3294 Federal Register / Vol. 80, No. 14 / Thursday, January 22, 2015 / Notices 

18See note 16. 

19See the Chicago Board Options Exchange, Inc.’s 

Fees Schedule and the International Securities 

Exchange, LLC’s Schedule of Fees. 20 15 U.S.C. 78s(b)(3)(A)(ii). 

21 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 73342 

(Oct. 10, 2014), 79 FR 62492. 4Letter to SEC from Anonymous Commenter, 

dated November 7, 2014. Comments regarding the 

Customer Rebate Program will continue 

to encourage Customer order flow to be 

directed to the Exchange. By 

incentivizing members to route 

Customer orders, the Exchange desires 

to attract liquidity to the Exchange, 

which in turn benefits all market 

participants. All market participants are 

eligible to qualify for a Customer Rebate. 

The Exchange believes this pricing 

amendment does not impose a burden 

on competition but rather that the 

proposed rule change will continue to 

promote competition on the Exchange. 

The Exchange does not believe that 

offering Specialists and Market Makers 

an enhanced Category B rebate of $0.03 

per contract in addition to the 

applicable Tier 2 or 3 rebate creates an 

undue burden on competition because 

Specialists and Market Makers have 

burdensome quoting obligations 18 to 

the market that do not apply to 

Customers, Professionals, Firms and 

Broker-Dealers. Specialists and Market 

Makers serve an important role on the 

Exchange with regard to order 

interaction and they provide liquidity in 

the marketplace. In addition, paying 

different rebates for Simple and 

Complex Orders is not novel. Other 

options exchanges today similarly 

differentiate rebates.19

The Exchange operates in a highly 

competitive market, comprised of 

twelve options exchanges, in which 

market participants can easily and 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

rebates to be inadequate. Accordingly, 

the fees that are assessed and the rebates 

paid by the Exchange described in the 

above proposal are influenced by these 

robust market forces and therefore must 

remain competitive with fees charged 

and rebates paid by other venues and 

therefore must continue to be reasonable 

and equitably allocated to those 

members that opt to direct orders to the 

Exchange rather than competing venues. 

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.20 At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2015–01 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–Phlx–2015–01. 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 Web site (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 Web site 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. All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Phlx– 

2015–01 and should be submitted on or 

before February 12, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–00965 Filed 1–21–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74058; File No. SR– 

NYSEArca–2014–114] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of 

Amendments No. 1 and No. 2 and 

Order Granting Accelerated Approval 

of a Proposed Rule Change, as 

Modified by Amendment Nos. 1 and 2, 

to List and Trade Shares of the iShares 

Interest Rate Hedged 0–5 Year High 

Yield Bond ETF, iShares Interest Rate 

Hedged 10+ Year Credit Bond ETF, and 

the iShares Interest Rate Hedged 

Emerging Markets Bond ETF Under 

NYSE Arca Equities Rule 8.600 

January 15, 2015. 

I. Introduction 

On September 29, 2014, NYSE Arca, 

Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to list and trade shares 

(‘‘Shares’’) of the iShares Interest Rate 

Hedged 0–5 Year High Yield Bond ETF 

(‘‘High Yield Bond Fund’’), iShares 

Interest Rate Hedged 10+ Year Credit 

Bond ETF (‘‘Credit Bond Fund’’), and 

the iShares Interest Rate Hedged 

Emerging Markets Bond ETF (‘‘Emerging 

Markets Bond Fund’’) (collectively ‘‘the 

Funds’’) under NYSE Arca Equities Rule 

8.600. The proposed rule change was 

published for comment in the Federal 

Register on October 17, 2014.3 The 

Commission received one supporting 

comment on the proposal,4 and on 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 14 / Thursday, January 22, 2015 / Notices 3295 

proposed rule change are available on the 

Commission’s Web site at: http://www.sec.gov/

comments/sr-nysearca-2014-114/

nysearca2014114.shtml. 

5 In Amendment No. 1, the Exchange (1) clarified 

that there presently is no sub-adviser to the Funds; 

(2) specified that US Treasury futures are a type of 

interest rate future; (3) provided more information 

about the Federal Funds futures the Funds may 

hold; (4) clarified the scope of the investment 

restriction on illiquid assets; (5) clarified one aspect 

of the net asset value calculation process for the 

Funds; (6) supplemented the information that 

would be provided in the disclosed portfolios of the 

Funds; and (7) clarified the availability of price 

information regarding the Funds’ holdings. 

