12690 Federal Register / Vol. 80, No. 46 / Tuesday, March 10, 2015 / Notices 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 57619 

(April 4, 2008), 73 FR 19544 (April 10, 2008) (SR– 

NYSEArca–2008–25) (order approving NYSE Arca 

Equities Rule 8.600 and listing and trading of shares 

of certain issues of Managed Fund Shares) (the 

‘‘Approval Order’’). The Approval Order approved 

the rules permitting the listing and trading of 

Managed Fund Shares, trading hours and halts, 

listing fees applicable to Managed Fund Shares, and 

the listing and trading of several individual series 

of Managed Fund Shares. 

5See Approval Order, supra note 4, at 19547. 

6 17 CFR 240.19b–4(e). As provided under SEC 

Rule 19b–4(e), the term ‘‘new derivative securities 

investors require a suspension of trading 

in the securities of the above-listed 

companies. 

Therefore, it is ordered, pursuant to 

Section 12(k) of the Securities Exchange 

Act of 1934, that trading in the 

securities of the above-listed companies 

is suspended for the period from 9:30 

a.m. EST on March 5, 2015, through 

11:59 p.m. EDT on March 18, 2015. 

By the Commission. 

Jill M. Peterson, 

Assistant Secretary 

[FR Doc. 2015–05515 Filed 3–6–15; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74433; File No. SR– 

NYSEArca–2015–02] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Relating to Amendments 

to NYSE Arca Equities Rule 8.600 to 

Adopt Generic Listing Standards for 

Managed Fund Shares 

March 4, 2015. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that, on February 

17, 2015, NYSE Arca, Inc. (the 

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

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The Exchange proposes to amend 

NYSE Arca Equities Rule 8.600 to adopt 

generic listing standards for Managed 

Fund Shares. The text of the proposed 

rule change is available on the 

Exchange’s Web site 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

NYSE Arca Equities Rule 8.600 to adopt 

generic listing standards for Managed 

Fund Shares. Under the Exchange’s 

current rules, a proposed rule change 

must be filed with the Securities and 

Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) for the listing and 

trading of each new series of Managed 

Fund Shares. The Exchange believes 

that it is appropriate to codify certain 

rules within Rule 8.600 that would 

generally eliminate the need for such 

proposed rule changes, which would 

create greater efficiency and promote 

uniform standards in the listing process. 

Background 

Rule 8.600 sets forth certain rules 

related to the listing and trading of 

Managed Fund Shares.4 Under Rule 

8.600(c)(1), the term ‘‘Managed Fund 

Share’’ means a security that: 

(a) represents an interest in a 

registered investment company 

(‘‘Investment Company’’) organized as 

an open-end management investment 

company or similar entity, that invests 

in a portfolio of securities selected by 

the Investment Company’s investment 

adviser (hereafter ‘‘Adviser’’) consistent 

with the Investment Company’s 

investment objectives and policies; 

(b) is issued in a specified aggregate 

minimum number in return for a 

deposit of a specified portfolio of 

securities and/or a cash amount with a 

value equal to the next determined net 

asset value; and 

(c) when aggregated in the same 

specified minimum number, may be 

redeemed at a holder’s request, which 

holder will be paid a specified portfolio 

of securities and/or cash with a value 

equal to the next determined net asset 

value. 

Effectively, Managed Fund Shares are 

securities issued by an activelymanaged open-end Investment 

Company (i.e., an actively-managed 

exchange-traded fund (‘‘ETF’’)). Because 

Managed Fund Shares are activelymanaged, they do not seek to replicate 

the performance of a specified passive 

index of securities. Instead, they 

generally use an active investment 

strategy to seek to meet their investment 

objectives. In contrast, an open-end 

Investment Company that issues 

Investment Company Units (‘‘Units’’), 

listed and traded on the Exchange 

pursuant to NYSE Arca Equities Rule 

5.2(j)(3), seeks to provide investment 

results that generally correspond to the 

price and yield performance of a 

specific foreign or domestic stock index, 

fixed income securities index or 

combination thereof. 

All Managed Fund Shares listed and/ 

or traded pursuant to Rule 8.600 

(including pursuant to unlisted trading 

privileges) are subject to the full 

panoply of Exchange rules and 

procedures that currently govern the 

trading of equity securities on the 

Exchange.5

In addition, Rule 8.600(d) currently 

provides for the criteria that Managed 

Fund Shares must satisfy for initial and 

continued listing on the Exchange, 

including, for example, that a minimum 

number of Managed Fund Shares are 

required to be outstanding at the time of 

commencement of trading on the 

Exchange. However, the current process 

for listing and trading new series of 

Managed Fund Shares on the Exchange 

requires that the Exchange submit a 

proposed rule change with the 

Commission. In this regard, 

Commentary .01 to Rule 8.600 specifies 

that the Exchange will file separate 

proposals under Section 19(b) of the Act 

(hereafter, a ‘‘proposed rule change’’) 

before listing and trading of [sic] shares 

of an issue of Managed Fund Shares. 

Proposed Changes to Rule 8.600 

The Exchange would amend 

Commentary .01 to Rule 8.600 to specify 

that the Exchange may approve 

Managed Fund Shares for listing and/or 

trading (including pursuant to unlisted 

trading privileges) pursuant to SEC Rule 

19b–4(e) under the Act, which pertains 

to derivative securities products (‘‘SEC 

Rule 19b–4(e)’’).6 SEC Rule 19b–4(e)(1) 

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Federal Register / Vol. 80, No. 46 / Tuesday, March 10, 2015 / Notices 12691 

product’’ means any type of option, warrant, hybrid 

securities product or any other security, other than 

a single equity option or a security futures product, 

whose value is based, in whole or in part, upon the 

performance of, or interest in, an underlying 

instrument. 

7 17 CFR 240.19b–4(c)(1). As provided under SEC 

Rule 19b–4(c)(1), a stated policy, practice, or 

interpretation of the SRO shall be deemed to be a 

proposed rule change unless it is reasonably and 

fairly implied by an existing rule of the SRO. 

