30524 Federal Register / Vol. 87, No. 97 / Thursday, May 19, 2022 / Notices 

24 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 89185 

(June 29, 2020), 85 FR 40328 (July 6, 2020) (SR– 

NYSEArca–2019–95). Rule 8.601–E(c)(1) provides 

that ‘‘[t]he term ‘‘Active Proxy Portfolio Share’’ 

means a security that (a) is issued by a investment 

company registered under the Investment Company 

Act of 1940 (‘‘Investment Company’’) organized as 

an open-end management investment company that 

invests in a portfolio of securities selected by the 

Investment Company’s investment adviser 

consistent with the Investment Company’s 

investment objectives and policies; (b) is issued in 

a specified minimum number of shares, or 

multiples thereof, in return for a deposit by the 

purchaser of the Proxy Portfolio or Custom Basket, 

as applicable, 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 or Custom Basket, as 

applicable, 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.’’ Rule 8.601–E(c)(2) provides that 

‘‘[t]he term ‘‘Actual Portfolio’’ means the identities 

and quantities of the securities and other assets 

held by the Investment Company that shall form the 

basis for the Investment Company’s calculation of 

NAV at the end of the business day.’’ Rule 8.601– 

E(c)(3) provides that ‘‘[t]he term ‘‘Proxy Portfolio’’ 

means a specified portfolio of securities, other 

financial instruments and/or cash designed to track 

closely the daily performance of the Actual 

Portfolio of a series of Active Proxy Portfolio Shares 

as provided in the exemptive relief pursuant to the 

Investment Company Act of 1940 applicable to such 

series.’’ Rule 8.601–E(c)(4) provides that the term 

‘‘Custom Basket’’ means a portfolio of securities 

that is different from the Proxy Portfolio 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. 

5The Commission has previously approved 

listing and trading on the Exchange of a number of 

issues of Managed Fund Shares under NYSE Arca 

Rule 8.600–E. See, e.g., Securities Exchange Act 

Release Nos. 57801 (May 8, 2008), 73 FR 27878 

(May 14, 2008) (SR–NYSEArca–2008–31) (order 

approving Exchange listing and trading of twelve 

actively-managed funds of the WisdomTree Trust); 

60460 (August 7, 2009), 74 FR 41468 (August 17, 

2009) (SR–NYSEArca–2009–55) (order approving 

listing of Dent Tactical ETF); 63076 (October 12, 

2010), 75 FR 63874 (October 18, 2010) (SR– 

NYSEArca–2010–79) (order approving Exchange 

listing and trading of Cambria Global Tactical ETF); 

63802 (January 31, 2011), 76 FR 6503 (February 4, 

2011) (SR–NYSEArca–2010–118) (order approving 

Exchange listing and trading of the SiM Dynamic 

Allocation Diversified Income ETF and SiM 

Dynamic Allocation Growth Income ETF). The 

Commission also has approved a proposed rule 

change relating to generic listing standards for 

Managed Fund Shares. See Securities Exchange Act 

Release No. 78397 (July 22, 2016), 81 FR 49320 

(July 27, 2016) (SR–NYSEArca–2015–110) 

(amending NYSE Arca Equities Rule 8.600 to adopt 

generic listing standards for Managed Fund Shares). 

6NYSE Arca Rule 8.600–E(c)(2) defines the term 

‘‘Disclosed Portfolio’’ as the identities and 

quantities of the securities and other assets held by 

the Investment Company that will form the basis for 

the Investment Company’s calculation of net asset 

value at the end of the business day. NYSE Arca 

Rule 8.600–E(d)(2)(B)(i) requires that the Disclosed 

Portfolio will be disseminated at least once daily 

and will be made available to all market 

participants at the same time. 

7A mutual fund is required to file with the 

Commission its complete portfolio schedules for the 

second and fourth fiscal quarters on Form N–CSR 

under the 1940 Act. Information reported on Form 

N–PORT for the third month of a fund’s fiscal 

quarter will be made publicly available 60 days 

after the end of a fund’s fiscal quarter. Form N– 

PORT requires reporting of a fund’s complete 

portfolio holdings on a position-by-position basis 

on a quarterly basis within 60 days after fiscal 

quarter end. Investors can obtain a series of Active 

Proxy Portfolio Shares’ Statement of Additional 

Information (‘‘SAI’’), its Shareholder Reports, its 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

CboeBZX–2022–030 and should be 

submitted on or before June 9, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–10736 Filed 5–18–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94908; File No. SR– 

NYSEArca–2022–28] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To List and Trade Shares 

of the Principal Real Estate Active 

Opportunities ETF Under NYSE Arca 

Rule 8.601 (Active Proxy Portfolio 

Shares) 

May 13, 2022. 

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 May 4, 

2022, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the 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 to list and 

trade shares of the Principal Real Estate 

Active Opportunities ETF under NYSE 

Arca Rule 8.601–E. 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 has adopted NYSE 

Arca Rule 8.601–E for the purpose of 

permitting the listing and trading, or 

trading pursuant to unlisted trading 

privileges (‘‘UTP’’), of Active Proxy 

Portfolio Shares, which are securities 

issued by an actively managed open-end 

investment management company.4

Commentary .01 to Rule 8.601–E 

requires the Exchange to file separate 

proposals under Section 19(b) of the Act 

before listing and trading any series of 

Active Proxy Portfolio Shares on the 

Exchange. Therefore, the Exchange is 

submitting this proposal in order to list 

and trade shares (‘‘Shares’’) as Active 

Proxy Portfolio Shares of the Principal 

Real Estate Active Opportunities ETF 

(the ‘‘Fund’’) under Rule 8.601–E. 

Key Features of Active Proxy Portfolio 

Shares 

While funds issuing Active Proxy 

Portfolio Shares will be activelymanaged and, to that extent, will be 

similar to Managed Fund Shares, Active 

Proxy Portfolio Shares differ from 

Managed Fund Shares in the following 

important respects. First, in contrast to 

Managed Fund Shares, which are 

actively-managed funds listed and 

traded under NYSE Arca Rule 8.600–E 5

and for which a ‘‘Disclosed Portfolio’’ is 

required to be disseminated at least 

once daily,6 the portfolio for an issue of 

Active Proxy Portfolio Shares will be 

publicly disclosed within at least 60 

days following the end of every fiscal 

quarter in accordance with normal 

disclosure requirements otherwise 

applicable to open-end management 

investment companies registered under 

the Investment Company Act of 1940 

(the ‘‘1940 Act’’).7 The composition of 


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Federal Register / Vol. 87, No. 97 / Thursday, May 19, 2022 / Notices 30525 

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

CEN, filed annually. A series of Active Proxy 

Portfolio Shares’ SAI and Shareholder Reports will 

be available free upon request from the Investment 

Company, and those documents and the Form N– 

PORT, Form N–CSR, and Form N–CEN may be 

viewed on-screen or downloaded from the 

Commission’s website at www.sec.gov. 

