund may depart from its 

principal investment strategies; for example, it may 

hold a higher than normal proportion of its assets 

in cash. During such periods, the Fund may not be 

able to achieve its investment objective. The Fund 

may adopt a defensive strategy when the Adviser 

and/or the Sub-Adviser believes securities in which 

the Fund normally invests have elevated risks due 

to market, political or economic factors and in other 

extraordinary circumstances. 

8Non-agency RMBS, CMBS and ABS are referred 

to collectively herein as ‘‘Private ABS/MBS.’’ 

9For purposes of this filing, cash equivalents are 

the short-term instruments with maturities of less 

than 3 months enumerated in Commentary .01(c) to 

Rule 8.600–E. 

10For purposes of this filing, the term ‘‘ETFs’’ 

includes Investment Company Units (as described 

in NYSE Arca Rule 5.2–E(j)(3)); Portfolio Depositary 

Receipts (as described in NYSE Arca Rule 8.100– 

E); and Managed Fund Shares (as described in 

NYSE Arca Rule 8.600–E). All ETFs will be listed 

and traded in the U.S. on a national securities 

exchange. While the Fund may invest in inverse 

ETFs, the Fund will not invest in leveraged (e.g., 

2X, ¥2X, 3X or ¥3X) ETFs. 

11ETNs include Index-Linked Securities (as 

described in NYSE Arca Rule 5.2–E(j)(6)). While the 

Fund may invest in inverse ETNs, the Fund will not 

invest in leveraged or inverse leveraged ETNs (e.g., 

2X or ¥3X). 

12For purposes of this filing, Work Out Securities 

include U.S. or foreign equity securities of any type 

acquired in connection with restructurings related 

to issuers of Fixed Income Securities held by the 

Fund. Work Out Securities are generally traded 

OTC, but may be traded on a U.S. or foreign 

exchange . 

public information regarding such 

portfolio. 

First Trust TCW Unconstrained Plus 

Bond ETF 

Principal Investments 

According to the Registration 

Statement, the investment objective of 

the Fund is to seek to maximize longterm total return. Under normal market 

conditions,7 the Fund intends to invest 

at least 80% of its net assets (including 

investment borrowings) in a portfolio of 

‘‘Fixed Income Securities’’ (described 

below). 

In managing the Fund’s portfolio, 

TCW intends to employ a flexible 

approach that allocates the Fund’s 

investments across a range of global 

investment opportunities and actively 

manage exposure to interest rates, credit 

sectors and currencies. TCW seeks to 

utilize independent, bottom-up research 

to identify securities that are 

undervalued and that offer a superior 

risk/return profile. Pursuant to this 

investment strategy, the Fund may 

invest in the following Fixed Income 

Securities, which may be represented by 

derivatives relating to such securities, as 

discussed below: 

• Securities issued or guaranteed by 

the U.S. government or its agencies, 

instrumentalities or U.S. governmentsponsored entities; 

• Treasury Inflation Protected 

Securities (‘‘TIPS’’); 

• agency and non-agency residential 

mortgage-backed securities (‘‘RMBS’’); 

agency and non-agency commercial 

mortgage-backed securities (‘‘CMBS’’); 

agency and non-agency asset-backed 

securities (‘‘ABS’’); 8

• domestic corporate bonds; 

• Fixed Income Securities issued by 

non-U.S. corporations and non-U.S. 

governments; 

• bank loans, including first lien 

senior secured floating rate bank loans 

(‘‘Senior Loans’’), secured and 

unsecured loans, second lien or more 

junior loans, and bridge loans; 

• fixed income convertible securities; 

• fixed income preferred securities; 

• municipal bonds; 

• collateralized loan obligations 

(‘‘CLOs’’); and 

• Rule 144A securities. 

The Fund may invest in agency RMBS 

and CMBS by investing in to-beannounced transactions (‘‘TBA 

Transactions’’). 

The Fund may hold cash and cash 

equivalents.9 In addition, the Fund may 

hold the following short-term 

instruments with maturities of three 

months or more: Certificates of deposit; 

bankers’ acceptances; repurchase 

agreements and reverse repurchase 

agreements; bank time deposits; and 

commercial paper. 

The Fund may enter into short sales 

of any securities in which the Fund may 

invest. 

The Fund may utilize exchange-listed 

and over-the-counter (‘‘OTC’’) traded 

derivatives instruments for duration/ 

yield curve management and/or hedging 

purposes, for risk management purposes 

or as part of its investment strategies. 

The Fund will use derivative 

instruments primarily to hedge interest 

rate risk, actively manage interest rate 

exposure, hedge foreign currency risk 

and actively manage foreign currency 

exposure. The Fund may also use 

derivative instruments to enhance 

returns, as a substitute for, or to gain 

exposure to, a position in an underlying 

asset, to reduce transaction costs, to 

maintain full market exposure, to 

manage cash flows or to preserve 

capital. Derivatives may also be used to 

hedge risks associated with the Fund’s 

other portfolio investments. Derivatives 

that the Fund may enter into are the 

following: Futures on interest rates, 

currencies, fixed income securities and 

fixed income indices; exchange-traded 

and OTC options on interest rates, 

currencies, fixed income securities and 

fixed income indices; swap agreements 

on interest rates, currencies, fixed 

income securities and fixed income 

indices; credit default swaps (‘‘CDX’’); 

and currency forward contracts. 

Other Investments 

While the Fund, under normal market 

conditions, invests at least 80% of its 

net assets in the Principal Investments 

described above, the Fund may invest 

its remaining assets in the following 

‘‘Non-Principal Investments.’’ 

The Fund may invest in exchangetraded common stock, exchange-traded 

preferred stock, and exchange-traded 

real estate investment trusts (‘‘REITs’’). 

The Fund may invest in the securities 

of other investment companies 

registered under the 1940 Act, including 

money market funds, exchange-traded 

funds (‘‘ETFs’’), open-end funds (other 

than money market funds and other 

ETFs), and U.S. exchange-traded closedend funds.10

The Fund may hold exchange-traded 

notes (‘‘ETNs’’).11

The Fund may hold exchange-traded 

or OTC ‘‘Work Out Securities.’’ 12

The Fund may hold exchange-traded 

or OTC equity securities issued upon 

conversion of fixed income convertible 

securities. 

Investment Restrictions 

The Fund may invest up to 50% of its 

total assets (calculated as the aggregate 

gross notional value) in Private ABS/ 

MBS, provided that the Fund may not 

invest more than 30% of its total assets 

(calculated as the aggregate gross 

notional value) in non-agency RMBS. 

The Exchange proposes that up to 

25% of the Fund’s assets may be 

invested in OTC derivatives that are 

used to reduce currency, interest rate or 

credit risk arising from the Fund’s 

investments (that is, ‘‘hedge’’). The 

Fund’s investments in OTC derivatives 

other than OTC derivatives used to 

hedge the Fund’s portfolio against 

currency, interest rate or credit risk will 

be limited to 20% of the assets in the 

Fund’s portfolio. For purposes of these 

percentage limitations on OTC 

derivatives, the weight of such OTC 

derivatives will be calculated as the 

aggregate gross notional value of such 

OTC derivatives. 

The Fund’s holdings of bank loans 

will not exceed 15% of the Fund’s total 

assets, and the Fund’s holdings of bank 


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13The Fund’s broad-based securities benchmark 

index will be identified in a future amendment to 

the Registration Statement following the Fund’s 

first full calendar year of performance. 