6See Securities Exchange Act Release No. 73659 

(Nov. 20, 2014), 79 FR 70607 (Nov. 26, 2014). The 

Commission designated a longer period within 

which to take action on the proposed rule change 

to provide more time for it to consider the proposed 

rule change, as modified by Amendment No. 1. 

7 In Amendment No. 2, the Exchange stated that 

(1) with respect to corporate bond issuances, the 

Adviser expects that under normal circumstances, 

each of the Funds will generally seek to invest in 

corporate bond issuances that have at least 

$100,000,000 par amount outstanding in developed 

countries and at least $200,000,000 par amount 

outstanding in emerging market countries; and (2) 

with respect to each Fund’s investments in fixedincome securities, no fixed-income security 

(excluding Treasury Securities, governmentsponsored entity and other exempted securities) 

will represent more than 30% of the weight of that 

Fund’s total assets, and the five highest weighted 

fixed income securities held by that Fund 

(excluding Treasury Securities, governmentsponsored entity and other exempted securities) 

will not in the aggregate account for more than 65% 

of the weight of that Fund’s total assets. 

8The Trust is registered under the 1940 Act. 

According to the Exchange, on December 6, 2013, 

the Trust filed with the Commission registration 

statements on Form N–1A relating to the Funds 

(‘‘Registration Statements’’) (File Nos. 333–179904 

and 811–22649). In addition, the Commission has 

issued an order granting certain exemptive relief to 

the Trust under the 1940 Act. See Investment 

Company Act Release No. 29571 (File No. 812– 

13601) (‘‘Exemptive Order’’). 

9The Exchange represents that the Adviser is not 

registered as a broker-dealer, but is affiliated with 

multiple broker-dealers. The Exchange further 

represents that the Adviser has implemented a ‘‘fire 

wall’’ with respect to its broker-dealer affiliates 

regarding access to information concerning the 

composition of and changes to the Funds’ portfolio. 

In addition, according to the Exchange, in the event 

(a) the Adviser or any sub-adviser becomes, or 

becomes newly affiliated with, a broker-dealer, or 

(b) any new adviser or sub-adviser is, or becomes 

affiliated with, a broker-dealer, the Adviser or any 

new adviser or sub-adviser, as applicable, will 

implement a fire wall with respect to its relevant 

personnel or its broker-dealer affiliate regarding 

access to information concerning the composition 

of and changes to the Funds’ portfolio, and will be 

subject to procedures designed to prevent the use 

and dissemination of material, non-public 

information regarding such portfolio. 

10Additional information regarding the Trust, the 

Funds, and the Shares, including investment 

strategies, risks, net asset value (‘‘NAV’’) 

calculation, creation and redemption procedures, 

fees, portfolio holdings disclosure policies, 

distributions, and taxes, among other information, 

is included in the Amendments No. 1, No. 2, and 

the Registration Statements, as applicable. See 

Amendment No. 1, supra note 5, Amendment No. 

2, supra note 7, and Registration Statements, supra 

note 8. 

11The term ‘‘under normal circumstances’’ 

includes, but is not limited to, the absence of 

extreme volatility or trading halts in the equity 

markets or the financial markets generally; 

operational issues causing dissemination of 

inaccurate market information; or force majeure 

type events such as systems failure, natural or manmade disaster, act of God, armed conflict, act of 

terrorism, riot or labor disruption or any similar 

intervening circumstance. 

12All Funds will invest only in futures contracts 

that are traded on an exchange that is a member of 

the Intermarket Surveillance Group (‘‘ISG’’) or with 

which the Exchange has in place a comprehensive 

surveillance sharing agreement. Swaps will be 

centrally cleared. All derivatives held by the Funds 

will be collateralized. 

November 18, 2014, the Exchange filed 

Amendment No 1. to the proposed rule 

change, which entirely replaced and 

superseded its proposal as originally 

filed.5 The Commission designated a 

longer period for Commission action.6

On January 14, 2015, the Exchange filed 

Amendment No. 2 to the proposed rule 

change.7 The Commission is publishing 

this notice to solicit comments on 

Amendments No. 1 and No. 2 from 

interested persons, and is approving the 

proposed rule change, as modified by 

Amendment Nos. 1 and 2, on an 

accelerated basis. 

II. Description of Proposed Rule Change 

A. In General 

The Exchange proposes to list and 

trade the Shares under NYSE Arca 

Equities Rule 8.600, which governs the 

listing and trading of Managed Fund 

Shares on the Exchange. The Shares will 

be offered by iShares U.S. ETF Trust 

(‘‘Trust’’),8 a registered open-end 

management investment company. 

