Federal Register / Vol. 89, No. 216 / Thursday, November 7, 2024 / Notices 88317 

17Unlike other market participants, Market 

Makers are subject to market making and quoting 

obligations. See Options 2, Sections 4 and 5. 18 15 U.S.C. 78s(b)(3)(A)(ii). 

19 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

that subscribe to SQF and SQF Purge 

Ports to quote on the Exchange. Market 

Makers are the only market participants 

that are assessed SQF Port and SQF 

Purge Port fees because they are the 

only market participants that are 

permitted to quote on the Exchange.17

These liquidity providers are critical 

market participants in that they are the 

only market participants that provide 

liquidity to the Exchange on a 

continuous basis. SQF Ports and SQF 

Purge Ports are only utilized in a Market 

Maker’s assigned options series. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed pricing changes will 

impose any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Intra-Market Competition 

The Exchange believes that the 

proposed fees do not put any market 

participants at a relative disadvantage 

compared to other market participants. 

As noted above, the Exchange would 

apply the proposed 10% increase to the 

SQF Port and SQF Purge Port fees to all 

Market Makers uniformly. Market 

Makers are the only market participants 

that are assessed SQF Port and SQF 

Purge Port fees because they are the 

only market participants that are 

permitted to quote on the Exchange. 

These liquidity providers are critical 

market participants in that they are the 

only market participants that provide 

liquidity to the Exchange on a 

continuous basis. SQF Ports and SQF 

Purge Ports are only utilized in a Market 

Maker’s assigned options series. 

Intermarket Competition 

The Exchange believes that the 

proposed fees do not impose a burden 

on intermarket competition or on other 

SROs that is not necessary or 

appropriate. In determining the 

proposed fees, the Exchange utilized an 

objective and stable metric with limited 

volatility. Utilizing Data PPI over a 

specified period of time is a reasonable 

means of recouping the Exchange’s 

investment in maintaining and 

enhancing its port offerings such as the 

SQF and SQF Purge Ports. The 

Exchange believes utilizing Data PPI, a 

tailored measure of inflation, to increase 

the fees for the SQF Port and SQF Purge 

Port, to recoup the Exchange’s 

investment in maintaining and 

enhancing such offerings would not 

impose a burden on intermarket 

competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.18

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is: (i) necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

ISE–2024–51 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–ISE–2024–51. 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 (https://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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–ISE–2024–51 and should be 

submitted on or before November 28, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–25835 Filed 11–6–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101503; File No. SR– 

NYSEARCA–2024–88] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To List and Trade Shares 

of the FM Compounders Equity ETF 

Under Rule 8.900–E (Managed Portfolio 

Shares) 

November 1, 2024. 

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 October 

24, 2024, NYSE Arca, Inc. (‘‘NYSE 

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

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 


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88318 Federal Register / Vol. 89, No. 216 / Thursday, November 7, 2024 / Notices 

4Rule 8.900–E(c)(1) provides that the term 

‘‘Managed Portfolio Share’’ means a security that (a) 

represents an interest in an investment company 

registered under the Investment Company Act of 

1940 (‘‘Investment Company’’) organized as an 

open-end management investment company that 

invests in a portfolio of securities selected by the 

Investment Company’s investment adviser 

consistent with the Investment Company’s 

investment objectives and policies; (b) is issued in 

a Creation Unit, or multiples thereof, in return for 

a designated portfolio of instruments (and/or an 

amount of cash) with a value equal to the next 

determined net asset value and delivered to the 

Authorized Participant (as defined in the 

Investment Company’s Form N–1A filed with the 

Commission) through a Confidential Account; (c) 

when aggregated into a Redemption Unit, or 

multiples thereof, may be redeemed for a 

designated portfolio of instruments (and/or an 

amount of cash) with a value equal to the next 

determined net asset value delivered to the 

Confidential Account for the benefit of the 

Authorized Participant; and (d) the portfolio 

holdings for which are disclosed within at least 60 

days following the end of every fiscal quarter. 

5See Securities Exchange Act Release Nos. 89663 

(August 25, 2020), 85 FR 53868 (August 31, 2020) 

(SR–NYSEArca–2020–48) (Order Approving a 

Proposed Rule Change, as Modified by Amendment 

No. 1, To List and Trade Shares of Gabelli ETFs 

Under Rule 8.900–E, Managed Portfolio Shares); 

90528 (November 30, 2020), 85 FR 78389 

(December 4, 2020) (SR–NYSEArca–2020–80) 

(Order Approving a Proposed Rule Change, as 

Modified by Amendment No. 2, To List and Trade 

Shares of Alger Mid Cap 40 ETF and Alger 25 ETF 

Under Rule 8.900–E); and 90683 (December 16, 

2020), 85 FR 83665 (December 22, 2020) (SR– 

NYSEArca–2020–94) (Order Approving a Proposed 

Rule Change, as Modified by Amendments No. 1 

and No. 2, To List and Trade Shares of the 

AdvisorShares Q Portfolio Blended Allocation ETF 

and AdvisorShares Q Dynamic Growth ETF Under 

NYSE Arca Rule 8.900–E). 

6See Securities Exchange Act Release Nos. 92349 

(July 19, 2021), 86 FR 39084 (July 23, 2021) (SR– 

NYSEArca–2021–54) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

to List and Trade Shares of the Cambiar Large Cap 

ETF, Cambiar Small Cap ETF and Cambiar SMID 

ETF); 94569 (March 31, 2022), 87 FR 19990 (April 

6, 2022) (SR–NYSEARCA–2022–16) (Notice of 

Filing and Immediate Effectiveness of Proposed 

Rule Change to List and Trade Shares of the 

DoubleLine Shiller CAPE U.S. Equities ETF under 

Rule 8.900–E (Managed Portfolio Shares)); and 

97029 (March 2, 2023), 88 FR 14419 (March 8, 

2023) (SR–NYSEARCA–2023–16) (Notice of Filing 

and Immediate Effectiveness of Proposed Rule 

Change To List and Trade Shares of Alger 

Weatherbie Enduring Growth ETF). 

7The Trust is registered under the Investment 

Company Act of 1940 (the ‘‘1940 Act’’). On August 

9, 2024, the Trust filed a registration statement on 

Form N–1A under the Securities Act of 1933 (the 

‘‘1933 Act’’) and the 1940 Act for the Fund (File 

No.811–23066) (the ‘‘Registration Statement’’). The 

Commission issued an order granting exemptive 

relief to the Trust (‘‘Exemptive Order’’) under the 

1940 Act on March 22, 2022 (Investment Company 

Act Release No. 34537). The Exemptive Order was 

granted in response to the Trust’s application for 

exemptive relief (the ‘‘Exemptive Application’’) 

(File No. 812–15282). The description of the 

operation of the Trust and the Fund herein is based, 

in part, on the Registration Statement. The 

Exchange will not commence trading in Shares of 

the Fund until this proposed rule change is 

operative. 

8Rule 8.900–E(c)(5) provides that the term 

‘‘Creation Basket’’ means, on any given business 

day, the names and quantities of the specified 

instruments (and/or an amount of cash) that are 

required for an AP Representative to deposit inkind on behalf of an Authorized Participant in 

exchange for a Creation Unit and the names and 

quantities of the specified instruments (and/or an 

amount of cash) that will be transferred in-kind to 

an AP Representative on behalf of an Authorized 

Participant in exchange for a Redemption Unit, 

which will be identical and will be transmitted to 

each AP Representative before the commencement 

of trading. 