14The NAV of the Fund’s Shares generally will 

be calculated once daily Monday through Friday as 

of the close of regular trading on the New York 

Stock Exchange (‘‘NYSE’’), generally 4:00 p.m., 

Eastern Time (‘‘E.T.’’). NAV per Share will be 

calculated by dividing the Fund’s net assets by the 

number of Fund Shares outstanding. 

15 It is expected that the Fund will typically issue 

and redeem Creation Units on a cash basis; 

however, at times, the Fund may issue and redeem 

Creation Units on an in-kind (or partially in-kind) 

(or partially cash) basis. 

16Commentary .01(a)(1) to NYSE Arca Rule 

8.600–E provides that the component stocks of the 

equity portion of a portfolio that are U.S. 

Component Stocks shall meet the following criteria 

initially and on a continuing basis: 

(A) Component stocks (excluding Derivative 

Securities Products and Index-Linked Securities) 

that in the aggregate account for at least 90% of the 

equity weight of the portfolio (excluding such 

Derivative Securities Products and Index-Linked 

Securities) each shall have a minimum market 

value of at least $75 million; 

(B) Component stocks (excluding Derivative 

Securities Products and Index-Linked Securities) 

that in the aggregate account for at least 70% of the 

equity weight of the portfolio (excluding such 

Derivative Securities Products and Index-Linked 

Securities) each shall have a minimum monthly 

trading volume of 250,000 shares, or minimum 

notional volume traded per month of $25,000,000, 

averaged over the last six months; 

(C) The most heavily weighted component stock 

(excluding Derivative Securities Products and 

Index-Linked Securities) shall not exceed 30% of 

the equity weight of the portfolio, and, to the extent 

applicable, the five most heavily weighted 

component stocks (excluding Derivative Securities 

Products and Index-Linked Securities) shall not 

exceed 65% of the equity weight of the portfolio; 

(D) Where the equity portion of the portfolio does 

not include Non-U.S. Component Stocks, the equity 

portion of the portfolio shall include a minimum of 

13 component stocks; provided, however, that there 

shall be no minimum number of component stocks 

if (i) one or more series of Derivative Securities 

loans other than Senior Loans will not 

exceed 5% of the Fund’s total assets. 

The Fund’s holdings in fixed income 

convertible securities and in equity 

securities issued upon conversion of 

such convertible securities will not 

exceed 10% of the Fund’s total assets. 

The Fund’s holdings in Work Out 

Securities will not exceed 5% of the 

Fund’s total assets. 

The Fund will not invest in securities 

or other financial instruments that have 

not been described in this proposed rule 

change. 

Other Restrictions 

The Fund’s investments, including 

derivatives, will be consistent with the 

Fund’s investment objective and will 

not be used to enhance leverage 

(although certain derivatives and other 

investments may result in leverage). 

That is, the Fund’s investments will not 

be used to seek performance that is the 

multiple or inverse multiple (e.g., 2X or 

¥3X) of the Fund’s primary broadbased securities benchmark index (as 

defined in Form N–1A).13

Use of Derivatives by the Fund 

The Fund may invest in the types of 

derivatives described in the ‘‘Principal 

Investments’’ section above for the 

purposes described in that section. 

Investments in derivative instruments 

will be made in accordance with the 

Fund’s investment objective and 

policies. 

To limit the potential risk associated 

with such transactions, the Fund will 

enter into offsetting transactions or 

segregate or ‘‘earmark’’ assets 

determined to be liquid by the Adviser 

in accordance with procedures 

established by the Trust’s Board of 

Trustees (the ‘‘Board’’). In addition, the 

Fund has included appropriate risk 

disclosure in its offering documents, 

including leveraging risk. Leveraging 

risk is the risk that certain transactions 

of the Fund, including the Fund’s use of 

derivatives, may give rise to leverage, 

causing the Fund to be more volatile 

than if it had not been leveraged. 

Impact on Arbitrage Mechanism 

The Adviser and the Sub-Adviser 

believe there will be minimal, if any, 

impact to the arbitrage mechanism as a 

result of the Fund’s use of derivatives. 

The Adviser and the Sub-Adviser 

understand that market makers and 

participants should be able to value 

derivatives as long as the positions are 

disclosed with relevant information. 

The Adviser and the Sub-Adviser 

believe that the price at which Shares of 

the Fund trade will continue to be 

disciplined by arbitrage opportunities 

created by the ability to purchase or 

redeem Shares of the Fund at their net 

asset value (‘‘NAV’’), which should 

ensure that Shares of the Fund will not 

trade at a material discount or premium 

in relation to their NAV. 

The Adviser and Sub-Adviser do not 

believe there will be any significant 

impacts to the settlement or operational 

aspects of the Fund’s arbitrage 

mechanism due to the use of 

derivatives. 

Creation and Redemption of Shares 

The Fund will issue and redeem 

Shares on a continuous basis at NAV 14

only in large blocks of Shares (‘‘Creation 

Units’’) in transactions with authorized 

participants, generally including brokerdealers and large institutional investors 

(‘‘Authorized Participants’’). Creation 

Units generally will consist of 50,000 

Shares. The size of a Creation Unit is 

subject to change. As described in the 

Registration Statement, the Fund will 

issue and redeem Creation Units in 

exchange for an in-kind portfolio of 

instruments and/or cash in lieu of such 

instruments (the ‘‘Creation Basket’’).15

In addition, if there is a difference 

between the NAV attributable to a 

Creation Unit and the market value of 

the Creation Basket exchanged for the 

Creation Unit, the party conveying 

instruments (which may include cashin-lieu amounts) with the lower value 

will pay to the other an amount in cash 

equal to the difference (referred to as the 

‘‘Cash Component’’). 

Creations and redemptions must be 

made by or through an Authorized 

Participant that has executed an 

agreement that has been agreed to by the 

Distributor and the Transfer Agent with 

respect to creations and redemptions of 

Creation Units. All standard orders to 

create Creation Units must be received 

by the Transfer Agent no later than the 

closing time of the regular trading 

session on the NYSE (ordinarily 4:00 

p.m., E.T.) (the ‘‘Closing Time’’) in each 

case on the date such order is placed in 

order for the creation of Creation Units 

to be effected based on the NAV of 

Shares as next determined on such date 

after receipt of the order in proper form. 

Shares may be redeemed only in 

Creation Units at their NAV next 

determined after receipt not later than 

the Closing Time of a redemption 

request in proper form by the Fund 

through the Transfer Agent and only on 

a business day. The Custodian, through 

the National Securities Clearing 

Corporation (‘‘NSCC’’), will make 

available on each business day, prior to 

the opening of business of the Exchange, 

the list of the names and quantities of 

the instruments comprising the Creation 

Basket, as well as the estimated Cash 

Component (if any), for that day. The 

published Creation Basket will apply 

until a new Creation Basket is 

announced on the following business 

day prior to commencement of trading 

in the Shares. 

Application of Generic Listing 

Requirements 

The Exchange is submitting this 

proposed rule change because the 

portfolio for the Fund will not meet all 

of the ‘‘generic’’ listing requirements of 

Commentary .01 to NYSE Arca Rule 

8.600–E applicable to the listing of 

Managed Fund Shares. The Fund’s 

portfolio will meet all such 

requirements except for those set forth 

in Commentary .01(a)(1), (a)(2), (b)(5), 

and (e), as described below. 

