Federal Register / Vol. 81, No. 20 / Monday, February 1, 2016 / Notices 5149 

1Based on data from Morningstar, as of 

September, 2015, there are 12,426 registered funds 

(open-end funds, closed-end funds, and exchangetraded funds), 4,683 funds of which have 

subadvisory relationships (approximately 38%). 

Based on data from the 2015 ICI Factbook, 843 new 

funds were established in 2014 (654 open-end 

funds + 176 exchange-traded funds + 13 closed-end 

funds (from the ICI Research Perspective, April 

2015)). 843 new funds × 38% = 320 funds. 

2 3 hours ÷ 4 rules = 0.75 hours. 3This estimate is based on the following 

calculation: 0.75 hours × 320 funds = 240 burden 

hours. 4 1,696 funds × 0.6 = 1,018 funds. 5 1,018 funds × 50 hours per fund = 50,900 hours. 6 240 hours + 50,900 hours = 51,140 hours. 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 76486 

(Nov. 20, 2015), 80 FR 74169 (‘‘Notice’’). 

Management and Budget (‘‘OMB’’) for 

extension and approval. 

Rule 17e–1 (17 CFR 270.17e–1) under 

the Investment Company Act of 1940 

(15 U.S.C. 80a–1 et seq.) (the 

‘‘Investment Company Act’’) deems a 

remuneration as ‘‘not exceeding the 

usual and customary broker’s 

commission’’ for purposes of Section 

17(e)(2)(A) if, among other things, a 

registered investment company’s 

(‘‘fund’s’’) board of directors has 

adopted procedures reasonably 

designed to provide that the 

remuneration to an affiliated broker is a 

reasonable and fair amount compared to 

that received by other brokers in 

connection with comparable 

transactions involving similar securities 

being purchased or sold on a securities 

exchange during a comparable period of 

time and the board makes and approves 

such changes as it deems necessary. In 

addition, each quarter, the board must 

determine that all transactions effected 

under the rule during the preceding 

quarter complied with the established 

procedures. Rule 17e–1 also requires the 

fund to (i) maintain permanently a 

written copy of the procedures adopted 

by the board for complying with the 

requirements of the rule; and (ii) 

maintain for a period of six years, the 

first two in an easily accessible place, a 

written record of each transaction 

subject to the rule, setting forth the 

amount and source of the commission, 

fee, or other remuneration received; the 

identity of the broker; the terms of the 

transaction; and the materials used to 

determine that the transactions were 

effected in compliance with the 

procedures adopted by the board. The 

recordkeeping requirements under rule 

17e–1 enable the Commission to ensure 

that affiliated brokers receive 

compensation that does not exceed the 

usual and customary broker’s 

commission. Without the recordkeeping 

requirements, Commission inspectors 

would have difficulty ascertaining 

whether funds were complying with 

rule 17e–1. 

Based on an analysis of fund filings, 

the staff estimates that approximately 

320 funds enter into subadvisory 

agreements each year.1 Based on 

discussions with industry 

representatives, the staff estimates that 

it will require approximately 3 attorney 

hours to draft and execute additional 

clauses in new subadvisory contracts in 

order for funds and subadvisers to be 

able to rely on the exemptions in rule 

17e–1. Because these additional clauses 

are identical to the clauses that a fund 

would need to insert in their 

subadvisory contracts to rely on rules 

12d3–1, 10f–3, and 17a–10, and because 

we believe that funds that use one such 

rule generally use all of these rules, we 

apportion this 3 hour time burden 

equally to all four rules. Therefore, we 

estimate that the burden allocated to 

rule 17e–1 for this contract change 

would be 0.75 hours.2 Assuming that all 

320 funds enter into new subadvisory 

contracts each year make the 

modification to their contract required 

by the rule, we estimate that the rule’s 

contract modification requirement will 

result in 240 burden hours annually.3

Based on an analysis of fund filings, 

we estimate that approximately 1,696 

funds use at least one affiliated broker. 

Based on staff experience and 

conversations with fund representatives, 

the staff estimates approximately 40 

percent of transactions (and thus, 40% 

of funds) that occur under the rule 17e– 

1 would be exempt from its 

recordkeeping and review requirements. 

This would leave approximately 1,018 

funds 4 still subject to the rule’s 

recordkeeping and review requirements. 

Based on staff experience and 

conversations with fund representatives, 

we estimate that the burden of 

compliance with rule 17e–1 is 

approximately 50 hours per fund per 

year. This time is spent, for example, 

reviewing the applicable transactions 

and maintaining records. Accordingly, 

we calculate the total estimated annual 

internal burden of complying with the 

review and recordkeeping requirements 

of rule 17e–1 to be approximately 

50,900 hours 5 and the total annual 

burden of the rule’s paperwork 

requirements is 51,140 hours.6

Estimates of average burden hours are 

made solely for the purposes of the 

Paperwork Reduction Act and are not 

derived from a comprehensive or even 

a representative survey or study of the 

costs of Commission rules and forms. 

The collection of information under rule 

17e–1 is mandatory. The information 

provided under rule 17e–1 will not be 

kept confidential. An agency may not 

conduct or sponsor, and a person is not 

required to respond to, a collection of 

information unless it displays a 

currently valid OMB control number. 

Written comments are invited on: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

(b) the accuracy of the Commission’s 

estimate of the burden of the collection 

of information; (c) ways to enhance the 

quality, utility, and clarity of the 

information collected; and (d) ways to 

minimize the burden of the collection of 

information on respondents, including 

through the use of automated collection 

techniques or other forms of information 

technology. Consideration will be given 

to comments and suggestions submitted 

in writing within 60 days of this 

publication. 