BlackRock Fund Advisors (‘‘BFA’’) will 

be the investment adviser for the Funds 

(the ‘‘Adviser’’).9 BFA is an indirect 

wholly-owned subsidiary of BlackRock, 

Inc. BlackRock Investments, LLC will be 

the principal underwriter and 

distributor of the Funds’ Shares. State 

Street Bank and Trust Company will 

serve as administrator, custodian and 

transfer agent for the Funds. 

B. The Exchange’s Description of the 

Funds 

The Exchange has made the following 

representations and statements in 

describing the Funds and its investment 

strategies, including other portfolio 

holdings and investment restrictions.10

1. Principal Investments of the iShares 

Interest Rate Hedged 0–5 Year High 

Yield Bond ETF 

The High Yield Bond Fund will seek 

to mitigate the interest rate risk of a 

portfolio composed of U.S. dollardenominated, high yield corporate 

bonds with remaining maturities of less 

than five years. This Fund will seek to 

achieve its investment objective by 

investing, under normal 

circumstances,11 at least 80% of its net 

assets in U.S. dollar-denominated high 

yield corporate bonds with remaining 

maturities of less than five years, in one 

or more investment companies 

(exchange-traded and non-exchangetraded) that principally invest in high 

yield bonds, in U.S. Treasury securities 

(or cash equivalents), and by taking 

short positions in U.S. Treasury futures, 

other interest rate futures contracts, and 

interest rate swaps.12

The High Yield Bond Fund intends to 

initially invest a substantial portion of 

its assets in one underlying fund, the 

iShares 0–5 Year High Yield Corporate 

Bond ETF (the ‘‘Underlying High Yield 

Corporate Bond Fund’’). This Fund will 

attempt to mitigate the interest rate risk 

primarily through the use of U.S. 

Treasury futures contracts and interest 

rate swaps. The High Yield Bond Fund 

may also take short positions in other 

interest rate futures contracts, including 

but not limited to, Eurodollar and 

Federal Funds futures. 

BFA will utilize a model-based 

proprietary investment process to 

assemble an investment portfolio 

composed of (i) long positions in the 

Underlying High Yield Corporate Bond 

Fund, (ii) long positions in U.S. dollardenominated high yield corporate 

bonds, (iii) long positions in U.S. 

Treasury securities, and (iv) short 

positions in U.S. Treasury futures, other 

interest rate futures contracts, and 

interest rate swaps. The Exchange notes 

that the short positions are expected to 

have, in the aggregate, approximately 

equivalent duration to the underlying 

securities in the Underlying High Yield 

Corporate Bond Fund and to the high 

yield corporate bonds. By taking these 

short positions, BFA will seek to 

mitigate the potential impact of rising 

interest rates on the performance of the 

Underlying High Yield Corporate Bond 

Fund and the high yield corporate 

bonds (conversely also limiting the 

potential positive impact of falling 

interest rates). The short positions will 

not be intended to mitigate other factors 

influencing the price of high yield 

bonds, such as credit risk, which may 

have a greater impact than rising or 

falling interest rates. Relative to a longonly investment in the same high yield 

bonds, the High Yield Bond Fund’s 

investment strategy is designed to 

outperform in a rising interest rate 

environment and underperform in a 

falling interest rate environment. 


tkelley on DSK3SPTVN1PROD with NOTICES
3296 Federal Register / Vol. 80, No. 14 / Thursday, January 22, 2015 / Notices 

13See supra note 11. 

14See supra note 12. 

15See supra note 11. 

16See supra note 12. 17See supra note 11. 

2. Principal Investments of the iShares 

Interest Rate Hedged 10+ Year Credit 

Bond ETF 

The Credit Bond Fund will seek to 

mitigate the interest rate risk of a 

portfolio composed of investment-grade 

U.S. corporate bonds and U.S. dollardenominated bonds, including those of 

non-U.S. corporations and governments, 

with remaining maturities greater than 

ten years. This Fund will seek to 

achieve its investment objective by 

investing, under normal 

circumstances,13 at least 80% of its net 

assets in investment-grade U.S. 

corporate bonds and U.S. dollardenominated bonds, including those of 

non-U.S. corporations and governments, 

with remaining maturities greater than 

ten years, in one or more investment 

companies (exchange-traded and nonexchange-traded) that principally invest 

in investment-grade bonds, in U.S. 

Treasury securities (or cash 

equivalents), and by taking short 

positions in U.S. Treasury futures, other 

interest rate futures contracts, and 

interest rate swaps.14

The Credit Bond Fund intends to 

initially invest a substantial portion of 

its assets in one underlying fund, the 

iShares 10+ Year Credit Bond ETF (the 

‘‘Underlying Credit Bond Fund’’). The 

Credit Bond Fund will attempt to 

mitigate the interest rate risk primarily 

through the use of U.S. Treasury futures 

contracts and interest rate swaps. The 

Credit Bond Fund may also invest in 

other interest rate futures contracts, 

including but not limited to, Eurodollar 

and Federal Funds futures. 

