Federal Register / Vol. 81, No. 32 / Thursday, February 18, 2016 / Notices 8269 

23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A Managed Portfolio Share is a security that 

represents an interest in an investment company 

registered under the Investment Company Act of 

1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as 

an open-end investment company or similar entity 

that invests in a portfolio of securities selected by 

its investment adviser consistent with its 

investment objectives and policies. In contrast, an 

open-end investment company that issues 

Investment Company Units, listed and traded on 

the Exchange under NYSE Arca Equities Rule 

5.2(j)(3) (‘‘Index ETFs’’), seeks to provide 

investment results that correspond generally to the 

price and yield performance of a specific foreign or 

domestic stock index, fixed income securities index 

or combination thereof. 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File No. SR– 

NYSEARCA–2016–04, and should be 

submitted on or before March 10, 2016. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2016–03270 Filed 2–17–16; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–77117; File No. SR– 

NYSEArca–2016–08] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change To Adopt NYSE Arca 

Equities Rule 8.900 To Permit Listing 

and Trading of Managed Portfolio 

Shares and To Permit Listing and 

Trading of Shares of Fifteen Issues of 

the Precidian ETFs Trust 

February 11, 2016. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that, on January 

27, 2016, NYSE Arca, Inc. (‘‘Exchange’’ 

or ‘‘NYSE Arca’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to adopt a 

new NYSE Arca Equities Rule 8.900 to 

permit it to list and trade Managed 

Portfolio Shares, which are shares of 

actively managed exchange-traded 

funds (‘‘ETFs’’) for which the portfolio 

is disclosed in accordance with 

standard mutual fund disclosure rules. 

In addition, the Exchange proposes to 

list and trade shares of the following 

under proposed NYSE Arca Equities 

Rule 8.900: Precidian U.S. Managed 

Volatility Fund; Precidian Strategic 

Value; Precidian Large Cap Value; 

Precidian Focused Dividend Strategy; 

Precidian U.S. Large Cap Growth; 

Precidian U.S. Core Equity; Precidian 

U.S. Mid Cap Growth; Precidian Total 

Return; Precidian High Dividend Yield; 

Precidian Small Cap Dividend Value; 

Precidian Multi-factor Small Cap Core; 

Precidian Multi-factor Small Cap 

Growth; Precidian Large Cap Core Plus 

130/30; Precidian Mid Cap Core Plus 

130/30; and Precidian Small Cap Core 

Plus 130/30. 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 add new 

NYSE Arca Equities Rule 8.900 for the 

purpose of permitting the listing and 

trading, or trading pursuant to unlisted 

trading privileges (‘‘UTP’’), of Managed 

Portfolio Shares, which are securities 

issued by an actively managed open-end 

investment management company.3 The 

Exchange also proposes to amend NYSE 

Arca Equities Rule 7.34 (Trading 

Sessions) to reference securities 

described in proposed NYSE Arca 

Equities Rule 8.900 in Rule 7.34(a)(3)(A) 

relating to securities traded in the Core 

Trading Session. 

In addition to the above-mentioned 

proposed rule changes, the Exchange 

proposes to list and trade shares 

(‘‘Shares’’) of the following under 

proposed NYSE Arca Equities Rule 

8.900: Precidian U.S. Managed 

Volatility Fund; Precidian Strategic 

Value; Precidian Large Cap Value; 

Precidian Focused Dividend Strategy; 

Precidian U.S. Large Cap Growth; 

Precidian U.S. Core Equity; Precidian 

U.S. Mid Cap Growth; Precidian Total 

Return; Precidian High Dividend Yield; 

Precidian Small Cap Dividend Value; 

Precidian Multi-factor Small Cap Core; 

Precidian Multi-factor Small Cap 

Growth; Precidian Large Cap Core Plus 

130/30; Precidian Mid Cap Core Plus 

130/30; and Precidian Small Cap Core 

Plus 130/30 (each, a ‘‘Fund’’ and, 

collectively, the ‘‘Funds’’). 

Proposed Listing Rules 

Proposed Rule 8.900 (a) provides that 

the Corporation will consider for 

trading, whether by listing or pursuant 

to UTP, Managed Portfolio Shares that 

meet the criteria of Rule 8.900. 

Proposed Rule 8.900 (b) provides that 

Rule 8.900 is applicable only to 

Managed Portfolio Shares and that, 

except to the extent inconsistent with 

Rule 8.900, or unless the context 

otherwise requires, the rules and 

procedures of the Corporation’s Board of 

Directors shall be applicable to the 

trading on the Corporation of such 

securities. Proposed Rule 8.900 (b) 

provides further that Managed Portfolio 

Shares are included within the 

definition of ‘‘security’’ or ‘‘securities’’ 

as such terms are used in the Rules of 

the Corporation. 

Proposed Definitions. Proposed Rule 

8.900(c)(1) defines the term ‘‘Managed 

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8270 Federal Register / Vol. 81, No. 32 / Thursday, February 18, 2016 / Notices 

4NYSE Arca Equities Rule 7.34(a)(5) (‘‘Trading 

Halts of Derivative Securities Products Listed on the 

NYSE Arca Marketplace)’’ provides that, with 

respect to Derivative Securities Products listed on 

the NYSE Arca Marketplace for which a net asset 

value is disseminated, if the Exchange becomes 

aware that the net asset value is not being 

disseminated to all market participants at the same 

time, it will halt trading in the affected Derivative 

Securities Product on the NYSE Arca Marketplace 

until such time as the net asset value is available 

to all market participants. 

Portfolio Share’’ as a security that (a) is 

issued by 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 consistent with the 

Investment Company’s investment 

objectives and policies; and (b) when 

aggregated in a number of shares equal 

to a Redemption Unit or multiples 

thereof, may be redeemed at the request 

of an Authorized Participant (as defined 

in the Investment Company’s Form N– 

1A filed with the SEC), which 

Authorized Participant will be paid 

though a confidential account 

established for its benefit a portfolio of 

securities and/or cash with a value 

equal to the next determined net asset 

value (‘‘NAV’’). 

Proposed Rule 8.900(c)(2) defines the 

term ‘‘Verified Intraday Indicative Value 

(‘‘VIIV’’) as the estimated indicative 

value of a Managed Portfolio Share 

based on all of the issuer’s holdings as 

of the close of business on the prior 

business day, priced and disseminated 

in one second intervals, and subject to 

validation by a pricing verification agent 

of the Investment Company that is 

responsible for comparing multiple 

independent pricing sources to establish 

the accuracy of the VIIV. 

Proposed Rule 8.900(c)(3) defines the 

term ‘‘Redemption Unit’’ as a specified 

number of Managed Portfolio Shares. 

Proposed Rule 8.900(c)(4) defines the 

term ‘‘Reporting Authority’’ in respect 

of a particular series of Managed 

Portfolio Shares as a reporting service 

designated by the issuer and acceptable 

to the Corporation or by the exchange 

that lists a particular series of Managed 

Portfolio Shares (if the Corporation is 

trading such series pursuant to UTP) as 

the official source for calculating and 

reporting information relating to such 

series, including, but not limited to, the 

VIIV, NAV, or other information relating 

to the issuance, redemption or trading of 

Managed Portfolio Shares. A series of 

Managed Portfolio Shares may have 

more than one Reporting Authority, 

each having different functions. 

Proposed Rule 8.900(d) sets forth 

initial and continued listing criteria 

applicable to Managed Portfolio Shares. 

Proposed Rule 8.900(d)(1)(A) provides 

that, for each series of Managed 

Portfolio Shares, the Corporation will 

establish a minimum number of 

Managed Portfolio Shares required to be 

outstanding at the time of 

commencement of trading on the 

Corporation. In addition, proposed Rule 

8.900(d)(1)(B) provides that the 

Corporation will obtain a representation 

from the issuer of each series of 

Managed Portfolio Shares that the NAV 

per share for the series will be 

calculated daily and that the NAV will 

be made available to all market 

participants at the same time.4

Proposed Rule 8.900(d)(2) provides 

that each series of Managed Portfolio 

Shares will be listed and traded subject 

to application of the following 

continued listing criteria. Proposed Rule 

8.900(d)(2)(A) provides that the VIIV for 

Managed Portfolio Shares will be widely 

disseminated by one or more major 

market data vendors every second 

during the Exchange’s Core Trading 

Session (as defined in NYSE Arca 

Equities Rule 7.34). 

Proposed Rule 8.900(d)(2)(B) provides 

that the Corporation will consider the 

suspension of trading in or removal 

from listing of a series of Managed 

Portfolio Shares under any of the 

following circumstances: (i) If, following 

the initial twelve-month period after 

commencement of trading on the 

Exchange of a series of Managed 

Portfolio Shares, there are fewer than 50 

beneficial holders of the series of 

Managed Portfolio Shares for 30 or more 

consecutive trading days; (ii) if the 

value of the VIIV is no longer calculated 

or made available to all market 

participants at the same time; (iii) if the 

Investment Company issuing the 

Managed Portfolio Shares has failed to 

file any filings required by the 

Commission or if the Corporation is 

aware that the Investment Company is 

not in compliance with the conditions 

of any exemptive order or no-action 

relief granted by the Commission to the 

Investment Company with respect to the 

series of Managed Portfolio Shares; or 

(iv) if such other event shall occur or 

condition exists which, in the opinion 

of the Corporation, makes further 

dealings on the Corporation inadvisable. 

Proposed Rule 8.900(d)(2)(C) provides 

that, upon notification to the 

Corporation by the Investment Company 

or its agent that (i) the prices from the 

multiple independent pricing sources to 

be validated by the Investment 

Company’s pricing verification agent 

differ by more than 25 basis points for 

60 seconds in connection with pricing 

of the VIIV, or (ii) that the VIIV of a 

series of Managed Portfolio Shares is not 

being priced and disseminated in onesecond intervals, as required, the 

Corporation shall halt trading in the 

Managed Portfolio Shares as soon as 

practicable. Such halt in trading shall 

continue until the Investment Company 

or its agent notifies the Corporation that 

the prices from the independent pricing 

sources no longer differ by more than 25 

basis points for 60 seconds or that the 

VIIV is being priced and disseminated 

as required. The Investment Company 

or its agent shall be responsible for 

monitoring that the VIIV is being priced 

and disseminated as required and 

whether the prices to be validated from 

multiple independent pricing sources 

differ by more than 25 basis points for 

60 seconds. With respect to series of 

Managed Portfolio Shares trading on the 

Corporation pursuant to unlisted trading 

privileges, if a temporary interruption 

occurs in the pricing or dissemination of 

the applicable Verified Intraday 

Indicative Value and the listing market 

halts trading in such series, the 

Corporation, upon notification by the 

listing market of such halt due to such 

temporary interruption, will halt trading 

in such series. In addition, if the 

Exchange becomes aware that the NAV 

with respect to a series of Managed 

Portfolio Shares is not disseminated to 

all market participants at the same time, 

it will halt trading in such series until 

such time as the NAV is available to all 

market participants. 

Proposed Rule 8.900(d)(2)(D) provides 

that, upon termination of an Investment 

Company, the Corporation requires that 

Managed Portfolio Shares issued in 

connection with such entity be removed 

from Corporation listing. 

