Federal Register / Vol. 86, No. 153 / Thursday, August 12, 2021 / Notices 44449 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4NYSE Arca Rule 8.601–E(c)(1) defines the term 

‘‘Active Proxy Portfolio Share’’ as a security that (a) 

is issued by an ‘‘Investment Company’’ registered 

under the Investment Company Act of 1940 (‘‘1940 

Act’’) (15 U.S.C. 80a) organized as an open-end 

management investment company that invests in a 

portfolio of securities selected by the Investment 

Company’s investment adviser consistent with the 

Investment Company’s investment objectives and 

policies; (b) is issued in a specified minimum 

number of shares, or multiples thereof, in return for 

a deposit by the purchaser of the Proxy Portfolio 

and/or cash with a value equal to the next 

determined net asset value (‘‘NAV’’); (c) when 

aggregated in the same specified minimum number 

of Active Proxy Portfolio Shares, or multiples 

thereof, may be redeemed at a holder’s request in 

return for the Proxy Portfolio and/or cash to the 

holder by the issuer with a value equal to the next 

determined NAV; and (d) the portfolio holdings for 

which are disclosed within at least 60 days 

following the end of every fiscal quarter. 

5 15 U.S.C. 80a et seq. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92595; File No. SR– 

NYSEArca–2021–64)] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change To Amend Rule 8.601–E 

(Active Proxy Portfolio Shares) To 

Provide for the Use of Custom Baskets 

August 6, 2021. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on July 28, 

2021, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Rule 8.601–E (Active Proxy Portfolio 

Shares) to provide for the use of 

‘‘Custom Baskets’’ consistent with the 

exemptive relief issued pursuant to the 

Investment Company Act of 1940 

applicable to a series of Active Proxy 

Portfolio Shares. The proposed rule 

change is available on the Exchange’s 

website at www.nyse.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 8.601–E (Active Proxy Portfolio 

Shares) 4 to provide for the use of 

‘‘Custom Baskets’’ consistent with the 

exemptive relief issued pursuant to the 

Investment Company Act of 1940 5

applicable to a series of Active Proxy 

Portfolio Shares. 

To effectuate this change, the 

Exchange proposes the following 

amendments to Rule 8.601–E. 

First, a new section 4 would be added 

to Rule 8.601–E(c) (Definitions) defining 

‘‘Custom Basket’’ to mean a portfolio of 

securities that is different from the 

Proxy Portfolio (as defined in Rule 

8.601–E(c)(3)) and is otherwise 

consistent with the exemptive relief 

issued pursuant to the Investment 

Company Act of 1940 applicable to a 

series of Active Proxy Portfolio Shares. 

Current sections (4) and (5) of Rule 

8.601–E(c) would be renumbered (5) 

and (6), respectively. The definition of 

‘‘Active Proxy Portfolio Share’’ in NYSE 

Arca Rule 8.601–E(c)(1) would be 

amended to provide for creations of 

shares in return for a deposit by the 

purchaser of, and redemptions of shares 

at a holder’s request in return for, a 

Custom Basket rather than a Proxy 

Portfolio to the extent permitted by a 

fund’s exemptive relief. In addition, the 

definition of ‘‘Reporting Authority’’ in 

respect of a particular series of Active 

Proxy Portfolio Shares in current section 

4 (proposed section 5) of Rule 8.601E(c) 

would be amended to provide for 

Custom Baskets to the extent permitted 

by a fund’s exemptive relief. Currently, 

‘‘Reporting Authority’’ in respect of a 

particular series of Active Proxy 

Portfolio Shares means the Exchange, an 

institution, or a reporting service 

designated by the Exchange or by the 

exchange that lists a particular series of 

Active Proxy Portfolio Shares (if the 

Exchange is trading such series 

pursuant to unlisted trading privileges) 

as the official source for calculating and 

reporting information relating to such 

series, including, but not limited to, 

NAV, the Actual Portfolio, Proxy 

Portfolio or other information relating to 

the issuance, redemption or trading of 

Active Proxy Portfolio Shares. The rule 

further provides that a series of Active 

Proxy Portfolio Shares may have more 

than one Reporting Authority, each 

having different functions. The 

Exchange would add ‘‘Custom Basket’’ 

to the non-exclusive list of information 

relating to Active Proxy Portfolio Shares 

that a Reporting Authority calculates 

and reports, i.e., including, but not 

limited to, NAV, the Actual Portfolio, 

Proxy Portfolio, Custom Basket, or other 

information relating to the issuance, 

redemption or trading of Active Proxy 

Portfolio Shares. 