BFA will utilize a model-based 

proprietary investment process to 

assemble an investment portfolio 

composed of (i) long positions in the 

Underlying Credit Bond Fund, (ii) long 

positions in U.S. dollar-denominated 

investment-grade corporate bonds, (iii) 

long positions in U.S. Treasury 

securities, and (iv) short positions in 

U.S. Treasury futures, other interest rate 

futures contracts, and interest rate 

swaps. The short positions are expected 

to have, in the aggregate, approximately 

equivalent duration to the underlying 

securities in the Underlying Credit Bond 

Fund and to the investment-grade 

corporate bonds. By taking these short 

positions, BFA will seek to mitigate the 

potential impact of rising interest rates 

on the performance of the Underlying 

Credit Bond Fund and the investmentgrade corporate bonds (conversely also 

limiting the potential positive impact of 

falling interest rates). Further, the short 

positions are not intended to mitigate 

other factors influencing the price of 

investment-grade bonds, such as credit 

risk, which may have a greater impact 

than rising or falling interest rates. 

Relative to a long-only investment in the 

same investment-grade bonds, the 

Credit Bond Fund’s investment strategy 

is designed to outperform in a rising 

interest rate environment and 

underperform in a falling interest rate 

environment. 

3. Principal Investments of the iShares 

Interest Rate Hedged Emerging Markets 

Bond ETF 

The Emerging Markets Bond Fund 

will seek to mitigate the interest rate 

risk of a portfolio composed of U.S. 

dollar-denominated, emerging market 

bonds. This Fund will seek to achieve 

its investment objective by investing, 

under normal circumstances,15 at least 

80% of its net assets in U.S. dollardenominated emerging market bonds, in 

one or more investment companies 

(exchange-traded and non-exchangetraded) that principally invest in 

emerging market bonds, in U.S. 

Treasury securities (or cash 

equivalents), and by taking short 

positions in U.S. Treasury futures, other 

interest rate futures contracts, and 

interest rate swaps.16

The Emerging Markets Bond Fund 

intends to initially invest a substantial 

portion of its assets in one underlying 

fund, the iShares J.P. Morgan USD 

Emerging Markets Bond ETF (the 

‘‘Underlying Emerging Markets Bond 

Fund’’). This Fund will attempt to 

mitigate the interest rate risk primarily 

through the use of U.S. Treasury futures 

contracts and interest rate swaps. It may 

also take short positions in other 

interest rate futures contracts, including 

but not limited to, Eurodollar and 

Federal Funds futures. 

BFA will utilize a model-based 

proprietary investment process to 

assemble an investment portfolio 

composed of (i) long positions in the 

Underlying Emerging Markets Bond 

Fund, (ii) long positions in U.S. dollardenominated emerging market bonds, 

(iii) long positions in U.S. Treasury 

securities, and (iv) short positions in 

U.S. Treasury futures, other interest rate 

futures contracts, and interest rate 

swaps. The short positions are expected 

to have, in the aggregate, approximately 

equivalent duration to the underlying 

securities in the Underlying Emerging 

Markets Bond Fund and to the emerging 

market bonds. By taking these short 

positions, BFA will seek to mitigate the 

potential impact of rising interest rates 

on the performance of the Underlying 

Emerging Markets Bond Fund and the 

emerging market bonds (conversely also 

limiting the potential positive impact of 

falling interest rates). Further, the short 

positions are not intended to mitigate 

other factors influencing the price of 

emerging market bonds, such as credit 

risk, which may have a greater impact 

than rising or falling interest rates. 

Relative to a long-only investment in the 

same emerging market bonds, the 

Emerging Markets Bond Fund’s 

investment strategy is designed to 

outperform in a rising interest rate 

environment and underperform in a 

falling interest rate environment. 

4. Other Investments of the Funds 

While each of the Funds, under 

normal circumstances,17 will invest at 

least 80% of its net assets in 

investments as described above, the 

Funds may also invest in other certain 

investments as described below. 