Please direct your written comments 

to Pamela Dyson, Director/Chief 

Information Officer, Securities and 

Exchange Commission, C/O Remi 

Pavlik-Simon, 100 F Street NE., 

Washington, DC 20549; or send an email 

to: PRA_Mailbox@sec.gov. 

Dated: January 25, 2016. 

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2016–01717 Filed 1–29–16; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–76974; File No. SR– 

NYSEArca–2015–110] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of 

Amendment No. 2 to Proposed Rule 

Change Amending NYSE Arca Equities 

Rule 8.600 To Adopt Generic Listing 

Standards for Managed Fund Shares 

January 26, 2016. 

On November 6, 2015, NYSE Arca, 

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

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

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

19b–4 thereunder,2 a proposed rule 

change to adopt generic listing 

standards for Managed Fund Shares. 

The proposed rule change was 

published for comment in the Federal 

Register on November 27, 2015.3 On 

November 23, 2015, after issuance of the 

Notice but before its publication, the 

Exchange filed Amendment No. 1 to the 


rmajette on DSK2TPTVN1PROD with NOTICES
5150 Federal Register / Vol. 81, No. 20 / Monday, February 1, 2016 / Notices 

4The Exchange withdrew this amendment on 

January 21, 2016. See infra note 10. 

5 15 U.S.C. 78s(b)(2). 

6See Securities Exchange Act Release No. 76819, 

81 FR 987 (Jan. 8, 2016). 

7See letter from Rob Ivanoff to the Commission 

dated Nov. 22, 2015, available at: http://

www.sec.gov/comments/sr-nysearca-2015-110/

nysearca2015110.shtml. 

8 15 U.S.C. 78s(b)(1). 

9 17 CFR 240.19b–4. 

10The Exchange has previously filed a proposed 

rule change to amend NYSE Arca Equities Rule 

8.600 to adopt generic listing standards for 

Managed Fund Shares. See Securities Exchange Act 

Release No. 74433 (March 4, 2015), 80 FR 12690 

(March 10, 2015) (SR–NYSEArca–2015–02). On 

June 3, 2015, the Exchange filed Amendment No. 

1 to the proposed rule change. See Securities 

Exchange Act Release No. 75115 (June 5, 2015), 80 

FR 33309 (June 11, 2015). On October 13, 2015, the 

Exchange withdrew the proposed rule change. See 

Securities Exchange Act Release No. 76186 (October 

19, 2015), 80 FR 64461 (October 23, 2015). This 

Amendment No. 2 to SR–NYSEArca–2015–110 

replaces SR–NYSEArca–2015–110 as originally 

filed and supersedes such filing in its entirety. The 

Exchange has withdrawn Amendment No. 1 to SR– 

NYSEArca–2015–110. 

11See 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. 12See Approval Order, supra note 11, at 19547. 

proposed rule change.4 On January 4, 

2016, pursuant to section 19(b)(2) of the 

Act,5 the Commission designated a 

longer period within which to approve 

the proposed rule change, disapprove 

the proposed rule change, or institute 

proceedings to determine whether to 

disapprove the proposed rule change.6

The Commission has received one 

comment on the proposal.7

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

Act 8 and Rule 19b–4 thereunder,9

notice is hereby given that, on January 

21, 2016, the Exchange filed with the 

Commission Amendment No. 2 to the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. 

Amendment No. 2 replaces and 

supersedes the proposed rule change as 

originally filed. The Commission is 

publishing this notice to solicit 

comments from interested persons on 

Amendment No. 2. 

I. Self-Regulatory Organization’s 

Statement of the Terms of 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 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 the 

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.10

Background 

Rule 8.600 sets forth certain rules 

related to the listing and trading of 

Managed Fund Shares.11 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.12

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 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 


rmajette on DSK2TPTVN1PROD with NOTICES
Federal Register / Vol. 81, No. 20 / Monday, February 1, 2016 / Notices 5151 

13 17 CFR 240.19b–4(e). As provided under SEC 

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

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. 

14 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. 

15Proposed 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. Securities Exchange Act Release 

No. 72666 (July 3, 2014), 79 FR 44224 (July 30, 

2014) (SR–NYSEArca–2013–122) (the ‘‘PIMCO 

Total Return Use of Derivatives Approval’’), at 

44227. 

16The 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. 

17See the PIMCO Total Return Use of Derivatives 

Approval. See also, Securities Exchange Act 

Release Nos. 66321 (February 3, 2012), 77 FR 6850 

(February 9, 2012) (SR–NYSEArca–2011–95) (the 

‘‘PIMCO Total Return 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, e.g., 

Securities Exchange Act Release No. 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’’). 

18For 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). 

19For the purposes of Commentary .01 and this 

proposal, the term ‘‘Non-U.S. Component Stocks’’ 

would have the same meaning as defined in NYSE 

Arca Equities Rule 5.2(j)(3). 

20For 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). 

21 Index-Linked Securities are securities listed 

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

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

to derivative securities products (‘‘SEC 

Rule 19b–4(e)’’).13 SEC Rule 19b–4(e)(1) 

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–4,14 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 

criteria of Rule 8.600(c) to provide that 

the Web site for each series of Managed 

Fund Shares shall disclose certain 

information regarding the Disclosed 

Portfolio, to the extent applicable. The 

required information includes the 

following, to the extent applicable: 

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 

security or other asset held as measured 

by select metrics, maturity date, coupon 

rate, effective date, market value and 

percentage weight of the holding in the 

portfolio.15

In addition, the Exchange would 

amend Rule 8.600(d) to specify that all 

Managed Fund Shares must have a 

stated investment objective, which must 

be adhered to under normal market 

conditions.16

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 U.S. Component Stocks, Non-U.S. 