Second, Rule 8.601–E(d) (Initial and 

Continued Listing), which currently 

provides criteria that Active Proxy 

Portfolio Shares must satisfy for initial 

and continued listing on the Exchange, 

would be amended to incorporate 

specific initial and continued listing 

criteria for Custom Baskets. Specifically, 

current Rule 8.601–E(d)(1)(B) provides 

that the Exchange shall obtain a 

representation from the issuer of each 

series of Active Proxy Portfolio Shares 

that the NAV per share for the series 

shall be calculated daily and that the 

NAV, the Proxy Portfolio, and the 

Actual Portfolio shall be made publicly 

available to all market participants at 

the same time. These requirements 

would become proposed Rule 8.601– 

E(d)(1)(B)(i) & (ii). The Exchange 

proposes a third romanette providing 

that the Exchange shall also obtain a 

representation from the issuer of each 

series of Active Proxy Portfolio Shares 

that the issuer and any person acting on 

behalf of the series of Active Proxy 

Portfolio Shares will comply with 

Regulation Fair Disclosure under the 

Securities Exchange Act of 1934, 

including with respect to any Custom 

Basket. 

Third, a new section (d)(2)(B)(ii) 

would be added to Rule 8.601–E 

providing that, with respect to each 

Custom Basket utilized by a series of 

Active Proxy Portfolio Shares, each 

business day, before the opening of 

trading in the Core Trading Session (as 

defined in Rule 7.34–E(a)), the 

investment company shall make 

publicly available on its website the 

composition of any Custom Basket 


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44450 Federal Register / Vol. 86, No. 153 / Thursday, August 12, 2021 / Notices 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

transacted on the previous business day, 

except a Custom Basket that differs from 

the applicable Proxy Portfolio only with 

respect to cash. Rule 8.601–E(d)(2)(B), 

which is currently titled ‘‘Proxy 

Portfolio,’’ would be amended to read 

‘‘Proxy Portfolio and Custom Basket.’’ 

Finally, the Exchange would make 

conforming amendments to 

Commentary .04 and Commentary .05 of 

Rule 8.601–E, as follows. 

First, Commentary .04 to NYSE Arca 

Rule 8.601–E provides that, if the 

investment adviser to the Investment 

Company issuing Active Proxy Portfolio 

Shares is registered as a broker-dealer or 

is affiliated with a broker-dealer, such 

investment adviser will erect and 

maintain a ‘‘fire wall’’ between the 

investment adviser and personnel of the 

broker-dealer or broker-dealer affiliate, 

as applicable, with respect to access to 

information concerning the composition 

and/or changes to such Investment 

Company’s Actual Portfolio and/or 

Proxy Portfolio. Commentary .04 further 

provides that any person related to the 

investment adviser or Investment 

Company who makes decisions 

pertaining to the Investment Company’s 

Actual Portfolio and/or Proxy Portfolio, 

or has access to non-public information 

regarding the Investment Company’s 

Actual Portfolio and/or the Proxy 

Portfolio, or changes thereto must be 

subject to procedures reasonably 

designed to prevent the use and 

dissemination of material non-public 

information regarding the Actual 

Portfolio and/or the Proxy Portfolio, or 

changes thereto. 

Commentary .04 would be amended 

to provide for Custom Baskets to the 

extent permitted by a fund’s exemptive 

relief. As proposed, Commentary .04 

would provide that if the investment 

adviser to the Investment Company 

issuing Active Proxy Portfolio Shares is 

registered as a broker-dealer or is 

affiliated with a broker-dealer, such 

investment adviser will erect and 

maintain a ‘‘fire wall’’ between the 

investment adviser and personnel of the 

broker-dealer or broker-dealer affiliate, 

as applicable, with respect to access to 

information concerning the composition 

and/or changes to such Investment 

Company’s Actual Portfolio, Proxy 

Portfolio, and/or Custom Basket, as 

applicable. In addition, Commentary .04 

would provide that any person related 

to the investment adviser or Investment 

Company who makes decisions 

pertaining to the Investment Company’s 

Actual Portfolio, Proxy Portfolio, and/or 

Custom Basket, as applicable, or has 

access to non-public information 

regarding the Investment Company’s 

Actual Portfolio, the Proxy Portfolio, 

and/or the Custom Basket, as applicable, 

or changes thereto must be subject to 

procedures reasonably designed to 

prevent the use and dissemination of 

material non-public information 

regarding the Actual Portfolio, the Proxy 

Portfolio, and/or the Custom Basket, as 

applicable, or changes thereto. 

Second, Commentary .05 to Rule 

8.601–E provides that any person or 

entity, including a custodian, Reporting 

Authority, distributor, or administrator, 

who has access to nonpublic 

information regarding the Investment 

Company’s Actual Portfolio or the Proxy 

Portfolio or changes thereto, must be 

subject to procedures reasonably 

designed to prevent the use and 

dissemination of material non-public 

information regarding the applicable 

Investment Company Actual Portfolio or 

the Proxy Portfolio or changes thereto. 

Moreover, if any such person or entity 

is registered as a broker-dealer or 

affiliated with a broker-dealer, such 

person or entity will erect and maintain 

a ‘‘fire wall’’ between the person or 

entity and the broker-dealer with 

respect to access to information 

concerning the composition and/or 

changes to such Investment Company 

Actual Portfolio or Proxy Portfolio. 

