44312 Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Notices 

1See Docket No. RM2018–3, Order Adopting 

Final Rules Relating to Non-Public Information, 

June 27, 2018, Attachment A at 19–22 (Order No. 

4679). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

INFORMATION CONTACT section by 

telephone for advice on filing 

alternatives. 

FOR FURTHER INFORMATION CONTACT: 

David A. Trissell, General Counsel, at 

202–789–6820. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

II. Docketed Proceeding(s) 

I. Introduction 

The Commission gives notice that the 

Postal Service filed request(s) for the 

Commission to consider matters related 

to negotiated service agreement(s). The 

request(s) may propose the addition or 

removal of a negotiated service 

agreement from the market dominant or 

the competitive product list, or the 

modification of an existing product 

currently appearing on the market 

dominant or the competitive product 

list. 

Section II identifies the docket 

number(s) associated with each Postal 

Service request, the title of each Postal 

Service request, the request’s acceptance 

date, and the authority cited by the 

Postal Service for each request. For each 

request, the Commission appoints an 

officer of the Commission to represent 

the interests of the general public in the 

proceeding, pursuant to 39 U.S.C. 505 

(Public Representative). Section II also 

establishes comment deadline(s) 

pertaining to each request. 

The public portions of the Postal 

Service’s request(s) can be accessed via 

the Commission’s website (http://

www.prc.gov). Non-public portions of 

the Postal Service’s request(s), if any, 

can be accessed through compliance 

with the requirements of 39 CFR 

3007.301.1

The Commission invites comments on 

whether the Postal Service’s request(s) 

in the captioned docket(s) are consistent 

with the policies of title 39. For 

request(s) that the Postal Service states 

concern market dominant product(s), 

applicable statutory and regulatory 

requirements include 39 U.S.C. 3622, 39 

U.S.C. 3642, 39 CFR part 3010, and 39 

CFR part 3020, subpart B. For request(s) 

that the Postal Service states concern 

competitive product(s), applicable 

statutory and regulatory requirements 

include 39 U.S.C. 3632, 39 U.S.C. 3633, 

39 U.S.C. 3642, 39 CFR part 3015, and 

39 CFR part 3020, subpart B. Comment 

deadline(s) for each request appear in 

section II. 

II. Docketed Proceeding(s) 

1. Docket No(s).: MC2018–213 and 

CP2018–295; Filing Title: USPS Request 

to Add Priority Mail & First-Class 

Package Service Contract 87 to 

Competitive Product List and Notice of 

Filing Materials Under Seal; Filing 

Acceptance Date: August 24, 2018; 

Filing Authority: 39 U.S.C. 3642, 39 CFR 

3020.30 et seq., and 39 CFR 3015.5; 

Public Representative: Curtis E. Kidd; 

Comments Due: September 4, 2018. 

2. Docket No(s).: MC2018–214 and 

CP2018–296; Filing Title: USPS Request 

to Add Priority Mail Express & Priority 

Mail Contract 72 to Competitive Product 

List and Notice of Filing Materials 

Under Seal; Filing Acceptance Date: 

August 24, 2018; Filing Authority: 39 

U.S.C. 3642, 39 CFR 3020.30 et seq., and 

39 CFR 3015.5; Public Representative: 

Curtis E. Kidd; Comments Due: 

September 4, 2018. 

This Notice will be published in the 

Federal Register. 

Stacy L. Ruble, 

Secretary. 

[FR Doc. 2018–18863 Filed 8–29–18; 8:45 am] 

BILLING CODE 7710–FW–P 

POSTAL SERVICE 

Product Change—Priority Mail Express 

and Priority Mail Negotiated Service 

Agreement 

AGENCY: Postal ServiceTM. 

ACTION: Notice. 

SUMMARY: The Postal Service gives 

notice of filing a request with the Postal 

Regulatory Commission to add a 

domestic shipping services contract to 

the list of Negotiated Service 

Agreements in the Mail Classification 

Schedule’s Competitive Products List. 

DATES: Date of required notice: August 

30, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Elizabeth Reed, 202–268–3179. 

SUPPLEMENTARY INFORMATION: The 

United States Postal Service® hereby 

gives notice that, pursuant to 39 U.S.C. 