8The Exchange would also add a new defined 

term under Rule 8.600(c)(5) to specify that the term 

‘‘normal market conditions’’ includes, but is not 

limited to, the absence of trading halts in the 

applicable financial markets generally; operational 

issues causing dissemination of inaccurate market 

information; or force majeure type events such as 

systems failure, natural or man-made disaster, act 

of God, armed conflict, act of terrorism, riot or labor 

disruption or any similar intervening circumstance. 

9See Securities Exchange Act Release Nos. 66321 

(February 3, 2012), 77 FR 6850 (February 9, 2012) 

(SR–NYSEArca–2011–95) (the ‘‘PIMCO Total 

Return Approval’’) and 72666 (July 3, 2014), 79 FR 

44224 (July 30, 2014) (SR–NYSEArca–2013–122) 

(the ‘‘PIMCO Total Return Use of Derivatives 

Approval’’); 69244 (March 27, 2013), 78 FR 19766 

(April 2, 2013) (SR–NYSEArca–2013–08) (the 

‘‘SPDR Blackstone/GSO Senior Loan Approval’’); 

68870 (February 8, 2013), 78 FR 11245 (February 

15, 2013) (SR–NYSEArca–2012–139) (the ‘‘First 

Trust Preferred Securities and Income Approval’’); 

69591 (May 16, 2013), 78 FR 30372 (May 22, 2013) 

(SR–NYSEArca–2013–33) (the ‘‘International Bear 

Approval’’); 61697 (March 12, 2010), 75 FR 13616 

(March 22, 2010) (SR–NYSEArca–2010–04) (the 

‘‘WisdomTree Real Return Approval’’); and 67054 

(May 24, 2012), 77 FR 32161 (May 31, 2012) (SR– 

NYSEArca–2012–25) (the ‘‘WisdomTree Brazil 

Bond Approval’’). Certain standards proposed 

herein for Managed Fund Shares are also based on 

previous proposed rule changes for specific series 

of Units for which Commission approval for listing 

was required due to the Units not satisfying certain 

standards of Commentary .01 and .02 to Rule 

5.2(j)(3). See Securities Exchange Act Release Nos. 

67985 (October 4, 2012), 77 FR 61804 (October 11, 

2012) (SR–NYSEArca–2012–92) (the ‘‘iShares 2018 

S&P AMT-Free Municipal Series and iShares 2019 

S&P AMT-Free Municipal Series Approval’’); 

63881(February 9, 2011), 76 FR 9065 (February 16, 

2011) (SR–NYSEArca–2010–120) (the ‘‘SPDR 

Nuveen S&P High Yield Municipal Bond ETF 

Approval’’); 63176 (October 25, 2010), 75 FR 66815 

(October 29, 2010) (SR–NYSEArca–2010–94) (the 

‘‘iShares Taxable Municipal Bond Fund 

Approval’’); and 69373 (April 15, 2013), 78 FR 

23601 (April 19, 2013) (SR–NYSEArca–2012–108) 

(the ‘‘NYSE Arca U.S. Equity Synthetic Reverse 

Convertible Index Fund Approval’’). 

10For the purposes of Commentary .01 and this 

proposal, the term ‘‘U.S. Component Stocks’’ would 

have the same meaning as defined in NYSE Arca 

Equities Rule 5.2(j)(3). 

11For the purposes of Commentary .01 and this 

proposal, the term ‘‘Derivative Securities Products’’ 

would have the same meaning as defined in NYSE 

Arca Equities Rule 7.34(a)(4)(A). 

12 Index-Linked Securities are securities listed 

under NYSE Arca Equities Rule 5.2(j)(6). 

13This proposed text is identical to the 

corresponding text of Commentary .01(a)(A)(1) to 

Rule 5.2(j)(3), except for the omission of the 

reference to ‘‘index,’’ which is not applicable, and 

the addition of the reference to Index-Linked 

Securities. 

14This proposed text is identical to the 

corresponding text of Commentary .01(a)(A)(2) to 

Rule 5.2(j)(3), except for the omission of the 

reference to ‘‘index,’’ which is not applicable, and 

the addition of the reference to Index-Linked 

Securities. 

15This proposed text is identical to the 

corresponding text of Commentary .01(a)(A)(3) to 

Rule 5.2(j)(3), except for the omission of the 

reference to ‘‘index,’’ which is not applicable, and 

Continued 

provides that the listing and trading of 

a new derivative securities product by a 

self-regulatory organization (‘‘SRO’’) is 

not deemed a proposed rule change, 

pursuant to paragraph (c)(1) of Rule 

19b–4,7 if the Commission has 

approved, pursuant to section 19(b) of 

the Act, the SRO’s trading rules, 

procedures and listing standards for the 

product class that would include the 

new derivative securities product and 

the SRO has a surveillance program for 

the product class. This is the current 

method pursuant to which ‘‘passive’’ 

ETFs are listed under NYSE Arca 

Equities Rule 5.2(j)(3). 

The Exchange would also specify 

within Commentary .01 to Rule 8.600 

that components of Managed Fund 

Shares listed pursuant to SEC Rule 19b– 

4(e) must satisfy on an initial and 

continued basis certain specific criteria, 

which the Exchange would include 

within Commentary .01, as described in 

greater detail below. As proposed, the 

Exchange would continue to file 

separate proposed rule changes before 

the listing and trading of Managed Fund 

Shares with components that do not 

satisfy the additional criteria described 

below or components other than those 

specified below. For example, if the 

components of a Managed Fund Share 

exceeded one of the applicable 

thresholds, the Exchange would file a 

separate proposed rule change before 

listing and trading such Managed Fund 

Share. Similarly, if the components of a 

Managed Fund Share included a 

security or asset that is not specified 

below, the Exchange would file a 

separate proposed rule change. 

The Exchange would also add to the 

‘‘generic’’ criteria of Rule 8.600(d) by 

specifying that all Managed Fund 

Shares must have a stated investment 

objective, which must be adhered to 

under normal market conditions.8

Finally, the Exchange would also 

amend the continued listing 

requirement in Rule 8.600(d)(2)(A) by 

changing the requirement that a 

Portfolio Indicative Value for Managed 

Fund Shares be widely disseminated by 

one or more major market data vendors 

at least every 15 seconds during the 

time when the Managed Fund Shares 

trade on the Exchange to a requirement 

that a Portfolio Indicative Value be 

widely disseminated by one or more 

major market data vendors at least every 

15 seconds during the Core Trading 

Session (as defined in NYSE Arca 

Equities Rule 7.34). 