The Funds may invest in repurchase 

and reverse repurchase agreements. The 

Funds may invest in money market 

instruments. The instruments in which 

the Funds may invest include: (i) Shares 

of money market funds (including those 

advised by BFA or otherwise affiliated 

with BFA); (ii) obligations issued or 

guaranteed by the U.S. government, its 

agencies or instrumentalities (including 

government-sponsored enterprises); (iii) 

negotiable certificates of deposit 

(‘‘CDs’’), bankers’ acceptances, fixedtime deposits and other obligations of 

U.S. and non-U.S. banks (including nonU.S. branches) and similar institutions; 

(iv) commercial paper rated, at the date 

of purchase, ‘‘Prime-1’’ by Moody’s®

Investors Service, Inc., ‘‘F–1’’ by Fitch 

Inc., or ‘‘A–1’’ by Standard & Poor’s®

(‘‘S&P®’’), or if unrated, of comparable 

quality as determined by BFA; (v) nonconvertible corporate debt securities 

(e.g., bonds and debentures) with 

remaining maturities at the date of 

purchase of not more than 397 days and 

that satisfy the rating requirements set 

forth in Rule 2a–7 under the 1940 Act; 

and (vi) short-term U.S. dollardenominated obligations of non-U.S. 

banks (including U.S. branches) that, in 

the opinion of BFA, are of comparable 

quality to obligations of U.S. banks 

which may be purchased by the Funds. 

Any of these instruments may be 

purchased on a current or forwardsettled basis. 

Each of the Funds also may invest in 

options that are traded on a U.S. or nonU.S. exchange and that reference U.S. 

Treasury securities. To the extent that 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 14 / Thursday, January 22, 2015 / Notices 3297 

18See supra note 4. 

19 15 U.S.C. 78f. 

20 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

21 15 U.S.C. 78f(b)(5). 

22 15 U.S.C. 78k–1(a)(1)(C)(iii). 

23The Exchange understands that several major 

market data vendors display and/or make widely 

available IOPVs taken from CTA or other data feeds. 

24 Derivatives that reference or allow delivery of 

more than one asset, such as U.S. Treasury futures, 

will name the underlying asset generically. 

25See supra note 5. 

26These reasons may include: (1) The extent to 

which trading is not occurring in the securities or 

the financial instruments composing the Disclosed 

Portfolio of the Funds; or (2) whether other unusual 

conditions or circumstances detrimental to the 

maintenance of a fair and orderly market are 

present. With respect to trading halts, the Exchange 

may consider all relevant factors in exercising its 

discretion to halt or suspend trading in the Shares. 

27See supra note 9. The Exchange states that an 

investment adviser to an open-end fund is required 

Continued 

the High Yield Bond Fund, the Credit 

Bond Fund, or the Emerging Markets 

Bond Fund invests in options, not more 

than 10% of such investment would be 

in options whose principal trading 

market is not a member of ISG or is a 

market with which the Exchange does 

not have a comprehensive surveillance 

sharing agreement. 

Each of the Funds may invest in debt 

securities of non-U.S. issuers and may 

invest in privately-issued debt 

securities. 

III. Description of Comment Letter 

As noted above, the Commission 

received one comment letter from an 

anonymous commenter.18 The 

commenter supported the proposal and 

stated that the Funds would be a useful 

tool for individual and smallinstitutional investors because it is 

difficult for many investors to otherwise 

achieve what the Funds claim they will 

deliver. The commenter also stated that 

the isolation of credit spread exposure 

in a liquid and relatively simple product 

should be attractive to many types of 

investors. 

IV. Discussion and Commission’s 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of 

Section 6 of the Act 19 and the rules and 

regulations thereunder applicable to a 

national securities exchange.20 In 

particular, the Commission finds that 

the proposal is consistent with Section 

6(b)(5) of the Act,21 which requires, 

among other things, that the Exchange’s 

rules be designed 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 Commission also 

finds that the proposal to list and trade 

the Shares on the Exchange is consistent 

with Section 11A(a)(1)(C)(iii) of the 

Act,22 which sets forth Congress’ finding 

that it is in the public interest and 

appropriate for the protection of 

investors and the maintenance of fair 

and orderly markets to assure the 

availability to brokers, dealers, and 

investors of information with respect to 

quotations for, and transactions in, 

securities. 