Component Stocks, 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.17

Proposed Commentary .01(a) would 

describe the standards for a Managed 

Fund Share portfolio that holds equity 

securities, which are defined to be U.S. 

Component Stocks,18 Non-U.S. 

Component Stocks,19 Derivative 

Securities Products,20 and Index-Linked 

Securities 21 listed on a national 

securities exchange. 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. 

As proposed in Commentary .01(a)(1) 

to Rule 8.600, the component stocks of 

the equity portion of a portfolio that are 

U.S. Component Stocks shall meet the 

following criteria: 

(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 


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5152 Federal Register / Vol. 81, No. 20 / Monday, February 1, 2016 / Notices 

22This 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. 

23This 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. 

24This 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 

the addition of the reference to Index-Linked 

Securities. 

25This 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. 

26 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. 

27Proposed rule changes for previously-listed 

series of Managed Fund Shares have similarly 

included the ability for such Managed Fund Share 

holdings to include not more than 10% of net assets 

in unsponsored ADRs. See, e.g., Securities 

Exchange Act Release No. 71067 (December 12, 

20113), 78 FR 76669 (December 18, 2013) (order 

approving listing and trading of shares of the SPDR 

MFS Systematic Core Equity ETF, SPDR MFS 

Systematic Growth Equity ETF, and SPDR MFS 

Systematic Value Equity ETF under NYSE Arca 

Equities Rule 8.600). 

28The proposed text is identical to the 

corresponding representation from the ‘‘SSgA 

Global Managed Volatility Release’’, as defined in 

footnote 27, below. The proposed text is also 

identical to the corresponding text of Commentary 

.01(a)(B)(1) to NYSE Arca Equities Rule 5.2(j)(3), 

except for the omission of the reference to ‘‘index,’’ 

which is not applicable, and that each Non-U.S. 

Component Stock must have a minimum market 

value of at least $100 million instead of the 90% 

required under Commentary .01(a)(B)(1) to NYSE 

Arca Equities Rule 5.2(j)(3). 

29The proposed text is identical to the 

corresponding representation from the SSgA Global 

Managed Volatility Release, as defined in footnote 

27, below. This proposed text also is identical to the 

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

NYSE Arca Equities Rule 5.2(j)(3), except for the 

omission of the reference to ‘‘index,’’ which is not 

applicable. 

30This proposed text is identical to the 

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

NYSE Arca Equities Rule 5.2(j)(3), except for the 

omission of the reference to ‘‘index,’’ which is not 

applicable. 

31This proposed text is similar to the 

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

NYSE Arca Equities Rule 5.2(j)(3), except for the 

omission of the reference to ‘‘index,’’ which is not 

applicable, the addition of the reference to IndexLinked Securities, the reference to the equity 

portion of the portfolio including Non-U.S. 

Component Stocks, and the reference to the 100% 

limitation applying to the ‘‘equity weight’’ of the 

portfolio, which is included because the proposed 

standards in Commentary .01 to Rule 8.600 permit 

the inclusion of non-equity securities, whereas 

Commentary .01 to NYSE Arca Equities Rule 

5.2(j)(3) applies only to equity securities. 

32This proposed text is similar to Commentary 

.01(a)(B)(5) to NYSE Arca Equities Rule 5.2(j)(3) as 

it relates to Non-U.S. Component Stocks. 

33A list of ISG members is available at 

www.isgportal.org. 

34Under Commentary .01 to NYSE Arca Equities 

Rule 5.2(j)(3), Units with components that include 

Non-U.S. Component Stocks can hold a portfolio 

that is entirely composed of Non-U.S. Component 

have a minimum market value of at least 

$75 million; 22

(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; 23

(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; 24

(4) Where the equity portion of the 

portfolio does not include Non-U.S. 

Component Stocks, the equity portion of 

the portfolio shall include a minimum 

of 13 component stocks; provided, 

however, that there shall be no 

minimum number of component stocks 

if (a) one or more series of Derivative 

Securities Products or Index-Linked 

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; 25

(5) Except as provided in proposed 

Commentary .01(a), equity securities 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; 26

(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) American Depositary Receipts 

(‘‘ADRs’’) may be sponsored or 

unsponsored. However no more than 

10% of the equity weight of the 

portfolio shall consist of unsponsored 

ADRs.27

As proposed in Commentary .01(a)(2) 

to Rule 8.600, the component stocks of 

the equity portion of a portfolio that are 

Non-U.S. Component Stocks shall meet 

the following criteria: 

(1) Non-U.S. Component Stocks each 

shall have a minimum market value of 

at least $100 million; 28

(2) Non-U.S. Component Stocks each 

shall have a minimum global monthly 

trading volume of 250,000 shares, or 

minimum global notional volume traded 

per month of $25,000,000, averaged over 

the last six months; 29

(3) The most heavily weighted NonU.S. Component Stock shall not exceed 

25% of the equity weight of the 

portfolio, and, to the extent applicable, 

the five most heavily weighted Non-U.S. 