Proposed Managed Fund Share Portfolio 

Standards 

The Exchange is proposing standards 

that would pertain to Managed Fund 

Shares to qualify for listing and trading 

pursuant to SEC Rule 19b–4(e). These 

standards would be grouped according 

to security or asset type. The Exchange 

notes that the standards proposed for a 

Managed Fund Share portfolio that 

holds domestic equity securities, 

Derivative Securities Products and 

Index-Linked Securities are based in 

large part on the existing equity security 

standards applicable to Units in 

Commentary .01 to Rule 5.2(j)(3). The 

standards proposed for a Managed Fund 

Share portfolio that holds fixed income 

securities are based in large part on the 

existing fixed income security standards 

applicable to Units in Commentary .02 

to Rule 5.2(j)(3). Many of the standards 

proposed for other types of holdings in 

a Managed Fund Share portfolio are 

based on previous proposed rule 

changes for specific series of Managed 

Fund Shares.9

Proposed Commentary .01(a) would 

describe the standards for a Managed 

Fund Share portfolio that holds equity 

securities, including U.S. Component 

Stocks,10 Derivative Securities 

Products,11 and Index-Linked 

Securities 12 listed on a national 

securities exchange, as follows: 

(1) Component stocks (excluding 

Derivative Securities Products and 

Index-Linked Securities) that in the 

aggregate account for at least 90% of the 

equity weight of the portfolio (excluding 

such Derivative Securities Products and 

Index-Linked Securities) each must 

have a minimum market value of at least 

$75 million; 13

(2) Component stocks (excluding 

Derivative Securities Products and 

Index-Linked Securities) that in the 

aggregate account for at least 70% of the 

equity weight of the portfolio (excluding 

such Derivative Securities Products and 

Index-Linked Securities) each must 

have a minimum monthly trading 

volume of 250,000 shares, or minimum 

notional volume traded per month of 

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

months; 14

(3) The most heavily weighted 

component stock (excluding Derivative 

Securities Products and Index-Linked 

Securities) must not exceed 30% of the 

equity weight of the portfolio, and, to 

the extent applicable, the five most 

heavily weighted component stocks 

(excluding Derivative Securities 

Products and Index-Linked Securities) 

must not exceed 65% of the equity 

weight of the portfolio; 15

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12692 Federal Register / Vol. 80, No. 46 / Tuesday, March 10, 2015 / Notices 

the addition of the reference to Index-Linked 

Securities. 

16This proposed text is identical to the 

corresponding text of Commentary .01(a)(A)(4) to 

Rule 5.2(j)(3), except for the omission of the 

reference to ‘‘index,’’ which is not applicable, the 

addition of the reference to Index-Linked Securities, 

and the reference to the 100% limit applying to the 

‘‘equity portion’’ of the portfolio—this last 

difference included [sic] because these proposed 

standards in Commentary .01(a) to Rule 8.600 

permit the inclusion of non-equity securities, 

whereas Commentary .01 to Rule 5.2(j)(3) only 

applies to equity securities. 

17 17 CFR 240.600. This proposed text is identical 

to the corresponding text of Commentary 

.01(a)(A)(5) to Rule 5.2(j)(3), except for the addition 

of ‘‘equity’’ to make clear that the standard applies 

to ‘‘equity securities’’, the exclusion of unsponsored 

ADRs, and the omission of the reference to ‘‘index,’’ 

which is not applicable. 

18 Debt securities include a variety of fixed 

income obligations, including, but not limited to, 

corporate debt securities, government securities, 

municipal securities, convertible securities, and 

mortgage-backed securities. Debt securities include 

investment-grade securities, non-investment-grade 

securities, and unrated securities. Debt securities 

also include variable and floating rate securities. 

19This text of proposed Commentary .01(b)(1)(i) 

to Rule 8.600 is based on the corresponding text of 

Commentary .02(a)(2) to Rule 5.2(j)(3) . 

20This proposed text is similar to the amendment 

to Commentary .02(a)(2) to Rule 5.2(j)(3) as 

proposed in SR–NYSEArca–2015–01. See Securities 

Exchange Act Release No. 74175 (January 29, 2015), 

80 FR 6150 (February 4, 2015) (notice of filing of 

proposed rule change amending NYSE Arca 

Equities Rule 5.2(j)(3), Commentary .02 relating to 

listing of Investment Company Units based on 

municipal bond indexes). Proposed rule changes for 

series of Units previously listed and traded on the 

Exchange pursuant to Rule 5.2(j)(3) similarly 

included the ability for such Units’ holdings to 

include municipal bond components with 

individual principal amount outstanding of less 

than $100 million. See, e.g., iShares 2018 S&P 

AMT-Free Municipal Series and iShares 2019 S&P 

AMT-Free Municipal Series Approval, supra note 9, 

at 61807; SPDR Nuveen S&P High Yield Municipal 

Bond ETF Approval, supra note 9, at 9066; and 

iShares Taxable Municipal Bond Fund Approval, 

supra note 9, at 66815–6. The proposed rule takes 

into account features of municipal bonds that differ 

from those of most other Fixed Income Securities. 

Principally, municipal bonds are issued with either 

‘‘serial’’ or ‘‘term’’ maturities or some combination 

thereof. The official statement issued in connection 

with a municipal bond offering describes the terms 

of the bonds and the issuer and/or obligor on the 

related bonds, which is comprised of a number of 

specific maturity sizes. The entire issue (sometimes 

referred to as the ‘‘deal size’’) receives the same 

credit rating and the various maturities are all 

subject to the provisions set forth in the official 

statement. The entire issue is based on a specified 

project or group of related projects and funded by 

the same revenue or other funding sources 

identified in the official statement. The Exchange 

believes that the proposed rule change is reasonable 

and appropriate in that pricing and liquidity of 

such maturity sizes is predominately based on the 

common characteristics of the aggregate issue of 

which the municipal bond is part. Thus, 

consideration of the aggregate issue rather than the 

individual bond component does not raise concerns 

regarding pricing or liquidity of the index 

components or of the Units overlying the applicable 

municipal bond index. 