9An 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 will be 

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 

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 following under Rule 

8.900–E (Managed Portfolio Shares): FM 

Compounders Equity ETF. The 

proposed rule change is available on the 

Exchange’s website at www.nyse.com, at 

the principal office of the Exchange, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

NYSE Arca Rule 8.900–E permits the 

listing and trading, or trading pursuant 

to unlisted trading privileges, of 

Managed Portfolio Shares, which are 

securities issued by an actively managed 

open-end investment management 

company.4 Rule 8.900–E(b)(1) requires 

the Exchange to file separate proposals 

under Section 19(b) of the Act before 

listing and trading any series of 

Managed Portfolio Shares on the 

Exchange. Therefore, the Exchange is 

submitting this proposal in order to list 

and trade Managed Portfolio Shares of 

the FM Compounders Equity ETF (the 

‘‘Fund’’) under Rule 8.900–E. 

The Commission has previously 

approved 5 and noticed for immediate 

effectiveness 6 listing and trading on the 

Exchange of Managed Portfolio Shares 

under NYSE Arca Rule 8.900–E. 

Description of the Fund and the Trust 

The shares of the Fund (the ‘‘Shares’’) 

will be issued by Northern Lights Fund 

Trust IV (the ‘‘Trust’’), a statutory trust 

organized under the laws of the state of 

Delaware and registered with the 

Commission as an open-end 

management investment company.7 The 

investment adviser to the Fund will be 

First Manhattan Co. LLC (the 

‘‘Adviser’’). The sub-adviser to the Fund 

will be Vident Advisory, LLC dba 

Vident Asset Management (the ‘‘SubAdviser’’). Northern Lights Distributors, 

LLC (the ‘‘Distributor’’) will serve as the 

distributor for the Fund’s Shares. All 

statements and representations made in 

this filing regarding (a) the description 

of the portfolio or reference assets, (b) 

limitations on portfolio holdings or 

reference assets, or (c) the applicability 

of Exchange rules shall constitute 

continued listing requirements for 

listing the Shares on the Exchange, as 

provided under Rule 8.900–E(b)(1). 

Rule 8.900–E(b)(4) provides that, if 

the investment adviser to the 

Investment Company issuing Managed 

Portfolio Shares is registered as a 

broker-dealer or is affiliated with a 

broker-dealer, such investment adviser 

will erect and maintain a ‘‘fire wall’’ 

between the investment adviser and 

personnel of the broker-dealer or brokerdealer affiliate, as applicable, with 

respect to access to information 

concerning the composition of and/or 

changes to such Investment Company 

portfolio and/or the Creation Basket.8

Any person related to the investment 

adviser or Investment Company who 

makes decisions pertaining to the 

Investment Company’s portfolio 

composition or has access to 

information regarding the Investment 

Company’s portfolio composition or 

changes thereto or the Creation Basket 

must be subject to procedures designed 

to prevent the use and dissemination of 

material non-public information 

regarding the applicable Investment 

Company portfolio or changes thereto or 

the Creation Basket. 

Rule 8.900–E(b)(4) is similar to 

Commentary .03(a)(i) and (iii) to Rule 

5.2–E(j)(3); however, Commentary .03(a) 

in connection with the establishment of 

a ‘‘fire wall’’ between the investment 

adviser and the broker-dealer reflects 

the applicable open-end fund’s 

portfolio, not an underlying benchmark 

index, as is the case with index-based 

funds.9 Rule 8.900–E(b)(4) is also 


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Federal Register / Vol. 89, No. 216 / Thursday, November 7, 2024 / Notices 88319 

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 

violations, 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. The Fund will also 

be required to comply with Exchange rules relating 

to disclosure, including Rule 5.3–E(i). 

10The Exchange represents that, for initial and 

continued listing, the Fund will be in compliance 

with Rule 10A–3 under the Act. See 17 CFR 

240.10A–3. 11Pursuant to the Exemptive Order, the only 

permissible investments for the Fund are the 

following that trade on a U.S. exchange 

contemporaneously with Shares of the Fund: 

exchange-traded funds (‘‘ETFs’’), exchange-traded 

notes, exchange-listed common stocks, exchangetraded preferred stocks, exchange-traded American 

Depositary Receipts, exchange-traded real estate 

investment trusts, exchange-traded commodity 

pools, exchange-traded metal trusts, exchangetraded currency trusts, and exchange-traded futures 

for which the reference asset is one in which the 

Fund may invest directly, in the case of an index 

future traded on a U.S. exchange, is based on an 

index, the components of which are a type of asset 

in which the Fund could invest directly, as well as 

cash and cash equivalents (which are short-term 

U.S. Treasury securities, government money market 

funds, and repurchase agreements). All of the 

equity instruments or futures held by the Fund will 

be traded on an exchange that is a member of the 

Intermarket Surveillance Group (‘‘ISG’’) or affiliated 

with a member of ISG or with which the Exchange 

has in place a comprehensive surveillance sharing 

agreement. 

similar to Commentary .06 to Rule 

8.600–E related to Managed Fund 

Shares, except that Rule 8.900–E(b)(4) 

relates to establishment and 

maintenance of a ‘‘fire wall’’ between 

the investment adviser and personnel of 

the broker-dealer or broker-dealer 

affiliate, as applicable, with respect to 

an Investment Company’s portfolio and 

Creation Basket, and not just to the 

underlying portfolio, as is the case with 

Managed Fund Shares. Neither the 

Adviser nor the Sub-Adviser is 

registered as a broker-dealer. The SubAdviser is not affiliated with a brokerdealer. The Adviser, however, is 

affiliated with a broker-dealer. The 

Adviser has implemented and will 

maintain a ‘‘fire wall’’ with respect to 

such broker-dealer affiliate regarding 

access to information concerning the 

composition of and/or changes to the 

Fund’s portfolio and/or Creation Basket. 

In the event (a) the Adviser or the 

Sub-Adviser becomes registered as a 

broker-dealer or becomes 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 personnel of the broker-dealer 

or broker-dealer affiliate regarding 

access to information concerning the 

composition and/or changes to the 

portfolio and/or Creation Basket. Any 

person related to the Adviser, the SubAdviser or the Trust who makes 

decisions pertaining to the Fund’s 

portfolio composition or that has access 

to information regarding the Fund’s 

portfolio composition or that has access 

to information regarding the Fund’s 

portfolio or changes thereto or the 

Creation Basket will be subject to 

procedures designed to prevent the use 

and dissemination of material nonpublic information regarding such 

portfolio or changes thereto and the 

Creation Basket. 

Further, Rule 8.900–E(b)(5) requires 

that any person or entity, including an 

AP Representative (as defined below), 

custodian, Reporting Authority, 

distributor, or administrator, who has 

access to non-public information 

regarding the Investment Company’s 

portfolio composition or changes thereto 

or the Creation Basket, must be subject 

to procedures reasonably designed to 

prevent the use and dissemination of 

material non-public information 

regarding the applicable Investment 

Company portfolio or changes thereto or 

the Creation Basket. Moreover, if any 

such person or entity is registered as a 

broker-dealer or affiliated with a brokerdealer, such person or entity will erect 

and maintain a ‘‘fire wall’’ between the 

person or entity and the broker-dealer 

with respect to access to information 

concerning the composition and/or 

changes to such Investment Company 

portfolio or Creation Basket. 