8 ‘‘Business Day’’ is defined to mean any day that 

the Exchange is open, including any day when the 

Fund satisfies redemption requests as required by 

Section 22(e) of the 1940 Act. 

9See Securities Exchange Act Release Nos. 89185 

(June 29, 2020), 85 FR 40328 (July 6, 2020) (SR– 

NYSEArca–2019–95) (Notice of Filing of 

Amendment No. 6 and Order Granting Accelerated 

Approval of a Proposed Rule Change, as Modified 

by Amendment No. 6, to Adopt NYSE Arca Rule 

8.601–E to Permit the Listing and Trading of Active 

Proxy Portfolio Shares and To List and Trade 

Shares of the Natixis U.S. Equity Opportunities ETF 

Under Proposed NYSE Arca Rule 8.601–E); 89192 

(June 30, 2020), 85 FR 40699 (July 7, 2020) (SR– 

NYSEArca–2019–96) (Notice of Filing of 

Amendment No. 5 and Order Granting Accelerated 

Approval of a Proposed Rule Change, as Modified 

by Amendment No. 5, to List and Trade Two Series 

of Active Proxy Portfolio Shares Issued by the 

American Century ETF Trust under NYSE Arca 

Rule 8.601–E); 89191 (June 30, 2020), 85 FR 40358 

(July 6, 2020) (SR–NYSEArca–2019–92) (Notice of 

Filing of Amendment No. 3 and Order Granting 

Accelerated Approval of a Proposed Rule Change, 

as Modified by Amendment No. 3, to List and Trade 

Four Series of Active Proxy Portfolio Shares Issued 

by T. Rowe Price Exchange-Traded Funds, Inc. 

under NYSE Arca Rule 8.601–E); 89438 (July 31, 

2020), 85 FR 47821 (August 6, 2020) (SR– 

NYSEArca–2020–51) (Order Granting Approval of a 

Proposed Rule Change, as Modified by Amendment 

No. 2, to List and Trade Shares of Natixis Vaughan 

Nelson Select ETF and Natixis Vaughan Nelson 

MidCap ETF under NYSE Arca Rule 8.601–E). 

10See Securities Exchange Act Release Nos. 

92104 (June 3, 2021), 86 FR 30635 (June 9, 2021) 

(NYSEArca–2021–46) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

to List and Trade Shares of the Nuveen Santa 

Barbara Dividend Growth ETF, Nuveen Small Cap 

Select ETF, and Nuveen Winslow Large-Cap 

Growth ESG ETF Under NYSE Arca Rule 8.601–E 

(Active Proxy Portfolio Shares); and 92958 

(September 13, 2021), 86 FR 51933 (September 17, 

2021) (NYSEArca–2021–77) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

To List and Trade Shares of the Nuveen Growth 

Opportunities ETF Under NYSE Arca Rule 8.601– 

E (Active Proxy Portfolio Shares). 

11The Trust is registered under the 1940 Act. On 

February 9, 2022, the Trust filed a post-effective 

amendment to its registration statement on Form N– 

1A under the 1940 Act relating to the Fund (File 

No. 333–201935) (the ‘‘Registration Statement’’). On 

February 9, 2022, the Trust, the Distributor, and the 

Adviser, filed an application for an order under 

Section 6(c) of the 1940 Act for exemptions from 

various provisions of the 1940 Act and rules 

thereunder (File No. 812–15308, dated February 9, 

2022) (the ‘‘Application’’). See Investment 

Company Act Release No. 34345 (July 27, 2021). On 

April 26, 2022, the Commission issued an order (the 

‘‘Exemptive Order’’) under the 1940 Act granting 

the exemptions requested in the Application 

(Investment Company Act Release No. 34571, April 

26, 2022). Investments made by the Fund will 

comply with the conditions set forth in the 

Application and the Exemptive Order. See, e.g., 

note 13, infra. The description of the operation of 

the Fund herein is based, in part, on the 

Registration Statement, the Application and the 

Exemptive Order. The Exchange will not commence 

trading in Shares of the Fund until the Registration 

Statement is effective. 

12An investment adviser to an open-end fund is 

required to be registered under the Investment 

Advisers Act of 1940 (the ‘‘Advisers Act’’). As a 

result, the Adviser and its related personnel will be 

subject to the provisions of Rule 204A–1 under the 

Advisers Act relating to codes of ethics. This Rule 

requires investment advisers to adopt a code of 

ethics that reflects the fiduciary nature of the 

relationship to clients as well as compliance with 

other applicable securities laws. Accordingly, 

procedures designed to prevent the communication 

and misuse of non-public information by an 

investment adviser must be consistent with Rule 

204A–1 under the Advisers Act. In addition, Rule 

206(4)–7 under the Advisers Act makes it unlawful 

for an investment adviser to provide investment 

advice to clients unless such investment adviser has 

(i) adopted and implemented written policies and 

procedures reasonably designed to prevent 

violations, by the investment adviser and its 

supervised persons, of the Advisers Act and the 

Commission rules adopted thereunder; (ii) 

implemented, at a minimum, an annual review 

regarding the adequacy of the policies and 

procedures established pursuant to subparagraph (i) 

above and the effectiveness of their 

implementation; and (iii) designated an individual 

(who is a supervised person) responsible for 

administering the policies and procedures adopted 

under subparagraph (i) above. 

the portfolio of an issue of Active Proxy 

Portfolio Shares would not be available 

at commencement of Exchange listing 

and trading. Second, in connection with 

the creation and redemption of Active 

Proxy Portfolio Shares, such creation or 

redemption may be exchanged for a 

Proxy Portfolio or Custom Basket, as 

applicable, and/or cash with a value 

equal to the next-determined NAV. A 

series of Active Proxy Portfolio Shares 

will disclose the Proxy Portfolio on a 

daily basis, which, as described above, 

is designed to track closely the daily 

performance of the Actual Portfolio of a 

series of Active Proxy Portfolio Shares, 

instead of the actual holdings of the 

Investment Company, as provided by a 

series of Managed Fund Shares. As set 

forth in NYSE Arca Rule 8.601– 

E(d)(2)(B)(ii), for Active Proxy Portfolio 

Shares using a Custom Basket, each 

Business Day,8 before the opening of 

trading in the Core Trading Session (as 

defined in NYSE Arca Rule 7.34–E (a)), 

the Investment Company shall 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. 