21This proposed text is identical to the 

corresponding text of Commentary .02(a)(4) to Rule 

5.2(j)(3), except for the omission of the reference to 

‘‘index,’’ which is not applicable. 

22This proposed text is identical to the 

corresponding text of Commentary .02(a)(5) to Rule 

5.2(j)(3), except for the omission of the reference to 

‘‘index,’’ which is not applicable, and the exclusion 

of the text ‘‘consisting entirely of.’’ 

23Proposed rule changes for previously-listed 

series of Managed Fund Shares have similarly 

included the ability for such Managed Fund Share 

holdings to include cash and cash equivalents. See, 

e.g., SPDR Blackstone/GSO Senior Loan Approval, 

supra note 9, at 19768–69 and First Trust Preferred 

Securities and Income Approval, supra note 9, at 

76150. 

24Proposed rule changes for previously-listed 

series of Managed Fund Shares have similarly 

specified short-term instruments with respect to 

their inclusion in Managed Fund Share holdings. 

See, e.g., First Trust Preferred Securities and 

Income Approval, supra note 9, at 76150–51. 

(4) The portfolio must include a 

minimum of 13 component stocks; 

provided, however, that there would be 

no minimum number of component 

stocks if (a) one or more series of 

Derivative Securities Products or IndexLinked Securities constitute, at least in 

part, components underlying a series of 

Managed Fund Shares, or (b) one or 

more series of Derivative Securities 

Products or Index-Linked Securities 

account for 100% of the equity weight 

of the portfolio of a series of Managed 

Fund Shares; 16

(5) Equity securities (excluding 

unsponsored American Depository 

Receipts (‘‘ADRs’’)) in the portfolio must 

be U.S. Component Stocks listed on a 

national securities exchange and must 

be NMS Stocks as defined in Rule 600 

of Regulation NMS; 17

(6) For Derivative Securities Products 

and Index-Linked Securities, no more 

than 25% of the equity weight of the 

portfolio could include leveraged and/or 

inverse leveraged Derivative Securities 

Products or Index-Linked Securities; 

and 

(7) ADRs may be sponsored or 

unsponsored. However no more than 

10% of the equity weight of the 

portfolio shall consist of unsponsored 

ADRs. 

Proposed Commentary .01(b) would 

describe the standards for a Managed 

Fund Share portfolio that holds fixed 

income securities, which are debt 

securities 18 that are notes, bonds, 

debentures or evidence of indebtedness 

that include, but are not limited to, U.S. 

Department of Treasury securities 

(‘‘Treasury Securities’’), governmentsponsored entity securities (‘‘GSE 

Securities’’), municipal securities, trust 

preferred securities, supranational debt 

and debt of a foreign country or a 

subdivision thereof, investment grade 

and high yield corporate debt, bank 

loans, mortgage and asset backed 

securities, and commercial paper. The 

applicable portfolio holdings standards 

would be as follows: 

(1) Components that in the aggregate 

account for at least 75% of the fixed 

income weight of the portfolio shall 

meet the following: 

(i) each shall have a minimum 

original principal amount outstanding 

of $100 million or more; 19 or 

(iii) [sic] if a municipal bond 

component, such component shall be 

issued in an offering with an aggregate 

size, as set forth in the official statement 

of the offering, of $100 million or 

more; 20

(2) No component fixed-income 

security (excluding Treasury Securities 

and GSE Securities) could represent 

more than 30% of the fixed income 

weight of the portfolio, and the five 

most heavily weighted component fixed 

income securities in the portfolio must 

not in the aggregate account for more 

than 65% of the fixed income weight of 

the portfolio; 21

(3) An underlying portfolio (excluding 

exempted securities) must include a 

minimum of 13 non-affiliated issuers; 22

(4) Component securities that in [sic] 

aggregate account for at least 90% of the 

fixed income weight of the portfolio 

must be either (a) from issuers that are 

required to file reports pursuant to 

Sections 13 and 15(d) of the Act; (b) 

from issuers that have a worldwide 

market value of its outstanding common 

equity held by non-affiliates of $700 

million or more; (c) from issuers that 

have outstanding securities that are 

notes, bonds debentures, or evidence of 

indebtedness having a total remaining 

principal amount of at least $1 billion; 

(d) exempted securities as defined in 

Section 3(a)(12) of the Act; or (e) from 

issuers that are a government of a 

foreign country or a political 

subdivision of a foreign country; and 

(5) Non-agency mortgage-related and 

other asset-backed securities 

components of a portfolio shall not 

account for more than 20% of the 

weight of the fixed income portion of 

the portfolio. 

Proposed Commentary .01(c) would 

describe the standards for a Managed 

Fund Share portfolio that holds cash 

and cash equivalents.23 Specifically, the 

portfolio may hold short-term 

instruments with maturities of less than 

3 months. There would be no limitation 

to the percentage of the portfolio 

invested in such holdings. Short-term 

instruments would include, without 

limitation, the following: 24

(1) U.S. Government securities, 

including bills, notes and bonds 

differing as to maturity and rates of 

interest, which are either issued or 

guaranteed by the U.S. Treasury or by 

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25Proposed rule changes for previously-listed 

series of Managed Fund Shares have similarly 

included the ability for such Managed Fund Share 

holdings to include listed derivatives. See, e.g., 

WisdomTree Real Return Approval, supra note 9, 

at 13617 and WisdomTree Brazil Bond Approval, 

supra note 9, at 32163. 

26 ISG is comprised of an international group of 

exchanges, market centers, and market regulators 

that perform front-line market surveillance in their 

respective jurisdictions. See https://

www.isgportal.org/home.html. 

27Proposed rule changes for previously-listed 

series of Managed Fund Shares have similarly 

included disclosure requirements with respect to 

each portfolio holding, as applicable to the type of 

holding. See, e.g.. PIMCO Total Return Use of 

Derivatives Approval, supra note 9, at 44227. 