The Fund will not comply with the 

requirements set forth in Commentary 

.01(a)(1) 16 and (a)(2) 17 to NYSE Arca 


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Products or Index-Linked Securities constitute, at 

least in part, components underlying a series of 

Managed Fund Shares, or (ii) one or more series of 

Derivative Securities Products or Index-Linked 

Securities account for 100% of the equity weight of 

the portfolio of a series of Managed Fund Shares; 

(E) Except as provided herein, equity securities in 

the portfolio shall be U.S. Component Stocks listed 

on a national securities exchange and shall be NMS 

Stocks as defined in Rule 600 of Regulation NMS 

under the Securities Exchange Act of 1934; and 

(F) American Depositary Receipts (‘‘ADRs’’) in a 

portfolio may be exchange-traded or non- exchangetraded. However, no more than 10% of the equity 

weight of a portfolio shall consist of non-exchangetraded ADRs. 

17Commentary .01(a)(2) to NYSE Arca Rule 

8.600–E provides that the component stocks of the 

equity portion of a portfolio that are Non-U.S. 

Component Stocks shall meet the following criteria 

initially and on a continuing basis: 

(A) Non-U.S. Component Stocks each shall have 

a minimum market value of at least $100 million; 

(B) Non-U.S. Component Stocks each shall have 

a minimum global monthly trading volume of 

250,000 shares, or minimum global notional volume 

traded per month of $25,000,000, averaged over the 

last six months; 

(C) The most heavily weighted Non-U.S. 

Component stock shall not exceed 25% of the 

equity weight of the portfolio, and, to the extent 

applicable, the five most heavily weighted Non-U.S. 

Component Stocks shall not exceed 60% of the 

equity weight of the portfolio; 

(D) Where the equity portion of the portfolio 

includes Non-U.S. Component Stocks, the equity 

portion of the portfolio shall include a minimum of 

20 component stocks; provided, however, that there 

shall be no minimum number of component stocks 

if (i) one or more series of Derivative Securities 

Products or Index-Linked Securities constitute, at 

least in part, components underlying a series of 

Managed Fund Shares, or (ii) one or more series of 

Derivative Securities Products or Index-Linked 

Securities account for 100% of the equity weight of 

the portfolio of a series of Managed Fund Shares; 

and 

(E) Each Non-U.S. Component Stock shall be 

listed and traded on an exchange that has last-sale 

reporting. 

18For purposes of these exceptions, investments 

in equity securities that are OTC Work Out 

Securities, OTC equity securities issued upon 

conversion of fixed income convertible securities, 

or non-exchange-traded securities of other open-end 

investment companies (e.g., mutual funds) are 

excluded and are discussed further below. 

19Commentary .01(b)(5) to NYSE Arca Rule 

8.600–E provides that non-agency, non-GSE and 

privately-issued mortgage-related and other assetbacked securities components of a portfolio shall 

not account, in the aggregate, for more than 20% 

of the weight of the fixed income portion of the 

portfolio. 

20Commentary .01(e) to NYSE Arca Rule 8.600– 

E provides that the portfolio may hold OTC 

derivatives, including forwards, options and swaps 

on commodities, currencies and financial 

instruments (e.g., stocks, fixed income, interest 

rates, and volatility) or a basket or index of any of 

the foregoing; however, on both an initial and 

continuing basis, no more than 20% of the assets 

in the portfolio may be invested in OTC derivatives. 

For purposes of calculating this limitation, a 

portfolio’s investment in OTC derivatives will be 

calculated as the aggregate gross notional value of 

the OTC derivatives. 

21The Commission has previously approved an 

exception from requirements set forth in 

Commentary .01(e) relating to investments in OTC 

derivatives similar to those proposed with respect 

to the Fund in Securities Exchange Act Release No. 

80657 (May 11, 2017), 82 FR 22702 (May 17, 2017) 

(SR–NYSEArca–2017–09) (Notice of Filing of 

Amendment No. 2 and Order Granting Accelerated 

Approval of a Proposed Rule Change, as Modified 

by Amendment No. 2, Regarding Investments of the 

Janus Short Duration Income ETF Listed Under 

NYSE Arca Equities Rule 8.600). 

Rule 8.600–E with respect to the Fund’s 

investments in equity securities.18

Instead, the Exchange proposes that (i) 

the Fund’s investments in equity 

securities will meet the requirements of 

Commentary .01(a) with the exception 

of Commentary .01(a)(1)(C) and 

.01(a)(1)(D) (with respect to U.S. 

Component Stocks) and Commentary 

.01(a)(2)(C) and .01(a)(2)(D) (with 

respect to Non-U.S. Component Stocks). 

Any Fund investment in exchangetraded common stocks, preferred stocks, 

REITS, ETFs, ETNs, exchange-traded 

equity securities issued upon 

conversion of fixed income convertible 

securities, exchange-traded Work Out 

Securities and U.S. exchange-traded 

closed-end funds would provide for 

enhanced diversification of the Fund’s 

portfolio and, in any case, would be 

non-principal Fund investments and 

would not exceed 20% of the Fund’s net 

assets in the aggregate. With respect to 

any Fund holdings of exchange-traded 

equity securities issued upon 

conversion of fixed income convertible 

securities and exchange-traded Work 

Out Securities, such securities will not 

exceed 10% and 5%, respectively, of the 

Fund’s total assets. The Adviser and 

Sub-Adviser represent that the Fund 

generally will not actively invest in 

equity securities issued upon 

conversion of fixed income convertible 

securities or Work Out Securities, but 

may, at times, receive a distribution of 

such securities in connection with the 

Fund’s holdings in other securities. 

Therefore, the Fund’s holdings in equity 

securities issued upon conversion of 

fixed income convertible securities and 

Work Out Securities generally would 

not be acquired as the result of the 

Fund’s voluntary investment decisions. 

The Adviser and Sub-Adviser represent 

that, under these circumstances, 

application of the weighting 

requirements of Commentary 

.01(a)(1)(C) and Commentary .01(a)(2)(C) 

and the minimum number of 

components requirements of 

Commentary .01(a)(1)(D) and 

Commentary .01(a)(2)(D) would impose 

an unnecessary burden on the Fund’s 

ability to hold such equity securities. 

The Fund will not comply with the 

requirement in Commentary .01(b)(5) to 

Rule 8.600–E that Private ABS/MBS in 

the Fund’s portfolio account, in the 

aggregate, for no more than 20% of the 

weight of the fixed income portion of 

the Fund’s portfolio.19 Instead, the 

Exchange proposes that, in order to 

enable the portfolio to be more 

diversified and provide the Fund with 

an opportunity to earn higher returns, 

the Fund may invest up to 50% of its 

total assets in Private ABS/MBS 

(calculated as the aggregate gross 

notional value), provided that the Fund 

may not invest more than 30% of its 

total assets in non-agency RMBS 

(calculated as the aggregate gross 

notional value). 

The Adviser and Sub-Adviser 

represent that the non-agency RMBS 

sector can be an important component 

of the Fund’s investment strategy 

because of the potential for attractive 

risk-adjusted returns relative to other 

fixed income sectors and the potential 

to add significantly to the 

diversification in the Fund’s portfolio. 

Similarly, the CMBS and ABS sectors 

also have the potential for attractive 

risk-adjusted returns and added 

portfolio diversification. 