Proposed Rule 8.900(d)(2)(E) provides 

that voting rights shall be as set forth in 

the applicable Investment Company 

prospectus. 

Proposed Rule 8.900(e), which relates 

to limitation of Corporation liability, 

provides that neither the Corporation, 

the Reporting Authority, nor any agent 

of the Corporation shall have any 

liability for damages, claims, losses or 

expenses caused by any errors, 

omissions, or delays in calculating or 

disseminating any current portfolio 

value; the VIIV; the current value of the 

portfolio of securities required to be 

deposited to the open-end management 

investment company in connection with 

issuance of Managed Portfolio Shares; 

the amount of any dividend equivalent 

payment or cash distribution to holders 

of Managed Portfolio Shares; NAV; or 

other information relating to the 

purchase, redemption, or trading of 

Managed Portfolio Shares, resulting 

from any negligent act or omission by 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 81, No. 32 / Thursday, February 18, 2016 / Notices 8271 

5The Exchange will propose applicable NYSE 

Arca Equities listing fees for Managed Portfolio 

Shares in the NYSE Arca Equities Schedule of Fees 

and Charges via a separate proposed rule change. 

6The Commission has previously approved 

listing and trading on the Exchange of a number of 

issues of Managed Fund Shares under Rule 8.600. 

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 activelymanaged funds of the WisdomTree Trust); 60460 

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

(SR–NYSEArca2009–55) (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). 

7NYSE Arca Equities Rule 8.600(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 

Equities Rule 8.600(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. 

8A mutual fund is required to file with the 

Commission its complete portfolio schedules for the 

second and fourth fiscal quarters on Form N–SAR 

under the 1940 Act, and is required to file its 

complete portfolio schedules for the first and third 

fiscal quarters on Form N–Q under the 1940 Act, 

within 60 days of the end of the quarter. Form 

N–Q requires funds to file the same schedules of 

investments that are required in annual and semiannual reports to shareholders. These forms are 

available to the public on the Commission’s Web 

site at www.sec.gov. 

the Corporation, the Reporting 

Authority or any agent of the 

Corporation, or any act, condition, or 

cause beyond the reasonable control of 

the Corporation, its agent, or the 

Reporting Authority, including, but not 

limited to, an act of God; fire; flood; 

extraordinary weather conditions; war; 

insurrection; riot; strike; accident; 

action of government; communications 

or power failure; equipment or software 

malfunction; or any error, omission, or 

delay in the reports of transactions in 

one or more underlying securities. 

Proposed Commentary .01 to NYSE 

Arca Equities Rule 8.900 provides that 

the Corporation will file separate 

proposals under Section 19(b) of the Act 

before the listing and trading of 

Managed Portfolio Shares. Proposed 

Commentary .02 to NYSE Arca Equities 

Rule 8.900 provides that transactions in 

Managed Portfolio Shares will occur 

only during the Core Trading Session as 

specified in NYSE Arca Equities Rule 

7.34(a)(3)(A). 

Proposed Commentary .03 to NYSE 

Arca Equities Rule 8.900 provides that 

the Exchange will implement written 

surveillance procedures for Managed 

Portfolio Shares. 

Proposed Commentary .04 to NYSE 

Arca Equities Rule 8.900 provides that 

Authorized Participants (as defined in 

the Investment Company’s Form N–1A 

filed with the SEC) or non-Authorized 

Participant market makers redeeming 

Managed Portfolio Shares will sign an 

agreement with an agent (‘‘Trusted 

Agent’’) to establish a confidential 

account for the benefit of such 

Authorized Participant or nonAuthorized Participant market maker 

that will receive all consideration from 

the issuer in a redemption. A Trusted 

Agent may not disclose the 

consideration received in a redemption 

except as required by law or as provided 

in the Investment Company’s Form 

N–1A, as applicable. 

Proposed Commentary .05 to NYSE 

Arca Equities Rule 8.900 provides that, 

if the investment adviser to the 

Investment Company issuing Managed 

Portfolio Shares is affiliated with a 

broker-dealer, or if any Trusted Agent is 

registered as a broker-dealer or is 

affiliated with a broker-dealer, such 

investment adviser or Trusted Agent 

will erect a ‘‘fire wall’’ between the 

investment adviser or Trusted Agent 

and (i) personnel of the broker-dealer or 

broker-dealer affiliate, as applicable, or 

(ii) the Authorized Participant or nonAuthorized Participant market maker, as 

applicable, with respect to access to 

information concerning the composition 

and/or changes to such Investment 

Company portfolio. Personnel who 

make decisions on the Investment 

Company’s portfolio composition must 

be subject to procedures designed to 

prevent the use and dissemination of 

material nonpublic information 

regarding the applicable Investment 

Company portfolio. 

Other Rules 

The Exchange proposes to amend 

NYSE Arca Equities Rule 7.34(a)(3)(A) 

to add securities described in NYSE 

Arca Equities Rule 8.900 to the 

securities for which the Core Trading 

Session shall conclude at 1:15:00 p.m. 

(Pacific Time) unless otherwise 

determined by the Corporation.5

Key Features of Managed Portfolio 

Shares 

While funds issuing Managed 

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

similar to Managed Fund Shares, 

Managed 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 Equities Rule 

8.600 6 and for which a ‘‘Disclosed 

Portfolio’’ is required to be disseminated 

at least once daily,7 the portfolio for an 

issue of Managed Portfolio Shares will 

be disclosed quarterly in accordance 

with normal disclosure requirements 

otherwise applicable to open-end 

investment companies registered under 

the 1940 Act.8 Second, in connection 

with the redemption of shares in 

‘‘Redemption Unit’’ size (as described 

below), the delivery of any portfolio 

securities in kind will generally be 

effected through a ‘‘Confidential 

Account’’ (as described below) for the 

benefit of the redeeming ‘‘Authorized 

Participant’’ (as described below in 

‘‘Creation and Redemption of Shares’’) 

without disclosing the identity of such 

securities to the Authorized Participant. 

For each series of Managed Portfolio 

Shares, an estimated value—the VIIV— 

that reflects an estimated intraday value 

of a fund’s portfolio will be 

disseminated. With respect to the 

Funds, the VIIV will be based upon all 

of a Fund’s holdings as of the close of 

the prior business day and will be 

widely disseminated by one or more 

major market data vendors every second 

during the Exchange’s Core Trading 

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

p.m., Eastern Time (‘‘E.T.’’)). The 

dissemination of the VIIV will allow 

investors to determine the estimated 

intra-day value of the underlying 

portfolio of a series of Managed 

Portfolio Shares on a daily basis and 

will provide a close estimate of that 

value throughout the trading day. The 

VIIV should not be viewed as a ‘‘realtime’’ update of the NAV per Share of 

each Fund because the VIIV may not be 

calculated in the same manner as the 

NAV, which will be computed once a 

day, generally at the end of the business 

day. Unlike the VIIV, which will be 

based on consolidated midpoint of the 

bid ask spread, the NAV per Share will 

be based on the closing price on the 

primary market for each portfolio 

security. If there is no closing price for 

a particular portfolio security, such as 

when it the subject of a trading halt, a 

Fund will use fair value pricing. That 

fair value pricing will be carried over to 

the next day’s VIIV until the first trade 

in that stock is reported unless the 

‘‘Adviser’’ (defined below) deems a 

particular portfolio security to be 

illiquid and/or the available ongoing 

pricing information unlikely to be 

reliable. In such case, that fact will be 

immediately disclosed on each Fund’s 

Web site, including the identity and 

weighting of that security in a Fund’s 

portfolio, and the impact of that security 

on VIIV calculation, including the fair 

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8272 Federal Register / Vol. 81, No. 32 / Thursday, February 18, 2016 / Notices 

9Statistical arbitrage enables a trader to construct 

an accurate proxy for another instrument, allowing 

it to hedge the other instrument or buy or sell the 

instrument when it is cheap or expensive in 

relation to the proxy. Statistical analysis permits 

traders to discover correlations based purely on 

trading data without regard to other fundamental 

drivers. These correlations are a function of 

differentials, over time, between one instrument or 

group of instruments and one or more other 

instruments. Once the nature of these price 

deviations have been quantified, a universe of 

securities is searched in an effort to, in the case of 

a hedging strategy, minimize the differential. Once 

a suitable hedging proxy has been identified, a 

trader can minimize portfolio risk by executing the 

hedging basket. The trader then can monitor the 

performance of this hedge throughout the trade 

period making correction where warranted. 

10A Non-Authorized Participant Market Maker is 

a market participant that makes a market in Shares, 

but is not an Authorized Participant. 

value price for that security being used 

for the calculation of that day’s VIIV. 

The Exchange, after consulting with 

various Lead Market Makers that trade 

exchange-traded funds (‘‘ETFs’’) on the 

Exchange, believes that market makers 

will be able to make efficient and liquid 

markets priced near the VIIV as long as 

a VIIV is disseminated every second, 

market makers have knowledge of a 

Fund’s means of achieving its 

investment objective even without daily 

disclosure of a Fund’s underlying 

portfolio, and market makers are 

permitted to engage in ‘‘Bona Fide 

Arbitrage’’, as described below. The 

Exchange believes that market makers 

will employ Bona Fide Arbitrage in 

addition to risk-management techniques 

such as ‘‘statistical arbitrage’’, which is 

currently used throughout the financial 

services industry, to make efficient 

markets in exchange-traded products.9

This ability should permit market 

makers to make efficient markets in an 

issue of Managed Portfolio Shares 

without knowledge of a Fund’s 

underlying portfolio. 

To enable market makers to engage in 

Bona Fide Arbitrage, on each ‘‘Business 

Day’’ (as defined below), before 

commencement of trading in Shares on 

the Exchange, the Funds will provide to 

a ‘‘Trusted Agent’’ (as described below) 

of each Authorized Participant or ‘‘NonAuthorized Participant Market 

Maker’’ 10 the identities and quantities 

of portfolio securities that will form the 

basis for a Fund’s calculation of NAV 

per Share at the end of the Business 

Day, as well as the names and quantities 

of the instruments comprising a 

‘‘Creation Basket’’ and the estimated 

‘‘Balancing Amount’’ (if any) (as 

described below), for that day. This 

information will permit Authorized 

Participants to purchase ‘‘Creation 

Units’’ through an in-kind transaction 

with a Fund, as described below. 

In addition, Authorized Participants 

will be able to instruct the Trusted 

Agent to buy or sell portfolio securities 

during the day and thereby engage in 

Bona Fide Arbitrage throughout the 

trading day. For example, if an 

Authorized Participant believes that 

Shares of a Fund are trading at a price 

that is higher than the value of its 

underlying portfolio based on the VIIV, 

the Authorized Participant may sell 

Shares short and instruct the Trusted 

Agent to buy portfolio securities for its 

Confidential Account. When the market 

price of a Fund’s Shares falls in line 

with the value of the portfolio, the 

Authorized Participant can then close 

out its positions in both the Shares and 

the portfolio securities. The Authorized 

Participant’s purchase of the portfolio 

securities into its Confidential Account, 

combined with the sale of Shares, may 

also create downward pressure on the 

price of Shares and/or upward pressure 

on the price of the portfolio securities, 

bringing the market price of Shares and 

the value of a Fund’s portfolio securities 

closer together. Similarly, an 

Authorized Participant could buy 

Shares and instruct the Trusted Agent to 

sell the underlying portfolio securities 

from its Confidential Account in an 

attempt to profit when a Fund’s Shares 

are trading at a discount to its portfolio. 