28A proposed rule change for series of Units 

previously listed and traded on the Exchange 

pursuant to Rule 5.2(j)(3) similarly included the 

ability for such Units’ holdings to include OTC 

derivatives, specifically OTC down-and-in put 

options, which are not NMS Stocks as defined in 

Rule 600 of Regulation NMS and therefore do not 

satisfy the requirements of Commentary .01(a)(A) to 

Rule 5.2(j)(3). See, e.g., NYSE Arca U.S. Equity 

Synthetic Reverse Convertible Index Fund 

Approval, supra note 9, at 23602. 

29Proposed rule changes for previously-listed 

series of Managed Fund Shares have similarly 

included disclosure requirements with respect to 

each portfolio holding, as applicable to the type of 

holding. See, e.g.. PIMCO Total Return Use of 

Derivatives Approval, supra note 9, at 44227. 

30Proposed rule changes for previously-listed 

series of Managed Fund Shares have similarly 

included the ability for such Managed Fund Shares 

to include illiquid assets. See, e.g., International 

Bear Approval, supra note 9, at 30375–76. Illiquid 

assets include securities subject to contractual or 

other restrictions on resale and other instruments 

that lack readily available markets as determined in 

accordance with Commission staff guidance. The 

Commission has stated that long-standing 

Commission guidelines have required open-end 

funds to hold no more than 15% of their net assets 

in illiquid securities and other illiquid assets. See 

Investment Company Act Release No. 28193 (March 

11, 2008), 73 FR 14618 (March 18, 2008), footnote 

34. See also Investment Company Act Release No. 

5847 (October 21, 1969), 35 FR 19989 (December 

31, 1970) (Statement Regarding ‘‘Restricted 

Securities’’); Investment Company Act Release No. 

18612 (March 12, 1992), 57 FR 9828 (March 20, 

1992) (Revisions of Guidelines to Form N–1A). A 

fund’s portfolio security is illiquid if it cannot be 

disposed of in the ordinary course of business 

within seven days at approximately the value 

ascribed to it by the fund. See Investment Company 

Act Release No. 14983 (March 12, 1986), 51 FR 

9773 (March 21, 1986) (adopting amendments to 

Rule 2a–7 under the 1940 Act); and Investment 

Company Act Release No. 17452 (April 23, 1990), 

55 FR 17933 (April 30, 1990) (adopting Rule 144A 

under the Securities Act of 1933). See also First 

Trust Preferred Securities and Income Approval, 

supra note 9, at 76151, n. 16. The Exchange 

understands that a number of factors are currently 

considered by investment companies in reaching 

liquidity decisions. Examples of factors that would 

be reasonable for a board of directors to take into 

account with respect to a Rule 144A security (but 

which would not necessarily be determinative) 

would include, among others: (1) The frequency of 

trades and quotes for the security; (2) the number 

of dealers willing to purchase or sell the security 

and the number of other potential purchasers; (3) 

dealer undertakings to make a market in the 

security; and (4) the nature of the security and the 

nature of the marketplace trades (e.g., the time 

needed to dispose of the security, the method of 

soliciting offers, and the mechanics of transfer). 

31 If a Managed Fund Share portfolio holds Rule 

144A securities, such securities would be subject to 

this 15% threshold if deemed to be illiquid by the 

Adviser. However, if deemed to be liquid by the 

Adviser, such Rule 144A securities would be 

subject to the other applicable standards. 

32See Approval Order, supra note 4 at 19548. 

33The Exchange made similar representations in 

the Approval Order. See id. at 19549. 

U.S. Government agencies or 

instrumentalities; 

(2) certificates of deposit issued 

against funds deposited in a bank or 

savings and loan association; 

(3) bankers’ acceptances, which are 

short-term credit instruments used to 

finance commercial transactions; 

(4) repurchase agreements and reverse 

repurchase agreements; 

(5) bank time deposits, which are 

monies kept on deposit with banks or 

savings and loan associations for a 

stated period of time at a fixed rate of 

interest; and 

(6) commercial paper, which are 

short-term unsecured promissory notes. 

Proposed Commentary .01(d) would 

describe the standards for a Managed 

Fund Share portfolio that holds listed 

and centrally cleared derivatives, 

including futures, options and cleared 

swaps on commodities, currencies and 

financial instruments (e.g., stocks, fixed 

income, interest rates, and volatility) or 

a basket or index of any of the 

foregoing.25 There would be no 

limitation to the percentage of the 

portfolio invested in such holdings; 

provided, however, that, in the 

aggregate, at least 90% of the weight of 

such holdings invested in futures and 

exchange-traded options shall consist of 

futures and options whose principal 

market is a member of the Intermarket 

Surveillance Group (‘‘ISG’’) or is a 

market with which the Exchange has a 

comprehensive surveillance sharing 

agreement (‘‘CSSA’’).26 Additionally, 

proposed Commentary .01(d)(2) requires 

certain information to be included on 

the Web site of each series of Managed 

Fund Shares holding any listed and 

centrally cleared derivative.27 The 

required information includes the 

following, to the extent relevant: ticker 

symbol, CUSIP or other identifier, a 

description of the holding, identity of 

the asset upon which the derivative is 

based, the strike price for any options, 

the quantity of each such derivative 

held as measured by select metrics, 

maturity date, coupon rate, effective 

date, market value and percentage 

weight of the holding in the portfolio. 

Proposed Commentary .01(e) would 

describe the standards for a Managed 

Fund Share portfolio that holds over the 

counter (‘‘OTC’’) derivatives, including 

forwards, options and swaps on 

commodities, currencies and financial 

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

interest rates, and volatility) or a basket 

or index of any of the foregoing.28 There 

would be no limitation to the percentage 

of the portfolio invested in such 

holdings. Additionally, proposed 

Commentary .01(e)(2) requires certain 

information to be included on the Web 

site of each series of Managed Fund 

Shares holding any OTC derivative.29

The required information includes the 

following, to the extent relevant: ticker 

symbol, CUSIP or other identifier, a 

description of the holding, identity of 

the asset upon which the derivative is 

based, the strike price for any options, 

the quantity of each such derivative 

held as measured by select metrics, 

maturity date, coupon rate, effective 

date, market value and percentage 

weight of the holding in the portfolio. 