Description of the Fund 10

The Fund’s holdings will conform to 

the permissible investments as set forth 

in the Exemptive Application and 

Exemptive Order, and the holdings will 

be consistent with all requirements in 

the Exemptive Application and 

Exemptive Order.11

According to the Registration 

Statement, the Fund’s primary objective 

is to seek long-term capital appreciation. 

The Fund will seek to invest in 25–35 

U.S. exchange-traded common stocks of 

various market capitalization. From 

time to time, the Fund may hold a 

greater number of stocks. 

Under normal circumstances, the 

Fund will invest at least 80% of its net 

assets in equity securities. According to 

the Registration Statement, the Adviser 

and/or the Sub-Adviser focuses on 

companies that it expects to generate 

free cash flow and that it believes to 

possess durable competitive advantages, 

earn higher than average returns on 

capital, and have opportunities to 

reinvest excess cash flows at aboveaverage rates of return. The Adviser 

and/or the Sub-Adviser seeks 

investments that may include: (1) 

compounders (highly resilient 

businesses that reliably generate and 

compound free cash flow), (2) 

undervalued businesses (companies, 

often out of favor, that the Adviser and/ 

or the Sub-Adviser believes are 

undervalued relative to their earnings 

power, cash flow, and/or tangible 

assets), and/or (3) special situations 

(companies undergoing restructuring, 

refinancing, management changes, and/ 

or comparable corporate actions that 

cause temporary disconnects between 

the share price and what the Adviser 

and/or the Sub-Adviser believes to be 

the company’s intrinsic value). 

According to the Registration 

Statement, in effecting its investment 

strategy, once an investment 

opportunity is identified, the Adviser 

and/or the Sub-Adviser will seek to 

purchase the shares at valuations that 

are favorable relative to the quality of 

the company’s business, its earnings, 

and the Adviser’s and/or the SubAdviser’s expectation for long-term 

growth in value-per-share. Generally, 

the Fund will focus on making longterm investments. However, the Adviser 

and/or the Sub-Adviser may sell a Fund 

holding when: (1) the holding no longer 

meets the Adviser’s and/or the SubAdviser’s investment criteria or the 

requirements of the Exemptive Order or 

its Exchange listing requirements; (2) 

the holding’s long-term earnings and 

reinvestment prospects deteriorate; (3) 

the Adviser and/or the Sub-Adviser 

loses confidence in the leadership and 

governance of the holding; (4) a new 

holding is judged to be comparatively 

more attractive than a current position; 

and/or (5) the valuation of a holding 

appears excessively higher than the 

Adviser’s and/or the Sub-Adviser’s 

estimates of long-term value. 

According to the Registration 

Statement, the Fund is a non-diversified 

investment company, which means that 

a meaningful portion of its assets may 

be invested in the securities of a smaller 

number of companies and/or a more 

limited number of sectors. 

The Fund is a non-transparent, 

actively managed ETF that does not seek 

to replicate the performance of a 

specified index. 


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12See note 11, supra. 

13Rule 8.900–E(c)(6) provides that the term 

‘‘Creation Unit’’ means a specified minimum 

number of Managed Portfolio Shares issued by an 

Investment Company at the request of an 

Authorized Participant in return for a designated 

portfolio of instruments and/or cash. Rule 8.900– 

E(c)(7) provides that the term ‘‘Redemption Unit’’ 

means a specified minimum number of Managed 

Portfolio Shares that may be redeemed to an 

Investment Company at the request of an 

Authorized Participant in return for a portfolio of 

instruments and/or cash. For purposes of this filing, 

the terms ‘‘Creation Unit’’ means either a Creation 

Unit as defined in Rules 8.900–E(c)(6) or a 

Redemption Unit as defined in Rule 8.900–E(c)(7). 

14Rule 8.900–E(c)(4) provides that the term 

‘‘Confidential Account’’ means an account owned 

by an Authorized Participant and held with an AP 

Representative on behalf of the Authorized 

Participant. The account will be established and 

governed by contractual agreement between the AP 

Representative and the Authorized Participant 

solely for the purposes of creation and redemption, 

while keeping confidential the Creation Basket 

constituents of each series of Managed Portfolio 

Shares, including from the Authorized Participant. 

The books and records of the Confidential Account 

will be maintained by the AP Representative on 

behalf of the Authorized Participant. 

15Rule 8.900–E(c)(3) provides that the term ‘‘AP 

Representative’’ means an unaffiliated brokerdealer, with which an Authorized Participant has 

signed an agreement to establish a Confidential 

Account for the benefit of such Authorized 

Participant, that will deliver or receive, on behalf 

of the Authorized Participant, all consideration to 

or from the Investment Company in a creation or 

redemption. An AP Representative will not be 

permitted to disclose the Creation Basket to any 

person, including the Authorized Participants. 

According to the Registration 

Statement, the Fund will invest in cash 

(and cash equivalents) when the Fund is 

unable to find enough attractive longterm investments to meet its investment 

objective. 

Investment Restrictions 

The Fund’s holdings will be 

consistent with all requirements 

described in the Exemptive Application 

and Exemptive Order.12

The Fund’s investments, including 

derivatives, will be consistent with its 

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 any securities benchmark index. 

As noted above, the Fund will not seek 

to replicate the performance of a 

specified index. 

Creations and Redemptions of Shares 

Creations and redemptions of Shares 

will take place as described in Rule 

8.900–E. Specifically, in connection 

with the creation and redemption of 

Creation Units 13 the delivery or receipt 

of any portfolio securities in-kind will 

be required to be effected through a 

separate confidential brokerage account 

(a ‘‘Confidential Account’’).14 An 

Authorized Participant (‘‘AP’’), as 

defined in the applicable Form N–1A 

filed with the Commission, will sign an 

agreement with an AP Representative 15

establishing the Confidential Account 

for the benefit of the AP. AP 

Representatives will be broker-dealers. 

An AP must be a participant in the 

Continuous Net Settlement System of 

the National Securities Clearing 

Corporation (‘‘NSCC’’) or a participant 

in the Depository Trust Company 

(‘‘DTC’’) and must have executed an 

authorized participant agreement 

(‘‘Participant Agreement’’) with the 

Distributor with respect to the creation 

and redemption of Creation Units and 

formed a Confidential Account for its 

benefit in accordance with the terms of 

the Participant Agreement. For purposes 

of creations or redemptions, all 

transactions will be effected through the 

respective AP’s Confidential Account, 

for the benefit of the AP, without 

disclosing the identity of such securities 

to the AP. 

Each business day, the Fund’s 

custodian will transmit the composition 

of the Fund’s Creation Basket (as 

described below) to each AP 

Representative. This information will 

permit an AP that has established a 

Confidential Account with an AP 

Representative to transact in the 

underlying securities of the Creation 

Basket through their AP 

Representatives, enabling them to 

engage in in-kind creation or 

redemption activity without knowing 

the identity or weighting of those 

securities. Fund Shares will be issued 

and redeemed in Creation Units of 5,000 

Shares. The size of a Creation Unit is 

subject to change. The Fund will offer 

and redeem Creation Units on a 

continuous basis at the net asset value 

(‘‘NAV’’) per Share next determined 

after receipt of an order in proper form. 