The Fund’s portfolio will not comply 

with the requirements set forth in 

Commentary .01(e) to NYSE Arca Rule 

8.600–E.20 Specifically, the Fund’s 

investments in OTC derivatives may 

exceed 20% of Fund assets, calculated 

as the aggregate gross notional value of 

such OTC derivatives. The Exchange 

proposes that up to 25% of the Fund’s 

assets (calculated as the aggregate gross 

notional value) may be invested in OTC 

derivatives that are used to reduce 

currency, interest rate or credit risk 

arising from the Fund’s investments 

(that is, ‘‘hedge’’). The Fund’s 

investments in OTC derivatives other 

than OTC derivatives used to hedge the 

Fund’s portfolio against currency, 

interest rate or credit risk will be limited 

to 20% of the assets in the Fund’s 

portfolio, calculated as the aggregate 

gross notional value of such OTC 

derivatives. 

The Adviser and Sub-Adviser believe 

that it is important to provide the Fund 

with additional flexibility to manage 

risk associated with its investments. 

Depending on market conditions, it may 

be critical that the Fund be able to 

utilize available OTC derivatives for this 

purpose to attempt to reduce impact of 

currency, interest rate or credit 

fluctuations on Fund assets. Therefore, 

the Exchange believes it is appropriate 

to apply a limit of up to 25% of the 

Fund’s assets to the Fund’s investments 

in OTC derivatives (calculated as the 

aggregate gross notional value of such 

OTC derivatives), including forwards, 

options and swaps, that are used for 

hedging purposes, as described above.21

As noted above, the Fund may hold 

equity securities that are Work Out 


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22Commentary .01 (a) to Rule 8.600–E specifies 

the equity securities accommodated by the generic 

criteria in Commentary .01(a), namely, U.S. 

Component Stocks (as described in Rule 5.2– 

E(j)(3)); Non-U.S. Component Stocks (as described 

in Rule 5.2–E(j)(3)); Derivative Securities Products 

(i.e., Investment Company Units and securities 

described in Section 2 of Rule 8–E); and IndexLinked Securities that qualify for Exchange listing 

and trading under Rule 5.2–E(j)(6). 

23For purposes of this section of the filing, nonexchange-traded securities of other registered 

investment companies do not include money 

market funds, which are cash equivalents under 

Commentary .01(c) to Rule 8.600–E and for which 

there is no limitation in the percentage of the 

portfolio invested in such securities. 

24The Commission has previously approved 

proposed rule changes under Section 19(b) of the 

Act for series of Managed Fund Shares that may 

invest in non-exchange traded investment company 

securities. See, e.g., Securities Exchange Act 

Release No. 78414 (July 26, 2016), 81 FR 50576 

(August 1, 2016) (SR–NYSEArca–2016–79) (order 

approving listing and trading of shares of the Virtus 

Japan Alpha ETF under NYSE Arca Equities Rule 

8.600). 

25The Commission initially approved the 

Exchange’s proposed rule change to exclude 

‘‘Derivative Securities Products’’ (i.e., Investment 

Company Units and securities described in Section 

2 of Rule 8) and ‘‘Index-Linked Securities (as 

described in Rule 5.2–E (j)(6)) from Commentary 

.01(a)(A) (1) through (4) to Rule 5.2–E(j)(3 in 

Securities Exchange Act Release No. 57751 (May 1, 

2008), 73 FR 25818 (May 7, 2008) (SR–NYSEArca– 

2008–29) (Order Granting Approval of a Proposed 

Rule Change, as Modified by Amendment No. 1 

Thereto, to Amend the Eligibility Criteria for 

Components of an Index Underlying Investment 

Company Units) (‘‘2008 Approval Order’’). See also, 

Securities Exchange Act Release No. 57561 (March 

26, 2008), 73 FR 17390 (April 1, 2008) (Notice of 

Filing of Proposed Rule Change and Amendment 

No. 1 Thereto to Amend the Eligibility Criteria for 

Components of an Index Underlying Investment 

Company Units). The Commission subsequently 

approved generic criteria applicable to listing and 

trading of Managed Fund Shares, including 

exclusions for Derivative Securities Products and 

Index-Linked Securities in Commentary .01(a)(1)(A) 

through (D), in Securities Exchange Act Release No. 

78397 (July 22, 2016), 81 FR 49320 (July 27, 2016) 

(Order Granting Approval of Proposed Rule Change, 

as Modified by Amendment No. 7 Thereto, 

Amending NYSE Arca Equities Rule 8.600 To 

Adopt Generic Listing Standards for Managed Fund 

Shares). See also, Amendment No. 7 to SR– 

NYSEArca–2015–110, available at https://

www.sec.gov/comments/sr-nysearca-2015-110/ 

nysearca2015110-9.pdf. 

26See Securities Exchange Act Release No. 83319 

(May 24, 2018) (SR–NYSEArca–2018–15) (Order 

Approving a Proposed Rule Change, as Modified by 

Amendment No. 1 Thereto, to Continue Listing and 

Trading Shares of the PGIM Ultra Short Bond ETF 

Under NYSE Arca Rule 8.600–E). 

Securities, which generally are traded 

OTC (but that may be traded on a U.S. 

or foreign exchange), exchange-traded or 

OTC equity securities issued upon 

conversion of fixed income convertible 

securities, and non-exchange-traded 

securities of other open-end investment 

company securities (e.g., mutual funds). 

The Exchange believes that it is 

appropriate and in the public interest to 

approve listing and trading of Shares of 

the Fund on the Exchange 

notwithstanding that the Fund would 

not meet the requirements of 

Commentary .01(a)(1)(A) through (E) to 

Rule 8.600–E with respect to the Fund’s 

investments in non-exchange-traded 

securities of open-end investment 

company securities,22 and 

notwithstanding that the Fund’s 

holdings of OTC equity securities issued 

upon conversion of fixed income 

convertible securities and OTC Work 

Out Securities would not meet the 

requirements of Commentary 

.01(a)(1)(A) through (E) and 

Commentary .01(a)(2) (A) through (E) to 

Rule 8.600–E. Investments in nonexchange-traded securities of open-end 

investment company securities will not 

be principal investments of the Fund.23

Such investments, which may include 

mutual funds that invest, for example, 

principally in fixed income securities, 

would be utilized to help the Fund meet 

its investment objective and to equitize 

cash in the short term. With respect to 

any Fund holdings of OTC equity 

securities issued upon conversion of 

fixed income convertible securities and 

OTC Work Out Securities, such 

securities will not exceed 10% and 5%, 

respectively, of the Fund’s total assets. 

The Adviser and Sub-Adviser represent 

that the Fund generally will not actively 

invest in OTC equity securities issued 

upon conversion of fixed income 

convertible securities or OTC Work Out 

Securities, but may, at times, receive a 

distribution of such securities in 

connection with the Fund’s holdings in 

other securities. Therefore, the Fund’s 

holdings in equity securities issued 

upon conversion of fixed income 

convertible securities and Work Out 

Securities generally would not be 

acquired as the result of the Fund’s 

voluntary investment decisions. 