Proposed Commentary .01(f) would 

describe the standards for a Managed 

Fund Share portfolio that holds illiquid 

assets.30 The portfolio could hold up to 

an aggregate amount of 15% of the 

weight of its portfolio (calculated at the 

time of investment) in assets deemed 

illiquid by the Adviser.31

The changes proposed herein would 

not have an impact on the existing rules 

applicable to the listing and trading of 

Managed Fund Shares, which address, 

for example, net asset value, creation 

and redemption of shares, availability of 

information, trading halts, surveillance 

and information bulletins. 

The Exchange believes that the 

proposed standards would continue to 

ensure transparency surrounding the 

listing process for Managed Fund 

Shares. Additionally, the Exchange 

believes that the proposed portfolio 

standards for listing and trading 

Managed Fund Shares, many of which 

track existing Exchange rules relating to 

Units, are reasonably designed to 

promote a fair and orderly market for 

such Managed Fund Shares.32 These 

proposed standards would also work in 

conjunction with the existing initial and 

continued listing criteria related to 

surveillance procedures and trading 

guidelines. 

In support of this proposal, the 

Exchange represents that: 33

(1) The Managed Fund Shares will 

continue to conform to the initial and 

continued listing criteria under Rule 

8.600; 

(2) the Exchange’s surveillance 

procedures are adequate to continue to 

properly monitor the trading of the 

Managed Fund Shares in all trading 

sessions and to deter and detect 

violations of Exchange rules. 

Specifically, the Exchange intends to 

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34 15 U.S.C. 78f(b). 

35 15 U.S.C. 78f(b)(5). 36See supra, note 9. 

37 15 U.S.C. 78s(b)(2). 

38 15 U.S.C. 78s(b)(3)(A). 

39 17 CFR 240.19b–4(e). 

40See Securities Exchange Act Release Nos. 

57561 (March 26, 2008), 73 FR 17390 (April 1, 

2008) (SR–NYSEArca–2008–29) (notice of filing of 

proposed rule change to amend eligibility criteria 

for components of an index underlying Investment 

Company Units); 57751 (May 1, 2008), 73 FR 25818 

(May 7, 2008) (SR–NYSEArca–2008–29) (order 

approving proposed rule change to amend 

eligibility criteria for components of an index 

underlying Investment Company Units). 

41See, e.g., Approval Order, supra note 4; 

International Bear Approval, supra note 9. 

42See Approval Order, supra note 4, at 19547. 

utilize its existing surveillance 

procedures applicable to derivative 

products, which will include Managed 

Fund Shares, to monitor trading in the 

Managed Fund Shares; 

(3) prior to the commencement of 

trading of a particular series of Managed 

Fund Shares, the Exchange will inform 

its Equity Trading Permit (‘‘ETP’’) 

Holders in a Bulletin of the special 

characteristics and risks associated with 

trading the Managed Fund Shares, 

including procedures for purchases and 

redemptions of Managed Fund Shares, 

suitability requirements under NYSE 

Arca Equities Rule 9.2(a), the risks 

involved in trading the Managed Fund 

Shares during the Opening and Late 

Trading Sessions when an updated 

Portfolio Indicative Value will not be 

calculated or publicly disseminated, 

information regarding the Portfolio 

Indicative Value, prospectus delivery 

requirements, and other trading 

information. In addition, the Bulletin 

will disclose that the Managed Fund 

Shares are subject to various fees and 

expenses, as described in the 

Registration Statement, and will discuss 

any exemptive, no-action, and 

interpretive relief granted by the 

Commission from any rules under the 

Act. Finally, the Bulletin will disclose 

that the net asset value for the Managed 

Fund Shares will be calculated after 4 

p.m. ET each trading day; and 

(4) the issuer of a series of Managed 

Fund Shares will be required to comply 

with Rule 10A–3 under the Act for the 

initial and continued listing of Managed 

Fund Shares, as provided under NYSE 

Arca Equities Rule 5.3. 

The Exchange notes that the proposed 

change is not otherwise intended to 

address any other issues and that the 

Exchange is not aware of any problems 

that ETP Holders or issuers would have 

in complying with the proposed change. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,34 in general, and 

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

of the Act,35 in particular, because 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, in general, to protect 

investors and the public interest. 

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 

because it would facilitate the listing 

and trading of additional Managed Fund 

Shares, which would enhance 

competition among market participants, 

to the benefit of investors and the 

marketplace. Specifically, after more 

than six years under the current process, 

whereby the Exchange is required to file 

a proposed rule change with the 

Commission for the listing and trading 

of each new series of Managed Fund 

Shares, the Exchange believes that it is 

appropriate to codify certain rules 

within Rule 8.600 that would generally 

eliminate the need for separate 

proposed rule changes. The Exchange 

believes that this would facilitate the 

listing and trading of additional types of 

Managed Fund Shares that have 

investment portfolios that are similar to 

investment portfolios for Units, which 

have been approved for listing and 

trading, thereby creating greater 

efficiencies in the listing process for the 

Exchange and the Commission. In this 

regard, the Exchange notes that the 

standards proposed for Managed Fund 

Share portfolios that include domestic 

equity securities, Derivative Securities 

Products, and Index-Linked Securities 

are based in large part on the existing 

equity security standards applicable to 

Units in Commentary .01 to Rule 

5.2(j)(3) and that the standards proposed 

for Managed Fund Share portfolios that 

include fixed income securities are 

based in large part on the existing fixed 

income standards applicable to Units in 

Commentary .02 to Rule 5.2(j)(3). 