Component Stocks shall not exceed 

60% of the equity weight of the 

portfolio; 30

(4) Where the equity portion of the 

portfolio includes Non-U.S. Component 

Stocks, the equity portion of the 

portfolio shall include a minimum of 20 

component stocks; provided, however, 

that there shall be no minimum number 

of component stocks if (i) one or more 

series of Derivative Securities Products 

or Index-Linked Securities constitute, at 

least in part, components underlying a 

series of Managed Fund Shares, or (ii) 

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; 31 and 

(5) Each Non-U.S. Component Stock 

shall be listed and traded on an 

exchange that has last-sale reporting.32

The Exchange notes that it is not 

proposing to require that any of the 

equity portion of the equity portfolio 

composed of Non-U.S. Component 

Stocks be listed on markets that are 

either a member of the Intermarket 

Surveillance Group (‘‘ISG’’) or a market 

with which the Exchange has a 

comprehensive surveillance sharing 

agreement (‘‘CSSA’’).33 However, as 

further detailed below, the regulatory 

staff of the Exchange, or 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 U.S. securities exchanges 

on which the components are traded. 

The Exchange notes that the generic 

listing standards for Units based on 

foreign indexes in NYSE Arca Equities 

Rule 5.2(j)(3) do not include specific 

ISG or CSSA requirements.34 In 


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Stocks that are listed on markets that are neither 

members of ISG, nor with which the Exchange has 

in place a CSSA. 

35See Securities Exchange Act Release No. 75023 

(May 21, 2015), 80 FR 30519 (May 28, 2015) (SR– 

NYSEArca–2014–100) (order approving listing and 

trading on the Exchange of shares of the SPDR SSgA 

Global Managed Volatility ETF under NYSE Arca 

Equities Rule 8.600) (‘‘SSgA Global Managed 

Volatility Release’’). 

36 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. 

37This text of proposed Commentary .01(b)(1) to 

Rule 8.600 is based on the corresponding text of 

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

38This 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. 

39This proposed text is similar 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, the exclusion of 

the text ‘‘consisting entirely of exempted securities’’ 

and the provision that there shall be no minimum 

number of non-affiliated issuers required for fixed 

income securities if at least 70% of the weight of 

the portfolio consists of equity securities as 

described in proposed Commentary .01(a). 

40Proposed rule changes for previously-listed 

series of Managed Fund Shares have similarly 

included the ability for such Managed Fund Share 

holdings to include up to 20% of net assets in nonagency, non-GSE and privately-issued mortgagerelated and other asset-backed securities. See, e.g., 

Securities Exchange Act Release No. 75566 (July 30, 

2015), 80 FR 46612 (August 5, 2015) (SR– 

NYSEArca–2015–42) (order approving listing and 

trading of shares of Newfleet Multi-Sector 

Unconstrained Bond ETF under NYSE Arca 

Equities Rule 8.600). 

41Proposed 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 17, at 19768–69 and First Trust Preferred 

Securities and Income Approval, supra note 17, at 

76150. 

42Proposed 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 17, at 76150–51. 

43Proposed 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 17, 

at 13617 and WisdomTree Brazil Bond Approval, 

supra note 17, at 32163. 

addition, the Commission has approved 

listing and trading on the Exchange of 

shares of an issue of Managed Fund 

Shares under NYSE Arca Equities Rule 

8.600 where non-U.S. equity securities 

in such issue’s portfolio meet specified 

criteria and where there is no 

requirement that such non-U.S. equity 

securities are traded in markets that are 

members of ISG or with which the 

Exchange has in place a CSSA.35

Proposed Commentary .01(a)(3) 

would provide that the portfolio may 

hold rights and warrants, provided that 

the common stock underlying such 

rights or warrants must be U.S. 

Component Stocks or Non-U.S. 

Component Stocks that meet the criteria 

set forth in paragraph (a)(1) or paragraph 

(a)(2) of Commentary .01. 

Proposed Commentary .01(b) would 

describe the standards for a Managed 

Fund Share portfolio that holds fixed 

income securities, which are debt 

securities 36 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 each 

shall have a minimum original principal 

amount outstanding of $100 million or 

more; 37

(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; 38

(3) An underlying portfolio (excluding 

exempted securities) that includes fixed 

income securities must include a 

minimum of 13 non-affiliated issuers; 

provided, however, that there shall be 

no minimum number of non-affiliated 

issuers required for fixed income 

securities if at least 70% of the weight 

of the portfolio consists of equity 

securities as described in proposed 

Commentary .01(a).39

(4) Component securities that in 

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, non-GSE and 

privately-issued mortgage-related and 

other asset-backed securities 

components of a portfolio shall not 

account, in the aggregate, for more than 

20% of the weight of the fixed income 

portion of the portfolio.40

(6) Any convertible security must be 

convertible into an equity security that 

meets the criteria set forth in paragraph 

(a)(1) or paragraph (a)(2) of Commentary 

.01. 

Proposed Commentary .01(c) would 

describe the standards for a Managed 

Fund Share portfolio that holds cash 

and cash equivalents.41 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 the 

following: 42

(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 

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; 

(6) commercial paper, which are 

short-term unsecured promissory notes; 

and 

(7) money market funds. 

Proposed Commentary .01(d) would 

describe the standards for a Managed 

Fund Share portfolio that holds listed 

derivatives, including futures, 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.43 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, 

exchange-traded options and swaps 

shall consist of futures, options and 


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44 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. 

45A 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 17, at 23602. 

46See Approval Order, supra note 11 at 19548. 

47The Exchange made similar representations in 

the Approval Order. See id. at 19549. 

48 15 U.S.C. 78f(b). 

49 15 U.S.C. 78f(b)(5). 50See supra, note 17. 

swaps 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’’).44 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.45 Proposed Commentary 

.01(e)(1) would provide that no more 

than 20% of the assets in the portfolio 

may be invested in OTC derivatives. 