3642 and 3632(b)(3), on August 24, 

2018, it filed with the Postal Regulatory 

Commission a USPS Request to Add 

Priority Mail Express & Priority Mail 

Contract 72 to Competitive Product List. 

Documents are available at 

www.prc.gov, Docket Nos. MC2018–214, 

CP2018–296. 

Elizabeth Reed, 

Attorney, Corporate and Postal Business Law. 

[FR Doc. 2018–18792 Filed 8–29–18; 8:45 am] 

BILLING CODE 7710–12–P 

POSTAL SERVICE 

Product Change—Priority Mail and 

First-Class Package Service 

Negotiated Service Agreement 

AGENCY: Postal ServiceTM. 

ACTION: Notice. 

SUMMARY: The Postal Service gives 

notice of filing a request with the Postal 

Regulatory Commission to add a 

domestic shipping services contract to 

the list of Negotiated Service 

Agreements in the Mail Classification 

Schedule’s Competitive Products List. 

DATES: Date of required notice: August 

30, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Elizabeth Reed, 202–268–3179. 

SUPPLEMENTARY INFORMATION: The 

United States Postal Service® hereby 

gives notice that, pursuant to 39 U.S.C. 

3642 and 3632(b)(3), on August 24, 

2018, it filed with the Postal Regulatory 

Commission a USPS Request to Add 

Priority Mail & First-Class Package 

Service Contract 87 to Competitive 

Product List. Documents are available at 

www.prc.gov, Docket Nos. MC2018–213, 

CP2018–295. 

Elizabeth Reed, 

Attorney, Corporate and Postal Business Law. 

[FR Doc. 2018–18791 Filed 8–29–18; 8:45 am] 

BILLING CODE 7710–12–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83936; File No. SR– 

NYSEArca–2018–60] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change To List and Trade Shares 

of the First Trust Long Duration 

Opportunities ETF Under NYSE Arca 

Rule 8.600–E 

August 24, 2018. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that, on August 

17, 2018, NYSE Arca, Inc. (the 

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

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Notices 44313 

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 

June 12, 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– 

174332 and 811–22559) (‘‘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 its 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. 

7The 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. The Fund may adopt a defensive strategy 

when the Adviser believes securities in which the 

Fund normally invests have elevated risks due to 

political or economic factors and in other 

extraordinary circumstances. 

8 Government-sponsored entities include, for 

example, the Government National Mortgage 

Association, the Federal National Mortgage 

Association, and the Federal Home Loan Mortgage 

Corporation. 

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 list and 

trade shares of the First Trust Long 

Duration Opportunities ETF 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 to list and 

trade shares (‘‘Shares’’) of First Trust 

Long Duration Opportunities ETF (the 

‘‘Fund’’) which under NYSE Arca Rule 

8.600–E, which governs the listing and 

trading of Managed Fund Shares on the 

Exchange.4

The Shares are offered by First Trust 

Exchange-Traded Fund IV (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. 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 is not registered as a 

broker-dealer. The Adviser is affiliated 

with First Trust Portfolios L.P., a brokerdealer, 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. In the event (a) the 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 its relevant personnel or its 

broker-dealer affiliate regarding access 

to information concerning the 

composition and/or changes to the 

portfolio, and will be subject to 

procedures designed to prevent the use 

and dissemination of material nonpublic information regarding such 

portfolio. 

First Trust Long Duration Opportunities 

ETF 

Principal Investments 

According to the Registration 

Statement, the investment objective of 

the Fund is to generate current income 

with a focus on preservation of capital. 

Under normal market conditions,7 the 

Fund will invest at least 80% of its net 

assets in a portfolio of ‘‘Fixed Income 

Securities’’ (described below), which 

may be represented by derivatives 

relating to such securities. The term 

Fixed Income Securities means: 

• Debt securities issued or guaranteed 

by the U.S. Government, its agencies or 

government-sponsored entities (‘‘GSE’’ 

or ‘‘U.S. Government Entities’’), other 

than ‘‘Agency Mortgage-Related 

Investments’’ as referenced below; 8

• mortgage-related debt securities and 

other mortgage-related instruments 

issued or guaranteed by the U.S. 

Government and U.S. Government 

Entities (collectively, ‘‘Agency 

Mortgage-Related Investments’’); and 

• debentures related to securities 

issued or guaranteed by the U.S. 