The Authorized Participant’s purchase 

of a Fund’s Shares in the secondary 

market, combined with the sale of the 

portfolio securities from its Confidential 

Account, may also create upward 

pressure on the price of Shares and/or 

downward pressure on the price of 

portfolio securities, driving the market 

price of Shares and the value of a 

Fund’s portfolio securities closer 

together. The Adviser represents that it 

understands that, other than the 

confidential nature of the account, this 

process is identical to how many 

Authorized Participants currently 

arbitrage existing traditional ETFs. 

Because other market participants can 

also engage in arbitrage activity without 

using the creation or redemption 

processes described above, the 

Confidential Account structure will be 

made available to any Non-Authorized 

Participant Market Maker that is willing 

to establish a Confidential Account. In 

that case, if a market participant 

believes that a Fund is overvalued 

relative to its underlying assets, the 

market participant may sell short Shares 

and instruct its Trusted Agent to buy 

portfolio securities in its Confidential 

Account, wait for the trading prices to 

move toward parity, and then close out 

the positions in both the Shares and the 

portfolio securities to realize a profit 

from the relative movement of their 

trading prices. Similarly, a market 

participant could buy Shares and 

instruct the Trusted Agent to sell the 

underlying portfolio securities in an 

attempt to profit when a Fund’s Shares 

are trading at a discount to a Fund’s 

underlying or reference assets. Any 

investor that is willing to transact 

through a broker-dealer that has 

established a Confidential Account with 

a Trusted Agent will have the same 

opportunity to engage in arbitrage 

activity. As discussed above, the trading 

of a Fund’s Shares and the Fund’s 

portfolio securities may bring the prices 

of a Fund’s Shares and its portfolio 

assets closer together through market 

pressure. This type of arbitrage is 

referred to herein as ‘‘Bona Fide 

Arbitrage.’’ 

The Exchange understands that 

traders use statistical analysis to derive 

correlations between different sets of 

instruments to identify opportunities to 

buy or sell one set of instruments when 

it is mispriced relative to the others. For 

Managed Portfolio Shares, market 

makers, in addition to employing Bona 

Fide Arbitrage, may use the knowledge 

of a Fund’s means of achieving its 

investment objective, as described in the 

applicable Fund registration statement, 

to construct a hedging proxy for a Fund 

to manage a market maker’s quoting risk 

in connection with trading Fund Shares. 

Market makers can then conduct 

statistical arbitrage between their 

hedging proxy (for example, the Russell 

1000 Index) and Shares of a Fund, 

buying and selling one against the other 

over the course of the trading day. They 

will evaluate how their proxy performed 

in comparison to the price of a Fund’s 

Shares, and use that analysis as well as 

knowledge of risk metrics, such as 

volatility and turnover, to enhance their 

proxy calculation to make it a more 

efficient hedge. 

Market makers not intending to utilize 

Bona Fide Arbitrage, have indicated to 

the Exchange that, after the first few 

days of trading, there will be sufficient 

data to run a statistical analysis which 

will lead to spreads being tightened 

substantially around the VIIV. This is 

similar to certain other existing 

exchange traded products (for example, 

ETFs that invest in foreign securities 

that do not trade during U. S. trading 

hours), in which spreads may be 

generally wider in the early days of 

trading and then narrow as market 

makers gain more confidence in their 

real-time hedges. 

Description of the Funds and the Trust 

The Shares of each Fund will be 

issued by Precidian ETFs Trust 

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Federal Register / Vol. 81, No. 32 / Thursday, February 18, 2016 / Notices 8273 

11The Trust will be registered under the 1940 

Act. On September 21, 2015, the Trust filed a 

registration statement on Form N–1A under the 

Securities Act of 1933 (the ‘‘1933 Act’’) (15 U.S.C. 

77a), and under the 1940 Act relating to the Funds 

(File Nos. 333–171987 and 811–22524) (the 

‘‘Registration Statement’’). The Trust 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– 

14116), dated July 18, 2013 (‘‘Exemptive 

Application’’). The Shares will not be listed on the 

Exchange until an order (‘‘Exemptive Order’’) under 

the 1940 Act has been issued by the Commission 

with respect to the Exemptive Application. 

Investments made by the Funds will comply with 

the conditions set forth in the Exemptive Order. 

The description of the operation of the Trust and 

the Funds herein is based, in part, on the 

Registration Statement and the Exemptive 

Application. 

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. 

13For purposes of this filing, ETFs include 

Investment Company Units (as described in NYSE 

Arca Equities Rule 5.2(j)(3)); Portfolio Depository 

Receipts (as described in NYSE Arca Equities Rule 

8.100); and Managed Fund Shares (as described in 

NYSE Arca Equities Rule 8.600). The ETFs in which 

a Fund will invest all will be listed and traded on 

national securities exchanges. While the Funds may 

invest in inverse ETFs, the Funds will not invest 

in leveraged (e.g., 2X, ¥2X, 3X or ¥3X)ETFs. 

(‘‘Trust’’), a statutory trust organized 

under the laws of the State of Delaware 

and registered with the Commission as 

an open-end management investment 

company.11 The investment adviser to 

the Trust will be Precidian Funds LLC 

(the ’’Adviser’’). Foreside Fund 

Services, LLC (‘‘Distributor’’) will serve 

as the distributor of the Fund’s Shares. 

As noted above, proposed 

Commentary .05 to NYSE Arca Equities 

Rule 8.900 provides that, if the 

investment adviser to the Investment 

Company issuing Managed Portfolio 

Shares is affiliated with a broker-dealer, 

or if any Trusted Agent is registered as 

a broker-dealer or is affiliated with a 

broker-dealer, such investment adviser 

or Trusted Agent will erect a ‘‘fire wall’’ 

between the investment adviser or 

Trusted Agent and (i) personnel of the 

broker-dealer or broker-dealer affiliate, 

as applicable, or (ii) the Authorized 

Participant or non-Authorized 

Participant market maker, as applicable, 

with respect to access to information 

concerning the composition and/or 

changes to such Investment Company 

portfolio. Personnel who make 

decisions on the Investment Company’s 

portfolio composition must be subject to 

procedures designed to prevent the use 

and dissemination of material 

nonpublic information regarding the 

applicable Investment Company 

portfolio.12 In addition, proposed 

Commentary .05 further requires that 

personnel who make decisions on the 

open-end fund’s portfolio composition 

must be subject to procedures designed 

to prevent the use and dissemination of 

material nonpublic information 

regarding the open-end fund’s portfolio. 

Proposed Commentary .05 to Rule 8.900 

is similar to Commentary .03(a)(i) and 

(iii) to NYSE Arca Equities Rule 

5.2(j)(3); however, Commentary .05 in 

connection with the establishment of a 

‘‘fire wall’’ between the investment 

adviser and the broker-dealer reflects 

the applicable open-end fund’s 

portfolio, not an underlying benchmark 

index, as is the case with index-based 

funds. The Adviser is not registered as 

a broker-dealer or affiliated with a 

broker-dealer. 

In the event (a) the Adviser or any 

sub-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 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 portfolio, and will be 

subject to procedures designed to 

prevent the use and dissemination of 

material non-public information 

regarding such portfolio. 

The portfolio for each Fund will 

consist of U.S.-listed securities and 

shares issued by other U.S.-listed 

ETFs 13 All exchange-listed equity 

securities in which the Funds will 

invest will be listed and traded on U.S. 

national securities exchanges. 

Description of the Funds 

Precidian U.S. Managed Volatility Fund 

The Precidian U.S. Managed 

Volatility Fund will typically invest 

primarily in securities of U.S. 

companies of all capitalization ranges. 

These securities may include common 

stocks, preferred stocks, ETFs and 

warrants. The Fund will seek to achieve 

an absolute return of the broad U.S. 

equity markets, but with a lower 

absolute volatility. 

Precidian Strategic Value 

The Fund will pursue its investment 

objective by investing primarily in high 

dividend yielding common stocks with 

dividend growth potential. The Fund’s 

security selection process involves 

screening and prioritizing stocks based 

on appropriate quantitative statistics. 

Those companies that rank as highly 

attractive in the screening process are 

closely scrutinized for inclusion in the 

portfolio using bottom-up fundamental 

proprietary research. 

Precidian Large Cap Value 

The Fund will invest primarily in 

large-capitalization companies, seeking 

consistent long-term performance. The 

Fund will follow a traditional valueoriented investment philosophy using a 

research-intensive approach. 

Precidian Focused Dividend Strategy 

The Fund will seek total return 

(including capital appreciation and 

current income) by employing a ‘‘buy 

and hold’’ strategy involving the 

periodic selection of high dividend 

yielding common stocks from the 

universe of Russell 3000 stocks. 

Precidian U.S. Large Cap Growth 

The Fund will seek long-term capital 

growth. The Fund will seek to achieve 

its investment objective by investing 

primarily in equities or groups of 

equities that the Adviser believes will 

provide higher returns than the Russell 

1000 Growth Index. 

Precidian U.S. Core Equity 

The Fund will seek high total return. 

The Fund will seek to achieve its 

investment objective by investing 

primarily in equities or groups of 

equities that the Adviser believes will 

provide higher returns than the S&P 500 

Index. 

Precidian U.S. Mid Cap Growth 

The Fund will invest primarily in 

common stocks of mid-cap companies 

with market capitalizations similar to 

those within the universe of the Russell 

Mid-Cap Growth Index. The Fund will 

seek companies that have a history of or 

the potential to achieve above-average 

growth. 

Precidian Total Return 

The Fund will seek total return, 

consisting of capital appreciation and 

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8274 Federal Register / Vol. 81, No. 32 / Thursday, February 18, 2016 / Notices 

14For purposes of this filing, cash equivalents 

include short-term instruments (instruments with 

maturities of less than 3 months) of the following 

types: (i) 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; (ii) 

certificates of deposit issued against funds 

deposited in a bank or savings and loan association; 

(iii) bankers’ acceptances, which are short-term 

credit instruments used to finance commercial 

transactions; (iv) repurchase agreements and reverse 

repurchase agreements; (v) 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; (vi) commercial 

paper, which are short-term unsecured promissory 

notes; and (vii) money market funds. 

15The diversification standard is set forth in 

Section 5(b)(1) of the 1940 Act. 

16See Form N–1A, Item 9. The Commission has 

taken the position that a fund is concentrated if it 

invests more than 25% of the value of its total 

assets in any one industry. See, e.g., Investment 

Company Act Release No. 9011 (October 30, 1975), 

40 FR 54241 (November 21, 1975). 

17 In reaching liquidity decisions, the Adviser 

may consider the following factors: the frequency 

of trades and quotes for the security; the number of 

dealers wishing to purchase or sell the security and 

the number of other potential purchasers; dealer 

undertakings to make a market in the security; and 

the nature of the security and the nature of the 

marketplace in which it trades (e.g., the time 

needed to dispose of the security, the method of 

soliciting offers and the mechanics of transfer). 