With respect to investments in nonexchange-traded investment company 

securities, because such securities have 

a net asset value based on the value of 

securities and financial assets the 

investment company holds, the 

Exchange believes it is both unnecessary 

and inappropriate to apply to such 

investment company securities the 

criteria in Commentary .01(a)(1).24

The Exchange notes that Commentary 

.01(A) through (D) to Rule 8.600–E 

exclude application of those provisions 

to certain ‘‘Derivative Securities 

Products’’ that are exchange-traded 

investment company securities, 

including Investment Company Units 

(as described in NYSE Arca Rule 5.2– 

E(j)(3)), Portfolio Depositary Receipts (as 

described in NYSE Arca Rule 8.100–E) 

and Managed Fund Shares (as described 

in NYSE Arca Rule 8.600–E).25 In its 

2008 Approval Order approving 

amendments to Commentary .01(a) to 

Rule 5.2(j)(3) that exclude Derivative 

Securities Products from certain 

provisions of Commentary .01(a) (which 

exclusions are similar to those in 

Commentary .01(a)(1) to Rule 8.600–E), 

the Commission stated that ‘‘based on 

the trading characteristics of Derivative 

Securities Products, it may be difficult 

for component Derivative Securities 

Products to satisfy certain quantitative 

index criteria, such as the minimum 

market value and trading volume 

limitations.’’ The Exchange notes that it 

would be difficult or impossible to 

apply to non-exchange-traded 

investment company securities the 

generic quantitative criteria (e.g., market 

capitalization, trading volume, or 

portfolio criteria) in Commentary .01 (A) 

through (D) applicable to U.S. 

Component Stocks. For example, the 

requirement for U.S. Component Stocks 

in Commentary .01(a)(1)(B) that there be 

minimum monthly trading volume of 

250,000 shares, or minimum notional 

volume traded per month of 

$25,000,000, averaged over the last six 

months is tailored to exchange-traded 

securities (e.g., U.S. Component Stocks) 

and not to mutual fund shares, which 

do not trade in the secondary market. 

Moreover, application of such criteria 

would not serve the purpose served 

with respect to U.S. Component Stocks, 

namely, to establish minimum liquidity 

and diversification criteria for U.S. 

Component Stocks held by series of 

Managed Fund Shares. 

The Exchange notes that the 

Commission has previously approved 

listing and trading of an issue of 

Managed Fund Shares that may invest 

in equity securities that are nonexchange-traded securities of other 

open-end investment company 

securities notwithstanding that the fund 

would not meet the requirements of 

Commentary .01(a)(1)(A) through (E) to 

Rule 8.600–E with respect to such 

fund’s investments in such securities.26

Thus, the Exchange believes that it is 

appropriate to permit the Fund to invest 

in non-exchange-traded open-end 

management investment company 

securities, as described above. 

The Exchange notes that, other than 

Commentary .01(a)(1), (a)(2), (b)(5), and 

(e) to Rule 8.600–E, as described above, 

the Fund’s portfolio will meet all other 

requirements of Rule 8.600–E. 

Availability of Information 

The Fund’s website 

(www.ftportfolios.com) will include the 

prospectus for the Fund that may be 

downloaded. The Fund’s website will 

include additional quantitative 


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27The Bid/Ask Price of the Fund’s Shares will be 

determined using the mid-point of the highest bid 

and the lowest offer on the Exchange as of the time 

of calculation of the Fund’s NAV. The records 

relating to Bid/Ask Prices will be retained by the 

Fund and its service providers. 

28Under accounting procedures followed by the 

Fund, trades made on the prior business day (‘‘T’’) 

will be booked and reflected in NAV on the current 

business day (‘‘T+1’’). Accordingly, the Fund will 

be able to disclose at the beginning of the business 

day the portfolio that will form the basis for the 

NAV calculation at the end of the business day. 

29Broker-dealers that are FINRA member firms 

have an obligation to report transactions in 

specified debt securities to TRACE to the extent 

required under applicable FINRA rules. Generally, 

such debt securities will have at issuance a maturity 

that exceeds one calendar year. For Fixed Income 

Securities that are not reported to TRACE, (i) 

intraday price quotations will generally be available 

from broker-dealers and trading platforms (as 

applicable) and (ii) price information will be 

available from feeds from market data vendors, 

published or other public sources, or online 

information services, as described above. 30See NYSE Arca Rule 7.12–E. 

information updated on a daily basis 

including, for the Fund, (1) daily trading 

volume, the prior business day’s 

reported closing price, NAV and 

midpoint of the bid/ask spread at the 

time of calculation of such NAV (the 

‘‘Bid/Ask Price’’),27 and a calculation of 

the premium and discount of the Bid/ 

Ask Price against the NAV, and (2) data 

in chart format displaying the frequency 

distribution of discounts and premiums 

of the daily Bid/Ask Price against the 

NAV, within appropriate ranges, for 

each of the four previous calendar 

quarters. On each business day, before 

commencement of trading in Shares in 

the Core Trading Session on the 

Exchange, the Fund will disclose on its 

website the Disclosed Portfolio as 

defined in NYSE Arca Rule 8.600– 

E(c)(2) that forms the basis for the 

Fund’s calculation of NAV at the end of 

the business day.28

On a daily basis, the Fund will 

disclose the information required under 

NYSE Arca Rule 8.600–E(c)(2) to the 

extent applicable. The website 

information will be publicly available at 

no charge. 

In addition, a basket composition file, 

which includes the security names and 

share quantities, if applicable, required 

to be delivered in exchange for the 

Fund’s Shares, together with estimates 

and actual cash components, will be 

publicly disseminated daily prior to the 

opening of the Exchange via the NSCC. 

The basket represents one Creation Unit 

of the Fund. Authorized Participants 

may refer to the basket composition file 

for information regarding Fixed Income 

Securities, and any other instrument 

that may comprise the Fund’s basket on 

a given day. 

Investors can also obtain the Trust’s 

Statement of Additional Information 

(‘‘SAI’’), the Fund’s Shareholder 

Reports, and the Fund’s Forms N–CSR 

and Forms N–SAR, filed twice a year. 

The Fund’s SAI and Shareholder 

Reports will be available free upon 

request from the Trust, and those 

documents and the Form N–CSR, Form 

N–PX and Form N–SAR may be viewed 

on-screen or downloaded from the 

Commission’s website at www.sec.gov. 

Intra-day and closing price 

information regarding exchange-traded 

options will be available from the 

exchange on which such instruments 

are traded. Intra-day and closing price 

information regarding Fixed Income 

Securities will be available from major 

market data vendors. Price information 

relating to OTC options, forwards and 

swaps will be available from major 

market data vendors. Intra-day price 

information for exchange-traded 

derivative instruments will be available 

from the applicable exchange and from 

major market data vendors. Intraday and 

other price information for the Fixed 

Income Securities in which the Fund 

will invest will be available through 

subscription services, such as 

Bloomberg, Markit and Thomson 

Reuters, which can be accessed by 

Authorized Participants and other 

market participants. Additionally, the 

Trade Reporting and Compliance Engine 

(‘‘TRACE’’) of the Financial Industry 

Regulatory Authority (‘‘FINRA’’) will be 

a source of price information for 

corporate bonds, and Private ABS/MBS, 

to the extent transactions in such 

securities are reported to TRACE.29

Trade price and other information 

relating to municipal bonds is available 

through the Municipal Securities 

Rulemaking Board’s Electronic 

Municipal Market Access (‘‘EMMA’’) 

system. Non-exchange-traded open-end 

investment company securities are 

typically priced once each business day 

and their prices will be available 

through the applicable fund’s website or 

from major market data vendors. Price 

information regarding U.S. government 

securities and cash equivalents 

generally may be obtained from brokers 

and dealers who make markets in such 

securities or through nationally 

recognized pricing services through 

subscription agreements. 

Information regarding market price 

and trading volume of the Shares, ETFs, 

ETNs, common stocks, preferred stocks, 

REITs, equity securities issued upon 

conversion of fixed income convertible 

securities, Work-Out Securities and 

closed-end funds will be continually 

available on a real-time basis throughout 

the day on brokers’ computer screens 

and other electronic services. 