Proposed Commentary .01(f) would 

provide that, to the extent that listed or 

OTC derivatives are used to gain 

exposure to individual equities and/or 

fixed income securities, or to indexes of 

equities and/or fixed income securities, 

such equities and/or fixed income 

securities, as applicable, shall meet the 

criteria set forth in Commentary .01(a) 

and .01(b) to Rule 8.600, respectively. 

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.46 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: 47

(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 

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 and the Disclosed 

Portfolio, 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 applicable 

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,48 in general, and 

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

of the Act,49 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 U.S. 

Component Stocks, Non-U.S. 

Component Stocks, 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.50

With respect to the proposed addition 

to the criteria of Rule 8.600(c) to provide 

that the Web site for each series of 

Managed Fund Shares shall disclose 

certain information regarding the 

Disclosed Portfolio, to the extent 

applicable, the Exchange notes that 

proposed rule changes approved by the 

Commission for previously-listed series 

of Managed Fund Shares have similarly 

included disclosure requirements with 

respect to each portfolio holding, as 


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51See supra, note 15. 

52 15 U.S.C. 78s(b)(2). 

53 15 U.S.C. 78s(b)(3)(A). 

54 17 CFR 240.19b–4(e). 

55See 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). 56See note 27, supra. 

57See, e.g., Approval Order, supra note 11; 

International Bear Approval, supra note 17. 

58See note 40, supra. 

59See note 41, supra. 

applicable to the type of holding.51 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 52

or submitted by a national securities 

exchange pursuant to section 19(b)(3)(A) 

of the Act 53 or would have been listed 

by a national securities exchange 

pursuant to the requirements of Rule 

19b–4(e) under the Act.54 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.55

With respect to the proposed criteria 

applicable to U.S. Component Stocks, 

the Exchange notes that such criteria are 

similar to those in Commentary .01 to 

NYSE Arca Equities Rule 5.2(j)(3) 

relating to criteria applicable to an 

index or portfolio of U.S. Component 

Stocks. In addition, Non-U.S. 

Component Stocks also will be required 

to meet criteria similar to certain generic 

listing standards in Commentary .01 to 

NYSE Arca Equities Rule 5.2(j)(3) 

relating to criteria applicable to an 

index or portfolio of U.S. Component 

Stocks and Non-U.S. Component Stocks 

underlying a series of Units to be listed 

and traded on the Exchange pursuant to 

Rule 19b–4(e) under the Act. 

With respect to the proposed 

requirement in Commentary .01(a)(1)(G) 

that no more than 10% of the equity 

weight of the portfolio shall consist of 

unsponsored ADRs, the Exchange notes 

that such requirement will ensure that 

unsponsored ADRs, which are traded 

OTC and which generally have less 

market transparency than sponsored 

ADRs, could account for only a small 

percentage of the equity weight of a 

portfolio. Further, the requirement is 

consistent with representations made in 

proposed rule changes for issues of 

Managed Fund Shares previously 

approved by the Commission.56

With respect to the proposed 

requirement in Commentary .01(a)(3) 

that a the common stock underlying 

rights or warrants in a portfolio must be 

U.S. Component Stocks or Non-U.S. 

Component Stocks that meet the criteria 

set forth in paragraph (a)(1) or paragraph 

(a)(2) of Commentary .01, such 

requirement would assure that common 

stocks underlying an issue of rights or 

warrants meet the liquidity and other 

criteria in Commentary .01 applicable to 

U.S. Component Stocks and Non-U.S. 

Component Stocks. 

Similarly, with respect to the 

proposed requirement in Commentary 

.01(b)(6) that any convertible security 

must be convertible into an equity 

security that meets the criteria in 

paragraph (a)(1) or paragraph (a)(2) of 

Commentary .01, such requirement 

would assure that the equity securities 

into which a convertible security could 

be converted meet the liquidity and 

other criteria in Commentary .01 

applicable to such equity securities (i.e., 

U.S. Component Stocks and Non-U.S. 

Component Stocks). 

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 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.57

With respect to the proposed 

requirement in Commentary .01(b)(3) to 

Rule 8.600 that an underlying portfolio 

(excluding exempted securities) that 

includes fixed income securities must 

include a minimum of 13 non-affiliated 

issuers, but that there would be no 

minimum number of non-affiliated 

issuers required for fixed income 

securities if at least 70% of the weight 

of the portfolio consists of equity 

securities, the Exchange notes that such 

requirement is consistent with proposed 

Commentary .01(b)(2). The Exchange 

further notes that Commentary .02 (a)(4) 

to Rule 5.2(j)(3) currently provides that 

a single fixed income security can 

represent up to 30% of the weight of an 

index underlying a series of Units. 

Proposed Commentary .01(b)(3) to Rule 

8.600, therefore, provides for a 

maximum weighting of a fixed income 

security in a fund’s portfolio 

comparable to existing rules applicable 

to Units based on fixed income indexes. 

