66022 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Notices 

25 12 U.S.C. 5465(e)(1)(I). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 73178 

(Sep. 22, 2014), 79 FR 58012 (‘‘Notice’’). 

4 In Amendment No. 1, Nasdaq corrected a 

typographical error, deleting the second use of the 

word ‘‘not’’ in the following statement throughout 

the filing: ‘‘ADRs not listed on an exchange that is 

not a member of ISG or a party to a comprehensive 

surveillance sharing agreement with the Exchange.’’ 

See infra note 10 (setting forth the full 

representation, as amended). Because Amendment 

No. 1 is a technical amendment that does not raise 

unique or novel regulatory issues, Amendment No. 

1 is not subject to notice and comment. 

5According to the Exchange, the Trust is 

registered with the Commission as an investment 

company under the Investment Company Act of 

1940 (‘‘1940 Act’’) and has filed a registration 

statement on Form N–1A (‘‘Registration Statement’’) 

with the Commission. The Exchange states that the 

Trust has obtained, or will obtain prior to listing 

Shares of the Fund on the Exchange, an order from 

the Commission granting certain exemptive relief to 

the Trust under the 1940 Act. See Post-Effective 

Amendment No. 14 to the Registration Statement on 

Form N–1A for the Trust, dated July 16, 2014 (File 

Nos. 333–179562 and 811–22668). See Application 

for an Order (Jun. 16, 2014) (File No. 812–14322). 

6The Exchange states that the Adviser is not a 

broker-dealer and is not affiliated with the any 

broker-dealer. The Exchange represents that in the 

event (a) the Adviser becomes newly affiliated with 

a broker-dealer or registers as a broker-dealer, or (b) 

any new adviser or sub-adviser is a registered 

broker-dealer or becomes affiliated with a brokerdealer, the Adviser, new adviser, or new subadviser, as the case may be, will implement a fire 

wall with respect to its relevant personnel and/or 

such broker-dealer affiliate, as applicable, regarding 

access to information concerning the composition 

or changes to the portfolio, and the Adviser, new 

adviser, or new sub-adviser, as the case may be, will 

be subject to procedures designed to prevent the use 

and dissemination of material, non-public 

information regarding the portfolio. The Exchange 

also states that the Adviser does not currently 

intend to become newly affiliated with any brokerdealer, and the Fund does not currently intend to 

use a sub-adviser. 

7The Commission notes that additional 

information regarding the Trust, the Fund, and the 

Shares, including investment strategies, risks, 

creation and redemption procedures, calculation of 

net asset value (‘‘NAV’’), fees, portfolio holdings 

disclosure policies, distributions, and taxes, among 

other things, can be found in the Notice and 

Registration Statement, as applicable. See supra 

notes 3 and 5, respectively. 

8The term ‘‘under normal market conditions’’ as 

used herein includes, but is not limited to, the 

absence of adverse market, economic, political or 

other conditions, including extreme volatility or 

trading halts in the securities markets or the 

financial markets generally; operational issues 

causing dissemination of inaccurate market 

information; or force majeure type events such as 

systems failure, natural or man-made disaster, act 

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

disruption, or any similar intervening circumstance. 

In periods of extreme market disturbance, the Fund 

may take temporary defensive positions by 

overweighting its portfolio in cash/cash-like 

instruments; however, to the extent possible, the 

Adviser would continue to seek to achieve the 

Fund’s investment objectives. 

9ADRs are receipts, typically issued by a bank or 

trust issuer, which evidence ownership of 

underlying securities issued by a non-U.S. issuer. 

For ADRs, the depository is typically a U.S. 

financial institution and the underlying securities 

are issued by a non-U.S. issuer. ADRs are not 

necessarily denominated in the same currency as 

their underlying securities. 

OCC’s margin policy, as described 

above, are designed to reduce the risk 

that clearing member margin assets 

would be insufficient should OCC need 

to use such assets to close-out positions 

of a defaulted clearing member. The 

changes are also designed to facilitate 

OCC to timely meet its settlement 

obligations because the change will 

diminish the likelihood that a large 

percentage of the value of a defaulting 

clearing member’s margin assets would 

not be available to OCC to cover losses 

in the event of a clearing member 

default. Therefore, the proposal (i) 

promotes robust risk management 

(including risk management of 

concentration risk and wrong-way risk), 

(ii) promotes safety and soundness, (iii) 

reduces systemic risks (including those 

caused by concentration risk and wrongway risk), and (iv) supports the stability 

of the broader financial system. 

III. Conclusion 

It is therefore noticed, pursuant to 

Section 806(e)(1)(I) of the Payment, 

Clearing and Settlement Supervision 

Act,25 that the Commission DOES NOT 

OBJECT to the proposal in OCC’s 

advance notice (SR–OCC–2014–803) 

and OCC is AUTHORIZED to implement 

the proposal as of the date of this notice 

or the date of an order by the 

Commission approving a proposed rule 

change that reflects rule changes that are 

consistent with the proposal in this 

advance notice (SR–OCC–2014–14), 

whichever is later. 

By the Commission. 