Information regarding the previous 

day’s closing price and trading volume 

information for the Shares will be 

published daily in the financial section 

of newspapers. 

Quotation and last sale information 

for the Shares, ETFs, ETNs, closed-end 

funds, REITs, certain common stocks, 

certain preferred stocks, certain equity 

securities issued upon conversion of 

fixed income convertible securities, and 

certain Work-Out Securities will be 

available via the Consolidated Tape 

Association (‘‘CTA’’) high-speed line. 

Exchange-traded options quotation and 

last sale information for options cleared 

via the Options Clearing Corporation 

(‘‘OCC’’) are available via the Options 

Price Reporting Authority (‘‘OPRA’’). In 

addition, the Portfolio Indicative Value 

(‘‘PIV’’), as defined in NYSE Arca Rule 

8.600–E(c)(3), will be widely 

disseminated by one or more major 

market data vendors at least every 15 

seconds during the Core Trading 

Session. 

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 

the Fund.30 Trading in Shares of the 

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 Fund’s 

Shares also will be subject to Rule 

8.600–E(d)(2)(D) (‘‘Trading Halts’’). 

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 from 4 a.m. 

to 8 p.m., E.T. in accordance with NYSE 

Arca Rule 7.34–E (Early, Core, and Late 

Trading Sessions). The Exchange has 

appropriate rules to facilitate 

transactions in the Shares during all 

trading sessions. 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. 

With the exception of the 

requirements of Commentary .01(a)(1), 

(a)(2), (b)(5), and (e) to Rule 8.600–E as 


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37566 Federal Register / Vol. 83, No. 148 / Wednesday, August 1, 2018 / Notices 

31 17 CFR 240.10A–3. 

32FINRA 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. 

33For a list of the current members of ISG, see 

www.isgportal.org. The Exchange notes that not all 

components of the Disclosed Portfolio may trade on 

markets that are members of ISG or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement (‘‘CSSA’’). 34 15 U.S.C. 78f(b)(5). 

described above in ‘‘Application of 

Generic Listing Requirements,’’ the 

Shares of the Fund will conform to the 

initial and continued listing criteria 

under NYSE Arca Rule 8.600–E. 

Consistent with NYSE Arca Rule 8.600– 

E(d)(2)(B)(ii), the Adviser and SubAdviser will implement and maintain, 

or be subject to, procedures designed to 

prevent the use and dissemination of 

material non-public information 

regarding the actual components of the 

Fund’s portfolio. 

The Exchange represents that, for 

initial and continued listing, the Fund 

will be in compliance with Rule 10A– 

3 31 under the Act, as provided by NYSE 

Arca Rule 5.3–E. The Exchange will 

obtain a representation from the issuer 

of the Shares that the NAV per Share 

will be calculated daily and that the 

NAV and the Disclosed Portfolio will be 

made available to all market 

participants at the same time. The 

Fund’s investments will be consistent 

with its investment goal and will not be 

used to provide multiple returns of a 

benchmark or to produce leveraged 

returns. 

Surveillance 

The Exchange represents that trading 

in the Shares will be subject to the 

existing trading surveillances, 

administered by FINRA on behalf of the 

Exchange, or by regulatory staff of the 

Exchange, which are designed to detect 

violations of Exchange rules and 

applicable federal securities laws. 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.32

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, certain exchangetraded options and certain exchangetraded futures, ETFs, ETNs, closed-end 

funds, certain common stocks, certain 

preferred stocks, certain REITs, certain 

equity securities issued upon 

conversion of fixed income convertible 

securities, certain Work-Out Securities 

with other markets and other entities 

that are members of the Intermarket 

Surveillance Group (‘‘ISG’’), and the 

Exchange or FINRA, on behalf of the 

Exchange, or both, may obtain trading 

information regarding trading in such 

securities and financial instruments 

from such markets and other entities.33

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 CSSA. In 

addition, FINRA, on behalf of the 

Exchange, is able to access, as needed, 

trade information for certain fixed 

income securities held by the Fund 

reported to FINRA’s TRACE. FINRA 

also can access data obtained from the 

Municipal Securities Rulemaking Board 

relating to municipal bond trading 

activity for surveillance purposes in 

connection with trading in the Shares. 

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

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 of 

the Fund on the Exchange. 

The issuer must notify the Exchange 

of any failure by the 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 the 

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 

The Exchange will inform its Equity 

Trading Permit 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 in 

Creation Unit aggregations (and that 

Shares are not individually redeemable); 

(2) NYSE Arca Rule 9.2–E(a), which 

imposes a duty of due diligence on its 

Equity Trading Permit Holders to learn 

the essential facts relating to every 

customer prior to trading the Shares; (3) 

the risks involved in trading the Shares 

during the Early and Late Trading 

Sessions when an updated PIV will not 

be calculated or publicly disseminated; 

(4) how information regarding the PIV 

and the Disclosed Portfolio is 

disseminated; (5) the requirement that 

Equity Trading Permit 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 the Fund is subject to 

various fees and expenses described in 

the 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 basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(5) 34 that an 

exchange have rules that are 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, in general, to protect investors and 

the public interest. 

The Exchange believes that the 

proposed rule change is designed to 

prevent fraudulent and manipulative 

acts and practices in that the Shares are 

listed and traded on the Exchange 

pursuant to the initial and continued 

listing criteria in NYSE Arca Rule 

8.600–E. The Exchange has in place 

surveillance procedures that are 

adequate to properly monitor trading in 

the Shares in all trading sessions and to 

deter and detect violations of Exchange 

rules and applicable federal securities 

laws. The Exchange or FINRA, on behalf 

of the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares, certain exchangetraded options and certain exchangetraded futures, ETFs, ETNs, closed-end 

funds, certain common stocks, certain 

preferred stocks, certain REITs, certain 

equity securities issued upon 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 148 / Wednesday, August 1, 2018 / Notices 37567 

conversion of fixed income convertible 

securities and certain Work-Out 

Securities 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 in such 

securities and financial instruments 

from such markets and other entities. 

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 CSSA. In addition, FINRA, on behalf 

of the Exchange, is able to access, as 

needed, trade information for certain 

fixed income securities held by the 

Fund reported to TRACE. FINRA also 

can access data obtained from the 

Municipal Securities Rulemaking Board 

relating to municipal bond trading 

activity for surveillance purposes in 

connection with trading in the Shares. 

The Adviser and Sub-Adviser are not 

registered as broker-dealers. The 

Adviser is affiliated with First Trust 

Portfolios L.P., a broker-dealer and has 

implemented and will maintain a fire 

wall with respect to its broker-dealer 

affiliate regarding access to information 

concerning the composition and/or 

changes to the portfolios. The SubAdviser is affiliated with multiple 

broker-dealers and has implemented 

and will maintain a fire wall with 

respect to its broker-dealer affiliates 

regarding access to information 

concerning the composition and/or 

changes to the portfolio. 

The Exchange notes that, other than 

Commentary .01(a)(1), (a)(2), (b)(5), and 

(e) to Rule 8.600–E, as described above, 

the Fund’s portfolio will meet all other 

requirements of Rule 8.600–E. 