The Commission has previously 

approved 9 and noticed for immediate 

effectiveness 10 the listing and trading 

on the Exchange of series of Active 

Proxy Portfolio Shares under NYSE 

Arca Rule 8.601–E. 

The Shares of the Fund will be issued 

by the Principal Exchange-Traded 

Funds (the ‘‘Trust’’), which is organized 

as a statutory trust organized under the 

laws of Delaware and registered with 

the Commission as an open-end 

management investment company. 

Principal Global Investors, LLC will be 

the investment adviser to the Fund (the 

‘‘Adviser’’). State Street Bank and Trust 

Company will serve as the Fund’s 

transfer agent, custodian, and will 

conduct certain administrative 

functions. ALPS Distributors, Inc. will 

act as the distributor (the ‘‘Distributor’’) 

for the Fund.11

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, Proxy 

Portfolio, and/or Custom Basket, as 

applicable. 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, 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, Proxy 

Portfolio, and/or the Custom Basket, as 

applicable, or changes thereto. 

Commentary .04 is similar to 

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

Arca Rule 5.2–E(j)(3); however, 

Commentary .04, in connection with the 

establishment of a ‘‘fire wall’’ between 

the investment adviser and the brokerdealer, reflects the applicable open-end 

fund’s portfolio, not an underlying 

benchmark index, as is the case with 

index-based funds.12 Commentary .04 is 

also similar to Commentary .06 to Rule 

8.600–E related to Managed Fund 

Shares, except that Commentary .04 

relates to establishment and 

maintenance of a ‘‘fire wall’’ between 

the investment adviser and personnel of 

the broker-dealer or broker-dealer 

affiliate, as applicable, applicable to an 

Investment Company’s Actual Portfolio, 

Proxy Portfolio, and/or Custom Basket, 

as applicable, or changes thereto, and 

not just to the underlying portfolio, as 

is the case with Managed Fund Shares. 

In addition, Commentary .05 to Rule 

8.601–E provides that any person or 

entity, including a custodian, Reporting 


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30526 Federal Register / Vol. 87, No. 97 / Thursday, May 19, 2022 / Notices 

13The ‘‘Tracking Basket’’ is the Proxy Portfolio 

for purposes of Rule 8.601–E(c)(3). 

14Pursuant to the Application and Exemptive 

Order, the permissible investments for the Fund 

include only the following instruments: ETFs 

traded on a U.S. exchange; exchange-traded notes 

(‘‘ETNs’’) traded on a U.S. exchange; U.S. exchangetraded common stocks, common stocks listed on a 

foreign exchange that trade on such exchange 

contemporaneously with the Shares (‘‘foreign 

common stocks’’) in the Exchange’s Core Trading 

Session (normally, 9:30 a.m. to 4:00 p.m. Eastern 

Time (‘‘E.T.’’)); U.S. exchange-traded preferred 

stocks, U.S. exchange-traded American Depositary 

Receipts (‘‘ADRs’’); U.S. exchange-traded real estate 

investment trusts; U.S. exchange-traded commodity 

pools; U.S. exchange-traded metals trusts; U.S. 

exchange-traded currency trusts; and U.S. 

exchange-traded futures that trade 

contemporaneously with the Shares. In addition, 

the Fund may hold cash and cash equivalents 

(short-term U.S. Treasury securities, government 

money market funds, and repurchase agreements). 

Pursuant to the Application and Exemptive Order, 

the Fund will not hold short positions or invest in 

derivatives other than U.S. exchange-traded futures, 

will not borrow for investment purposes, and will 

not purchase any securities that are illiquid 

investments at the time of purchase. 

15Real estate companies include real estate 

investment trusts (‘‘REITs’’) and non-REITs. REITs 

are pooled investment vehicles that invest in 

income producing real estate, real estate related 

loans, or other types of real estate interests. REITs 

are corporations or business trusts that are 

permitted to eliminate corporate level federal 

income taxes by meeting certain requirements of the 

Internal Revenue Code. 

Authority, distributor, or administrator, 

who has access to non-public 

information regarding the Investment 

Company’s Actual Portfolio, 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. 

The Adviser is not registered as a 

broker-dealer but is affiliated with 

broker-dealers. The Adviser has 

implemented and will maintain a ‘‘fire 

wall’’ with respect to such broker-dealer 

affiliates regarding access to information 

concerning the composition of and/or 

changes to the Fund’s Actual Portfolio, 

Proxy Portfolio, and/or Custom Basket, 

as applicable. 

In the event (a) the Adviser becomes 

registered as a broker-dealer or becomes 

newly affiliated with a broker-dealer, or 

(b) any new adviser or sub-adviser is a 

registered broker-dealer, or becomes 

affiliated with a broker-dealer, it will 

implement and maintain a ‘‘fire wall’’ 

with respect to its relevant personnel or 

its broker-dealer affiliate regarding 

access to information concerning the 

composition and/or changes to the 

Fund’s Actual Portfolio, Proxy Portfolio, 

and/or Custom Basket, as applicable, 

and will be subject to procedures 

designed to prevent the use and 

dissemination of material non-public 

information regarding the Fund’s Actual 

Portfolio, Proxy Portfolio, and/or 

Custom Basket, as applicable, or 

changes thereto. Any person related to 

the Adviser or the Fund who makes 

decisions pertaining to the Fund’s 

Actual Portfolio, the Proxy Portfolio, or 

Custom Basket, as applicable, or has 

access to non-public information 

regarding the Fund’s Actual Portfolio, 

the Proxy Portfolio, and/or the Custom 

Basket, as applicable, or changes thereto 

are subject to procedures reasonably 

designed to prevent the use and 

dissemination of material non-public 

information regarding the Fund’s Actual 

Portfolio, the Proxy Portfolio, and/or the 

Custom Basket, as applicable, or 

changes thereto. 

In addition, any person or entity, 

including any service provider for the 

Fund, who has access to non-public 

information regarding the Fund’s Actual 

Portfolio, the Proxy Portfolio, and/or the 

Custom Basket, as applicable, or 

changes thereto, will be subject to 

procedures reasonably designed to 

prevent the use and dissemination of 

material non-public information 

regarding the Fund’s Actual Portfolio, 

the Proxy Portfolio, and/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 has erected and will 

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 the Fund’s Actual Portfolio, 

Proxy Portfolio, and/or Custom Basket, 

as applicable. 