Quotation and last-sale information 

for the Shares and the shares of the 

Underlying High Yield Corporate Bond 

Fund, Underlying Credit Bond Fund, 

the Underlying Emerging Markets Bond 

Fund, and any other exchange-traded 

funds held by any of the Funds will be 

available via the Consolidated Tape 

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

addition, the Indicative Optimized 

Portfolio Indicative Value (‘‘IOPV’’), 

which is the Portfolio Indicative Value 

as defined in NYSE Arca Equities Rule 

8.600(c)(3), will be widely disseminated 

at least every fifteen seconds during the 

NYSE Arca Core Trading Session by one 

or more major market data vendors.23

On a daily basis, each of the Funds will 

disclose for each portfolio security or 

other financial instrument the following 

information on the Funds’ Web site: 

Ticker symbol, if any; CUSIP number or 

other identifier, if any; a description of 

the holding (including the type of 

holding, such as the type of swap); the 

identity of the security or other asset or 

instrument underlying the holding,24 if 

any; for options, the option strike price; 

quantity held (as measured by, for 

example, par value, notional value or 

number of shares, contracts or units); 

maturity date, if any; coupon rate, if 

any; market value of the holding; and 

the percentage weighting of the holding 

in the portfolio.25 The Web site 

information will be publicly available at 

no charge. 

In addition, for each of the Funds, a 

basket composition file, which includes 

the security names and share quantities 

required to be delivered in exchange for 

that Fund’s Shares, together with 

estimates and actual cash components, 

will be publicly disseminated daily 

prior to the opening of the New York 

Stock Exchange (‘‘NYSE’’) via National 

Securities Clearing Corporation. The 

NAV of each of the Funds will be 

determined as of the close of trading 

(normally 4 p.m., Eastern Time) on each 

day the NYSE is open for business. 

Information regarding market price 

and trading volume of the Shares 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. Intra-day, 

closing and settlement prices of 

exchange-traded portfolio assets, 

including investment companies, 

money market instruments, futures and 

options will be available from the 

securities exchanges and futures 

exchanges trading such securities and 

futures contracts, respectively; 

automated quotation systems; published 

or other public sources; or on-line 

information services, such as Bloomberg 

or Reuters or any such future service 

provider. The Funds’ Web site will 

include a form of the prospectus for the 

High Yield Bond Fund, the Credit Bond 

Fund, and the Emerging Markets Bond 

Fund and additional data relating to 

NAV and other applicable quantitative 

information for the Funds. 

The Exchange will obtain a 

representation from the issuer of the 

Shares that, for each Fund, the NAV per 

Share will be calculated daily and the 

NAV and the Disclosed Portfolio will be 

made available to all market 

participants at the same time. Trading in 

Shares will be halted if the circuit 

breaker parameters in NYSE Arca 

Equities Rule 7.12 have been reached or 

because of market conditions or for 

reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable,26 and trading in the Shares 

will be subject to NYSE Arca Equities 

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

additional circumstances under which 

trading in the Shares may be halted. The 

Exchange states that it has a general 

policy prohibiting the distribution of 

material, non-public information by its 

employees. Consistent with NYSE Arca 

Equities Rule 8.600(d)(2)(B)(ii), the 

Commission notes that the Reporting 

Authority must implement and 

maintain, or be subject to, procedures 

designed to prevent the use and 

dissemination of material, non-public 

information regarding the actual 

components of the Funds’ portfolios. In 

addition, the Exchange states that the 

Adviser is affiliated with multiple 

broker-dealers and that the Adviser has 

implemented a fire wall with respect to 

its broker-dealer affiliates regarding 

access to information concerning the 

composition and changes to the Funds’ 

portfolios.27 The Exchange represents 


tkelley on DSK3SPTVN1PROD with NOTICES
3298 Federal Register / Vol. 80, No. 14 / Thursday, January 22, 2015 / Notices 

to be registered under the Investment Advisers Act 

of 1940 (‘‘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 nonpublic 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. 

28The Exchange states that FINRA surveils 

trading on the Exchange pursuant to a regulatory 

services agreement and that the Exchange is 

responsible for FINRA’s performance under this 

regulatory services agreement. 

29 17 CFR 240.10A–3. 

30 15 U.S.C. 78f(b)(5). 

that trading in the Shares will be subject 

to the existing trading surveillances, 

administered by the Financial Industry 

Regulatory Authority (‘‘FINRA’’) on 

behalf of the Exchange, which are 

designed to detect violations of 

Exchange rules and applicable federal 

securities laws.28 The Exchange further 

represents that these procedures are 

adequate to properly monitor Exchangetrading 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. Moreover, prior to the 

commencement of trading, the Exchange 

states that it will inform its Equity 

Trading Permit Holders in an 

Information Bulletin of the special 

characteristics and risks associated with 

trading the Shares. 

The Commission notes that the Funds 

and the Shares must comply with the 

initial and continued listing criteria in 

NYSE Arca Equities Rule 8.600 for the 

Shares to be listed and traded on the 

Exchange. The Exchange represents that 

it 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. In support of this 

proposal, the Exchange has also made 

the following representations: 

(1) The Shares will be subject to 

NYSE Arca Equities Rule 8.600, which 

sets forth the initial and continued 

listing criteria applicable to Managed 

Fund Shares. 