The proposed rule change is designed 

to promote just and equitable principles 

of trade and to protect investors and the 

public interest in that the Exchange will 

obtain a representation from the issuer 

of the Shares that the NAV per Share 

will be calculated daily and that the 

NAV and the Disclosed Portfolio will be 

made available to all market 

participants at the same time. In 

addition, a large amount of information 

will be publicly available regarding the 

Fund and the Shares, thereby promoting 

market transparency. Quotation and last 

sale information for the Shares, ETFs, 

ETNs, closed-end funds, certain REITs, 

certain common stocks, certain 

preferred stocks, certain equity 

securities issued upon conversion of 

fixed income convertible securities, and 

certain Work-Out Securities will be 

available via the CTA high-speed line. 

Exchange-traded options quotation and 

last sale information for options cleared 

via the OCC are available via OPRA. The 

Exchange will inform its Equity Trading 

Permit Holders in an Information 

Bulletin of the special characteristics 

and risks associated with trading the 

Shares. Trading in Shares of the Fund 

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. Trading in the 

Shares will be subject to NYSE Arca 

Rule 8.600–E (d)(2)(D), which sets forth 

circumstances under which Shares of 

the Fund may be halted. In addition, as 

noted above, investors will have ready 

access to information regarding the 

Fund’s holdings, NAV, the PIV, the 

Disclosed Portfolio, and quotation and 

last sale information for the Shares. 

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 activelymanaged exchange-traded product that 

principally will hold fixed income 

securities and 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 CSSA. In 

addition, as noted above, investors will 

have ready access to information 

regarding the Fund’s holdings, NAV, 

Disclosed Portfolio, and quotation and 

last sale information for the Shares. 

Deviations from the generic 

requirements, as described above, are 

necessary for the Fund to achieve its 

investment objective in a manner that is 

cost-effective and that maximizes 

investors’ returns. Further, the proposed 

alternative requirements are narrowly 

tailored to allow the Fund to achieve its 

investment objective in a manner that is 

consistent with the principles of Section 

6(b)(5) of the Act. As a result, it is in the 

public interest to approve listing and 

trading of Shares of the Fund on the 

Exchange pursuant to the requirements 

set forth herein. 

As noted above, the Fund will not 

comply with the requirements set forth 

in Commentary .01(a)(1) and (a)(2) to 

NYSE Arca Rule 8.600–E with respect to 

the Fund’s investments in equity 

securities. Instead, the Exchange 

proposes that (i) the Fund’s investments 

in equity securities will meet the 

requirements of Commentary .01(a) with 

the exception of Commentary 

.01(a)(1)(C) and .01(a)(1)(D) (with 

respect to U.S. Component Stocks) and 

Commentary .01(a)(2)(C) and 

.01(a)(2)(D) (with respect to Non-U.S. 

Component Stocks). The Exchange 

believes it is appropriate and in the 

public interest to approve listing and 

trading of Shares of the Fund 

notwithstanding that the Fund’s 

holdings in such equity securities do 

not comply with the requirements set 

forth in Commentary .01(a)(1) and (a)(2) 

to NYSE Arca Rule 8.600–E in that any 

Fund investment in exchange-traded 

common stocks, preferred stocks, 

REITS, ETFs, ETNs, U.S. exchangetraded closed-end funds, exchangetraded equity securities issued upon 

conversion of fixed income convertible 

securities, and exchange-traded Work 

Out Securities would provide for 

enhanced diversification of the Fund’s 

portfolio. Such securities would be nonprincipal Fund investments, not 

exceeding 20% of the Fund’s net assets 

in the aggregate. 

As noted above, the Fund will not 

comply with the requirement in 

Commentary .01(b)(5) to Rule 8.600–E 

that Private ABS/MBS in the Fund’s 

portfolio account, in the aggregate, for 

no more than 20% of the weight of the 

fixed income portion of the Fund’s 

portfolio. Instead, the Exchange 

proposes that, in order to enable the 

portfolio to be more diversified and 

provide the Fund with an opportunity 

to earn higher returns, the Fund may 

invest up to 50% of its total assets in 

Private ABS/MBS (calculated as the 

aggregate gross notional value), 

provided that the Fund may not invest 

more than 30% of its total assets in nonagency RMBS (calculated as the 

aggregate gross notional value). The 

Exchange believes it is appropriate and 

in the public interest to approve listing 

and trading of Shares of the Fund 

notwithstanding that the Fund’s 

holdings in such Private ABS/MBS do 

not comply with the requirements set 

forth in Commentary .01(b)(5) to NYSE 

Arca Rule 8.600–E in that the Fund’s 

investment in Private ABS/MBS is 

expected to provide the Fund with 

benefits associated with increased 

diversification, as Private ABS/MBS 

investments tend to be less correlated to 

interest rates than many other fixed 

income securities. The Fund’s 

investment in Private ABS/MBS will be 

subject to the Fund’s liquidity 

procedures as adopted by the Board, 

and the Adviser and Sub-Adviser do not 

expect that investments in Private ABS/ 

MBS of up to 50% of the total assets of 

the Fund will have any material impact 


sradovich on DSK3GMQ082PROD with NOTICES
37568 Federal Register / Vol. 83, No. 148 / Wednesday, August 1, 2018 / Notices 

35See note 23, supra. 

on the liquidity of the Fund’s 

investments. 

The Adviser and Sub-Adviser 

represent that the non-agency RMBS 

sector can be an important component 

of the Fund’s investment strategy 

because of the potential for attractive 

risk-adjusted returns relative to other 

fixed income sectors and the potential 

to add significantly to the 

diversification in the Fund’s portfolio. 

Similarly, the CMBS and ABS sectors 

also have the potential for attractive 

risk-adjusted returns and added 

portfolio diversification. 

As noted above, the Fund’s portfolio 

will not comply with the requirements 

set forth in Commentary .01(e) to NYSE 

Arca Rule 8.600–E. The Exchange 

proposes that up to 25% of the Fund’s 

assets (calculated as the aggregate gross 

notional value) may be invested in OTC 

derivatives that are used to reduce 

currency, interest rate or credit risk 

arising from the Fund’s investments 

(that is, ‘‘hedge’’), and that the Fund’s 

investments in OTC derivatives other 

than OTC derivatives used to hedge the 

Fund’s portfolio against currency, 

interest rate or credit risk will be limited 

to 20% of the assets in the Fund’s 

portfolio, calculated as the aggregate 

gross notional value of such OTC 

derivatives. The Exchange believes it is 

appropriate and in the public interest to 

approve listing and trading of Shares of 

the Fund notwithstanding that the 

Fund’s holdings in OTC derivatives do 

not comply with the requirements set 

forth in Commentary .01(e) to NYSE 

Arca Rule 8.600–E in that, depending on 

market conditions, it may be critical that 

the Fund be able to utilize available 

OTC derivatives to attempt to reduce 

impact of currency, interest rate or 

credit fluctuations on Fund assets. 

Therefore, the Exchange believes it is 

appropriate to apply a limit of up to 

25% of the Fund’s assets to the Fund’s 

investments in OTC derivatives 

(calculated as the aggregate gross 

notional value of such OTC derivatives), 

including forwards, options and swaps, 

that are used for hedging purposes, as 

described above. 

The Adviser and Sub-Adviser 

represent that OTC derivatives can be 

tailored to hedge the specific risk arising 

from the Fund’s investments and 

frequently may be a more efficient 

hedging vehicle than listed derivatives. 