The Fund’s NAV per Share will be 

determined as of the closing time of the 

regular trading session on the Exchange 

(ordinarily, 4:00 p.m. E.T.) on each day 

that the Exchange is open. 

In order to keep costs low and permit 

the Fund to be as fully invested as 

possible, Shares will be purchased and 

redeemed in Creation Units and 

principally in-kind for securities or in 

cash for the value of such securities. 

The Fund will issue Creation Units 

principally in exchange for (i) the inkind deposit of a designated portfolio of 

securities (the ‘‘Deposit Securities’’), 

which for each Creation Unit will 

constitute a substantial replication, or a 

representation, of the securities 

included in the Fund’s portfolio, and (ii) 

if applicable, an amount of cash (the 

‘‘Cash Component’’). Together, the 

Deposit Securities and the Cash 

Component, if applicable, constitute the 

‘‘Fund Deposit.’’ The Deposit Securities 

and the securities that will be delivered 

in an in-kind transfer in a redemption 

(the ‘‘Fund Securities’’) will be 

identical. The Cash Component is an 

amount equal to the difference between 

the NAV of the Shares of the Fund (per 

Creation Unit) and the market value of 

the Deposit Securities. The Cash 

Component serves the function of 

compensating for any differences 

between the NAV per Creation Unit and 

the market value of the Deposit 

Securities. 

On each business day, prior to the 

opening of business on the Exchange 

(ordinarily, 9:30 a.m. E.T.), the 

custodian will make available through 

NSCC the list of the company names 

and the required number of shares of 

each Deposit Security, as applicable, 

and Cash Component, as applicable, to 

be included in the current Fund Deposit 

(based on information at the end of the 

previous business day) for the Fund. 

The Deposit Securities, as applicable, 

and Cash Component, as applicable, 

announced are applicable to purchases 

of Creation Units until the nextannounced composition of the Fund 

Deposit. When full or partial cash 

purchases of Creation Units are 

available or specified for the Fund, they 

will be effected in essentially the same 

manner as in-kind purchases thereof. 

On any given business day, the names 

and quantities of the instruments that 

constitute the Deposit Securities and the 

names and quantities of the instruments 

that constitute the Fund Securities will 

be identical to and will correspond pro 

rata to the positions in the Fund’s 

portfolio (including cash positions), and 

these instruments may be referred to, in 

the case of either a purchase or a 

redemption, as the ‘‘Creation Basket.’’ 

Placement of Purchase Orders 

The Fund will issue Shares through 

the Distributor on a continuous basis at 

NAV. The Exchange represents that the 

issuance of Shares will operate in a 

manner substantially similar to that of 

other ETFs. The Fund will issue Shares 

only at the NAV per Share next 

determined after an order in proper 

form is received. 

A creation transaction, which is 

subject to acceptance by the Distributor, 

generally begins when an AP enters into 

an irrevocable creation order with the 

Fund and delivers to the AP 

Representative the cash necessary to 

purchase the designated portfolio of 


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16To the extent that the Fund allows creations or 

redemptions to be conducted in cash, such 

transactions will be effected in the same manner for 

all APs transacting in cash. 

17The Bid/Ask Price of the Fund’s Shares is 

determined using the mid-point between the 

current national best bid and offer at the time of 

calculation of the Fund’s NAV. The records relating 

to Bid/Ask Prices will be retained by the Fund or 

its service providers. 

securities that constitute the Creation 

Basket in the Confidential Account. The 

AP Representative then purchases and 

delivers the designated portfolio of 

securities to the Fund’s custodian, and 

the Fund then instructs the custodian to 

exchange such portfolio of securities for 

a specified number of Shares in volumes 

of Creation Units. The AP 

Representative will seek to assemble the 

shares of the Creation Basket in a 

manner that will not reveal its 

composition. The Distributor will 

furnish acknowledgements to those 

placing such orders that the orders have 

been accepted, but the Distributor may 

reject any order which is not submitted 

in proper form, as described in the 

Fund’s prospectus or Statement of 

Additional Information (‘‘SAI’’). 

The NAV of the Fund is expected to 

be determined once each business day 

as of the close of the regular trading 

session on the Exchange (ordinarily, 

4:00 p.m. E.T.). An AP must submit an 

irrevocable purchase order by the time 

set forth in the Participant Agreement 

and/or applicable order form, on any 

business day in order to receive that 

business day’s NAV. On days when the 

Exchange closes or is anticipated to 

close earlier than normal, the Fund may 

require purchase orders to be placed 

earlier in the day. The date on which an 

order to purchase (or redeem, as further 

described below) Creation Units is 

received and accepted is referred to as 

the ‘‘Order Placement Date.’’ 

Purchases of Shares will be settled inkind and/or in cash for an amount equal 

to the applicable NAV per Share 

purchased plus applicable transaction 

fees.16 The Fund may permit full or 

partial cash purchases of Creation Units 

of the Fund under the circumstances 

described above. When full or partial 

cash purchases of Creation Units are 

available or specified for the Fund, they 

will be effected in essentially the same 

manner as in-kind purchases thereof. In 

the case of a full or partial cash 

purchase, the AP, through the AP 

Representative, must pay the cash 

equivalent of the Deposit Securities it 

would otherwise provide through an inkind purchase, plus the same Cash 

Component required to be paid in 

connection with an in-kind purchase. 

Authorized Participant Redemption 

The Shares may be redeemed to the 

Fund in Creation Unit size or multiples 

thereof as described below. Redemption 

orders of Creation Units must be placed 

by or through an AP. Creation Units of 

the Fund will be redeemable at their 

NAV per Share next determined after 

receipt of a redemption request in 

proper form. Orders to redeem Creation 

Units must be submitted in proper form 

prior to the time as set forth in the 

Participant Agreement. 

Each business day, prior to the 

opening of trading on the Exchange 

(currently 9:30 a.m., Eastern time), the 

custodian will transmit to each AP 

Representative the identity and the 

required number of each Fund Security 

and, as applicable and under the 

circumstances described below, the cash 

value of the Fund Securities that will be 

applicable to redemption requests for 

that day, and the amount of the Cash 

Redemption Amount (as defined below, 

if any). A redemption transaction 

generally begins when an AP enters into 

an irrevocable redemption order with 

the Fund. The Fund then instructs the 

custodian to deliver a designated 

portfolio of securities that constitute the 

Creation Basket to the appropriate AP 

Representative’s Confidential Account 

in exchange for the Fund Shares in 

volumes of Creation Units being 

redeemed. Orders to redeem Creation 

Units must submitted in proper form 

prior to the time as set forth in the 

Participant Agreement. 