Commentary .05 would similarly be 

amended to provide for Custom Baskets 

to the extent permitted by a fund’s 

exemptive relief. As proposed, 

Commentary .05 would be amended to 

provide that any person or entity, 

including a custodian, Reporting 

Authority, distributor, or administrator, 

who has access to non-public 

information regarding the Investment 

Company’s Actual Portfolio, or the 

Proxy Portfolio, or the Custom Basket, 

as applicable, or changes thereto, must 

be subject to procedures reasonably 

designed to prevent the use and 

dissemination of material non-public 

information regarding the applicable 

Investment Company Actual Portfolio, 

the Proxy Portfolio, or the Custom 

Basket, as applicable, or changes 

thereto. Moreover, if any such person or 

entity is registered as a broker-dealer or 

affiliated with a broker-dealer, such 

person or entity will erect and maintain 

a ‘‘fire wall’’ between the person or 

entity and the broker-dealer with 

respect to access to information 

concerning the composition and/or 

changes to such Investment Company 

Actual Portfolio, Proxy Portfolio, or 

Custom Basket, as applicable. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

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

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

of the Act,7 in particular, in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. 

The Exchange believes that amending 

Rule 8.601–E to incorporate specific 

initial and continued listing criteria 

required to be met by Active Proxy 

Portfolio Shares that utilize Custom 

Baskets is designed to prevent 

fraudulent and manipulative acts and 

practices. The Exchange believes that 

the daily dissemination of the 

composition of any Custom Basket 

transacted on the previous day, except 

a Custom Basket that differs from the 

applicable Proxy Portfolio only with 

respect to cash, together with the right 

of Authorized Participants to create and 

redeem each day at the NAV, will 

enable market participants to value and 

trade shares in a manner that will not 

lead to significant deviations between 

the Bid/Ask Price and NAV of shares of 

a series of Active Proxy Portfolio Shares. 

Further, including Custom Baskets in 

the requirements of Commentaries .04 

and .05 would act as a safeguard against 

any misuse and improper dissemination 

of nonpublic information related to a 

fund’s Custom Basket or changes 

thereto. The requirement that any 

person or entity implement procedures 

reasonably designed to prevent the use 

and dissemination of material nonpublic information regarding a Custom 

Basket will act to prevent any 

individual or entity from sharing such 

information externally and the internal 

‘‘fire wall’’ requirements applicable 

where an entity is a registered brokerdealer or affiliated with a broker-dealer 

will act to make sure that no entity will 

be able to misuse the data for their own 

purposes. 

As such, the Exchange believes that 

the proposed amendment of Rule 8.601– 

E is designed to prevent fraudulent and 

manipulative acts and practices. 

The proposed rule change is also 

designed to perfect the mechanism of a 

free and open market and, in general, to 

protect investors and the public interest 

in that it will permit use of Custom 

Baskets consistent with an issuer’s 

exemptive relief in a manner that will 

benefit investors by increasing 

efficiencies in the creation/redemption 

process. The Exchange believes this will 


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Federal Register / Vol. 86, No. 153 / Thursday, August 12, 2021 / Notices 44451 

8 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

enhance competition among market 

participants, to the benefit of investors 

and the marketplace. Similarly, the 

Exchange believes that the proposed 

initial and continued listing standards 

are designed to promote disclosure and 

transparency with respect to the use of 

Custom Baskets consistent with an 

issuer’s exemptive relief. Specifically, 

the Exchange believes that requiring as 

an initial listing condition that an issuer 

and any person acting on behalf of the 

series of Active Proxy Portfolio Shares 

comply with Regulation Fair Disclosure 

under the Securities Exchange Act of 

1934, including with respect to any 

Custom Basket, would further the full 

and fair disclosure objectives of 

Regulation Fair Disclosure to the benefit 

of the investing public and all market 

participants. Further, the Exchange 

believes that requiring as a continued 

listing condition that, with respect to 

each Custom Basket utilized by a series 

of Active Proxy Portfolio Shares, each 

business day, before the opening of 

trading in the Core Trading Session (as 

defined in Rule 7.34–E(a)), an 

investment company make publicly 

available on its website the composition 

of any Custom Basket transacted on the 

previous business day, except a Custom 

Basket that differs from the applicable 

Proxy Portfolio only with respect to 

cash, also furthers the goals of 

transparency and full and fair 

disclosure, to the benefit of investors 

and the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes the proposed rule 

change, by permitting use of Custom 

Baskets consistent with an issuer’s 

exemptive relief, would introduce 

additional competition among various 

ETF products to the benefit of investors. 

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 up to 90 days (i) as the 

Commission may designate if it finds 

such longer period to be appropriate 

and publishes its reasons for so finding 

or (ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2021–64 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2021–64. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2021–64, and 

should be submitted on or before 

September 2, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–17173 Filed 8–11–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92597; File No. SR–CBOE– 

2021–044] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Its Fees 

Schedule Relating to the Options 

Regulatory Fee 

August 6, 2021. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on August 2, 

2021, Cboe Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘Cboe Options’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe Exchange, Inc. (the ‘‘Exchange’’ 

or ‘‘Cboe Options’’) proposes to amend 

its Fees Schedule relating to the Options 

Regulatory Fee. The text of the proposed 

rule change is provided in Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://www.cboe.com/ 

AboutCBOE/CBOELegal

RegulatoryHome.aspx), at the 

Exchange’s Office of the Secretary, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 


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