18The Commission has stated that long-standing 

Commission guidelines have required open-end 

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

in illiquid securities and other illiquid assets. See 

Investment Company Act Release No. 28193 (March 

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

34. See also, Investment Company Act Release No. 

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

31, 1970) (Statement Regarding ‘‘Restricted 

Securities’’); Investment Company Act Release No. 

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

current income. The Fund will invest 

primarily in large, dividend-yielding 

companies selected by a quantitative 

total return formula. 

Precidian High Dividend Yield 

The Fund will seek to track a 

benchmark that provides broad 

exposure to U.S. companies that are 

dedicated to consistently paying largerthan-average dividends. 

Precidian Small Cap Dividend Value 

The Fund will seek long-term capital 

appreciation and current income 

through investments in small cap 

companies that the Fund believes are 

undervalued and typically pay a 

dividend. Such companies generally 

will have a market capitalization below 

$3.5 billion at the time of purchase. 

Precidian Multi-Factor Small Cap Core 

The Fund’s investment objective will 

be to provide long-term capital 

appreciation by investing primarily in a 

diversified portfolio of small cap equity 

securities that possess both value and 

growth characteristics. 

Precidian Multi-Factor Small Cap 

Growth 

The Fund’s investment objective will 

be to provide long-term cap 

appreciation by primarily investing in a 

diversified portfolio of small cap equity 

securities. 

Precidian Large Cap Core Plus 130/30 

The Fund will invest primarily in 

securities of large-capitalization 

companies with characteristics similar 

to those comprising the Russell 1000. 

The Fund will take long positions in 

securities that will likely appreciate 

more rapidly in rising markets and short 

positions in those that will likely 

decline faster in declining markets. 

Precidian Mid Cap Core Plus 130/30 

The Fund will invest primarily in 

equity securities of mid-cap companies 

with market capitalizations equal to 

those within the universe of the Russell 

Mid Cap Index. The Fund will take long 

positions in securities that will likely 

appreciate more rapidly in rising 

markets and short positions in those 

that will likely decline faster in 

declining markets. 

Precidian Small Cap Core Plus 130/30 

The Fund will invest primarily in 

equity securities of small-cap companies 

with market capitalizations equal to 

those within the universe of the Russell 

Small Cap Index. The Fund will take 

long positions in securities that will 

likely appreciate more rapidly in rising 

markets and short positions in those 

that will likely decline faster in 

declining markets. 

Other Investments 

While each Fund, under normal 

market conditions, will invest primarily 

in U.S.-listed securities, as described 

above, each Fund may invest its 

remaining assets in other securities and 

financial instruments, as described 

below. 

According to the Registration 

Statement, each Fund may enter into 

repurchase agreements. A repurchase 

agreement is an instrument under which 

the purchaser (i.e., a Fund) acquires the 

security and the seller agrees, at the 

time of the sale, to repurchase the 

security at a mutually agreed upon time 

and price, thereby determining the yield 

during the purchaser’s holding period. 

Repurchase agreements may be 

construed to be collateralized loans by 

the purchaser to the seller secured by 

the securities transferred to the 

purchaser. 

Each Fund may enter into reverse 

repurchase agreements, which involve 

the sale of securities with an agreement 

to repurchase the securities at an 

agreed-upon price, date and interest 

payment and have the characteristics of 

borrowing. Generally, the effect of such 

transactions is that the Fund can recover 

all or most of the cash invested in the 

portfolio securities involved during the 

term of the reverse repurchase 

agreement, while in many cases the 

Fund is able to keep some of the interest 

income associated with those securities. 

Each Fund may invest a portion of its 

assets in cash or cash equivalents.14

Each Fund may invest in the 

securities of other investment 

companies (including money market 

funds) to the extent allowed by law. 

Investment Restrictions 

A Fund may not, with respect to 75% 

of its total assets, purchase securities of 

any issuer (except securities issued or 

guaranteed by the U.S. government, its 

agencies or instrumentalities or shares 

of investment companies) if, as a result, 

more than 5% of its total assets would 

be invested in the securities of such 

issuer; or (ii) acquire more than 10% of 

the outstanding voting securities of any 

one issuer (and for purposes of this 

policy, the issuer of the underlying 

security will be deemed to be the issuer 

of any respective depositary receipt).15

A Fund may not invest 25% or more 

of its total assets in the securities of one 

or more issuers conducting their 

principal business activities in the same 

industry or group of industries. This 

limitation does not apply to investments 

in securities issued or guaranteed by the 

U.S. government, its agencies or 

instrumentalities, or shares of 

investment companies. A Fund will not 

invest 25% or more of its total assets in 

any investment company that so 

concentrates.16

Each Fund may invest up to an 

aggregate amount of 15% of its net 

assets in illiquid assets (calculated at 

the time of investment),17 consistent 

with Commission guidance. Each Fund 

will monitor its portfolio liquidity on an 

ongoing basis to determine whether, in 

light of current circumstances, an 

adequate level of liquidity is being 

maintained, and will consider taking 

appropriate steps in order to maintain 

adequate liquidity if, through a change 

in values, net assets, or other 

circumstances, more than 15% of a 

Fund’s net assets are invested in illiquid 

assets. Illiquid assets include securities 

subject to contractual or other 

restrictions on resale and other 

instruments that lack readily available 

markets as determined in accordance 

with Commission staff guidance.18

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Federal Register / Vol. 81, No. 32 / Thursday, February 18, 2016 / Notices 8275 

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

fund’s portfolio security is illiquid if it cannot be 

disposed of in the ordinary course of business 

within seven days at approximately the value 

ascribed to it by the fund. See Investment Company 

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

9773 (March 21, 1986) (adopting amendments to 

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

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

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

under the Securities Act of 1933). 

19 26 U.S.C. 851. 

20 In the event that a Trusted Agent is a bank, the 

bank will be required to have an affiliated brokerdealer to accommodate the execution of hedging 

transactions on behalf of the holder of a 

Confidential Account. 

21The Adviser represents that the Funds intend 

to engage in share splits and reverse splits in order 

to keep the price of Shares generally within this 

range. By keeping the price of a Share in this range, 

it will dampen the impact of volatility in the prices 

of the underlying portfolio securities in a Fund, 

which has the effect of making it almost impossible 

to determine, based on changes in market prices, 

what securities are being held in a Fund’s portfolio. 

22The Funds must comply with the federal 

securities laws in accepting Deposit Instruments 

and satisfying redemptions with Redemption 

Instruments, including that the Deposit Instruments 

and Redemption Instruments are sold in 

transactions that would be exempt from registration 

under the 1933 Act. 

23 In determining whether a particular Fund will 

sell or redeem Creation Units entirely on a cash or 

in-kind basis, whether for a given day or a given 

order, the key consideration will be the benefit that 

would accrue to a Fund and its investors. The 

Adviser represents that the Funds do not currently 

anticipate the need to sell or redeem Creation Units 

entirely on a cash basis. 

24The Adviser represents that transacting through 

a Confidential Account is similar to transacting 

through a broker-dealer account, except that the 

Trusted Agent will be bound to keep the names and 

weights of the portfolio securities confidential. 

According to the Registration 

Statement, each Fund will seek to 

qualify for treatment as a Regulated 

Investment Company (‘‘RIC’’) under the 

Internal Revenue Code.19

The Shares of each Fund will conform 

to the initial and continued listing 

criteria under proposed Rule 8.900. The 

Funds will not invest in options, 

futures, forwards or swaps. 

Each Fund’s investments will be 

consistent with its investment objective 

and will not be used to enhance 

leverage. While a Fund may invest in 

inverse ETFs, a Fund will not invest in 

leveraged (e.g., 2X, ¥2X, 3X or ¥3X) 

ETFs. 

The Funds will not invest in nonU.S.-listed securities. 

Creations and Redemptions of Shares 

In connection with the creation and 

redemption of Creation Units (defined 

below), the delivery or receipt of any 

portfolio securities in-kind will be 

required to be effected through a 

confidential brokerage account (i.e., a 

Confidential Account) with a Trusted 

Agent, which will be a bank or brokerdealer such as JP Morgan Chase, State 

Street Bank and Trust, or Bank of New 

York Mellon, for the benefit of an 

Authorized Participant.20 An 

Authorized Participant will generally be 

a Depository Trust Company (‘‘DTC’’) 

Participant that has executed a 

‘‘Participant Agreement’’ with the 

Distributor with respect to the creation 

and redemption of Creation Units and 

formed a Confidential Account for its 

benefit in accordance with the terms of 

the Participant Agreement. For purposes 

of creations or redemptions, all 

transactions will be effected through 

that Confidential Account, for the 

benefit of the Authorized Participant 

without disclosing the identity of such 

securities to the Authorized Participant. 

Each Trusted Agent will be given, before 

the commencement of trading each 

Business Day (defined below), both the 

holdings of a Fund and their relative 

weightings for that day. This 

information will permit an Authorized 

Participant, or other market participant 

that has established a Confidential 

Account with a Trusted Agent, to 

instruct the Trusted Agent to buy and 

sell positions in the portfolio securities 

to permit Bona Fide Arbitrage, as 

defined above. 

Shares of each Fund will be issued in 

Creation Units of 25,000 or more Shares. 

The Funds will offer and sell Creation 

Units through the Distributor on a 

continuous basis at the NAV per Share 

next determined after receipt of an order 

in proper form. The NAV per Share of 

each Fund will be determined as of the 

close of regular trading on the New York 

Stock Exchange (‘‘NYSE’’) on each day 

that the NYSE is open. A ‘‘Business 

Day’’ is defined as any day that the 

Trust is open for business. The Funds 

will sell and redeem Creation Units only 

on Business Days. Applicants anticipate 

that the initially price of a Share will 

range from $20 to $30, and that the price 

of a Creation Unit initial will range from 

$1,000,000 to $5,000,000.21

In order to keep costs low and permit 

each Fund to be as fully invested as 

possible, Shares will be purchased and 

redeemed in Creation Units and 

generally on an in-kind basis. 

Accordingly, except where the purchase 

or redemption will include cash under 

the limited circumstances described in 

the Registration Statement, purchasers 

will be required to purchase Creation 

Units by making an in-kind deposit of 

specified instruments (‘‘Deposit 

Instruments’’), and shareholders 

redeeming their Shares will receive an 

in-kind transfer of specified instruments 

(‘‘Redemption Instruments’’).22 On any 

given Business Day, the names and 

quantities of the instruments that 

constitute the Deposit Instruments and 

the names and quantities of the 

instruments that constitute the 

Redemption Instruments will be 

identical, and these instruments may be 

referred to, in the case of either a 

purchase or a redemption, as the 

‘‘Creation Basket.’’ 23

As noted above, each Authorized 

Participant will be required to establish 

a Confidential Account with a Trusted 

Agent and transact with each Fund 

through that Confidential Account.24

Therefore, before the commencement of 

trading on each Business Day, the 

Trusted Agent of each Authorized 

Participant will be provided, on a 

confidential basis, with a list of the 

names and quantities of the instruments 

comprising a Creation Basket, as well as 

the estimated Balancing Amount (if 

any), for that day. The published 

Creation Basket will apply until a new 

Creation Basket is announced on the 

following Business Day, and there will 

be no intra-day changes to the Creation 

Basket except to correct errors in the 

published Creation Basket. The 

instruments and cash that the purchaser 

is required to deliver in exchange for the 

Creation Units it is purchasing are 

referred to as the ‘‘Portfolio Deposit.’’ 