Redemption proceeds for a Creation 

Unit are paid in-kind, in cash, or 

combination thereof, as determined by 

the Trust. With respect to in-kind 

redemptions of a Fund, redemption 

proceeds for a Creation Unit will consist 

of Fund Securities, as announced by the 

custodian on the business day of the 

request for redemption received in 

proper form plus cash in an amount 

equal to the difference between the NAV 

of the Shares of the Fund being 

redeemed, as next determined after a 

receipt of a request in proper form, and 

the value of Fund Securities (the ‘‘Cash 

Redemption Amount’’), less any fixed 

redemption transaction fee as set forth 

below and any applicable additional 

variable charge as set forth below. In the 

event that the Fund’s securities have a 

value greater than the NAV of the 

Shares of the Fund, the Cash 

Redemption Amount equal to the 

differential is required to be made by 

the AP to the Fund. The Participant 

Agreement signed by each AP will 

require establishment of a Confidential 

Account to receive distributions of 

securities in-kind upon redemption. 

Each AP will be required to open a 

Confidential Account with an AP 

Representative in order to facilitate 

orderly processing of redemptions. 

Net Asset Value 

The NAV will be calculated for the 

Shares of the Fund on each business 

day. The Fund’s NAV is determined as 

of the close of regular trading on the 

New York Stock Exchange, normally 

4:00 p.m., E.T. The NAV of the Fund’s 

Shares is determined by adding the total 

value of its assets, subtracting its 

liabilities and then dividing the result 

by the number of Shares outstanding. 

In computing the Fund’s NAV, the 

Fund’s securities holdings are valued 

based on their last readily available 

market price. Securities for which such 

information is readily available are 

generally valued at the last reported 

sales price, the official closing price as 

reported by an independent pricing 

service on the primary market or 

exchange on which they are traded, or, 

in the absence of reported sales, at the 

mean between the current bid and ask 

prices on such exchange. If market 

prices are unavailable or the Fund 

thinks that they are unreliable, or when 

the value of a security has been 

materially affected by events occurring 

after the relevant market closes, the 

Fund will price those securities at fair 

value as determined in good faith using 

methods approved by the Fund’s Board. 

More information about the valuation 

of the Fund’s holdings can be found in 

the SAI. 

Information regarding the Fund’s 

NAV and how often Shares of the Fund 

traded at a price above (i.e., at a 

premium) or below (i.e., at a discount) 

the Fund’s NAV will be available on the 

Fund’s website 

(www.firstmanhattan.com). 

Availability of Information 

The Fund’s website, 

(www.firstmanhattan.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 the prior business day’s NAV, 

market closing price or mid-point of the 

bid/ask spread at the time of calculation 

of such NAV (the ‘‘Bid/Ask Price’’),17

and a calculation of the premium and 

discount of the market closing price or 

Bid/Ask Price against the NAV. The 

website and information will be 

publicly available at no charge. 

Form N–PORT requires reporting of a 

Fund’s complete portfolio holdings on a 

position-by-position basis on a quarterly 


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18Rule 8.900–E(c)(2) provides that the term 

‘‘Verified Intraday Indicative Value’’ is the 

indicative value of a Managed Portfolio Share based 

on all of the holdings of a series of Managed 

Portfolio Shares as of the close of business on the 

prior business day and, for corporate actions, based 

on the applicable holdings as of the opening of 

business on the current business day, priced and 

disseminated in one second intervals during the 

Core Trading Session by the Reporting Authority. 

19Rule 8.900–E(c)(8) provides that the term 

‘‘Reporting Authority’’ in respect of a particular 

series of Managed Portfolio Shares means the 

Exchange, an institution, or a reporting service 

designated by the Exchange or by the exchange that 

lists a particular series of Managed Portfolio Shares 

(if the Exchange is trading such series pursuant to 

unlisted trading privileges), as the official source for 

calculating and reporting information relating to 

such series, including, but not limited to, the NAV, 

the VIIV, or other information relating to the 

issuance, redemption, or trading of Managed 

Portfolio Shares. A series of Managed Portfolio 

Shares may have more than one Reporting 

Authority, each having different functions. 20See Rule 7.12–E. 

21The Exemptive Application provides that the 

Investment Company or their agent will request that 

the Exchange halt trading in the applicable series 

of Managed Portfolio Shares where: (i) the intraday 

indicative values calculated by the calculation 

engines differ by more than 25 basis points for 60 

seconds in connection with pricing of the VIIV; or 

(ii) holdings representing 10% or more of a series 

of Managed Portfolio Shares’ portfolio have become 

subject to a trading halt or otherwise do not have 

readily available market quotations. Any such 

requests will be one of many factors considered in 

order to determine whether to halt trading in a 

series of Managed Portfolio Shares and the 

Exchange retains sole discretion in determining 

whether trading should be halted. As provided in 

the Exemptive Application, each series of Managed 

Portfolio Shares would employ a pricing 

verification agent to continuously compare two 

intraday indicative values during regular trading 

hours in order to ensure the accuracy of the VIIV. 

basis within 60 days after fiscal quarter 

end. Investors can obtain a Fund’s SAI, 

its shareholder reports, its Form N–CSR, 

filed twice a year, and its Form N–CEN, 

filed annually. The Fund’s SAI and 

shareholder reports are available free 

upon request from the Fund, and those 

documents and the Form N–PORT, 

Form N–CSR, and Form N–CEN may be 

viewed onscreen or downloaded from 

the Commission’s website at 

www.sec.gov. 

Information regarding market price 

and trading volume of the Shares will be 

continually available to market 

participants 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 will 

be available via the Consolidated Tape 

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

addition, the Verified Intraday 

Indicative Value (‘‘VIIV’’), as defined in 

Rule 8.900–E(c)(2),18 will be widely 

disseminated by the Reporting 

Authority 19 and/or one or more major 

market data vendors in one second 

intervals during the Exchange’s Core 

Trading Session. 

Dissemination of the VIIV 

With respect to trading of the Shares, 

the ability of market participants to buy 

and sell Shares at prices near the VIIV 

is dependent upon their assessment that 

the VIIV is a reliable, indicative realtime value for the Fund’s underlying 

holdings. Market participants are 

expected to accept the VIIV as a reliable, 

indicative real-time value because (1) 

the VIIV will be calculated and 

disseminated based on the Fund’s actual 

portfolio holdings, (2) the securities in 

which the Fund plans to invest are 

generally highly liquid and actively 

traded and trade at the same time as the 

Fund and therefore generally have 

accurate real time pricing available, and 

(3) market participants will have a daily 

opportunity to evaluate whether the 

VIIV at or near the close of trading is 

indeed predictive of the actual NAV. 

The VIIV will be widely disseminated 

by the Reporting Authority and/or by 

one or more major market data vendors 

in one second intervals during the Core 

Trading Session and will be 

disseminated to all market participants 

at the same time. The VIIV is based on 

the current market value of the 

securities in the Fund’s portfolio that 

day. The methodology for calculating 

the Fund’s VIIV will be available on the 

Fund’s website. The VIIV is intended to 

provide investors and other market 

participants with a highly correlated per 

Share value of the underlying portfolio 

that can be compared to the current 

market price. Therefore, under normal 

circumstances the VIIV would be 

effectively a near real time 

approximation of the Fund’s NAV, 

which will be computed only once a 

day, and is available free of charge from 

one or more market data vendors. 

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.20 Trading in Shares of the 

Fund will be halted if the circuit breaker 

parameters in 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 Shares will 

be subject to Rule 8.900–E(d)(2)(C), 

which sets forth circumstances under 

which Shares of the Fund will be 

halted. 