Government and U.S. Government 

Entities. 

The Fund may invest in the following 

derivative instruments: options, futures 

contracts and swap agreements. 


amozie on DSK3GDR082PROD with NOTICES1
44314 Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Notices 

9For 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. 

10For purposes of this filing, cash equivalents are 

the short-term instruments enumerated in 

Commentary .01(c) to Rule 8.600–E. 

11For purposes of this filing, Agency MortgageRelated Investments and Non-Agency MortgageRelated Investments consist of: (1) Residential 

mortgage-backed securities (‘‘RMBS’’); (2) 

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

(3) stripped mortgage-backed securities (‘‘SMBS’’), 

which are mortgage-backed securities where 

mortgage payments are divided up between paying 

the loan’s principal and paying the loan’s interest; 

and (4) collateralized mortgage obligations 

(‘‘CMOs’’) and real estate mortgage investment 

conduits (‘‘REMICs’’) where they are divided into 

multiple classes with each class being entitled to a 

different share of the principal and/or interest 

payments received from the pool of underlying 

assets. 

12The 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. 

13The 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. 

14 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. 

According to the Registration Statement, 

the use of these derivative transactions 

may allow the Fund to obtain net long 

or short exposures to selected interest 

rates or durations. The Fund may also 

utilize derivatives to enhance return, to 

hedge some of the risks of its 

investments in securities, as a substitute 

for a position in the underlying asset, to 

reduce transaction costs, to maintain 

full market exposure (which means to 

adjust the characteristics of its 

investments to more closely 

approximate those of the markets in 

which it invests), to manage cash flows 

or to preserve capital 

The Fund may invest in exchangetraded funds (‘‘ETFs’’) that invest in 

Fixed Income Securities.9 Such ETFs 

will count towards the Fund’s 80% 

investment requirement described 

above. 

The Fund may enter into mortgage 

dollar rolls. 

The Fund may invest in to-beannounced transactions (‘‘TBA’’). 

Cash earmarked or otherwise held as 

collateral for settling mortgage dollar 

rolls, TBA transactions, and other 

delayed-delivery transactions will count 

towards the Fund’s 80% investment 

requirement described above. 

The Fund may enter into short sales 

of any securities in which the Fund may 

invest. 

Other Investments 

While, under normal market 

conditions, the Fund will invest at least 

80% of the Fund’s net assets in the 

securities and financial instruments 

described above under ‘‘Principal 

Investments’’, the Fund may invest up 

to 20% of its net assets in the securities 

and financial instruments described 

below. 

The Fund may invest in cash and cash 

equivalents.10 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 invest up to 20% of its 

net assets in other fixed income 

securities, including asset-backed 

securities (‘‘ABS’’) and mortgage-related 

debt securities and other mortgagerelated instruments not issued or 

guaranteed by the U.S. Government or 

U.S. Government Entities (‘‘Non-Agency 

Mortgage-Related Investments’’).11

The Fund may invest in nonexchange-traded investment company 

securities (i.e., mutual funds). 

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).12

Use of Derivatives by the Fund 

The Fund may invest in the types of 

derivatives described in the ‘‘Other 

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 believes there will be 

minimal, if any, impact to the arbitrage 

mechanism as a result of the Fund’s use 

of derivatives. The Adviser understands 

that market makers and participants 

should be able to value derivatives as 

long as the positions are disclosed with 

relevant information. The Adviser 

believes 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 does 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 13

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’’).14

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 


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Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Notices 44315 

15Commentary .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 IndexLinked 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 

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. 

16Commentary .01(b)(1) to Rule 8.600–E provides 

that components that in the aggregate account for 

at least 75% of the fixed income weight of the 

portfolio each shall have a minimum original 

principal amount outstanding of $100 million or 

more. 

17See note 7, supra. 

18The approximate average daily trading volume 

in agency mortgage-backed securities (‘‘MBS’’) from 

2003–2017 was $249 billion. The average daily 

trading volume in agency MBS for June 2018 was 

approximately $223.2 billion. As of March 31, 2018, 

approximately $6.99 trillion in agency MBS was 

outstanding. (Source: Securities Industry and 

Financial Markets Association (SIFMA)). 

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. 

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),15 (b)(1), and 

(b)(5), as described below. 