Placement of Purchase Orders 

Each Fund will issue Shares through 

the Distributor on a continuous basis at 

NAV. The Exchange represents that the 

issuance of Shares will operate in a 

manner substantially similar to that of 

other ETFs. 

Each Fund will issue Shares only at 

the NAV per Share next determined 

after an order in proper form is received. 

The Trust will sell and redeem Shares 

on each such day and will not suspend 

the right of redemption or postpone the 

date of payment or satisfaction upon 

redemption for more than seven days, 

other than as provided by Section 22(d) 

of the 1940 Act. 

Shares may be purchased from a Fund 

by an Authorized Participant for its own 

account or for the benefit of a customer. 

The Distributor will furnish 

acknowledgements to those placing 

such orders that the orders have been 

accepted, but the Distributor may reject 

any order which is not submitted in 

proper form, as described in a Fund’s 

prospectus or Statement of Additional 

Information (‘‘SAI’’). Purchases of 

Shares will be settled in-kind or cash for 

an amount equal to the applicable NAV 

per Share purchased plus applicable 

‘‘Transaction Fees’’, as discussed below. 

The NAV of each Fund is expected to 

be determined once each Business Day 

at a time determined by the Trust’s 

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8276 Federal Register / Vol. 81, No. 32 / Thursday, February 18, 2016 / Notices 

25A ‘‘custom order’’ is any purchase or 

redemption of Shares made in whole or in part on 

a cash basis, as provided in the Registration 

Statement. 

26A Trusted Agent will provide information 

related to creations and redemption of Creation 

Units to the Financial Industry Regulatory 

Authority (‘‘FINRA’’) upon request. 

27 It is anticipated that any portion of a Fund’s 

NAV attributable to appreciated short positions will 

be paid in cash, as securities sold short are not 

susceptible to in-kind settlement. The value of other 

positions not susceptible to in-kind settlement may 

also be paid in cash. 

28The terms of each Confidential Account will be 

set forth as an exhibit to the applicable Participant 

Agreement, which will be signed by each 

Authorized Participant. The terms of the 

Confidential Account will provide that the trust be 

formed under applicable state laws; the Custodian 

may act as Trusted Agent of the Confidential 

Account; and the Trusted Agent will be paid by the 

Authorized Participant a fee negotiated directly 

between the Authorized Participants and the 

Trusted Agent(s). 

Board of Directors (‘‘Board’’), currently 

anticipated to be as of the close of the 

regular trading session on the NYSE 

(ordinarily 4:00 p.m. E.T.) (the 

‘‘Valuation Time’’). Each Fund will 

establish a cut-off time (‘‘Order Cut-Off 

Time’’) for purchase orders in proper 

form. To initiate a purchase of Shares, 

an Authorized Participant must submit 

to the Distributor an irrevocable order to 

purchase such Shares after the most 

recent prior Valuation Time but not 

later than the Order Cut-Off Time. The 

Order Cut-Off Time for a Fund may be 

its Valuation Time, or may be prior to 

the Valuation Time if the Board 

determines that an earlier Order Cut-Off 

Time for purchase of Shares is necessary 

and is in the best interests of Fund 

shareholders. 

All orders to purchase Creation Units 

must be received by the Distributor no 

later than the scheduled closing time of 

the regular trading session on the NYSE 

(ordinarily 4:00 p.m. E.T.) (‘‘Order CutOff Time’’) in each case on the date such 

order is placed (‘‘Transmittal Date’’) in 

order for the purchaser to receive the 

NAV per Share determined on the 

Transmittal Date. In the case of custom 

orders, the order must be received by 

the Distributor, no later than 3:00 p.m. 

E.T., or such earlier time as may be 

designated by the Funds and disclosed 

to Authorized Participants.25 The 

Distributor will maintain a record of 

Creation Unit purchases and will send 

out confirmations of such purchases.26

Transaction Fees 

The Trust may impose purchase or 

redemption transaction fees 

(‘‘Transaction Fees’’) in connection with 

the purchase or redemption of Shares 

from the Funds. The exact amounts of 

any such Transaction Fees will be 

determined by the Adviser but will not 

exceed 2%. The purpose of the 

Transaction Fees is to protect the 

continuing shareholders against 

possible dilutive transactional expenses, 

including operational processing and 

brokerage costs, associated with 

establishing and liquidating portfolio 

positions, including short positions, in 

connection with the purchase and 

redemption of Shares. 

Purchases of Shares—Secondary Market 

Only Authorized Participants and 

their customers will be able to acquire 

Shares at NAV directly from a Fund 

through the Distributor. The required 

payment must be transferred in the 

manner set forth in a Fund’s SAI by the 

specified time on the third DTC 

settlement day following the day it is 

transmitted (the ‘‘Transmittal Date’’). 

These investors and others will also be 

able to purchase Shares in secondary 

market transactions at prevailing market 

prices. Each Fund will reserve the right 

to reject any purchase order at any time. 

Redemption 

Beneficial Owners may sell their 

Shares in the secondary market. 

Alternatively, investors that own 

enough Shares to constitute a 

Redemption Unit (currently, 25,000 

Shares) or multiples thereof may redeem 

those Shares through the Distributor, 

which will act as the Trust’s 

representative for redemption. The size 

of a Redemption Unit will be subject to 

change. Redemption orders for 

Redemption Units or multiples thereof 

must be placed by or through an 

Authorized Participant. 

Authorized Participant Redemption 

The Shares may be redeemed to a 

Fund in Redemption Unit size or 

multiples thereof as described below. 

Redemption orders of Redemption Units 

must be placed by or through an 

Authorized Participant (‘‘AP 

Redemption Order’’). Each Fund will 

establish an Order Cut-Off Time for 

redemption orders of Redemption Units 

in proper form. Redemption Units of the 

Fund will be redeemable at their NAV 

per Share next determined after receipt 

of a request for redemption by the Trust 

in the manner specified below before 

the Order Cut-Off Time. To initiate an 

AP Redemption Order, an Authorized 

Participant must submit to the 

Distributor an irrevocable order to 

redeem such Redemption Unit after the 

most recent prior Valuation Time but 

not later than the Order Cut-Off Time. 

The Order Cut-Off Time for a Fund may 

be its Valuation Time, or may be prior 

to the Valuation Time if the Board 

determines that an earlier Order Cut-Off 

Time for redemption of Redemption 

Units is necessary and is in the best 

interests of Fund shareholders. 

Consistent with the provisions of 

Section 22(e) of the 1940 Act and Rule 

22e–2 thereunder, the right to redeem 

will not be suspended, nor payment 

upon redemption delayed, except for: 

(1) Any period during which the NYSE 

is closed other than customary weekend 

and holiday closings, (2) any period 

during which trading on the NYSE is 

restricted, (3) any period during which 

an emergency exists as a result of which 

disposal by a Fund of securities owned 

by it is not reasonably practicable or it 

is not reasonably practicable for a Fund 

to determine its NAV, and (4) for such 

other periods as the Commission may by 

order permit for the protection of 

shareholders. 

Redemptions will occur primarily inkind, although redemption payments 

may also be made partly or wholly in 

cash.27 The Participant Agreement 

signed by each Authorized Participant 

will require establishment of a 

Confidential Account to receive 

distributions of securities in-kind upon 

redemption.28 Each Authorized 

Participant will be required to appoint 

a Trusted Agent of its Confidential 

Account in order to facilitate orderly 

processing of redemptions. While a 

Fund will generally distribute securities 

in-kind, the Adviser may determine 

from time to time that it is not in a 

Fund’s best interests to distribute 

securities in-kind, but rather to sell 

securities and/or distribute cash. For 

example, the Adviser may distribute 

cash to facilitate orderly portfolio 

management in connection with 

rebalancing or transitioning a portfolio 

in line with its investment objective, or 

if there is substantially more creation 

than redemption activity during the 

period immediately preceding a 

redemption request, or as necessary or 

appropriate in accordance with 

applicable laws and regulations. In this 

manner, a Fund can use in-kind 

redemptions to reduce the unrealized 

capital gains that may, at times, exist in 

a Fund by distributing low cost lots of 

each security that a Fund needs to 

dispose of to maintain its desired 

portfolio exposures. Shareholders of a 

Fund would benefit from the in-kind 

redemptions through the reduction of 

the unrealized capital gains in a Fund 

that would otherwise have to be realized 

and, eventually, distributed to 

shareholders. 

The redemption basket will consist of 

the same securities for all Authorized 

Participants on any given day subject to 

the Adviser’s ability to make minor 

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29 If the NAV of the Shares redeemed differs from 

the value of the securities delivered to the 

applicable Confidential Account, the Fund will pay 

a cash balancing amount to compensate for the 

difference between the value of the securities 

delivered and the NAV. 30An Authorized Participant will issue execution 

instructions to the Trusted Agent and be 

responsible for all associated profit or losses. Like 

a traditional ETF, the Authorized Participant has 

the ability to sell the basket securities at any point 

during normal trading hours. 31Under applicable provisions of the Internal 

Revenue Code, the Authorized Participant is 

expected to be deemed a ‘‘substantial owner’’ of the 

Confidential Account because it receives 

distributions from the Confidential Account. As a 

result, all income, gain or loss realized by the 

Confidential Account will be directly attributed to 

the Authorized Participant. In a redemption, the 

Authorized Participant will have a basis in the 

distributed securities equal to the fair market value 

at the time of the distribution and any gain or loss 

realized on the sale of those Shares will be taxable 

income to the Authorized Participant. 

adjustments to address odd lots, 

fractional shares, tradeable sizes or 

other situations. 

After receipt of a Redemption Order, 

a Fund’s custodian (‘‘Custodian’’) will 

typically deliver securities to the 

Confidential Account on a pro rata basis 

(which securities are determined by the 

Adviser) with a value approximately 

equal to the value of the Shares 29

tendered for redemption at the Cut-Off 

time. The Custodian will make delivery 

of the securities by appropriate entries 

on its books and records transferring 

ownership of the securities to the 

Authorized Participant’s Confidential 

Account, subject to delivery of the 

Shares redeemed. The Trusted Agent of 

the Confidential Account will in turn 

liquidate, hedge or otherwise manage 

the securities based on instructions from 

the Authorized Participant.30 If the 

Trusted Agent is instructed to sell all 

securities received at the close on the 

redemption date, the Trusted Agent will 

pay the liquidation proceeds net of 

expenses plus or minus any cash 

balancing amount to the Authorized 

Participant through DTC.31 The 

redemption securities that the 

Confidential Account receives is 

expected to mirror the portfolio 

holdings of a Fund pro rata. To the 

extent a Fund distributes portfolio 

securities through an in-kind 

distribution to more than one 

Confidential Account for the benefit of 

that account’s Authorized Participant, 

each Fund expects to distribute a pro 

rata portion of the portfolio securities 

selected for distribution to each 

redeeming Authorized Participant. 