Specifically, Rule 8.900–E(d)(2)(C)(i) 

provides that the Exchange may 

consider all relevant factors in 

exercising its discretion to halt trading 

in a series of Managed Portfolio Shares. 

Trading may be halted because of 

market conditions or for reasons that, in 

the view of the Exchange, make trading 

in the series of Managed Portfolio 

Shares inadvisable. These may include: 

(a) the extent to which trading is not 

occurring in the securities and/or the 

financial instruments composing the 

portfolio; or (b) whether other unusual 

conditions or circumstances detrimental 

to the maintenance of a fair and orderly 

market are present.21

Rule 8.900–E(d)(2)(C)(ii) provides 

that, if the Exchange becomes aware 

that: (i) the VIIV of a series of Managed 

Portfolio Shares is not being calculated 

or disseminated in one second intervals, 

as required; (ii) the NAV with respect to 

a series of Managed Portfolio Shares is 

not disseminated to all market 

participants at the same time; (iii) the 

holdings of a series of Managed 

Portfolio Shares are not made available 

on at least a quarterly basis as required 

under the 1940 Act; or (iv) such 

holdings are not made available to all 

market participants at the same time 

(except as otherwise permitted under 

the currently applicable exemptive 

order or no-action relief granted by the 

Commission or Commission staff to the 

Investment Company with respect to the 

series of Managed Portfolio Shares), it 

will halt trading in such series until 

such time as the VIIV, the NAV, or the 

holdings are available, as required. 

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 Exchange in all trading sessions in 

accordance with Rule 7.34–E(a). As 

provided in 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. A minimum of 50,000 Shares 

of the Fund will be outstanding at the 

commencement of trading on the 

Exchange. 

The Shares will conform to the initial 

and continued listing criteria under 

Rule 8.900–E, as well as all terms in the 

Exemptive Order. The Exchange will 

obtain a representation from the issuer 


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22 15 U.S.C. 78f(b). 

23 15 U.S.C. 78f(b)(5). 

of the Shares of the Fund that the NAV 

per Share of the Fund will be calculated 

daily and will be made available to all 

market participants at the same time. 

Surveillance 

The Exchange believes that its 

surveillance procedures are adequate to 

properly monitor the trading of Shares 

on the Exchange during all trading 

sessions and to deter and detect 

violations of Exchange rules and the 

applicable federal securities laws. 

Trading of Shares through the Exchange 

will be subject to the Exchange’s 

surveillance procedures for derivative 

products. As part of these surveillance 

procedures and consistent with Rule 

8.900–E(b)(3) and 8.900–E(d)(2)(B), the 

Adviser will upon request make 

available to the Exchange and/or the 

Financial Industry Regulatory Authority 

(‘‘FINRA’’), on behalf of the Exchange, 

the daily portfolio holdings of the Fund. 

The issuer of the Shares of the Fund 

will be required to represent to the 

Exchange that it will advise 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 surveil 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 

Exchange Rule 5.5–E(m). 

FINRA, on behalf of the Exchange, or 

the regulatory staff of the Exchange, or 

both, will communicate as needed 

regarding trading in the Shares and 

certain exchange-traded instruments 

with other markets and other entities 

that are members of the Intermarket 

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

on behalf of the Exchange, or the 

regulatory staff of the Exchange, or both, 

may obtain trading information 

regarding trading such securities from 

such markets and other entities. In 

addition, the Exchange may obtain 

information regarding trading in the 

Shares and certain exchange-traded 

instruments from markets and other 

entities that are members of ISG or with 

which the Exchange has in place a 

comprehensive surveillance sharing 

agreement. 

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,22 in general, and 

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

of the Act,23 in particular, in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. 

The Exchange believes that this 

proposed rule change is designed to 

prevent fraudulent and manipulative 

acts and practices in that the Fund 

would meet each of the rules relating to 

listing and trading of Managed Portfolio 

Shares. To the extent that the Fund is 

not in compliance with such rules, the 

Exchange would either prevent the 

Fund from listing and trading on the 

Exchange or commence delisting 

procedures under Rule 8.900–E(d)(2)(B). 

Specifically, the Exchange would 

consider the suspension of trading, and 

commence delisting proceedings under 

Rule 8.900–E(d)(2)(B), of the Fund 

under any of the following 

circumstances: (a) if, following the 

initial twelve-month period after 

commencement of trading on the 

Exchange, there are fewer than 50 

beneficial holders of the Fund; (b) if the 

Exchange has halted trading in the Fund 

because the VIIV is interrupted pursuant 

to Rule 8.900–E(d)(2)(C)(ii) and such 

interruption persists past the trading 

day in which it occurred or is no longer 

available; (c) if the Exchange has halted 

trading in the Fund because the net 

asset value with respect to such Fund is 

not disseminated to all market 

participants at the same time, the 

holdings of such Fund are not made 

available on at least a quarterly basis as 

required under the 1940 Act, or such 

holdings are not made available to all 

market participants at the same time 

pursuant to Rule 8.900–E(d)(2)(C)(ii) 

and such issue persists past the trading 

day in which it occurred; (d) if the 

Exchange has halted trading in Shares of 

the Fund pursuant to Rule 8.900– 

E(d)(2)(C)(i) and such issue persists past 

the trading day in which it occurred; (e) 

if the Fund has failed to file any filings 

required by the Commission or if the 

Exchange is aware that the Fund is not 

in compliance with the conditions of 

any currently applicable exemptive 

order or no-action relief granted by the 

Commission or Commission staff with 

respect to the Fund; (f) if any of the 

continued listing requirements set forth 

in Rule 8.900–E are not continuously 

maintained; (g) if any of the statements 

of representations regarding (a) the 

description of the portfolio, (b) 

limitations on portfolio holdings, or (c) 

the applicability of Exchange listing 

rules as specified herein to permit the 

listing and trading of the Fund, are not 

continuously maintained; or (h) if such 

other event shall occur or condition 

exists which, in the opinion of the 

Exchange, makes further dealings on the 

Exchange inadvisable. 

As discussed above, neither the 

Adviser nor the Sub-Adviser is 

registered as a broker-dealer. The SubAdviser is not affiliated with a brokerdealer. The Adviser, however, is 

affiliated with a broker-dealer and has 

implemented and will maintain a ‘‘fire 

wall’’ with respect to such affiliate 

broker-dealer regarding access to 

information concerning the composition 

and/or changes to the Fund’s portfolio 

and Creation Basket. In the event that (a) 

the Adviser or the Sub-Adviser becomes 

registered as a broker-dealer or becomes 

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, the 

Adviser and/or the Sub-Adviser will 

implement and maintain a fire wall with 

respect to personnel of the broker-dealer 

or broker-dealer affiliate regarding 

access to information concerning the 

composition and/or changes to the 

portfolio and/or Creation Basket. Any 

person related to the Adviser, the SubAdviser or the Trust who makes 

decisions pertaining to the Fund’s 

portfolio composition or that has access 

to information regarding the Fund’s 

portfolio or changes thereto or the 

Creation Basket will be subject to 

procedures designed to prevent the use 

and dissemination of material nonpublic information regarding such 

portfolio or changes thereto and the 

Creation Basket. 