Additionally, many of the standards 

proposed for other types of holdings of 

series of Managed Fund Shares are 

based on previous proposed rule 

changes for specific series of Managed 

Fund Shares.36 With respect to the 

proposed exclusion of Derivatives 

Securities Products and Index-Linked 

Securities from the requirements of 

proposed Commentary .01(a) of Rule 

8.600, the Exchange believes it is 

appropriate to exclude Index-Linked 

Securities as well as Derivative 

Securities Products from certain 

component stock eligibility criteria for 

Managed Fund Shares in so far as 

Derivative Securities Products and 

Index-Linked Securities are themselves 

subject to specific quantitative listing 

and continued listing requirements of a 

national securities exchange on which 

such securities are listed. Derivative 

Securities Products and Index-Linked 

Securities that are components of a 

fund’s portfolio would have been listed 

and traded on a national securities 

exchange pursuant to a proposed rule 

change approved by the Commission 

pursuant to Section 19(b)(2) of the Act 37

or submitted by a national securities 

exchange pursuant to Section 

19(b)(3)(A) of the Act 38 or would have 

been listed by a national securities 

exchange pursuant to the requirements 

of Rule 19b–4(e) under the Act.39 The 

Exchange also notes that Derivative 

Securities Products and Index-Linked 

Securities are derivatively priced, and, 

therefore, the Exchange believes that it 

would not be necessary to apply the 

proposed generic quantitative criteria 

(e.g., market capitalization, trading 

volume, or portfolio component 

weighting) applicable to equity 

securities other than Derivative 

Securities Products or Index-Linked 

Securities (e.g., common stocks) to such 

products.40

With respect to the proposed 

amendment to the continued listing 

requirement in Rule 8.600(d)(2)(A) to 

require dissemination of a Portfolio 

Indicative Value at least every 15 

seconds during the Core Trading 

Session (as defined in NYSE Arca 

Equities Rule 7.34), such requirement 

conforms to the requirement applicable 

to the dissemination of the Intraday 

Indicative Value for Investment 

Company Units in Commentary .01(c) 

and Commentary .02(c) to NYSE Arca 

Equities Rule 5.2(j)(3). In addition, such 

dissemination is consistent with 

representations made in proposed rule 

changes for issues of Managed Fund 

Shares previously approved by the 

Commission.41

The proposed rule change is also 

designed to protect investors and the 

public interest because Managed Fund 

Shares listed and traded pursuant to 

Rule 8.600, including pursuant to the 

proposed new portfolio standards, 

would continue to be subject to the full 

panoply of Exchange rules and 

procedures that currently govern the 

trading of equity securities on the 

Exchange.42

The Exchange believes that the 

proposed rule change is designed to 

prevent fraudulent and manipulative 

acts and practices because the Managed 

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43 15 U.S.C. 78f(b)(8). 

44See proposed Commentaries .01(a) and (b) to 

NYSE Arca Equities Rule 8.600. 

Fund Shares will be listed and traded 

on the Exchange pursuant to the initial 

and continued listing criteria in Rule 

8.600. The Exchange has in place 

surveillance procedures that are 

adequate to properly monitor trading in 

the Managed Fund Shares in all trading 

sessions and to deter and detect 

violations of Exchange rules and 

applicable federal securities laws. The 

Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’), on behalf of 

the Exchange, will communicate as 

needed regarding trading in Managed 

Fund Shares with other markets that are 

members of the ISG, including all U.S. 

securities exchanges and futures 

exchanges on which the components are 

traded. In addition, the Exchange may 

obtain information regarding trading in 

Managed Fund Shares from other 

markets that are members of the ISG, 

including all U.S. securities exchanges 

and futures exchanges on which the 

components are traded, or with which 

the Exchange has in place a CSSA. 

The Exchange also believes that the 

proposed rule change would fulfill the 

intended objective of Rule 19b–4(e) 

under the Act by allowing Managed 

Fund Shares that satisfy the proposed 

listing standards to be listed and traded 

without separate Commission approval. 

However, as proposed, the Exchange 

would continue to file separate 

proposed rule changes before the listing 

and trading of Managed Fund Shares 

that do not satisfy the additional criteria 

described above. 

For these reasons, the Exchange 

believes that the proposal is consistent 

with the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,43 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. 

Instead, the Exchange believes that the 

proposed rule change would facilitate 

the listing and trading of additional 

types of Managed Fund Shares and 

result in a significantly more efficient 

process surrounding the listing and 

trading of Managed Fund Shares, which 

will enhance competition among market 

participants, to the benefit of investors 

and the marketplace. The Exchange 

believes that this would reduce the time 

frame for bringing Managed Fund 

Shares to market, thereby reducing the 

burdens on issuers and other market 

participants and promoting competition. 

In turn, the Exchange believes that the 

proposed change would make the 

process for listing Managed Fund Shares 

more competitive by applying uniform 

listing standards with respect to 

Managed Fund Shares portfolio 

holdings. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. In 

particular, the Commission seeks 

comments on the following questions: 

1. According to the Exchange, many 

of the requirements of the proposed rule 

applicable to equity and fixed income 

securities holdings are identical to the 

requirements for equity and fixed 

income index-based ETFs, 

respectively.44

a. Do commenters believe that these 

requirements for index-based ETFs 

should equally apply to the listing and 

trading of Managed Fund Shares? If so, 

why? If not, why not? 

b. Do commenters believe that the 

requirements for index-based ETFs that 

the Exchange proposes to apply to 

Managed Fund Shares are adequate to 

deter manipulation irrespective of 

similarities between the two types of 

products? If so, why? If not, why not? 

2. In addition, as noted by the 

Exchange, some of the requirements of 

the proposed rule are identical to 

certain, specifically tailored 

requirements referenced in other 

previously approved proposed rule 

changes pertaining to the listing and 

trading of specific series of Managed 

Fund Shares. What are commenters’ 

views on whether these specifically 

tailored requirements for certain series 

of Managed Fund Shares ought to 

equally apply to all Managed Fund 

Shares by virtue of being incorporated 

into these proposed generic listing 

standards? 

3. Do commenters believe that the 

proposed listing requirements are 

adequate to deter manipulation and 

other trading abuses of the price of 

generically listed Managed Fund 

Shares? If so, why? If not, why not? 

4. Under the proposed rule, there 

would be no limitation to the percentage 

of the portfolio invested in short-term 

cash equivalents or derivative 

instruments. In addition, under the 

proposed rule, there would be no 

limitation as to the types of short-term 

cash equivalents or derivative 

instruments that could be held in the 

portfolio. To what extent, if at all, 

should the proposed generic listing 

standards restrict the holding of these 

portfolio components? If so, how and 

why? If not, why not? 