(2) The Exchange has appropriate 

rules to facilitate transactions in the 

Shares during all trading sessions. 

(3) FINRA, on behalf of the Exchange, 

will communicate as needed regarding 

trading in the Shares, exchange-traded 

equity securities, futures and options 

contracts with other markets and other 

entities that are members of ISG, and 

FINRA, on behalf of the Exchange, may 

obtain trading information regarding 

trading in the Shares, exchange-traded 

equity securities, futures and options 

contracts from such markets and other 

entities. In addition, the Exchange may 

obtain information regarding trading in 

the Shares, exchange-trade equity 

securities, futures and options contracts 

from ISG member markets or markets 

with which the Exchange has in place 

a comprehensive surveillance sharing 

agreement. 

(4) With respect to its exchangetraded equity securities investments, the 

Funds will invest only in equity 

securities that trade in markets that are 

members of the ISG or are parties to a 

comprehensive surveillance sharing 

agreement with the Exchange. To the 

extent that any of the Funds invest in 

options, not more than 10% of such 

investment would be in options whose 

principal trading market is not a 

member of ISG or is a market with 

which the Exchange does not have a 

comprehensive surveillance sharing 

agreement. The Funds will invest only 

in futures contracts that are traded on an 

exchange that is a member of the ISG or 

with which the Exchange has in place 

a comprehensive surveillance sharing 

agreement. 

(5) Prior to the commencement of 

trading, the Exchange will inform its 

Equity Trading Permit Holders in an 

Information Bulletin of the special 

characteristics and risks associated with 

trading the Shares. Specifically, the 

Information Bulletin will discuss the 

following: (a) The procedures for 

purchases and redemptions of Shares in 

creation units (and that Shares are not 

individually redeemable); (b) NYSE 

Arca Equities Rule 9.2(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; (c) 

the risks involved in trading the Shares 

during the Opening and Late Trading 

Sessions when an updated Portfolio 

Indicative Value will not be calculated 

or publicly disseminated; (d) how 

information regarding the Portfolio 

Indicative Value and Disclosed Portfolio 

is disseminated; (e) 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 (f) trading information. 

(6) For initial and continued listing, 

the Funds will be in compliance with 

Rule 10A–3 under the Act,29 as 

provided by NYSE Arca Equities Rule 

5.3. 

(7) Each of the Funds may hold up to 

an aggregate amount of 15% of its net 

assets in illiquid assets (calculated at 

the time of investment). 

(8) A minimum of 100,000 Shares for 

each of the Funds will be outstanding at 

the commencement of trading on the 

Exchange. 

(9) With respect to each Fund’s 

investments in fixed-income securities, 

no fixed-income security (excluding 

Treasury Securities, governmentsponsored-entity securities, and other 

exempted securities) will represent 

more than 30% of the weight of that 

Fund’s total assets, and the five highest 

weighted fixed income securities held 

by such Fund (excluding Treasury 

Securities, government-sponsored entity 

and other exempted securities) will not 

in the aggregate account for more than 

65% of the weight of that Fund’s total 

assets. 

This approval order is based on all of 

the Exchange’s representations, 

including those set forth above and in 

Amendments No. 1 and No. 2. 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change, as modified by 

Amendments No. 1 and No. 2, is 

consistent with Section 6(b)(5) of the 

Act 30 and the rules and regulations 

thereunder applicable to a national 

securities exchange. 

V. Solicitation of Comments on 

Amendments No. 1 and No. 2 

Interested persons are invited to 

submit written data, views, and 

arguments concerning whether 

Amendments No. 1 and No. 2 are 

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–2014–114 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. 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 14 / Thursday, January 22, 2015 / Notices 3299 

31 15 U.S.C. 78s(b)(2). 

32 15 U.S.C. 78s(b)(2). 

33 17 CFR 200.30–3(a)(12). 

All submissions should refer to File 

Number SR–NYSEArca–2014–114. 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 Web site (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 Web site 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. All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NYSEArca–2014–114 and should be 

submitted on or before February 12, 

2015. 

V. Accelerated Approval of Proposed 

Rule Change as Modified by 

Amendment Nos. 1 and 2 

The Commission finds good cause to 

approve the proposed rule change, as 

modified by Amendments No. 1 and No. 

2, prior to the thirtieth day after the date 

of publication of notice of the 

amendments in the Federal Register. 

Amendment No. 1 supplements the 

proposed rule change by, among other 

things, supplementing the information 

that will be provided regarding the 

Disclosed Portfolios of the Funds. The 

Commission believes that dissemination 

of this additional information should 

aid in the pricing of the Shares. 