In addition, Rule 8.900–E(b)(5) 

requires that any person or entity, 

including an AP Representative, 

custodian, Reporting Authority, 

distributor, or administrator, who has 

access to non-public information 

regarding the Investment Company’s 

portfolio composition or changes thereto 

or the Creation Basket, must be subject 

to procedures designed to prevent the 

use and dissemination of material nonpublic information regarding the 

applicable Investment Company 

portfolio or changes thereto or the 

Creation Basket. Moreover, if any such 

person or entity is registered as a brokerdealer or affiliated with a broker-dealer, 

such person or entity will erect and 

maintain a ‘‘fire wall’’ between the 

person or entity and the broker-dealer 

with respect to access to information 


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88324 Federal Register / Vol. 89, No. 216 / Thursday, November 7, 2024 / Notices 

24See note 20, supra. 

25The Exchange represents that, for initial and 

continued listing, the Fund will be in compliance 

with Rule 10A–3 under the Act. See 17 CFR 

240.10A–3. 

26See note 11, supra. 

concerning the composition and/or 

changes to such Investment Company 

portfolio or Creation Basket. Any person 

or entity who has access to information 

regarding the Fund’s portfolio 

composition or changes thereto or the 

Creation Basket will be subject to 

procedures designed to prevent the use 

and dissemination of material 

nonpublic information regarding the 

portfolio or changes thereto or the 

Creation Basket. 

The Exchange further believes that 

Rule 8.900–E is designed to prevent 

fraudulent and manipulative acts and 

practices related to the listing and 

trading of Shares of the Fund because it 

provides meaningful requirements about 

both the data that will be made publicly 

available about the Shares, as well as 

the information that will only be 

available to certain parties and the 

controls on such information. 

Specifically, the Exchange believes that 

the requirements related to information 

protection set forth in Rule 8.900– 

E(b)(5) will act as a safeguard against 

misuse and improper dissemination of 

information related to the Fund’s 

portfolio composition, the Creation 

Basket, or changes thereto. The 

requirement that any person or entity 

implement procedures to prevent the 

use and dissemination of material nonpublic information regarding the 

portfolio or Creation Basket will act to 

prevent any individual or entity from 

sharing such information externally and 

the internal ‘‘fire wall’’ requirements 

applicable where an entity is a 

registered broker-dealer or affiliated 

with a broker-dealer will act to make 

sure that no entity will be able to misuse 

the data for their own purposes. 

Accordingly, the Exchange believes that 

this proposal is designed to prevent 

fraudulent and manipulative acts and 

practices. 

The Exchange further believes that the 

proposal is designed to prevent 

fraudulent and manipulative acts and 

practices related to the listing and 

trading of Shares of the Fund and to 

promote just and equitable principles of 

trade and to protect investors and the 

public interest because the Exchange 

would halt trading under certain 

circumstances under which trading in 

the Shares of the Fund may be 

inadvisable. Specifically, trading in the 

Shares will be subject to Rule 8.900– 

E(d)(2)(C)(i), which provides that the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt trading in the Fund. Trading may 

be halted because of market conditions 

or for reasons that, in the view of the 

Exchange, make trading in the series of 

Managed Portfolio Shares inadvisable. 

These may include: (a) the extent to 

which trading is not occurring in the 

securities and/or the financial 

instruments composing the portfolio; or 

(b) whether other unusual conditions or 

circumstances detrimental to the 

maintenance of a fair and orderly 

market are present.24 Additionally, 

trading in the Shares will be subject to 

Rule 8.900–E(d)(2)(C)(ii), which 

provides that the Exchange would halt 

trading where the Exchange becomes 

aware that: (a) the VIIV of a series of 

Managed Portfolio Shares is not being 

calculated or disseminated in one 

second intervals, as required; (b) the net 

asset value with respect to a series of 

Managed Portfolio Shares is not 

disseminated to all market participants 

at the same time; (c) the holdings of a 

series of Managed Portfolio Shares are 

not made available on at least a 

quarterly basis as required under the 

1940 Act; or (d) such holdings are not 

made available to all market 

participants at the same time (except as 

otherwise permitted under the currently 

applicable exemptive order or no-action 

relief granted by the Commission or 

Commission staff to the Investment 

Company with respect to the series of 

Managed Portfolio Shares). The 

Exchange would halt trading in such 

Shares until such time as the VIIV, the 

NAV, or the holdings are available, as 

required. 

With respect to the proposed listing 

and trading of Shares of the Fund, the 

Exchange believes that the proposed 

rule change is designed to prevent 

fraudulent and manipulative acts and 

practices in that the Shares will be 

listed and traded on the Exchange 

pursuant to the initial and continued 

listing criteria in Rule 8.900–E.25 The 

Fund’s holdings will conform to the 

permissible investments as set forth in 

the Exemptive Application and 

Exemptive Order.26 As noted above, 

FINRA, on behalf of the Exchange, or 

the regulatory staff of the Exchange, or 

both, will communicate as needed 

regarding trading in the Shares and the 

underlying exchange-traded instruments 

with other markets and other entities 

that are members of the ISG, and 

FINRA, on behalf of the Exchange, or 

the regulatory staff of the Exchange, or 

both, may obtain trading information 

regarding trading such instruments from 

such markets and other entities. In 

addition, the Exchange may obtain 

information regarding trading in the 

Shares and the underlying exchangetraded instruments from markets and 

other entities that are members of ISG or 

with which the Exchange has in place 

a comprehensive surveillance sharing 

agreement. 

With respect to trading of Shares of 

the Fund, the ability of market 

participants to buy and sell Shares at 

prices near the VIIV is dependent upon 

their assessment that the VIIV is a 

reliable, indicative real-time value for 

the Fund’s underlying holdings. Market 

participants are expected to accept the 

VIIV as a reliable, indicative real-time 

value because (1) the VIIV will be 

calculated and disseminated based on 

the Fund’s actual portfolio holdings, (2) 

the securities in which the Fund plans 

to invest are generally highly liquid and 

actively traded and trade at the same 

time as the Fund and therefore generally 

have accurate real time pricing 

available, and (3) market participants 

will have a daily opportunity to 

evaluate whether the VIIV at or near the 

close of trading is indeed predictive of 

the actual NAV. 

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 that the NAV per 

Share of the Fund will be calculated 

daily and that the NAV will be made 

available to all market participants at 

the same time. Investors can also obtain 

the Fund’s SAI, its shareholder reports, 

its Form N–CSR (filed twice a year), and 

its Form N–CEN (filed annually). The 

Fund’s SAI and shareholder reports will 

be available free upon request from the 

Fund, and those documents and the 

Form N–PORT, Form N–CSR, and Form 

N–CEN may be viewed on-screen or 

downloaded from the Commission’s 

website at www.sec.gov. 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 will be 

available via the CTA high-speed line. 

Information regarding the VIIV will be 

widely disseminated in one second 

intervals throughout the Core Trading 

Session by the Reporting Authority and/ 

or one or more major market data 

vendors. The website for the Fund will 

include a prospectus for the Fund that 

may be downloaded, and additional 

data relating to NAV and other 

applicable quantitative information, 

updated on a daily basis. Moreover, 

prior to the commencement of trading, 

the Exchange will inform its members in 

an Information Bulletin of the special 


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Federal Register / Vol. 89, No. 216 / Thursday, November 7, 2024 / Notices 88325 

27 15 U.S.C. 78s(b)(3)(A). 