If the Authorized Participant would 

receive a security that it is restricted 

from receiving, a Fund will deliver cash 

equal to the value of that security. 

To address odd lots, fractional shares, 

tradeable sizes or other situations where 

dividing securities is not practical or 

possible, the Adviser may make minor 

adjustments to the pro rata portion of 

portfolio securities selected for 

distribution to each redeeming 

Authorized Participant on such 

Business Day. 

The Trust will accept a Redemption 

Order in proper form. A Redemption 

Order is subject to acceptance by the 

Trust and must be preceded or 

accompanied by an irrevocable 

commitment to deliver the requisite 

number of Shares. At the time of 

settlement, an Authorized Participant 

will initiate a delivery of the Shares 

versus subsequent payment against the 

proceeds, if any, of the sale of portfolio 

securities distributed to the applicable 

Confidential Account plus or minus any 

cash balancing amounts, and less the 

expenses of liquidation. 

Net Asset Value 

The NAV per Share of a Fund will be 

computed by dividing the value of the 

net assets of a Fund (i.e., the value of 

its total assets less total liabilities) by 

the total number of Shares of a Fund 

outstanding, rounded to the nearest 

cent. Expenses and fees, including, 

without limitation, the management, 

administration and distribution fees, 

will be accrued daily and taken into 

account for purposes of determining 

NAV. Interest and investment income 

on the Trust’s assets accrue daily and 

will be included in the Fund’s total 

assets. The NAV per Share for a Fund 

will be calculated by a Fund’s 

administrator (‘‘Administrator’’) and 

determined as of the close of the regular 

trading session on the NYSE (ordinarily 

4:00 p.m., E.T.) on each day that the 

NYSE is open. 

Shares of exchange-listed equity 

securities will be valued at market 

value, which will generally be 

determined using the last reported 

official closing or last trading price on 

the exchange or market on which the 

securities are primarily traded at the 

time of valuation. Repurchase and 

reverse repurchase agreements will be 

valued based on price quotations or 

other equivalent indications of value 

provided by a third-party pricing 

service. Money market funds will be 

valued based on price quotations or 

other equivalent indications of value 

provided by a third-party pricing 

service. Cash equivalents will generally 

be valued on the basis of independent 

pricing services or quotes obtained from 

brokers and dealers. 

When last sale prices and market 

quotations are not readily available, are 

deemed unreliable or do not reflect 

material events occurring between the 

close of local markets and the time of 

valuation, investments will be valued 

using fair value pricing as determined in 

good faith by the Adviser under 

procedures established by and under the 

general supervision and responsibility 

of the Trust’s Board of Trustees. 

Investments that may be valued using 

fair value pricing include, but are not 

limited to: (1) Securities that are not 

actively traded; (2) securities of an 

issuer that becomes bankrupt or enters 

into a restructuring; and (3) securities 

whose trading has been halted or 

suspended. 

The frequency with which each 

Fund’s investments will be valued using 

fair value pricing will primarily be a 

function of the types of securities and 

other assets in which the respective 

Fund will invest pursuant to its 

investment objective, strategies and 

limitations. If the Funds invest in openend management investment companies 

registered under the 1940 Act (other 

than ETFs), they may rely on the NAVs 

of those companies to value the shares 

they hold of them. 

Valuing the Funds’ investments using 

fair value pricing involves the 

consideration of a number of subjective 

factors and thus the prices for those 

investments may differ from current 

market valuations. Accordingly, fair 

value pricing could result in a 

difference between the prices used to 

calculate NAV and the prices used to 

determine a Fund’s VIIV, which could 

result in the market prices for Shares 

deviating from NAV. In cases where the 

fair value price of the security is 

materially different from the pricing 

data provided by the independent 

pricing sources and the Adviser 

determined that the ongoing pricing 

information is not likely to be reliable, 

the fair value will be used for 

calculation of the VIIV, and a Fund’s 

Custodian will be instructed to disclose 

the identity and weight of the fair 

valued securities, as well as the fair 

value price being used for the security. 

Availability of Information 

The Funds’ Web site 

(www.precidianfunds.com), which will 

be publicly available prior to the public 

offering of Shares, will include a form 

of the prospectus for each Fund that 

may be downloaded. The Funds’ Web 

site will include additional quantitative 

information updated on a daily basis, 

including, for each Fund, (1) daily 

trading volume, the prior Business Day’s 

reported closing price, NAV and midpoint of the bid/ask spread at the time 

of calculation of such NAV (the ‘‘Bid/

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32The Bid/Ask Price of a Fund will be 

determined using the mid-point of the highest bid 

and the lowest offer on the Exchange as of the time 

of calculation of a Fund’s NAV. The records relating 

to Bid/Ask Prices will be retained by each Fund and 

its service providers. 

33A Fund’s Custodian will provide, on a daily 

basis, the constituent basket file comprised of all 

securities plus any cash to the independent pricing 

agent(s) for purposes of pricing. 34See NYSE Arca Equities Rule 7.12. 

Ask Price’’),32 and a calculation of the 

premium and discount of the Bid/Ask 

Price against the NAV, and (2) data in 

chart format displaying the frequency 

distribution of discounts and premiums 

of the daily Bid/Ask Price against the 

NAV, within appropriate ranges, for 

each of the four previous calendar 

quarters. The Web site and information 

will be publicly available at no charge. 

As noted above, a mutual fund is 

required to file with the Commission its 

complete portfolio schedules for the 

second and fourth fiscal quarters on 

Form N–SAR under the 1940 Act, and 

is required to file its complete portfolio 

schedules for the first and third fiscal 

quarters on Form N–Q under the 1940 

Act, within 60 days of the end of the 

quarter. Form N–Q requires funds to file 

the same schedules of investments that 

are required in annual and semi-annual 

reports to shareholders. The Trust’s SAI 

and each Fund’s shareholder reports 

will be available free upon request from 

the Trust. These documents and forms 

may be viewed on-screen or 

downloaded from the Commission’s 

Web site at www.sec.gov. 

Information regarding market price 

and trading volume of the Shares will be 

continually available on a real-time 

basis throughout the day on brokers’ 

computer screens and other electronic 

services. Information regarding the 

previous day’s closing price and trading 

volume information for the Shares will 

be published daily in the financial 

section of newspapers. Updated price 

information for U.S. exchange-listed 

equity securities is available through 

major market data vendors or securities 

exchanges trading such securities. The 

intraday, closing and settlement prices 

of money market funds, repurchase 

agreements, reverse repurchase 

agreements and cash equivalents will be 

readily available from published or 

other public sources, or major market 

data vendors such as Bloomberg and 

Thomson Reuters. The NAV of any 

investment company security 

investment will be readily available on 

the Web site of the relevant investment 

company and from major market data 

vendors. Quotation and last sale 

information for the Shares will be 

available via the Consolidated Tape 

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

addition, the VIIV, as defined in NYSE 

Arca Equities Rule 8.900(c)(3) and as 

described further below, will be widely 

disseminated by one or more major 

market data vendors at least every 

second during the Exchange’s Core 

Trading Session. 

Dissemination of the Verified Intraday 

Indicative Value 

The VIIV, which is approximate value 

of each Fund’s investments on a per 

Share basis, will be disseminated every 

second during the Exchange’s Core 

Trading Session. The VIIV should not be 

viewed as a ‘‘real-time’’ update of NAV 

because the VIIV may not be calculated 

in the same manner as NAV, which is 

computed once per day. 

The Exchange will disseminate the 

VIIV for each Fund in one-second 

intervals during the Core Trading 

Session, through the facilities of the 

CTA. The VIIV is essentially an intraday 

NAV calculation every second during 

the Core Trading Session. Each Fund 

will adopt procedures governing the 

calculation of the VIIV and will bear 

responsibility for the accuracy of its 

calculation. Pursuant to those 

procedures, the VIIV will include all 

accrued income and expenses of a Fund 

and will assure that any extraordinary 

expenses, booked during the day, that 

would be taken into account in 

calculating a Fund’s NAV for that day 

are also taken into account in 

calculating the VIIV. For purposes of the 

VIIV, securities held by a Fund will be 

valued throughout the day based on the 

mid-point between the disseminated 

current national best bid and offer. The 

Adviser represents that, by utilizing the 

mid-point pricing for purposes of VIIV 

calculation, stale prices are eliminated 

and more accurate representation of the 

real time value of the underlying 

securities is provided to the market. 

Specifically, quotations based on the 

mid-point of bid/ask spreads more 

accurately reflect current market 

sentiment by providing real time 

information on where market 

participants are willing to buy or sell 

securities at that point in time. Using 

quotations rather than last sale 

information addresses concerns 

regarding the staleness of pricing 

information of less actively traded 

securities. Because quotations are 

updated more frequently than last sale 

information especially for inactive 

securities, the VIIV will be based on 

more current and accurate information. 

The use of quotations will also dampen 

the impact of any momentary spikes in 

the price of a portfolio security. 

Each Fund will utilize two 

independent pricing sources to provide 

two independent sources of pricing 

information. Each Fund will also utilize 

a ‘‘Pricing Verification Agent’’ and 

establish a computer-based protocol that 

will permit the Pricing Verification 

Agent to continuously compare the two 

data streams from the independent 

pricing agents sources on a real time 

basis.33 A single VIIV will be 

disseminated publicly for each Fund; 

however, the Pricing Verification Agent 

will continuously compare the public 

VIIV against a non-public alternative 

intra-day indicative value to which the 

Pricing Verification Agent has access. If 

it becomes apparent that there is a 

material discrepancy between the two 

data streams, the Exchange will be 

notified and have the ability to halt 

trading in a Fund until the discrepancy 

is resolved. Each Fund’s Board will 

review the procedures used to calculate 

the VIIV and maintain its accuracy as 

appropriate, but not less than annually. 

The specific methodology for 

calculating the VIIV will be disclosed on 

each Fund’s Web site. 

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 Funds.34 Trading in Shares of the 

Funds will be halted if the circuit 

breaker parameters in NYSE Arca 

Equities Rule 7.12 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. These may 

include: (1) If the VIIV applicable to a 

Fund’s Shares is not being disseminated 

as required; (2) the extent to which 

trading is not occurring in the securities 

and/or the financial instruments 

comprising the holdings of a Fund; or 

(3) whether other unusual conditions or 

circumstances detrimental to the 

maintenance of a fair and orderly 

market are present. Trading in the 

Shares will be subject to NYSE Arca 

Equities Rule 8.900(d)(2)(C), which sets 

forth circumstances under which Shares 

of the Funds will be halted. 

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 only during 

the Core Trading Session in accordance 

with NYSE Arca Equities Rule 

7.34(a)(3)(A). As provided in NYSE Arca 

Equities Rule 7.6, Commentary .03, the 

minimum price variation (‘‘MPV’’) for 

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35See 17 CFR 240.10A–3. 