Description of the Fund 

According to the Registration 

Statement, the Adviser will identify a 

‘‘Tracking Basket’’ 13 for the Fund, 

which is designed to closely track the 

daily performance of the Fund but is not 

the Fund’s Actual Portfolio. The 

Tracking Basket is comprised of (1) 

select recently disclosed portfolio 

holdings (‘‘Strategy Components’’); (2) 

liquid ETFs that convey information 

about the types of instruments (that are 

not otherwise fully represented by the 

Strategy Components) in which the fund 

invests (‘‘Representative ETFs’’); and (3) 

cash and cash equivalents. 

Representative ETFs are selected for 

inclusion in the Tracking Basket such 

that, when aggregated with the other 

Tracking Basket components, the 

Tracking Basket corresponds to the 

Fund’s overall holdings exposure. 

The Fund will publish on its website 

a Tracking Basket before the 

commencement of trading of the Fund’s 

Shares on each Business Day, and the 

Adviser will not make intra-day changes 

to the Tracking Basket except to correct 

errors in the published Tracking Basket. 

Disclosure of the Tracking Basket will 

be compliant with Rule 8.601–E(c)(3). 

In addition, on each Business Day 

before the commencement of trading in 

Shares on the listing exchange, the Fund 

publishes Tracking Basket Weight 

Overlap on its website. The Tracking 

Basket Weight Overlap is the percentage 

weight overlap between the holdings of 

the prior Business Day’s Tracking 

Basket compared to the holdings of the 

Fund that formed the basis for the 

Fund’s calculation of NAV at the end of 

the prior Business Day. It is calculated 

by taking the lesser weight of each asset 

held in common between the Fund’s 

Actual Portfolio and the Tracking 

Basket, and adding the totals. The 

Tracking Basket Weight Overlap is 

intended to provide investors with an 

understanding of the degree to which 

the Tracking Basket and the Fund’s 

Actual Portfolio overlap and help 

investors evaluate the risk that the 

performance of the Tracking Basket may 

deviate from the performance of the 

portfolio holdings of the Fund. 

The Fund’s holdings will conform to 

the permissible investments as set forth 

in the Application and Exemptive 

Order, and the holdings will be 

consistent with all requirements in the 

Application and Exemptive Order.14

Any foreign common stocks held by the 

Fund will be 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. 

According to the Registration 

Statement, the Fund’s investment 

objective is to seek total return. Under 

normal market conditions, the Fund 

will invest at least 80% of its net assets 

(including the amount of any 

borrowings for investment purposes) in 

securities of companies principally 

engaged in the real estate industry at the 

time of purchase.15


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16See note 14, supra. 

17The Fund’s performance is benchmarked 

against the FTSE NAREIT All Equity REITs Index. 

18The records relating to Bid/Ask Prices will be 

retained by the Fund or its service providers. The 

‘‘Bid/Ask Price’’ is the midpoint of the highest bid 

and lowest offer based upon the National Best Bid 

and Offer as of the time of calculation of the Fund’s 

NAV. The ‘‘National Best Bid and Offer’’ is the 

current national best bid and national best offer as 

disseminated by the Consolidated Quotation 

System or UTP Plan Securities Information 

Processor. The ‘‘Closing Price’’ of Shares is the 

official closing price of the Shares on the Exchange. 

19The ‘‘premium/discount’’ refers to the 

premium or discount to the NAV at the end of a 

trading day and will be calculated based on the last 

Bid/Ask Price or the Closing Price on such trading 

day. 

20See note 4, supra. Rule 8.601–E(c)(3) provides 

that the website for each series of Active Proxy 

Portfolio Shares shall disclose the information 

regarding the Proxy Portfolio as provided in the 

exemptive relief pursuant to the 1940 Act 

applicable to such series, including the following, 

to the extent applicable: (i) Ticker symbol; (ii) 

CUSIP or other identifier; (iii) Description of 

holding; (iv) Quantity of each security or other asset 

held; and (v) Percentage weighting of the holding 

in the portfolio. 

The Fund seeks to minimize its 

investments in traditional real estate 

sectors (e.g., conventional office, retail, 

apartments, and industrial) because of 

changing investor preferences and 

shifting economic and social factors. 

The Fund, instead, seeks to favor 

investments in growing non-traditional 

real estate sectors that are benefiting 

from these economic and societal shifts 

(e.g., data centers, wireless towers, and 

single-family rentals). 

Investment Restrictions 

The Shares of the Fund will conform 

to the initial and continued listing 

criteria under Rule 8.601–E. The Fund’s 

holdings will be limited to and 

consistent with permissible holdings as 

described in the Application and 

Exemptive Order and all requirements 

in the Application and Exemptive 

Order.16 The Fund’s investments, 

including derivatives, will be consistent 

with its investment objective and will 

not be used to enhance leverage 

(although certain derivatives and other 

investments may result in leverage). 

That is, the Fund’s investments will not 

be used to seek performance that is the 

multiple or inverse multiple (e.g., 2X or 

¥3X) of the Fund’s primary broadbased securities benchmark index (as 

defined in Form N–1A).17

Creations and Redemptions of Shares 

According to the Registration 

Statement, the Trust will issue and sell 

Shares of the Fund only in specified 

minimum size ‘‘Creation Units’’ through 

the Distributor on a continuous basis at 

their NAV next determined after receipt 

of an order in proper form on any 

Business Day. The NAV of the Fund’s 

Shares will be calculated each Business 

Day as of the close of regular trading on 

the Exchange, ordinarily 4:00 p.m. E.T. 

A Creation Unit will consist of at least 

20,000 Shares. 

According to the Registration 

Statement, Shares of the Fund will be 

purchased and redeemed in Creation 

Units. Creation Units generally can be 

purchased or redeemed in-kind in 

exchange for the Strategy Components 

included in the Fund’s Tracking Basket, 

together with an amount of cash 

corresponding to the value of the 

Representative ETFs and cash and cash 

equivalents that form the remainder of 

the Tracking Basket. 

Fund Shares may be redeemed only in 

Creation Units at their NAV next 

determined after receipt of a redemption 

request in proper form by the 

Distributor and only on a Business Day. 

The redemption proceeds for a Creation 

Unit will consist of the in-kind 

redemption basket (‘‘In-Kind 

Redemption Basket’’) and a cash 

redemption amount (‘‘Cash Redemption 

Amount’’), or an all cash payment 

(‘‘Cash Value’’), in all instances equal to 

the value of a Creation Unit. 