With respect to the proposed 

requirement in Commentary .01(b)(5) 

that non-agency, non-GSE and privatelyissued mortgage-related and other assetbacked securities components of a 

portfolio shall not account, in the 

aggregate, for more than 20% of the 

weight of the fixed income portion of 

the portfolio, the Exchange notes that 

such requirement is consistent with 

representations made in proposed rule 

changes for issues of Managed Fund 

Shares previously approved by the 

Commission.58

With respect to the proposed 

amendment to Commentary .01(c) 

relating to cash and cash equivalents, 

while there is no limitation on the 

amount of cash and cash equivalents 

that can make up the portfolio, such 

instruments are short-term, highly 

liquid, and of high credit quality, 

making them less susceptible than other 

asset classes both to price manipulation 

and volatility. Further, the requirement 

is consistent with representations made 

in proposed rule changes for issues of 

Managed Fund Shares previously 

approved by the Commission.59

With respect to proposed 

Commentary .01(d)(1) to Rule 8.600 

relating to listed derivatives, the 

Exchange believes that it is appropriate 

that there be no limit to the percentage 

of a portfolio invested in such holdings, 

provided that, in the aggregate, at least 

90% of the weight of such holdings 


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60The Commission has noted that ‘‘[c]entral 

clearing mitigates counterparty risk among dealers 

and other institutions by shifting that risk from 

individual counterparties to [central counterparties 

(‘‘CCPs’’)], thereby protecting CCPs from each 

other’s potential failures.’’ See Securities Exchange 

Act Release No. 67286 (June 28, 2012) (File No. S7– 

44–10) (Process for Submissions for Review of 

Security-Based Swaps for Mandatory Clearing and 

Notice Filing Requirements for Clearing Agencies). 

61There are currently five categories of swaps 

eligible for central clearing: Interest rate swaps; 

credit default swaps; foreign exchange swaps; 

equity swaps; and commodity swaps. The following 

entities provide central clearing for OTC 

derivatives: ICE Clear Credit (US); ICE Clear (EU); 

CME Group; LCH.Clearnet; and Eurex. 62Pursuant to the Dodd-Frank Act, OTC and 

centrally-cleared swaps are regulated by the CFTC 

with the exception of security-based swaps, which 

are regulated by the Commission. 

63The following entities are provisionally 

registered with the CFTC as SDRs: BSDR LLC., 

Chicago Mercantile Exchange, Inc., DTCC Data 

Repository, and ICE Trade Vault. 

64Approximately 21 entities are currently 

temporarily registered with the CFTC as SEFs. 

65See Securities Exchange Act Release No. 74244 

(February 11, 2015), 80 FR 14564 (March 19, 2015) 

(Regulation SBSR—Reporting and Dissemination of 

Security-Based Swap Information). 

66See, e.g., Securities Exchange Act Release No. 

74842 (April 29, 2015), 86 FR 25723 (May 5, 2015) 

(SR–NYSEArca–2014–89) (order approving listing 

and trading of shares of eight PIMCO exchangetraded funds). 

invested in futures, exchange-traded 

options and swaps would consist of 

futures and options whose principal 

market is a member of ISG or is a market 

with which the Exchange has a 

comprehensive surveillance sharing 

agreement. Such a requirement would 

facilitate information sharing among 

market participants trading shares of a 

series on Managed Fund Shares as well 

as futures and options that such series 

may hold. In addition, listed swaps 

would be centrally cleared, reducing 

counterparty risk and thereby furthering 

investor protection.60

With respect to proposed 

Commentary .01(e) to Rule 8.600 

relating to OTC derivatives, the 

Exchange believes that the limitation to 

20% of assets for non-centrally cleared 

derivatives would assure that the 

preponderance of fund investments 

would not be in derivatives that are not 

listed and centrally cleared. The 

Exchange believes that such a limitation 

is sufficient to mitigate the risks 

associated with price manipulation 

because a 20% cap on OTC derivatives 

will ensure that any series of Managed 

Fund Shares will be sufficiently broadbased in scope to minimize potential 

manipulation associated with OTC 

derivatives and because the remaining 

80% of the portfolio will consist of 

instruments subject to numerous 

restrictions designed to prevent 

manipulation, including equity 

securities (which, as proposed, would 

be subject to market cap, trading 

volume, and diversity requirements, 

among others), fixed income securities 

(which, as proposed, would be subject 

to principal amount outstanding, 

diversity, and issuer requirements, 

among others), cash and cash 

equivalents (which, as proposed, would 

be limited to short-term, highly liquid, 

and high credit quality instruments), 

and/or listed derivatives (which, as 

proposed, 90% of the weight of such 

listed derivatives will be futures, 

options and swaps whose principal 

market is a member of ISG). 

With respect to proposed 

Commentary .01(f) to Rule 8.600 relating 

to a fund’s use of listed or OTC 

derivatives to gain exposure to 

individual equities and/or fixed income 

securities, or to indexes of equities and/ 

or indexes of fixed income securities, 

the Exchange notes that such exposure 

would be required to meet the 

numerical and other criteria set forth in 

proposed Commentary .01(a) and .01(b) 

to Rule 8.600 respectively. The 

Exchange notes that, for purposes of this 

proposal, a portfolio’s investment in 

OTC derivatives will be calculated as 

the amount of any margin required by 

a counterparty for the purchase of a 

derivative by a fund. 

Quotation and other market 

information relating to listed futures 

and options is available from the 

exchanges listing such instruments as 

well as from market data vendors. With 

respect to centrally-cleared swaps 61 and 

non-centrally-cleared swaps regulated 

by the Commodity Futures Trading 

Commission (the ‘‘CFTC’’),62 the DoddFrank Act mandates that swap 

information be reported to swap data 

repositories (‘‘SDRs’’).63 SDRs provide a 

central facility for swap data reporting 

and recordkeeping and are required to 

comply with data standards set by the 

CFTC, including real-time public 

reporting of swap transaction data to a 

derivatives clearing organization or 

SEF.64 SDRs require real-time reporting 

of all OTC and centrally cleared 

derivatives, including public reporting 

of the swap price and size. The parties 

responsible for reporting swaps 

information are CFTC-registered swap 

dealers (‘‘RSDs’’), major swap 

participants, and SEFs. If swap 

counterparties do not fall into the above 

categories, then one of the parties to the 

swap must report the trade to the SDR. 