36FINRA surveils certain trading activity on the 

Exchange pursuant to a regulatory services 

agreement. The Exchange is responsible for 

FINRA’s performance under this regulatory services 

agreement. 

37For a list of the current members of ISG, see 

www.isgportal.org. 

38 15 U.S.C. 78f(b). 

39 15 U.S.C. 78f(b)(5). 

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 Equities Rule 8.900. The 

Exchange represents that, for initial 

and/or continued listing, each Fund will 

be in compliance with Rule 10A–3 

under the Act,35 as provided by NYSE 

Arca Equities Rule 5.3. A minimum of 

100,000 Shares of each Fund will be 

outstanding at the commencement of 

trading on the Exchange. The Exchange 

will obtain a representation from the 

issuer of the Shares of each Fund that 

the NAV per Share of each Fund will be 

calculated daily and will be made 

available to all market participants at 

the same time. 

Surveillance 

The Exchange represents that trading 

in the Shares will be subject to the 

existing trading surveillances, 

administered by regulatory staff of the 

Exchange or the FINRA on behalf of the 

Exchange, which are designed to detect 

violations of Exchange rules and 

applicable federal securities laws.36 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. 

FINRA, on behalf of the Exchange, or 

the regulatory staff of the Exchange, will 

communicate as needed regarding 

trading in the Shares, underlying stocks 

and ETFs with other markets and other 

entities that are members of the 

Intermarket Surveillance Group (‘‘ISG’’), 

and FINRA, on behalf of the Exchange, 

or the regulatory staff of the Exchange, 

may obtain trading information 

regarding trading such securities from 

such markets and other entities. In 

addition, the Exchange may obtain 

information regarding trading in the 

Shares, underlying stocks and ETFs 

from markets and other entities that are 

members of ISG or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement.37

The Funds’ Adviser will make 

available daily to FINRA and the 

Exchange the portfolio holdings of each 

Fund 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. 

Information Bulletin 

Prior to the commencement of 

trading, the Exchange will inform its 

Equity Trading Permit (‘‘ETP’’) Holders 

in an Information Bulletin (‘‘Bulletin’’) 

of the special characteristics and risks 

associated with trading the Shares. 

Specifically, the Bulletin will discuss 

the following: (1) The procedures for 

purchases and redemptions of Shares; 

(2) NYSE Arca Equities Rule 9.2(a), 

which imposes a duty of due diligence 

on its ETP Holders to learn the essential 

facts relating to every customer prior to 

trading the Shares; (4) how information 

regarding the VIIV is disseminated; (5) 

the requirement that ETP Holders 

deliver a prospectus to investors 

purchasing newly issued Shares prior to 

or concurrently with the confirmation of 

a transaction; and (6) trading 

information. 

In addition, the Bulletin will 

reference that the Funds are subject to 

various fees and expenses described in 

the Registration Statement. The Bulletin 

will discuss any exemptive, no-action, 

and interpretive relief granted by the 

Commission from any rules under the 

Act. The Bulletin will also disclose that 

the NAV for the Shares will be 

calculated after 4:00 p.m., E.T. each 

trading day. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,38 in general, and 

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

of the Act,39 in particular, in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. 

The Exchange believes that proposed 

Rule 8.900 is designed to prevent 

fraudulent and manipulative acts and 

practices in that the proposed rules 

relating to listing and trading of 

Managed Portfolio Shares provide 

specific initial and continued listing 

criteria required to be met by such 

securities. Proposed Rule 8.900(d) sets 

forth initial and continued listing 

criteria applicable to Managed Portfolio 

Shares. Proposed Rule 8.900(d)(1) 

provides that, for each series of 

Managed Portfolio Shares, the 

Corporation will establish a minimum 

number of Managed Portfolio Shares 

required to be outstanding at the time of 

commencement of trading. In addition, 

the Corporation will obtain a 

representation from the issuer of each 

series of Managed Portfolio Shares that 

the NAV per share for the series will be 

calculated daily and that the NAV will 

be made available to all market 

participants at the same time. Proposed 

Rule 8.900(d)(2) provides that each 

series of Managed Portfolio Shares will 

be listed and traded subject to 

application of the specified continued 

listing criteria, as described above. 

Proposed Rule 8.900(d)(2)(A) provides 

that the VIIV for Managed Portfolio 

Shares will be widely disseminated by 

one or more major market data vendors 

every second during the Exchange’s 

Core Trading Session. Proposed Rule 

8.900(d)(2)(C) provides that, upon 

notification to the Corporation by the 

Investment Company or its agent that (i) 

the prices from the multiple 

independent pricing sources to be 

validated by the Investment Company’s 

pricing verification agent differ by more 

than 25 basis points for 60 seconds in 

connection with pricing of the VIIV, or 

(ii) that the VIIV of a series of Managed 

Portfolio Shares is not being priced and 

disseminated in one-second intervals, as 

required, the Corporation shall halt 

trading in the Managed Portfolio Shares 

as soon as practicable. Such halt in 

trading shall continue until the 

Investment Company or its agent 

notifies the Corporation that the prices 

from the independent pricing sources 

no longer differ by more than 25 basis 

points for 60 seconds or that the VIIV is 

being priced and disseminated as 

required. Proposed Commentary .05 to 

NYSE Arca Equities Rule 8.900 provides 

that, if the investment adviser to the 

Investment Company issuing Managed 

Portfolio Shares is affiliated with a 

broker-dealer, or if any Trusted Agent is 

registered as a broker-dealer or is 

affiliated with a broker-dealer, such 

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40See note 9, supra. 

41See Investment Company Act Release No. 

25258 (November 8, 2001) (the ‘‘Concept Release’’). 

42The Adviser represents that the mechanics of 

arbitrage and hedging differ. Prior Rule 10a–1 and 

investment adviser or Trusted Agent 

will erect a ‘‘fire wall’’ between the 

investment adviser or Trusted Agent 

and (i) personnel of the broker-dealer or 

broker-dealer affiliate, as applicable, or 

(ii) the Authorized Participant or nonAuthorized Participant market maker, as 

applicable, with respect to access to 

information concerning the composition 

and/or changes to such Investment 

Company portfolio. Personnel who 

make decisions on the Investment 

Company’s portfolio composition must 

be subject to procedures designed to 

prevent the use and dissemination of 

material nonpublic information 

regarding the applicable Investment 

Company portfolio Personnel who make 

decisions on the Investment Company’s 

portfolio composition must be subject to 

procedures designed to prevent the use 

and dissemination of material 

nonpublic information regarding the 

applicable Investment Company 

portfolio. 

With respect to the proposed listing 

and trading of Shares of the Funds, 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 Equities 

Rule 8.900. Price information for the 

exchange-listed equity securities held 

by the Funds will be available through 

major market data vendors or securities 

exchanges listing and trading such 

securities. All exchange-listed equity 

securities held by the Funds will be 

listed on national securities exchanges. 

The listing and trading of such 

securities is subject to rules of the 

exchanges on which they are listed and 

traded, as approved by the Commission. 

The Funds will primarily hold U.S.- 

listed securities or ETFs. Further, the 

Funds will not invest in options, futures 

or swaps. A Fund’s investments will be 

consistent with its respective 

investment objective and will not be 

used to enhance leverage. The Funds 

will not invest in non-U.S.-listed 

securities. FINRA, on behalf of the 

Exchange, or the regulatory staff of the 

Exchange, will communicate as needed 

regarding trading in the Shares and 

underlying stocks and ETFs with other 

markets and other entities that are 

members of the ISG, and FINRA, on 

behalf of the Exchange, or the regulatory 

staff of the Exchange, may obtain 

trading information regarding trading 

such securities from such markets and 

other entities. In addition, the Exchange 

may obtain information regarding 

trading in the Shares, underlying stocks 

and ETFs from markets and other 

entities that are members of ISG or with 

which the Exchange has in place a 

comprehensive surveillance sharing 

agreement. A Trusted Agent will 

provide information related to creations 

and redemption of Creation Units to 

FINRA upon request. The Funds’ 

Adviser will make available daily to 

FINRA and the Exchange the portfolio 

holdings of each Fund in order to 

facilitate the performance of the 

surveillances referred to above. 

The Exchange, after consulting with 

various Lead Market Makers that trade 

ETFs on the Exchange, believes that 

market makers will be able to make 

efficient and liquid markets priced near 

the VIIV as long as an accurate VIIV is 

disseminated every second, market 

makers have knowledge of a fund’s 

means of achieving its investment 

objective even without daily disclosure 

of a fund’s underlying portfolio, and are 

able to engage in Bona Fide Arbitrage. 

The Exchange believes that market 

makers will employ risk-management 

techniques such as Bona Fide Arbitrage 

in addition to ‘‘statistical arbitrage’’, 

which is currently used throughout the 

financial services industry, to make 

efficient markets in exchange traded 

products.40 This ability should permit 

market makers to make efficient markets 

in shares without knowledge of a fund’s 

underlying portfolio. 

The Exchange understands that 

traders, in addition to employing Bona 

Fide Arbitrage, use statistical analysis to 

derive correlations between different 

sets of instruments to identify 

opportunities to buy or sell one set of 

instruments when it is mispriced 

relative to the others. For Managed 

Portfolio Shares, market makers 

utilizing statistical arbitrage use the 

knowledge of a fund’s means of 

achieving its investment objective, as 

described in the applicable fund 

registration statement, to construct a 

hedging proxy for a fund to manage a 

market maker’s quoting risk in 

connection with trading fund shares. 

Market makers will then conduct 

statistical arbitrage between their 

hedging proxy (for example, the Russell 

1000 Index) and shares of a fund, 

buying and selling one against the other 

over the course of the trading day. 

Eventually, at the end of each day, they 

will evaluate how their proxy performed 

in comparison to the price of a fund’s 

shares, and use that analysis as well as 

knowledge of risk metrics, such as 

volatility and turnover, to enhance their 

proxy calculation to make it a more 

efficient hedge. 

Market makers who anticipate 

employing statistical arbitrage more 

often than Bona Fide Arbitrage, have 

indicated to the Exchange that, after the 

first few days of trading, there will be 

sufficient data to run a statistical 

analysis which will lead to spreads 

being tightened substantially around 

VIIV. This is similar to certain other 

existing exchange traded products (for 

example, ETFs that invest in foreign 

securities that do not trade during U. S. 

trading hours), in which spreads may be 

generally wider in the early days of 

trading and then narrow as market 

makers gain more confidence in their 

real-time hedges. 

The Lead Market Makers also 

indicated that, as with some other new 

exchange-traded products, spreads may 

be generally wider in the early days of 

trading and would tend to narrow as 

market makers gain more confidence in 

the accuracy of their hedges and their 

ability to adjust these hedges in realtime relative to the published VIIV and 

gain an understanding of the applicable 

market risk metrics such as volatility 

and turnover, and as natural buyers and 

sellers enter the market. Other relevant 

factors cited by Lead Market Makers 

were that a fund’s investment objectives 

are clearly disclosed in the applicable 

prospectus, the existence of quarterly 

portfolio disclosure, the capacity to 

engage in Bona Fide Arbitrage and the 

ability to create shares in creation unit 

size. 