The Cash Redemption Amount will 

typically include an amount, reflecting 

the difference, if any, between the NAV 

of a Creation Unit and the market value 

of the securities in the In-Kind 

Redemption Basket (the ‘‘Balancing 

Amount’’). If the NAV per Creation Unit 

exceeds the market value of the 

securities in the In-Kind Redemption 

Basket, the Fund pays the Balancing 

Amount to the redeeming investor. By 

contrast, if the NAV per Creation Unit 

is less than the market value of the 

securities in the In-Kind Redemption 

Basket, the redeeming investor pays the 

Balancing Amount to the Fund. 

Each Business Day, prior to the 

opening of trading on the Exchange, the 

Fund will publish through the National 

Securities Clearing Corporation the 

names and the required number of 

shares of each security in the In-Kind 

Redemption Basket to be included in 

the current redemption proceeds for the 

Fund (based on information at the end 

of the previous Business Day) (subject to 

correction). If applicable, the Fund will 

also make available on each Business 

Day, the estimated cash component 

(‘‘Cash Component’’ or Cash Value, 

effective through and including the 

previous Business Day, per Creation 

Unit. 

All orders to purchase or redeem 

Creation Units must be placed with the 

Distributor by or through an Authorized 

Participant. Orders to purchase or 

redeem Creation Units will be accepted 

until the ‘‘Order Cut-Off Time,’’ 

generally expected to be 4:00 p.m. E.T. 

for in-kind creation and redemption 

baskets (‘‘In-Kind Creation and 

Redemption Baskets’’), and 2:00 p.m. 

E.T. for Custom Baskets (which includes 

cash value) transactions. Accordingly, 

In-Kind Creation and Redemption 

Baskets are expected to be accepted 

until the close of regular trading on the 

Exchange on each Business Day, which 

is usually 4:00 p.m. E.T. On days when 

the Exchange or bond markets close 

earlier than normal (such as the day 

before a holiday), the Order Cut-Off 

Time is expected to track the Exchange 

or bond markets closing and be 

similarly earlier than normal. 

Availability of Information 

The Fund’s website 

(www.principalfunds.com) will include 

a form of the prospectus for the Fund 

that may be downloaded. The Fund’s 

website will include on a daily basis, 

per Share of the Fund, the prior 

Business Day’s NAV, the prior Business 

Day’s ‘‘Closing Price’’ or ‘‘Bid/Ask 

Price,’’ 18 and a calculation of the 

premium/discount of such Closing Price 

or Bid/Ask Price against such NAV.19

The Adviser has represented that the 

Fund’s website will also provide: (1) 

Any other information regarding 

premiums/discounts as may be required 

for other ETFs under Rule 6c–11 under 

the 1940 Act, as amended, and (2) any 

information regarding the bid/ask 

spread for the Fund as may be required 

for other ETFs under Rule 6c–11 under 

the 1940 Act, as amended. The Fund’s 

website also will disclose the 

information required under Rule 8.601– 

E(c)(3).20 The website and information 

will be publicly available at no charge. 

The identity and quantity of 

investments in the Tracking Basket for 

the Fund will be publicly available on 

the Fund’s website before the 

commencement of trading in Shares on 

each Business Day. The website will 

also include information relating to the 

Tracking Basket Weight Overlap, as 

discussed above. With respect to each 

Custom Basket utilized by a series of 

Active Proxy Portfolio shares, before the 

opening of trading in the Core Trading 

Session (as defined in NYSE Arca Rule 

7.34–E(a)), the Investment Company 

shall 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. 

Typical mutual fund-style annual, 

semi-annual and quarterly disclosures 

contained in the Fund’s Commission 


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21See note 7, supra. 

22See NYSE Arca Rule 7.12–E. 

23FINRA conducts cross-market surveillances on 

behalf of the Exchange pursuant to a regulatory 

services agreement. The Exchange is responsible for 

FINRA’s performance under this regulatory services 

agreement. 

filings will be provided on the Fund’s 

website on a current basis.21 Thus, the 

Fund will publish the portfolio contents 

of its Actual Portfolio on a periodic 

basis, and no less than 60 days after the 

end of every fiscal quarter. 

Investors can also obtain the Fund’s 

SAI, Shareholder Reports, Form N–CSR, 

N–PORT, and Form N–CEN. The 

prospectus, SAI, and Shareholder 

Reports are available free upon request, 

and those documents and the Form N– 

CSR, N–PORT, and Form N–CEN may 

be viewed on-screen or downloaded 

from the Commission’s website. The 

Exchange also notes that pursuant to the 

Application, the Fund must comply 

with Regulation Fair Disclosure, which 

prohibits selective disclosure of any 

material non-public information. 

Information regarding the market 

price of Shares and trading volume in 

Shares, will be continually available on 

a real-time basis throughout the day on 

brokers’ computer screens and other 

electronic services. The previous day’s 

closing price and trading volume 

information for the Shares will be 

published daily in the financial section 

of newspapers. 

Quotation and last sale information 

for the Shares and U.S. exchange-traded 

instruments (excluding futures 

contracts) will be available via the 

Consolidated Tape Association (‘‘CTA’’) 

high-speed line, from the exchanges on 

which such securities trade, or through 

major market data vendors or 

subscription services. Quotation and 

last sale information for futures 

contracts will be available from the 

exchanges on which they trade. Intraday 

price information for all exchangetraded instruments, which include all 

eligible instruments except cash and 

cash equivalents, will be available from 

the exchanges on which they trade, or 

through major market data vendors or 

subscription services. Intraday price 

information for cash equivalents is 

available through major market data 

vendors, subscription services and/or 

pricing services. 

Trading Halts 

With respect to trading halts, the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in the Shares of 

the Fund.22 Trading in Shares of the 

Fund will be halted if the circuit breaker 

parameters in NYSE Arca Rule 7.12–E 

have been reached. Trading also may be 

halted because of market conditions or 

for reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. Trading in the Shares will 

be subject to NYSE Arca Rule 8.601– 

E(d)(2)(D), which sets forth 

circumstances under which Shares of 

the Fund will be halted. 

Specifically, Rule 8.601–E(d)(2)(D) 

provides that the Exchange may 

consider all relevant factors in 

exercising its discretion to halt trading 

in a series of Active Proxy Portfolio 

Shares. Trading may be halted because 

of market conditions or for reasons that, 

in the view of the Exchange, make 

trading in the series of Active Proxy 

Portfolio Shares inadvisable. These may 

include: (a) The extent to which trading 

is not occurring in the securities and/or 

the financial instruments composing the 

Proxy Portfolio and/or Actual Portfolio; 

or (b) whether other unusual conditions 

or circumstances detrimental to the 

maintenance of a fair and orderly 

market are present. If the Exchange 

becomes aware that the NAV, Proxy 

Portfolio, or Actual Portfolio with 

respect to a series of Active Proxy 

Portfolio Shares is not disseminated to 

all market participants at the same time, 

the Exchange shall halt trading in such 

series until such time as the NAV, Proxy 

Portfolio, or Actual Portfolio is available 

to all market participants at the same 

time. 