28 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

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

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

29 17 CFR 240.19b–4(f)(6)(iii). 

30See supra note 6. 

31For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

characteristics and risks associated with 

trading the Shares. 

In addition, as noted above, investors 

will have ready access to the VIIV, and 

quotation and last sale information for 

the Shares. The Shares will conform to 

the initial and continued listing criteria 

under Rule 8.900–E. The Fund’s 

investments, including derivatives, will 

be consistent with its 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 

any securities benchmark index. 

The Exchange also believes that 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 actively-managed exchange-traded 

products 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 comprehensive surveillance 

sharing agreement. In addition, as noted 

above, investors will have ready access 

to information regarding the VIIV and 

quotation and last sale information for 

the Shares. 

For the above reasons, the Exchange 

believes that the proposed rule change 

is consistent with the requirements of 

Section 6(b)(5) of the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes the proposed rule 

change would permit the listing and 

trading of an additional activelymanaged exchange-traded product, 

thereby promoting competition among 

exchange-traded products 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 

Because the foregoing proposed rule 

change does not: (i) significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 27 and Rule 19b– 

4(f)(6) thereunder.28

A proposed rule change filed 

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

Act normally does not become operative 

for 30 days after the date of its filing. 

However, Rule 19b–4(f)(6)(iii) 29 permits 

the Commission to designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has requested 

that the Commission waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange notes that the 

Commission has noticed for immediate 

effectiveness proposed rule changes to 

permit listing and trading on the 

Exchange of Managed Portfolio Shares 

similar to the Fund.30 The proposed 

listing rule for the Fund raises no novel 

legal or regulatory issues. Thus, the 

Commission believes that waiver of the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest. Accordingly, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposed rule change operative upon 

filing.31

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

NYSEARCA–2024–88 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–2024–88. 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 (https://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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–NYSEARCA–2024–88 and should be 

submitted on or before November 29, 

2024. 


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88326 Federal Register / Vol. 89, No. 216 / Thursday, November 7, 2024 / Notices 

32 17 CFR 200.30–3(a)(12), (59). 

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

2 17 CFR 240.19b–4. 

3An active port shall mean that the port was 

utilized to submit a quote to the System during a 

given month. See Options 7, Section 9, B. Today, 

Market Makers are not assessed an active SQF Port 

Fee for additional ports acquired for ten business 

days for the purpose of transitioning technology. 

The member organization is required to provide the 

Exchange with written notification of the transition 

and all additional ports, provided at no cost, will 

be removed at the end of the ten business days. See 

Options 7, Section 9, B. 

4Phlx proposes to add commas between per port 

and per month on the Pricing Schedule for the SQF 

Purge Port Fee. 

5See Securities Exchange Act Release No. 74833 

(April 29, 2015), 80 FR 25749 (May 5, 2015) (SR– 

Phlx–2015–36). 

6See Securities Exchange Act Release No. 77613 

(April 13, 2016), 81 FR 23023 (April 19, 2016) (SR– 

Phlx–2016–45). 

7See https://data.bls.gov/timeseries/

PCU5182105182105. 

8See https://www.bls.gov/ppi/overview.htm. 

9See Id. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.32

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–25837 Filed 11–6–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101498; File No. SR–Phlx– 

2024–55] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Options 7, 

Section 9 

November 1, 2024. 

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 October 

18, 2024, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘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 Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Options 7, Section 9. 

While these amendments are effective 

upon filing, the Exchange has 

designated the proposed amendments to 

be operative on January 1, 2025. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend the Exchange’s SQF 

Port Fee and SQF Purge Port Fee. 

Specifically, the Exchange proposes to 

raise its SQF Port Fee and SQF Purge 

Port Fee in Options 7, Section 9, B by 

10%. 

Today, Phlx assesses $1,250 per port, 

per month up to a maximum of $42,000 

per month for an SQF Port that receives 

inbound quotes at any time within that 

month.3 With this proposal, Phlx would 

assess Market Makers $1,375 per port, 

per month (a 10% increase from $1,250) 

up to a maximum of $46,200 per month 

(a 10% increase from $42,000). Also, 

today, Phlx assesses $500 per port, per 

month for each of the first 5 SQF Purge 

Ports and $100 per port, per month for 

each port thereafter. With this proposal, 

Phlx would assess Market Makers $550 

per port, per month for each of the first 

5 SQF Purge Ports (a 10% increase from 

$500) and $110 per port, per month for 

each port thereafter (a 10% increase 

from $100).4

The proposed SQF Port Fee and SQF 

Purge Port Fee increases would enable 

the Exchange to maintain and improve 

its market technology and services to 

remain competitive with its peers. Over 

the years, customer demand for risk 

protections and capacity has increased. 

The Exchange continues to invest in 

maintaining, improving, and enhancing 

its port protocols—for the benefit and 

often at the behest of its customers. 

Such enhancements include refreshing 

hardware, upgrading risk protections 

and information security, and offering 

customers additional capacity. The 

Exchange has not increased Phlx’s SQF 

Port Fee since 2015,5 and has not 

increased its SQF Purge Port Fee since 

2016 6 where inflation has been between 

roughly 15%–16%, as measured using 

the metric described below. 

Nevertheless, the Exchange proposes to 

increase its SQF Port Fee by 10%, only 

with respect to inflation that has 

occurred since 2015, and its SQF Purge 

Port Fee by 10%, only with respect to 

inflation that has occurred since 2016. 

Further, the Exchange also proposes to 

increase the maximum monthly fee that 

may be assessed for an SQF Port by 10% 

so as to align with the increase to the 

SQF Port Fee. 

As discussed below, the Exchange 

proposes to adjust its fees by an 

industry- and product-specific 

inflationary measure. It is reasonable 

and consistent with the Act for the 

Exchange to recoup its investments, at 

least in part, by adjusting its fees. 

Continuing to operate at fees frozen at 

2015 and 2016 levels, respectively, 

impacts the Exchange’s ability to 

enhance its offerings and the interests of 

market participants and investors. 

The fee increases the Exchange 

proposes are based on an industryspecific Producer Price Index (‘‘PPI’’), 

which is a tailored measure of 

inflation.7 As a general matter, the 

Producer Price Index is a family of 

indexes that measures the average 

change over time in selling prices 

received by domestic producers of 

goods and services. PPI measures price 

change from the perspective of the 

seller. This contrasts with other metrics, 

such as the Consumer Price Index 

(‘‘CPI’’), that measure price change from 

the purchaser’s perspective.8 About 

10,000 PPIs for individual products and 

groups of products are tracked and 

released each month.9 PPIs are available 

for the output of nearly all industries in 

the goods-producing sectors of the U.S. 

economy—mining, manufacturing, 

agriculture, fishing, and forestry—as 

well as natural gas, electricity, and 

construction, among others. The PPI 

program covers approximately 69 

percent of the service sector’s output, as 

measured by revenue reported in the 

2017 Economic Census. 

For purposes of this proposal, the 

relevant industry-specific PPI is the 

Hosting, Activer Server Pages, and 

Other IT Infrastructure Provisioning 

Services (‘‘Data PPI’’) within the Data 

Processing and Related Services 

Industry, which is an industry netoutput PPI that measures the average 


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