The Fund will not comply with the 

requirements set forth in Commentary 

(b)(1) and (b)(5) to NYSE Arca Rule 

8.600–E with respect to the Fund’s 

investments in Fixed Income Securities. 

The Fund will not comply with the 

requirement in Commentary .01(b)(1) to 

Rule 8.600–E that components that in 

the aggregate account for at least 75% of 

the fixed income weight of the portfolio 

each shall have a minimum original 

principal amount outstanding of $100 

million or more.16 Instead, the Exchange 

proposes that, except for periods of high 

cash inflows or outflows,17 components 

that in the aggregate account for at least 

30% of the fixed income weight of the 

portfolio each shall have a minimum 

original principal amount outstanding 

of $50 million or more. 

As noted above in ‘‘Principal 

Investments’’, under normal market 

conditions, the Fund’s principal 

holdings will include Agency MortgageRelated Investments (as defined above), 

securities issued or guaranteed by the 

U.S. Government and U.S. Government 

Entities other than Agency MortgageRelated Investments, and debentures 

related to securities issued or 

guaranteed by the U.S. Government and 

U.S. Government Entities. The Adviser 

represents that the Agency MortgageRelated Investments market is extremely 

large and liquid; 18 however, individual 

bond sizes in Agency Mortgage-Related 

Investments tend to be slightly smaller 

on average than standard corporate 

obligation deal issuances. For example, 

as of March 31, 2018 there were 

approximately $3.06 trillion in Fannie 

Mae outstanding; however, that amount 

is comprised of tens of thousands of 

individual pools with a range of 

individual pool specific issue sizes. 

While an individual tranche may be less 

than $100 million, it may have been 

issued as part of a deal in excess of $100 

million. The Adviser represents that, 

except for periods of high cash inflows 

or outflows, at least 30% (based on 

dollar amount invested) of the fixed 

income weight of the securities in 

which the Fund invests would have a 

minimum original principal amount 

outstanding of $50 million or more. The 

Adviser represents that these criteria are 

appropriate, based on the size and 

liquidity of the market in which agency 

mortgage securities generally trade and 

the anticipated availability of Agency 

Mortgage-Related Investments that 

would satisfy the Fund’s investment 

parameters. 

As noted above, the Fund will not 

comply with the requirement in 

Commentary .01(b)(5) that investments 

in non-agency, non-government 

sponsored entity and privately issued 

mortgage-related and other asset-backed 

securities (i.e., Non-Agency MortgageRelated Investments) not account, in the 

aggregate, for more than 20% of the 

weight of the fixed income portion of 

the portfolio.19 Instead, Non-Agency 

Mortgage-Related Investments will, in 

the aggregate, not exceed more than 

20% of the total assets of the Fund. 

This alternative requirement is 

appropriate because the Fund’s 

investment in Non-Agency MortgageRelated Investments is expected to 

provide the Fund with benefits 

associated with increased 

diversification, as Non-Agency 

Mortgage-Related Investments tend to be 

less correlated to interest rates than 

many other fixed income securities. The 

Adviser represents that the Fund’s 

investment in Non-Agency MortgageRelated Investments will be subject to 

the Fund’s liquidity procedures as 

adopted by the Board, and the Adviser 

does not expect that investments in 

Non-Agency Mortgage-Related 

Investments of up to 20% of the total 

assets of the Fund will have any 

material impact on the liquidity of the 

Fund’s investments. The Exchange 


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20See, e.g., Securities Exchange Act Release Nos. 

80946 (June 15, 2017) 82 FR 28126 (June 20, 2017) 

(SR–NASDAQ–2017–039) (permitting the 

Guggenheim Limited Duration ETF to invest up to 

20% of its total assets in privately-issued, nonagency and non-GSE ABS and MBS); 76412 

(November 10, 2015), 80 FR 71880 (November 17, 

2015) (SR–NYSEArca–2015–111) (permitting the 

RiverFront Strategic Income Fund to invest up to 

20% of its assets in privately-issued, non-agency 

and non-GSE ABS and MBS); 74814 (April 27, 

2015), 80 FR 24986 (May 1, 2015) (SR–NYSEArca– 

2014–017) (permitting the Guggenheim Enhanced 

Short Duration ETF to invest up to 20% of its assets 

in privately-issued, non-agency and non-GSE ABS 

and MBS); 74109 (January 21, 2015), 80 FR 4327 

(January 27, 2015) (SR–NYSEArca–2014–134) 

(permitting the IQ Wilshire Alternative Strategies 

ETF to invest up to 20% of its total assets in MBS 

and other ABS, without any limit on the type of 

such MBS and ABS); 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). 