Trading Rules 

The Exchange deems the Shares to be 

equity securities, thus rendering trading 

in the Shares subject to the Exchange’s 

existing rules governing the trading of 

equity securities. Shares will trade on 

the NYSE Arca Marketplace in all 

trading sessions in accordance with 

NYSE Arca Rule 7.34–E(a). As provided 

in NYSE Arca Rule 7.6–E, the minimum 

price variation (‘‘MPV’’) for quoting and 

entry of orders in equity securities 

traded on the NYSE Arca Marketplace is 

$0.01, with the exception of securities 

that are priced less than $1.00 for which 

the MPV for order entry is $0.0001. 

The Shares will conform to the initial 

and continued listing criteria under 

NYSE Arca Rule 8.601–E. The Exchange 

has appropriate rules to facilitate 

trading in the Shares during all trading 

sessions. 

A minimum of 100,000 Shares for the 

Fund will be outstanding at the 

commencement of trading on the 

Exchange. In addition, pursuant to Rule 

8.601–E(d)(1)(B), the Exchange, prior to 

commencement of trading in the Shares, 

will obtain a representation from the 

Trust that the NAV per Share of the 

Fund will be calculated daily, that the 

NAV, Proxy Portfolio, and the Actual 

Portfolio for the Fund will be made 

publicly available to all market 

participants at the same time, and the 

Trust and any person acting on behalf 

of the Trust will comply with 

Regulation Fair Disclosure under the 

Securities Exchange Act of 1934, 

including with respect to any Custom 

Basket. 

With respect to Active Proxy Portfolio 

Shares, all of the Exchange member 

obligations relating to product 

description and prospectus delivery 

requirements will continue to apply in 

accordance with Exchange rules and 

federal securities laws, and the 

Exchange and the Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 

will continue to monitor Exchange 

members for compliance with such 

requirements. 

Surveillance 

The Exchange represents that trading 

in the Shares will be subject to the 

existing trading surveillances, 

administered by the Exchange, as well 

as cross-market surveillances 

administered by FINRA on behalf of the 

Exchange, which are designed to detect 

violations of Exchange rules and 

applicable federal securities laws.23 The 

Exchange represents that these 

procedures are adequate to properly 

monitor Exchange trading of the Shares 

in all trading sessions and to deter and 

detect violations of Exchange rules and 

federal securities laws applicable to 

trading on the Exchange. 

The surveillances referred to above 

generally focus on detecting securities 

trading outside their normal patterns, 

which could be indicative of 

manipulative or other violative activity. 

When such situations are detected, 

surveillance analysis follows and 

investigations are opened, where 

appropriate, to review the behavior of 

all relevant parties for all relevant 

trading violations. 

The Exchange or FINRA, on behalf of 

the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares and underlying 

exchange-traded instruments with other 

markets and other entities that are 

members of the ISG, and the Exchange 

or FINRA, on behalf of the Exchange, or 

both, may obtain trading information 

regarding trading such securities and 

underlying exchange-traded instruments 

from such markets and other entities. In 

addition, the Exchange may obtain 

information regarding trading in such 

securities and underlying exchangetraded instruments from markets and 

other entities that are members of ISG or 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 97 / Thursday, May 19, 2022 / Notices 30529 

24For a list of the current members of ISG, see 

www.isgportal.org. 

25 15 U.S.C. 78f(b). 

26 15 U.S.C. 78f(b)(5). 

27The Exchange represents that, for initial and 

continued listing, the Fund will be in compliance 

with Rule 10A–3 under the Act, as provided by 

NYSE Arca Rule 5.3–E. 

28See note 14, supra. 

29The Fund’s performance is benchmarked 

against the FTSE NAREIT All Equity REITs Index. 

with which the Exchange has in place 

a comprehensive surveillance sharing 

agreement.24

The Adviser will make available daily 

to FINRA and the Exchange the Actual 

Portfolio of the Fund, upon request, in 

order to facilitate the performance of the 

surveillances referred to above. 

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

Commentary .03 to NYSE Arca Rule 

8.601–E provides that the Exchange will 

implement and maintain written 

surveillance procedures for Active 

Proxy Portfolio Shares. As part of these 

surveillance procedures, the Investment 

Company’s investment adviser will, 

upon request by the Exchange or 

FINRA, on behalf of the Exchange, make 

available to the Exchange or FINRA the 

daily Actual Portfolio holdings of each 

series of Active Proxy Portfolio Shares. 

The Exchange believes that the ability to 

access the information on an as needed 

basis will provide it with sufficient 

information to perform the necessary 

regulatory functions associated with 

listing and trading series of Active 

Proxy Portfolio Shares on the Exchange, 

including the ability to monitor 

compliance with the initial and 

continued listing requirements as well 

as the ability to surveil for manipulation 

of Active Proxy Portfolio Shares. 

The Exchange will utilize its existing 

procedures to monitor issuer 

compliance with the requirements of 

Rule 8.601–E. For example, the 

Exchange will continue to use intraday 

alerts that will notify Exchange 

personnel of trading activity throughout 

the day that may indicate that unusual 

conditions or circumstances are present 

that could be detrimental to the 

maintenance of a fair and orderly 

market. The Exchange will require from 

the issuer of a series of Active Proxy 

Portfolio Shares, upon initial listing and 

periodically thereafter, a representation 

that it is in compliance with Rule 

8.601–E. The Exchange notes that 

Commentary .01 to Rule 8.601–E 

requires an issuer of Active Proxy 

Portfolio Shares to notify the Exchange 

of any failure to comply with the 

continued listing requirements of Rule 

8.601–E. In addition, the Exchange will 

require the issuer to represent that it 

will notify the Exchange of any failure 

to comply with the terms of applicable 

exemptive and no-action relief. As part 

of its surveillance procedures, the 

Exchange will rely on the foregoing 

procedures to become aware of any noncompliance with the requirements of 

Rule 8.601–E. 