Cleared swaps regulated by the CFTC 

must be executed on a Designated 

Contract Market (‘‘DCM’’) or SEF. Such 

cleared swaps have the same reporting 

requirements as futures, including endof-day price, volume, and open interest. 

CFTC swaps reporting requirements 

require public dissemination of, among 

other items, product ID (if available); 

asset class; underlying reference asset, 

reference issuer, or reference index; 

termination date; date and time of 

execution; price, including currency; 

notional amounts, including currency; 

whether direct or indirect 

counterparties include an RSD; whether 

cleared or un-cleared; and platform ID 

of where the contract was executed (if 

applicable). 

With respect to security-based swaps 

regulated by the Commission, the 

Commission has adopted Regulation 

SBSR under the Act implementing 

requirements for regulatory reporting 

and public dissemination of securitybased swap transactions set forth in title 

VII of the Dodd-Frank Act. Regulation 

SBSR provides for the reporting of 

security-based swap information to 

registered security-based swap data 

repositories (‘‘Registered SDRs’’) or the 

Commission, and the public 

dissemination of security-based swap 

transaction, volume, and pricing 

information by Registered SDRs.65

Price information relating to forwards 

and OTC options will be available from 

major market data vendors. 

The Exchange notes that a fund’s 

investments in derivative instruments 

would be subject to limits on leverage 

imposed by the 1940 Act. Section 18(f) 

of the 1940 Act and related Commission 

guidance limit the amount of leverage 

an investment company can obtain. A 

fund’s investments would be consistent 

with its investment objective and would 

not be used to enhance leverage. To 

limit the potential risk associated with 

a fund’s use of derivatives, a fund will 

segregate or ‘‘earmark’’ assets 

determined to be liquid by a fund in 

accordance with the 1940 Act (or, as 

permitted by applicable regulation, 

enter into certain offsetting positions) to 

cover its obligations under derivative 

instruments. A fund’s investments will 

not be used to seek performance that is 

the multiple or inverse multiple (i.e., 

2Xs and 3Xs) of a fund’s broad-based 

securities market index (as defined in 

Form N–1A).66 In addition, the 

Exchange notes that, under proposed 

Commentary .01(a) to Rule 8.600, for 

Derivative Securities Products and 

Index-Linked Securities, no more than 

25% of the equity weight of a fund’s 

portfolio could include leveraged and/or 

inverse leveraged Derivative Securities 

Products or Index-Linked Securities. 

The proposed rule change is also 

designed to protect investors and the 

public interest because Managed Fund 

Shares listed and traded pursuant to 


rmajette on DSK2TPTVN1PROD with NOTICES
Federal Register / Vol. 81, No. 20 / Monday, February 1, 2016 / Notices 5157 

67See Approval Order, supra note 11, at 19547. 68 15 U.S.C. 78f(b)(8). 

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.67

The proposed rule change is also 

designed to protect investors and the 

public interest as well as to promote just 

and equitable principles of trade in that 

any Non-U.S. Component Stocks will 

each meet the following criteria initially 

and on a continuing basis: (1) Have a 

minimum market value of at least $100 

million; (2) have a minimum global 

monthly trading volume of 250,000 

shares, or minimum global notional 

volume traded per month of 

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

months; (3) most heavily weighted NonU.S. Component Stock shall not exceed 

25% of the equity weight of the 

portfolio, and, to the extent applicable, 

the five most heavily weighted Non-U.S. 

Component Stocks shall not exceed 

60% of the equity weight of the 

portfolio; and (4) each Non-U.S. 

Component Stock shall be listed and 

traded on an exchange that has last-sale 

reporting. The Exchange believes that 

such quantitative criteria are sufficient 

to mitigate any concerns that may arise 

on the basis of a series of Managed Fund 

Shares potentially holding 100% of its 

assets in Non-U.S. Component Stocks 

that are neither listed on members of 

ISG nor exchanges with which the 

Exchange has in place a CSSA because, 

as stated above, such criteria are either 

the same or more stringent than the 

portfolio requirements for Index Fund 

Shares that hold Non-U.S. Component 

Stocks and there are no such 

requirements related to such securities 

being listed on an exchange that is a 

member of ISG or with which the 

Exchange has in place a CSSA. Further, 

the Exchange has not encountered and 

is not aware of any instances of 

manipulation or other negative impact 

in any series of Index Fund Shares that 

has occurred by virtue of the Index 

Fund Shares holding such Non-U.S. 

Component Stocks. As such, the 

Exchange believes that there should be 

no difference in the portfolio 

requirements for Managed Fund Shares 

and Index Fund Shares as it relates to 

holding Non-U.S. Component Stocks 

that are not listed on an exchange that 

is a member of ISG or with which the 

Exchange has in place a CSSA. 

The Exchange believes that the 

proposed rule change is designed to 

prevent fraudulent and manipulative 

acts and practices because the Managed 

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. 

FINRA, on behalf of the Exchange, or 

the regulatory staff 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,68 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. 