For example, the Fund could obtain an 

OTC foreign currency derivative in a 

notional amount that exactly matches 

the notional amount of the Fund’s 

investments. If the Fund were limited to 

investing up to 20% of assets in OTC 

derivatives, the Fund might have to 

‘‘over hedge’’ or ‘‘under hedge’’ if round 

lot sizes in listed derivatives were not 

available. In addition, for example, an 

OTC CDX option can be structured to 

provide protection tailored to the 

Fund’s credit exposure and can be a 

more efficient way to hedge credit risk 

with respect to specific exposures than 

listed derivatives. Similarly, OTC 

interest rate derivatives can be more 

effective hedges of interest rate exposure 

because they can be customized to 

match the basis risk arising from the 

term of the investments held by the 

Fund. 

Because the Fund, in furtherance of 

its investment objective, may invest a 

substantial percentage of its investments 

in foreign currency denominated Fixed 

Income Securities, the 20% limit in 

Commentary .01(e) to Rule 8.600–E 

could result in the Fund being unable to 

fully pursue its investment objective 

while attempting to sufficiently mitigate 

investment risks. The inability of the 

Fund to adequately hedge its holdings 

would effectively limit the Fund’s 

ability to invest in certain instruments, 

or could expose the Fund to additional 

investment risk. For example, if the 

Fund’s assets (on a gross notional value 

basis) were $100 million and no listed 

derivative were suitable to hedge the 

Fund’s risk, under the generic standards 

the Fund would be limited to holding 

up to $20 million gross notional value 

in OTC derivatives ($100 million * 

20%). Accordingly, the maximum 

amount the Fund would be able to 

invest in foreign currency denominated 

Fixed Income Securities while 

remaining adequately hedged would be 

$20 million. The Fund then would hold 

$60 million in assets that could not be 

hedged, other than with listed 

derivatives, which, as noted above, 

might not be sufficiently tailored to the 

specific instruments to be hedged. 

In addition, by applying the 20% 

limitation in Commentary .01(e) to Rule 

8.600–E, the Fund would be less able to 

protect its holdings from more than one 

risk simultaneously. For example, if the 

Fund’s assets (on a gross notional basis) 

were $100 million and the Fund held 

$20 million in foreign currency 

denominated Fixed Income Instruments 

with two types of risks (e.g., currency 

and credit risk) which could not be 

hedged using listed derivatives, the 

Fund would be faced with the choice of 

either holding $20 million aggregate 

gross notional value in OTC derivatives 

to mitigate one of the risks while 

passing the other risk to its 

shareholders, or, for example, holding 

$10 million aggregate gross notional 

value in OTC derivatives on each of the 

risks while passing the remaining 

portion of each risk to the Fund’s 

shareholders. 

The Adviser and Sub-Adviser believe 

that it is in the best interests of the 

Fund’s shareholders for the Fund to be 

allowed to reduce the currency, interest 

rate or credit risk arising from the 

Fund’s investments using the most 

efficient financial instrument. While 

certain risks can be hedged via listed 

derivatives, OTC derivatives (such as 

forwards, options and swaps) can be 

customized to hedge against precise 

risks. Accordingly, the Adviser and SubAdviser believe that OTC derivatives 

may frequently be a more efficient 

hedging vehicle than listed derivatives. 

Therefore, the Exchange believes that 

increasing the percentage limit in 

Commentary .01(e), as described above, 

to the Fund’s investments in OTC 

derivatives, including forwards, options 

and swaps, that are used specifically for 

hedging purposes would help protect 

investors and the public interest. 

As noted above, the Fund’s portfolio 

will not meet the requirements of 

Commentary .01(a)(1)(A) through (E) to 

Rule 8.600–E with respect to the Fund’s 

investments in non-exchange-traded 

securities of open-end investment 

company securities,and, with respect to 

the Fund’s holdings of OTC equity 

securities issued upon conversion of 

fixed income convertible securities and 

OTC Work Out Securities, would not 

meet the requirements of Commentary 

.01(a)(1)(A) through (E) and 

Commentary .01(a)(2) (A) through (E) to 

Rule 8.600–E. The Exchange believes 

that it is appropriate and in the public 

interest to approve listing and trading of 

Shares of the Fund on the Exchange 

notwithstanding that the Fund would 

not meet the requirements of 

Commentary .01(a)(1)(A) through (E) to 

Rule 8.600–E with respect to the Fund’s 

investments in non-exchange-traded 

securities of open-end investment 

company securities,and 

notwithstanding that the Fund’s 

holdings of OTC equity securities issued 

upon conversion of fixed income 

convertible securities and OTC Work 

Out Securities would not meet the 

requirements of Commentary 

.01(a)(1)(A) through (E) and 

Commentary .01(a)(2) (A) through (E) to 

Rule 8.600–E. Investments in nonexchange-traded securities of open-end 

investment company securities will not 

be principal investments of the Fund.35

Such investments, which may include 

mutual funds that invest, for example, 

principally in fixed income securities, 

would be utilized to help the Fund meet 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 148 / Wednesday, August 1, 2018 / Notices 37569 

36 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 83272 

(May 17, 2018), 83 FR 23978. 

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

5See Securities Exchange Act Release No. 83595, 

83 FR 32158 (July 11, 2018). The Commission 

designated August 21, 2018 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. 

6See Letter to Brent J. Fields, Secretary, 

Commission, from Sal Arnuk and Joe Saluzzi, 

Partners, Co-Founders, and Co-Heads of Equity 

Trading, Themis Trading LLC, dated June 12, 2018. 

7See Letter to Brent J. Fields, Secretary, 

Commission, from Brett M. Kitt, Senior Associate 

General Counsel, Nasdaq, dated July 10, 2018. 

its investment objective and to equitize 

cash in the short term. 

With respect to any Fund holdings of 

exchange-traded or OTC equity 

securities issued upon conversion of 

fixed income convertible securities and 

Work Out Securities, such securities 

will not exceed 10% and 5%, 

respectively, of the Fund’s total assets. 

The Adviser and Sub-Adviser represent 

that the Fund generally will not actively 

invest in equity securities issued upon 

conversion of fixed income convertible 

securities or Work Out Securities, but 

may, at times, receive a distribution of 

such securities in connection with the 

Fund’s holdings in other securities. 

Therefore, the Fund’s holdings in equity 

securities issued upon conversion of 

fixed income convertible securities and 

Work Out Securities generally would 

not be acquired as the result of the 

Fund’s voluntary investment decisions. 

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 shares 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. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purpose of the Act. The Exchange 

notes that the proposed rule change will 

facilitate the listing and trading of an 

additional type of actively-managed 

exchange-traded product that 

principally will hold fixed income 

securities and that will enhance 

competition among market participants, 

to the benefit of investors and the 

marketplace. 

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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be 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–2018–43 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-2018–43. 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–2018–43 and 

should be submitted on or before 

August 22, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.36

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2018–16424 Filed 7–31–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83721; File No. SR– 

NASDAQ–2018–038] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Withdrawal of Proposed Rule Change 

To Amend Rule 4702(b)(14) To 

Establish a Price Improvement Only 

Variation on the Midpoint Extended 

Life Order 

July 26, 2018. 

On May 4, 2018, The Nasdaq Stock 

Market LLC (‘‘Nasdaq’’ 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 establish a price improvement 

only variation on the Midpoint 

Extended Life Order. The proposed rule 

change was published for comment in 

the Federal Register on May 23, 2018.3

On July 5, 2018, 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 approve or disapprove the 

proposed rule change.5 The Commission 

received one comment letter on the 

proposed rule change 6 and one 

response letter from the Exchange.7 On 

July 23, 2018, the Exchange withdrew 


sradovich on DSK3GMQ082PROD with NOTICES