With respect to the Fund, all 

statements and representations made in 

this filing regarding (a) the description 

of the portfolio or reference asset, (b) 

limitations on portfolio holdings or 

reference assets, or (c) the applicability 

of Exchange listing rules specified in 

this rule filing shall constitute 

continued listing requirements for 

listing the Shares on the Exchange. The 

Exchange will obtain a representation 

from the Trust, prior to commencement 

of trading in the Shares of the Fund, that 

it will advise the Exchange of any 

failure by the Fund to comply with the 

continued listing requirements, and, 

pursuant to its obligations under 

Section 19(g)(1) of the Act, the Exchange 

will monitor for compliance with the 

continued listing requirements. If the 

Fund is not in compliance with the 

applicable listing requirements, the 

Exchange will commence delisting 

procedures under NYSE Arca Rule 5.5– 

E(m). 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,25 in general, and 

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

of the Act,26 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.27

With respect to the proposed listing 

and trading of Shares of the Fund, the 

Exchange believes that the proposed 

rule change is designed to prevent 

fraudulent and manipulative acts and 

practices in that the Shares will be 

listed and traded on the Exchange 

pursuant to the initial and continued 

listing criteria in NYSE Arca Rule 

8.601–E. 

The Fund’s holdings will conform to 

the permissible investments as set forth 

in the Application and Exemptive 

Order, and the holdings will be 

consistent with all requirements in the 

Application and Exemptive Order.28

The Exchange or FINRA, on behalf of 

the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares and underlying 

exchange-traded instruments with other 

markets and other entities that are 

members of the ISG, and the Exchange 

or FINRA, on behalf of the Exchange, or 

both, may obtain trading information 

regarding trading in the Shares and 

underlying exchange-traded instruments 

from such markets and other entities. In 

addition, the Exchange may obtain 

information regarding trading in the 

Shares and underlying exchange-traded 

instruments from markets and other 

entities that are members of ISG or with 

which the Exchange has in place a 

comprehensive surveillance sharing 

agreement. Any foreign common stocks 

held by the Fund will be traded on an 

exchange that is a member of the ISG or 

with which the Exchange has in place 

a comprehensive surveillance sharing 

agreement. 

The daily dissemination of the 

identity and quantity of Tracking Basket 

component investments, together with 

the right of Authorized Participants to 

create and redeem each day at the NAV, 

will be sufficient for market participants 

to value and trade Shares in a manner 

that will not lead to significant 

deviations between the Shares’ Bid/Ask 

Price and NAV. 

The Fund’s investments, including 

derivatives, will be consistent with its 

investment objective and will not be 

used to enhance leverage (although 

certain derivatives and other 

investments may result in leverage). 

That is, the Fund’s investments will not 

be used to seek performance that is the 

multiple or inverse multiple (e.g., 2X or 

¥3X) of the Fund’s primary broadbased securities benchmark index (as 

defined in Form N–1A).29

The proposed rule change is designed 

to promote just and equitable principles 

of trade and to protect investors and the 

public interest in that the Exchange will 

obtain a representation from the Trust 

that the NAV per Share of the Fund will 

be calculated daily and that the NAV, 

Tracking Basket, Actual Portfolio, and/ 

or Custom Basket, as applicable, for the 

Fund will be made available to all 

market participants at the same time. 

Investors can obtain the Fund’s SAI, 

shareholder reports, and its Form N– 

CSR, Form N–PORT, and Form N–CEN. 

The Fund’s SAI and shareholder reports 

will be available free upon request from 

the Fund, and those documents and the 

Form N–CSR, Form N–PORT, and Form 

N–CEN may be viewed on-screen or 

downloaded from the Commission’s 

website. 

Commentary .03 to NYSE Arca Rule 

8.601–E provides that the Exchange will 


jspears on DSK121TN23PROD with NOTICES1
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30See note 4, supra. 

31See note 14, supra. 

32 15 U.S.C. 78s(b)(3)(A). 

33 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

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

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

implement and maintain written 

surveillance procedures for Active 

Proxy Portfolio Shares. As part of these 

surveillance procedures, the Investment 

Company’s investment adviser will, 

upon request by the Exchange or 

FINRA, on behalf of the Exchange, make 

available to the Exchange or FINRA the 

daily portfolio holdings of each series of 

Active Proxy Portfolio Shares. The 

Exchange believes that the ability to 

access the information on an as needed 

basis will provide it with sufficient 

information to perform the necessary 

regulatory functions associated with 

listing and trading series of Active 

Proxy Portfolio Shares on the Exchange, 

including the ability to monitor 

compliance with the initial and 

continued listing requirements as well 

as the ability to surveil for manipulation 

of Active Proxy Portfolio Shares. With 

respect to the Fund, the Adviser will 

make available daily to FINRA and the 

Exchange the portfolio holdings of the 

Fund upon request in order to facilitate 

the performance of the surveillances 

referred to above. 

The Exchange will utilize its existing 

procedures to monitor compliance with 

the requirements of Rule 8.601–E. For 

example, the Exchange will continue to 

use intraday alerts that will notify 

Exchange personnel of trading activity 

throughout the day that may indicate 

that unusual conditions or 

circumstances are present that could be 

detrimental to the maintenance of a fair 

and orderly market. The Exchange will 

require from the Trust, upon initial 

listing and periodically thereafter, a 

representation that it is in compliance 

with Rule 8.601–E. The Exchange notes 

that Commentary .01 to Rule 8.601–E 

requires the issuer of the Shares to 

notify the Exchange of any failure to 

comply with the continued listing 

requirements of Rule 8.601–E. In 

addition, the Exchange will require the 

issuer to represent that it will notify the 

Exchange of any failure to comply with 

the terms of applicable exemptive and 

no-action relief. The Exchange will rely 

on the foregoing procedures to become 

aware of any non-compliance with the 

requirements of Rule 8.601–E. 

In addition, with respect to the Fund, 

a large amount of information will be 

publicly available regarding the Fund 

and the Shares, thereby promoting 

market transparency. 

Quotation and last sale information 

for the Shares and U.S. exchange-traded 

instruments (excluding futures 

contracts) will be available via the CTA 

high-speed line, from the exchanges on 

which such securities trade, or through 

major market data vendors or 

subscription services. Quotation and 

last sale information for futures 

contracts will be available from the 

exchanges on which they trade. Intraday 

price information for all exchangetraded instruments, which include all 

eligible instruments except cash and 

cash equivalents, will be available from 

the exchanges on which they trade, or 

through major market data vendors or 

subscription services. Intraday price 

information for cash equivalents is 

available through major market data 

vendors, subscription services and/or 

pricing services. 