The Commission’s concept release 

regarding ‘‘Actively Managed ExchangeTraded Funds’’ highlighted several 

issues that could impact the 

Commission’s willingness to authorize 

the operation of an actively-managed 

ETF, including whether effective 

arbitrage of the ETF shares exists.41 The 

Concept Release identifies the 

transparency of a fund’s portfolio and 

the liquidity of the securities in a fund’s 

portfolio as central to effective arbitrage. 

With respect to the Funds, the Funds’ 

use of U.S.-listed securities and the 

ability of market makers to engage in 

Bona Fide Arbitrage provide adequate 

liquidity as well as the ability to engage 

in riskless arbitrage. Additionally, 

certain existing ETFs with portfolios of 

foreign securities have shown their 

ability to trade efficiently in the 

secondary market at approximately their 

NAV even though they do not provide 

opportunities for riskless arbitrage 

transactions during much of the trading 

day.42 Such ETFs have been shown to 

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Federal Register / Vol. 81, No. 32 / Thursday, February 18, 2016 / Notices 8281 

Regulation T under the Act both describe arbitrage 

as either buying and selling the same security in 

two different markets or buying and selling two 

different securities, one of which is convertible into 

the other. This is also known as a ‘‘riskless 

arbitrage’’ transaction in that the transaction is risk 

free since it generally consists of buying an asset at 

one price and simultaneously selling that same 

asset at a higher price, thereby generating a profit 

on the difference. Hedging, on the other hand, 

involves managing risk by purchasing or selling a 

security or instrument that will track or offset the 

value of another security or instrument. Arbitrage 

and hedging are both used to manage risk; however, 

they involve different trading strategies. 

43Price correlation trading is used throughout the 

financial industry. It is used to discover both 

trading opportunities to be exploited, such as 

currency pairs and statistical arbitrage, as well as 

for risk mitigation such as dispersion trading and 

beta hedging. These correlations are a function of 

differentials, over time, between one or multiple 

securities pricing. Once the nature of these price 

deviations have been quantified, a universe of 

securities is searched in an effort to, in the case of 

a hedging strategy, minimize the differential. Once 

a suitable hedging basket has been identified, a 

trader can minimize portfolio risk by executing the 

hedging basket. The trader then can monitor the 

performance of this hedge throughout the trade 

period, making corrections where warranted. 

44With respect to trading in Shares of the Funds, 

market participants would manage risk in a variety 

of ways. In addition to Bona Fide Arbitrage, it is 

expected that market participants will be able to 

determine how to trade Shares at levels 

approximating the VIIV without taking undue risk 

by gaining experience with how various market 

factors (e.g., general market movements, sensitivity 

of the VIIV to intraday movements in interest rates 

or commodity prices, etc.) affect VIIV, and by 

finding hedges for their long or short positions in 

Shares using instruments correlated with such 

factors. The Adviser expects that market 

participants will initially determine the VIIV’s 

correlation to a major large capitalization equity 

benchmark with active derivative contracts, such as 

the Russell 1000 Index, and the degree of sensitivity 

of the VIIV to changes in that benchmark. For 

example, using hypothetical numbers for 

illustrative purposes, market participants should be 

able to determine quickly that price movements in 

the Russell 1000 Index predict movements in a 

Fund’s VIIV 95% of the time (an acceptably high 

correlation) but that the VIIV generally moves 

approximately half as much as the Russell 1000 

Index with each price movement. This information 

is sufficient for market participants to construct a 

reasonable hedge—buy or sell an amount of futures, 

swaps or ETFs that track the Russell 1000 equal to 

half the opposite exposure taken with respect to 

Shares. Market participants will also continuously 

compare the intraday performance of their hedge to 

a Fund’s VIIV. If the intraday performance of the 

hedge is correlated with the VIIV to the expected 

degree, market participants will feel comfortable 

they are appropriately hedged and can rely on the 

VIIV as appropriately indicative of a Fund’s 

performance. 

45The statements in the Statutory Basis section of 

this filing relating to pricing efficiency, arbitrage, 

and activities of market participants, including 

market makers and Authorized Participants, are 

based on representations by the Adviser and review 

by the Exchange. 

have pricing characteristics very similar 

to ETFs that can be arbitraged in this 

manner. For example, index-based ETFs 

containing securities that trade during 

different trading hours than the ETF, 

such as ETFs that hold Asian stocks, 

have demonstrated efficient pricing 

characteristics notwithstanding the 

inability of market professionals to 

engage in ‘‘riskless arbitrage’’ with 

respect to the underlying portfolio for 

most, or even all, of the U.S. trading day 

when Asian markets are closed. Pricing 

for shares of such ETFs is efficient 

because market professionals are still 

able to hedge their positions with 

offsetting, correlated positions in 

derivative instruments during the entire 

trading day. 

The real-time dissemination of a 

fund’s VIIV, the ability for market 

makers to engage is riskless arbitrage 

through the Bona Fide Arbitrage 

mechanism, 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 pricing efficiency with respect to 

trading a series of Managed Portfolio 

Shares will generally rest on the ability 

of market participants to arbitrage 

between the shares and a fund’s 

portfolio, in addition to the ability of 

market participants to assess a fund’s 

underlying value accurately enough 

throughout the trading day in order to 

hedge positions in shares effectively. 

Professional traders not employing Bona 

Fide Arbitrage can buy shares that they 

perceive to be trading at a price less 

than that which will be available at a 

subsequent time, and sell shares they 

perceive to be trading at a price higher 

than that which will be available at a 

subsequent time. It is expected that, as 

part of their normal day-to-day trading 

activity, market makers assigned to 

shares by the Exchange, off-exchange 

market makers, firms that specialize in 

electronic trading, hedge funds and 

other professionals specializing in shortterm, non-fundamental trading 

strategies will assume the risk of being 

‘‘long’’ or ‘‘short’’ shares through such 

trading and will hedge such risk wholly 

or partly by simultaneously taking 

positions in correlated assets 43 or by 

netting the exposure against other, 

offsetting trading positions—much as 

such firms do with existing ETFs and 

other equities. Disclosure of a fund’s 

investment objective and principal 

investment strategies in its prospectus 

and SAI, along with the dissemination 

of the VIIV every second, should permit 

professional investors to engage easily 

in this type of hedging activity.44

With respect to trading of Shares of 

the Funds, the ability of market 

participants to buy and sell Shares at 

prices near the VIIV is dependent upon 

their assessment that the VIIV is a 

reliable, indicative real-time value for a 

Fund’s underlying holdings. Market 

participants are expected to accept the 

VIIV as a reliable, indicative real-time 

value because (1) the VIIV will be 

calculated and disseminated based on a 

Fund’s actual portfolio holdings, (2) the 

securities in which the Funds plan to 

invest are generally highly liquid and 

actively traded and therefore generally 

have accurate real time pricing 

available, and (3) market participants 

will have a daily opportunity to 

evaluate whether the VIIV at or near the 

close of trading is indeed predictive of 

the actual NAV. 

The real-time dissemination of a 

Fund’s VIIV, the ability for market 

makers to engage is riskless arbitrage 

through the Bona Fide Arbitrage 

mechanism, together with the ability of 

Authorized Participants to create and 

redeem each day at the NAV, will be 

crucial 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.45

In a typical index-based ETF, it is 

standard for Authorized Participants to 

know what securities must be delivered 

in a creation or will be received in a 

redemption. For Managed Portfolio 

Shares, however, Authorized 

Participants do not need to know the 

securities comprising the portfolio of a 

Fund since creations and redemptions 

are handled through the Confidential 

Account mechanism. The Adviser 

represents that the in-kind creations and 

redemptions through a Confidential 

Account will preserve the integrity of 

the active investment strategy and 

eliminate the potential for ‘‘free riding’’ 

or ‘‘front-running’’, while still providing 

investors with the advantages of the ETF 

structure. 

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 issuer 

of an issue of Managed Portfolio Shares 

that the NAV per share of a fund will 

be calculated daily and that the NAV 

and will be made available to all market 

participants at the same time. Investors 

can also obtain a fund’s SAI, 

shareholder reports, and its Form N– 

CSR and Form N–SAR. A fund’s SAI 

and shareholder reports will be 

available free upon request from the 

applicable fund, and those documents 

and the Form N–CSR and Form N–SAR 

may be viewed on-screen or 

downloaded from the Commission’s 

Web site. In addition, with respect to 

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8282 Federal Register / Vol. 81, No. 32 / Thursday, February 18, 2016 / Notices 

46 17 CFR 200.30–3(a)(12). 

the Funds, a large amount of 

information will be publicly available 

regarding the Funds and the Shares, 

thereby promoting market transparency. 

Quotation and last sale information for 

the Shares will be available via the CTA 

high-speed line. Information regarding 

the intra-day value of the Shares of a 

Fund, which is the VIIV as defined in 

proposed NYSE Arca Equities Rule 

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

every second throughout the Exchange’s 

Core Trading Session by one or more 

major market data vendors. The Web 

site for the Funds will include a form of 

the prospectus for the Funds that may 

be downloaded, and additional data 

relating to NAV and other applicable 

quantitative information, updated on a 

daily basis. Moreover, prior to the 

commencement of trading, the Exchange 

will inform its ETP Holders in an 

Information Bulletin of the special 

characteristics and risks associated with 

trading the Shares. Trading in Shares of 

a Fund will be halted if the circuit 

breaker parameters in NYSE Arca 

Equities Rule 7.12 have been reached or 

because of market conditions or for 

reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. Trading in the Shares will 

be subject to NYSE Arca Equities Rule 

8.900(d)(2)(C), which sets forth 

circumstances under which Shares of 

the Funds will be halted. In addition, as 

noted above, investors will have ready 

access to the VIIV, and quotation and 

last sale information for the Shares. The 

Shares will conform to the initial and 

continued listing criteria under 

proposed Rule 8.900. The Funds will 

not invest in options, futures, forwards 

or swaps. Each Fund’s investments will 

be consistent with its investment 

objective and will not be used to 

enhance leverage. While a Fund may 

invest in inverse ETFs, a Fund will not 

invest in leveraged (e.g., 2X, ¥2X, 3X or 

¥3X) ETFs. The Funds will not invest 

in non-U.S. listed securities. 

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. 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 the VIIV and 

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 another type of 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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or up to 90 days (i) as the 

Commission may designate if it finds 

such longer period to be appropriate 

and publishes its reasons for so finding 

or (ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2016–08 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–2016–08. 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 Exchange’s principal office. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2016–08 and 

should be submitted on or before March 

10, 2016. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.46

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2016–03269 Filed 2–17–16; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

31995; File No. 812–14574] 

PowerShares Exchange-Traded SelfIndexed Fund Trust, et al.; Notice of 

Application 

February 11, 2016. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application for an 

order under section 6(c) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) for an exemption from sections 

2(a)(32), 5(a)(1), 22(d), and 22(e) of the 

Act and rule 22c–1 under the Act, under 

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