21Commentary .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). 

22For 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. 

23The 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. 

24See 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). 

25The 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 

notes that the Commission has 

previously approved the listing of 

actively managed ETFs that can invest 

20% of their total assets in non-U.S. 

Government, non-agency, non-GSE and 

other privately issued ABS and MBS.20

Thus, it is appropriate to allow an 

exception to the Fund’s investments in 

Non-Agency Mortgage-Related 

Investments set forth in Commentary 

.01(b)(5) of the generic listing standards. 

As noted above, the Fund may invest 

in equity securities that are nonexchange-traded open-end investment 

company securities (i.e., 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 

open-end investment company 

securities.21 Investments in nonexchange-traded open-end investment 

company securities will not be principal 

investments of the Fund.22 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 investments by the 

Fund in non-exchange-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). 

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).23 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 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.24 Thus, the Exchange 

believes that it is appropriate to permit 

the Fund to invest in non-exchangetraded open-end management 

investment company securities, as 

described above. 

The Exchange notes that, other than 

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

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 

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’’),25 and a calculation of 


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of calculation of the Fund’s NAV. The records 

relating to Bid/Ask Prices will be retained by the 

Fund and its service providers. 

26Under 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. 

27Broker-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. 

28See NYSE Arca Rule 7.12–E. 

29 17 CFR 240.10A–3. 

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.26

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 Form N–CSR, 

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 Forms N–CSR 

and N–PX may be viewed on-screen or 

downloaded from the Commission’s 

website at www.sec.gov. 

Intra-day and closing price 

information regarding futures and 

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 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. For 

exchange-listed securities, intraday 

price quotations will generally be 

available from broker-dealers and 

trading platforms (as applicable). 

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 certain 

Fixed Income Securities, including 

Agency Mortgage-Related Investments 

and Non-Agency Mortgage-Related 

Investments, to the extent transactions 

in such securities are reported to 

TRACE.27 Non-exchange-traded openend 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, GSEs, debentures, cash 

equivalents and other short-term 

instruments 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 and 

ETFs 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 and ETFs 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.28 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), 

(b)(5), and (e) to Rule 8.600–E as 

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 will 

implement and maintain, or be subject 

to, procedures designed to prevent the 

use and dissemination of material nonpublic 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 29 under 

the Act, as provided by NYSE Arca Rule 

5.3–E. The Exchange will obtain a 

representation from the issuer of the 


amozie on DSK3GDR082PROD with NOTICES1
44318 Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Notices 

30FINRA 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. 

31For 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’’). 32 15 U.S.C. 78f(b)(5). 

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.30

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, and ETFs 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.31

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. 

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) 32 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, and ETFs 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. The Adviser 

is not registered as a broker-dealer. 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 Exchange notes that, other than 

Commentary .01(a)(1), (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 


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Notices 44319 

33See note 18, supra. 34See note 20, supra. 

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 and 

ETFs will be available via the CTA highspeed line, and from the national 

securities exchanges on which they are 

listed. 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 requirement in 

Commentary .01(b)(1) to Rule 8.600–E 

that components that in the aggregate 

account for at least 75% of the fixed 

income weight of the portfolio each 

shall have a minimum original principal 

amount outstanding of $100 million or 

more. Instead, the Exchange proposes 

that components that in the aggregate 

account for at least 30% of the fixed 

income weight of the portfolio each 

shall have a minimum original principal 

amount outstanding of $50 million or 

more. The Adviser represents that the 

Agency Mortgage-Related Investments 

market is extremely large and liquid; 33

however, individual bond sizes in 

Agency Mortgage-Related Investments 

tend to be slightly smaller on average 

than standard corporate obligation deal 

issuances. The Adviser represents that, 

except for periods of high cash inflows 

or outflows, at least 30% (based on 

dollar amount invested) of the fixed 

income weight of the securities in 

which the Fund invests would have a 

minimum original principal amount 

outstanding of $50 million or more. The 

Adviser represents that these criteria are 

appropriate, based on the size and 

liquidity of the market in which agency 

mortgage securities generally trade and 

the anticipated availability of Agency 

Mortgage-Related Investments that 

would satisfy the Fund’s investment 

parameters. 