The website for the Fund will include 

a form of the prospectus that may be 

downloaded, and additional data 

relating to NAV and other applicable 

quantitative information, updated on a 

daily basis. Trading in Shares of the 

Fund will be halted if the circuit breaker 

parameters in NYSE Arca Rule 7.12–E 

have been reached or because of market 

conditions or for reasons that, in the 

view of the Exchange, make trading in 

the Shares inadvisable. Trading in the 

Shares will be subject to NYSE Arca 

Rule 8.601–E(d)(2)(D), which sets forth 

circumstances under which Shares of 

the Fund will be halted. In addition, as 

noted above, investors will have ready 

access to the Tracking Basket and 

quotation and last sale information for 

the Shares. The identity and quantity of 

investments in the Tracking Basket will 

be publicly available on the Fund’s 

website before the commencement of 

trading in Shares on each Business Day. 

The Shares will conform to the initial 

and continued listing criteria under 

Rule 8.601–E.30

The Fund’s holdings will conform to 

the permissible investments as set forth 

in the Application and Exemptive 

Order, and the holdings will be 

consistent with all requirements in the 

Application and Exemptive Order.31

Any foreign common stocks held by the 

Fund will be traded on an exchange that 

is a member of the ISG or with which 

the Exchange has in place a 

comprehensive surveillance sharing 

agreement. 

The proposed rule change is designed 

to perfect the mechanism of a free and 

open market and, in general, to protect 

investors and the public interest in that 

it will facilitate the listing and trading 

of an additional type of activelymanaged exchange-traded product that 

will enhance competition among market 

participants, to the benefit of investors 

and the marketplace. The Exchange will 

obtain a representation from the 

Adviser, prior to commencement of 

trading in the Shares of the Fund, that 

it will advise the Exchange of any 

failure by the Fund to comply with the 

continued listing requirements, and, 

pursuant to its obligations under 

Section 19(g)(1) of the Act, the Exchange 

will monitor for compliance with the 

continued listing requirements. If the 

Fund is not in compliance with the 

applicable listing requirements, the 

Exchange will commence delisting 

procedures under NYSE Arca Rule 5.5– 

E(m). 

As noted above, the Exchange has in 

place surveillance procedures relating to 

trading in the Shares and may obtain 

information via ISG from other 

exchanges that are members of ISG or 

with which the Exchange has entered 

into a comprehensive surveillance 

sharing agreement. In addition, as noted 

above, investors will have ready access 

to information regarding quotation and 

last sale information for the Shares. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes the proposed rule 

change would permit listing and trading 

of an additional actively-managed ETF 

that has characteristics different from 

existing actively-managed and index 

ETFs and 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 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 32 and Rule 19b– 

4(f)(6) thereunder.33


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 97 / Thursday, May 19, 2022 / Notices 30531 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

34 17 CFR 240.19b–4(f)(6)(iii). 

35See supra notes 9 and 10. 

36For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 37 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Notice of Filing infra note 4, 87 FR at 19566. 

4Securities Exchange Act Release No. 94542 

(Mar. 29, 2022), 87 FR 19566 (Apr. 4, 2022) (File 

No. SR–OCC–2022–003) (‘‘Notice of Filing’’). 

5The Commission received one comment letter 

that addressed market conduct generally; however, 

additional discussion is unnecessary because the 

comment letter does not bear on the purpose or 

legal basis of the Proposed Rule Change. The 

comment on the Proposed Rule Change is available 

at https://www.sec.gov/comments/sr-occ-2022-003/ 

srocc2022003.htm. 

6Capitalized terms used but not defined herein 

have the meanings specified in OCC’s Rules and ByLaws, available at https://www.theocc.com/about/ 

publications/bylaws.jsp. 

7Securities Exchange Act Release No. 88131 (Feb. 

5, 2020), 85 FR 7806 (Feb. 11, 2020) (File No. SR– 

NYSEAmer–2019–038). 

8See OCC By-Laws Article VI, Section 11A, 

Interpretations and Policies .05. 

A proposed rule change filed 

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

Act normally does not become operative 

for 30 days after the date of its filing. 

However, Rule 19b–4(f)(6)(iii) 34 permits 

the Commission to designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has requested 

that the Commission waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange notes that the 

Commission has approved and noticed 

for immediate effectiveness proposed 

rule changes to permit listing and 

trading on the Exchange of Active Proxy 

Portfolio Shares similar to the Fund.35

The proposed listing rule for the Fund 

raises no novel legal or regulatory 

issues. Thus, the Commission believes 

that waiver of the 30-day operative 

delay is consistent with the protection 

of investors and the public interest. 

Accordingly, the Commission hereby 

waives the 30-day operative delay and 

designates the proposed rule change 

operative upon filing.36

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2022–28 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–2022–28. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2022–28 and 

should be submitted on or before June 

9, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.37

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–10734 Filed 5–18–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94910; File No. SR–OCC– 

2022–003] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Order 

Granting Approval of Proposed Rule 

Change by The Options Clearing 

Corporation Concerning Cash-Settled 

FLEX ETF Options 

May 13, 2022. 

I. Introduction 

On March 16, 2022, the Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change SR–OCC–2022– 

003 (‘‘Proposed Rule Change’’) pursuant 

to Section 19(b) of the Securities 

Exchange Act of 1934 (‘‘Exchange 

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

amend various provisions of the OCC 

By-Laws and Rules to accommodate the 

issuance, clearance and settlement of 

flexibly structured options on exchangetraded funds (‘‘fund shares’’ or ‘‘ETFs’’) 

that are cash-settled (‘‘Cash-Settled Flex 

ETF Options’’).3 The Proposed Rule 

Change was published for public 

comment in the Federal Register on 

April 4, 2022.4 The Commission 

received no comments regarding the 

substance of the Proposed Rule 

Change.5 This order approves the 

Proposed Rule Change. 

II. Background 6

The NYSE American Exchange 

(‘‘NYSE American’’) received approval 

to list Cash-Settled Flex ETF Options as 

a variation of the currently-traded, 

physically-settled equity flex options.7

Cash-Settled Flex ETF Options generally 

have the same characteristics as 

physically-settled equity flex options, 

except Cash-Settled Flex ETF Options 

are cash-settled, not physically-settled, 

with a settlement amount based on the 

difference between the price of the 

underlying security on the date of 

exercise and the strike price of the 

exercised option. 

OCC submitted the Proposed Rule 

Change because its rules do not allow 

for the settlement of equity options in 

cash, except in two specific 

circumstances: (i) The underlying 

security undergoes a corporate action 

resulting in the conversion of the option 

deliverable to only cash,8 or (ii) the 

underlying security is otherwise 


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