Amendment No. 2 modifies the 

proposed rule change by specifying (1) 

the minimum par amounts outstanding 

for the corporate bonds that generally 

will be held by the Funds; and (2) 

portfolio concentration limits for fixed 

income securities held by the Funds. 

This assisted the Commission in 

evaluating the liquidity of certain types 

of potential holdings and the 

susceptibility of the Shares to price 

manipulation. Accordingly, the 

Commission finds good cause, pursuant 

to Section 19(b)(2) of the Act,31 to 

approve the proposed rule change, as 

modified by Amendment Nos. 1 and 2, 

on an accelerated basis. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,32 that the 

proposed rule change as modified by 

Amendments No. 1 and No. 2 (SR– 

NYSEArca–2014–114) be, and it hereby 

is, approved on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–00964 Filed 1–21–15; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF STATE 

[Public Notice 9007] 

30-Day Notice of Proposed Information 

Collection: Ten DDTC Information 

Collections 

ACTION: Notice of request for public 

comments. 

SUMMARY: The Department of State has 

submitted the information collections 

described below to the Office of 

Management and Budget (OMB) for 

approval. In accordance with the 

Paperwork Reduction Act of 1995, we 

are requesting comments on these 

collections from all interested 

individuals and organizations. The 

purpose of this notice is to allow 30 

days for public comment. 

DATES: The Department will accept 

comments from the public up to 30 days 

from January 22, 2015. 

ADDRESSES: Comments and questions 

should be directed to Mr. Robert Hart, 

Office of Defense Trade Controls Policy, 

U.S. Department of State, who may be 

reached via the following methods: 

• Internet: Persons with access to the 

Internet may use the Federal Docket 

Management System (FDMS) to 

comment on this notice by going to 

www.regulations.gov and searching for 

the document by entering the docket ID: 

‘‘DOS–2014–0024’’ in the search bar. If 

necessary, use the ‘‘narrow by agency’’ 

filter option on the results page. 

• Email: hartrl@state.gov. 

• Mail: Mr. Robert Hart, SA–1, 12th 

Floor, Directorate of Defense Trade 

Controls, Bureau of Political-Military 

Affairs, U.S. Department of State, 

Washington, DC 20522–0112. 

You must include the information 

collection title and the OMB control 

number in any correspondence. 

FOR FURTHER INFORMATION CONTACT: 

Direct requests for additional 

information to Mr. Robert Hart, PM/

DDTC, SA–1, 12th Floor, Directorate of 

Defense Trade Controls, Bureau of 

Political-Military Affairs, U.S. 

Department of State, Washington, DC, 

20522–0112, who may be reached via 

phone at (202) 736–9221, or via email at 

hartrl@state.gov. 

• Title of Information Collection: 

Application/License for Permanent 

Export of Unclassified Defense Articles 

and Related Unclassified Technical 

Data. 

• OMB Control Number: 1405–0003. 

• Type of Request: Extension of 

Currently Approved Collection. 

• Originating Office: Bureau of 

Political-Military Affairs, Directorate of 

Defense Trade Controls, PM/DDTC. 

• Form Number: DSP–5. 

• Respondents: Business and 

Nonprofit Organizations. 

• Estimated Number of Respondents: 

2,748. 

• Estimated Number of Responses: 

53,170. 

• Average Hours per Response: 1 

hour. 

• Total Estimated Burden: 53,170 

hours. 

• Frequency: On Occasion. 

• Obligation to Respond: Required to 

Obtain Benefits. 

• Title of Information Collection: 

Application/License for Temporary 

Import of Unclassified Defense Articles. 

• OMB Control Number: 1405–0013. 

• Type of Request: Extension of 

Currently Approved Collection. 

• Originating Office: Bureau of 

Political-Military Affairs, Directorate of 

Defense Trade Controls, PM/DDTC. 

• Form Number: DSP–61. 

• Respondents: Business and 

Nonprofit Organizations. 

• Estimated Number of Respondents: 

311. 

• Estimated Number of Responses: 

1,671. 

• Average Hours per Response: 1⁄2

hour. 

• Total Estimated Burden: 835 hours. 

• Frequency: On Occasion. 

• Obligation to Respond: Required to 

Obtain Benefits. 

• Title of Information Collection: 

Application/License for Temporary 

Export of Unclassified Defense Articles. 

• OMB Control Number: 1405–0023. 

• Type of Request: Extension of 

Currently Approved Collection. 


tkelley on DSK3SPTVN1PROD with NOTICES