As noted above, the Fund will not 

comply with the requirement in 

Commentary .01(b)(5) that investments 

in non-agency, non-government 

sponsored entity and privately issued 

mortgage-related and other asset-backed 

securities (i.e., Non-Agency MortgageRelated Investments and ABS) not 

account, in the aggregate, for more than 

20% of the weight of the fixed income 

portion of the portfolio. Instead, NonAgency Mortgage-Related Investments 

will, in the aggregate, not exceed more 

than 20% of the total assets of the Fund. 

This alternative requirement is 

appropriate because the Fund’s 

investment in Non-Agency MortgageRelated Investments is expected to 

provide the Fund with benefits 

associated with increased 

diversification, as Non-Agency 

Mortgage-Related Investments tend to be 

less correlated to interest rates than 

many other fixed income securities. The 

Adviser represents that the Fund’s 

investment in Non-Agency MortgageRelated Investments will be subject to 

the Fund’s liquidity procedures as 

adopted by the Board, and the Adviser 

does not expect that investments in 

Non-Agency Mortgage-Related 

Investments of up to 20% of the total 

assets of the Fund will have any 

material impact on the liquidity of the 

Fund’s investments. The Exchange 

notes that the Commission has 

previously approved the listing of 

actively managed ETFs that can invest 

20% of their total assets in non-U.S. 

Government, non-agency, non-GSE and 

other privately issued ABS and MBS.34

Thus, it is appropriate to expand the 

limit on the Fund’s investments in NonAgency Mortgage-Related Investments 

set forth in Commentary .01(b)(5) of the 

generic listing standards. 

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 

open-end investment company 

securities. 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 

open-end investment company 

securities. Investments in nonexchange-traded open-end investment 

company securities will not be principal 

investments of the Fund. 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. 

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 


amozie on DSK3GDR082PROD with NOTICES1
44320 Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Notices 

35 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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–2018–60 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–2018–60. 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–2018–60, and 

should be submitted on or before 

October 1, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.35

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18781 Filed 8–29–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83941; File No. SR–BOX– 

2018–25] 

Self-Regulatory Organizations; BOX 

Options Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Reflect in 

the Exchange’s Governing Documents 

and the Exchange’s Rulebook, 

Changes to the Exchange’s Name 

August 24, 2018. 

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 August 

15, 2018, BOX Options Exchange LLC 

(the ‘‘Exchange’’) 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 self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule from 

interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to reflect in 

the Exchange’s governing documents 

and the Exchange’s rulebook, changes to 

the Exchange’s name. The text of the 

proposed rule change is available from 

the principal office of the Exchange, at 

the Commission’s Public Reference 

Room and also on the Exchange’s 

internet website at http://

boxoptions.com. 

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 these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization has 

prepared summaries, set forth in 

Sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this filing is to reflect 

in the Exchange’s governing documents 

and the Exchange’s rulebook, changes to 

the Exchange’s name. On July 19, 2018, 

the BOX Options Exchange LLC Board 

of Directors approved that the name of 

BOX Options Exchange LLC be changed 

to ‘‘BOX Exchange LLC’’ and that each 

officer of the Company be, and hereby 

is, authorized and directed to undertake 

any actions required or advisable to 

carry out the name change, including 

with respect to the SEC and any 

governmental or third parties. The 

Exchange intends for these changes to 

be effective upon filing. 

As proposed, references to the 

Exchange’s name will be deleted and 

revised to state the new name, as 

described more fully below. No other 

substantive changes are being proposed 

in this filing. The Exchange represents 

that these changes are concerned solely 

with the administration of the Exchange 

and do not affect the meaning, 

administration, or enforcement of any 

rules of the Exchange or the rights, 

obligations, or privileges of Exchange 

members or their associated persons in 

any way. Accordingly, this filing is 

being submitted under Rule 19b–4(f)(3). 

In lieu of providing a copy of the 


amozie on DSK3GDR082PROD with NOTICES1