5. Do commenters have views on 

whether the proposed generic listing 

requirements for Managed Fund Shares 

have adequately accounted for all types 

of assets that a portfolio can hold? 

Should the proposed rules include 

additional or fewer restrictions? Are 

there other measures that the 

Commission and the Exchange should 

consider with respect to a portfolio of 

Managed Fund Shares that are 

generically listed? 

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–2015–02 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2015–02. 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 

mstockstill on DSK4VPTVN1PROD with NOTICES

12696 Federal Register / Vol. 80, No. 46 / Tuesday, March 10, 2015 / Notices 

45 17 CFR 200.30–3(a)(12). 

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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

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–2015–02 and should be 

submitted on or before March 31, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.45

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–05480 Filed 3–9–15; 8:45 am] 

BILLING CODE 8011–01–P 

SOCIAL SECURITY ADMINISTRATION 

[Docket No. SSA 2014–0015] 

Privacy Act of 1974, as Amended; 

Computer Matching Program (Social 

Security Administration (SSA)/

Department of Veterans Affairs (VA), 

Veterans Benefits Administration 

(VBA))—Match Number 1008 

AGENCY: Social Security Administration 

(SSA). 

ACTION: Notice of a renewal of an 

existing computer matching program 

that will expire on November 10, 2014. 

SUMMARY: In accordance with the 

provisions of the Privacy Act, as 

amended, this notice announces a 

renewal of an existing computer 

matching program that we are currently 

conducting with VA/VBA. 

DATES: We will file a report of the 

subject matching program with the 

Committee on Homeland Security and 

Governmental Affairs of the Senate; the 

Committee on Oversight and 

Government Reform of the House of 

Representatives; and the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget 

(OMB). The matching program will be 

effective as indicated below. 

ADDRESSES: Interested parties may 

comment on this notice by either 

telefaxing to (410) 966–0869 or writing 

to the Executive Director, Office of 

Privacy and Disclosure, Office of the 

General Counsel, Social Security 

Administration, 617 Altmeyer Building, 

6401 Security Boulevard, Baltimore, MD 

21235–6401. All comments received 

will be available for public inspection at 

this address. 

FOR FURTHER INFORMATION CONTACT: The 

Executive Director, Office of Privacy 

and Disclosure, Office of the General 

Counsel, as shown above. 

SUPPLEMENTARY INFORMATION: 

A. General 

The Computer Matching and Privacy 

Protection Act of 1988 (Public Law 

(Pub. L.) 100–503), amended the Privacy 

Act (5 U.S.C. 552a) by describing the 

conditions under which computer 

matching involving the Federal 

government could be performed and 

adding certain protections for persons 

applying for, and receiving, Federal 

benefits. Section 7201 of the Omnibus 

Budget Reconciliation Act of 1990 (Pub. 

L. 101–508) further amended the 

Privacy Act regarding protections for 

such persons. 

The Privacy Act, as amended, 

regulates the use of computer matching 

by Federal agencies when records in a 

system of records are matched with 

other Federal, State, or local government 

records. It requires Federal agencies 

involved in computer matching 

programs to: 

(1) Negotiate written agreements with 

the other agency or agencies 

participating in the matching programs; 

(2) Obtain approval of the matching 

agreement by the Data Integrity Boards 

of the participating Federal agencies; 

(3) Publish notice of the computer 

matching program in the Federal 

Register; 

(4) Furnish detailed reports about 

matching programs to Congress and 

OMB; 

(5) Notify applicants and beneficiaries 

that their records are subject to 

matching; and 

(6) Verify match findings before 

reducing, suspending, terminating, or 

denying a person’s benefits or 

payments. 

B. SSA Computer Matches Subject to 

the Privacy Act 

We have taken action to ensure that 

all of our computer matching programs 

comply with the requirements of the 

Privacy Act, as amended. 

Kirsten J. Moncada, 

Executive Director, Office of Privacy and 

Disclosure, Office of the General Counsel. 

Notice of Computer Matching Program, 

SSA With the Department of Veterans 

Affairs (VA), Veterans Benefits 

Administration (VBA) 

A. Participating Agencies 

SSA and VA/VBA 

B. Purpose of the Matching Program 

The purpose of this matching program 

is to provide us with information 

necessary to: (1) Identify certain 

Supplemental Security Income (SSI) 

and Special Veterans Benefit (SVB) 

recipients under Title XVI and Title VIII 

of the Social Security Act (Act), 

respectively, who receive VAadministered benefits; (2) determine the 

eligibility or amount of payment for SSI 

and SVB recipients; and (3) identify the 

income of individuals who may be 

eligible for Medicare cost-sharing 

assistance through the Medicare Savings 

Program as part of our Medicare 

outreach efforts. 

C. Authority for Conducting the 

Matching Program 

The legal authority for VA to disclose 

information under this agreement is 

1631(f) of the Act (42 U.S.C. 1383(f)). 

The legal authorities for us to conduct 

this computer matching program are 

806(b), 1144, and 1631(e)(1)(B) and (f) of 

the Act (42 U.S.C. 1006(b), 1320b–14, 

and 1383(e)(1)(B) and (f)). 

D. Categories of Records and Persons 

Covered by the Matching Program 

1. Systems of Records 

VA will provide us with electronic 

files containing compensation and 

pension payment data from its system of 

records (SOR) entitled the 

‘‘Compensation, Pension, Education, 

and Vocational Rehabilitation and 

Employment Records—VA’’ (58VA/21/

22/28), republished with updated name 

at 74 FR 14865 (April 1, 2009) and last 

amended at 77 FR 42593 (July 19, 2012). 

We will match the VA data with SSI/ 

SVB payment information maintained 

in our SOR entitled ‘‘Supplemental 

Security Income Record and Special 

Veterans Benefits’’ (SSA/ODSSIS 60– 

0103), last published at 71 FR 1830 

(January 11, 2006). 

2. Number of Records 

We estimate receiving 60 million 

records annually from VA. 

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