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. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether Amendment No. 2 to 

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–2015–110 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–2015–110. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for Web site viewing and 

printing in the Commission’s Public 

Reference Section, 100 F Street NE., 

Washington, DC 20549 on official 

business days between 10:00 a.m. and 

3:00 p.m. Copies of the filing will also 

be available for inspection and copying 

at the NYSE’s principal office and on its 

Internet Web site at www.nyse.com. All 

comments received will be posted 

without change; the Commission does 


rmajette on DSK2TPTVN1PROD with NOTICES
5158 Federal Register / Vol. 81, No. 20 / Monday, February 1, 2016 / Notices 

69 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 Nos. 74128 

(January 23, 2015), 80 FR 4951 (January 29, 2015) 

(SR–NYSE–2015–03) (Notice—NYSE Integrated 

Feed) and 76485 (Nov. 20, 2015), 80 FR 74158 (Nov. 

27, 2015) (SR–NYSE–2015–57) (establishing fees for 

NYSE Integrated Feed). 

5The text of footnote 6 in Exhibit 5 of this 

proposed rule change was previously filed under a 

separate filing. See SR–NYSE–2016–02 (Proposed 

Rule Change to Amend the Fees for NYSE 

OpenBook). 

6 Data vendors currently report a unique Vendor 

Account Number for each location at which they 

provide a data feed to a data recipient. The 

Exchange considers each Vendor Account Number 

a location. For example, if a data recipient has five 

Vendor Account Numbers, representing five 

locations, for the receipt of the NYSE Integrated 

Feed product, that data recipient will pay the 

Multiple Data Feed fee with respect to three of the 

five locations. 

7See Securities Exchange Act Release No. 76485 

(November 20, 2015), 80 FR 74158 (November 27, 

2015) (SR–NYSE–2015–57). 

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

9 15 U.S.C. 78f(b)(4), (5). 

10See Securities Exchange Act Release No. 70010 

(July 19, 2013), 78 FR 44984 (July 25, 2013) (SR– 

CTA/CQ–2013–04). 

11See ‘‘Direct Access Fee,’’ Options Price 

Reporting Authority Fee Schedule Fee Schedule 

PRA Plan [sic] at http://www.opradata.com/pdf/

fee_schedule.pdf. 

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–2015–110 and 

should be submitted on or before 

February 16, 2016. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.69

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2016–01714 Filed 1–29–16; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–76973; File No. SR–NYSE– 

2016–09] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change Amending 

the Fees for NYSE Integrated Feed 

January 26, 2016. 

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 January 

13, 2016, New York Stock Exchange 

LLC (‘‘NYSE’’ or the ‘‘Exchange’’) 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 selfregulatory 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 Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

fees for NYSE Integrated Feed to 

establish a multiple data feed fee. 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

fees for NYSE Integrated Feed market 

data product,4 as set forth on the NYSE 

Proprietary Market Data Fee Schedule 

(‘‘Fee Schedule’’). The Exchange 

proposes to establish the multiple data 

feed fee. Specifically, the Exchange 

proposes to establish a new monthly fee, 

the ‘‘Multiple Data Feed Fee,’’ that 

would apply to data recipients that take 

a data feed for a market data product in 

more than two locations. Data recipients 

taking NYSE Integrated Feed in more 

than two locations would be charged 

$200 per additional location per product 

per month.5 No new reporting would be 

required.6

Additionally, the various fees 

applicable to NYSE Integrated Feed, 

other than the Multiple Data Feed Fee, 

became operative on January 1, 2016.7

Accordingly, the Exchange proposes to 

remove text from the Fee Schedule 

noting that through December 31, 2015, 

there would be no charge for the fees for 

NYSE Integrated Feed and text noting 

that the fees would be applicable from 

January 1, 2016. The proposed change 

would provide clarity to subscribers of 

NYSE Integrated Feed. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of section 6 of the Act,8

in general, and sections 6(b)(4) and 

6(b)(5) of the Act,9 in particular, in that 

it provides an equitable allocation of 

reasonable fees among users and 

recipients of the data and is not 

designed to permit unfair 

discrimination among customers, 

issuers, and brokers. 

The fees are also equitable and not 

unfairly discriminatory because they 

will apply to all data recipients that 

choose to subscribe to NYSE Integrated 

Feed. 

The Exchange believes that it is 

reasonable to require data recipients to 

pay a modest additional fee taking a 

data feed for a market data product in 

more than two locations, because such 

data recipients can derive substantial 

value from being able to consume the 

product in as many locations as they 

want. In addition, there are 

administrative burdens associated with 

tracking each location at which a data 

recipient receives the product. The 

Multiple Data Feed Fee is designed to 

encourage data recipients to better 

manage their requests for additional 

data feeds and to monitor their usage of 

data feeds. The proposed fee is designed 

to apply to data feeds received in more 

than two locations so that each data 

recipient can have one primary and one 

backup data location before having to 

pay a multiple data feed fee. The 

Exchange notes that this pricing is 

consistent with similar pricing adopted 

in 2013 by the Consolidated Tape 

Association (‘‘CTA’’).10 The Exchange 

also notes that the OPRA Plan imposes 

a similar charge of $100 per connection 

for circuit connections in addition to the 

primary and backup connections.11

The Exchange notes that NYSE 

Integrated Feed is entirely optional. The 

Exchange is not required to make NYSE 

Integrated Feed available or to offer any 

specific pricing alternatives to any 

customers, nor is any firm required to 

purchase NYSE Integrated Feed. Firms 

that do purchase NYSE Integrated Feed 

do so for the primary goals of using it 

to increase revenues, reduce expenses, 

and in some instances compete directly 

with the Exchange (including for order 

flow); those firms are able to determine 


rmajette on DSK2TPTVN1PROD with NOTICES