Kevin O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26344 Filed 11–5–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73480; File No. SR– 

NASDAQ–2014–090] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Granting Approval of Proposed Rule 

Change, as Modified by Amendment 

No. 1 Thereto, Relating to the Listing 

and Trading of Shares of the Validea 

Market Legends ETF of the ETF Series 

Solutions ETF Trust 

October 31, 2014. 

I. Introduction 

On September 11, 2014, The 

NASDAQ Stock Market LLC (‘‘Nasdaq’’ 

or ‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

list and trade the shares (‘‘Shares’’) of 

the Validea Market Legends ETF 

(‘‘Fund’’) under Nasdaq Rule 5735. The 

proposed rule change was published for 

comment in the Federal Register on 

September 26, 2014.3 The Commission 

received no comments on the proposed 

rule change. On October 28, 2014, the 

Exchange filed Amendment No. 1 to the 

proposed rule change.4 The Commission 

is approving the proposed rule change, 

as modified by Amendment No. l 

thereto. 

II. Description of Proposed Rule Change 

The Exchange proposes to list and 

trade the Shares pursuant to Nasdaq 

Rule 5735, which governs the listing 

and trading of Managed Fund Shares on 

the Exchange. The Shares will be 

offered by the ETF Series Solutions 

Trust (‘‘Trust’’), which was established 

as a Delaware business trust on 

February 9, 2012.5 The Fund is a series 

of the Trust. Validea Capital 

Management, LLC will be the 

investment adviser (‘‘Adviser’’) to the 

Fund.6 Quasar Distributors, LLC will be 

the principal underwriter and 

distributor of the Fund’s Shares. U.S. 

Bancorp Fund Services, LLC (‘‘USBFS’’) 

will act as the administrator, accounting 

agent, and transfer agent to the Fund. 

U.S. Bank National Association will act 

as the custodian to the Fund. 

The Exchange has made the following 

representations and statements in 

describing the Fund and its principal 

investments, other investments, and 

investment restrictions.7

Principal Investments of the Fund 

According to the Exchange, the 

Fund’s primary investment objective is 

to achieve capital appreciation, with a 

secondary focus on income. The Fund is 

a non-diversified, actively-managed 

exchange-traded fund (‘‘ETF’’) that will 

pursue its objectives by investing 

primarily at least 80% of its assets 

under normal market conditions,8 in 

U.S. exchange-listed equity securities of 

U.S. companies and foreign equity 

securities traded on a U.S. exchange as 

American Depositary Receipts 

(‘‘ADRs’’).9 The Fund’s investment in 

ADRs may include ADRs representing 

companies in emerging markets. With 

respect to its investments in exchangelisted common stocks and ADRs, the 

Fund will invest in such securities that 

trade in markets that are members of the 

Intermarket Surveillance Group (‘‘ISG’’). 

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Notices 66023 

10The Exchange represents that, while the Fund’s 

investments in equity securities traded over-thecounter include shares of common stock and ADRs, 

not more than 10% of the net assets of the Fund, 

in the aggregate, will be invested in: (1) Unlisted or 

unsponsored ADRs; (2) ADRs not listed on an 

exchange that is a member of ISG or a party to a 

comprehensive surveillance sharing agreement with 

the Exchange; or (3) unlisted common stocks or 

common stocks not listed on an exchange that is a 

member of the ISG or a party to a comprehensive 

surveillance sharing agreement with the Exchange. 

11The term ‘‘money market instruments,’’ as used 

herein, means: (i) Short-term obligations issued by 

the U.S. Government; (ii) short term negotiable 

obligations of commercial banks, fixed time 

deposits and bankers’ acceptances of U.S. and 

foreign banks and similar institutions; (iii) 

commercial paper rated at the date of purchase 

‘‘Prime-1’’ by Moody’s Investors Service, Inc. or 

‘‘A–1+’’ or ‘‘A–1’’ by Standard & Poor’s, or, if 

unrated, of comparable quality, as the Adviser of 

the Fund determines; and (iv) money market 

mutual funds. 

12See supra note 10 and accompanying text. 

13See infra note 14 and accompanying text. 

14 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. See Notice, supra note 3, 79 FR at 58014. 

15 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

16 15 U.S.C. 78f(b)(5). 

17 15 U.S.C. 78k–1(a)(1)(C)(iii). 

18According to the Exchange, the Intraday 

Indicative Value will reflect an estimated intraday 

value of the Fund’s portfolio and will be based 

Continued 

The Fund may invest in the securities 

of companies of any market 

capitalization, but the Adviser expects 

that the Fund will have a bias toward 

small-cap and mid-cap companies. The 

Adviser also expects to limit the Fund’s 

investment in any individual economic 

sector to no more than 40% of the 

Fund’s total assets. 

The Exchange notes that the Adviser 

will select securities using a proprietary 

quantitative and fundamentals-based 

system that evaluates investment 

opportunities based on the published 

investment strategies of legendary 

investors whose investment strategies 

have generally been subject to 

significant academic or media analysis, 

such as Warren Buffet, Peter Lynch, and 

David Dreman. The Adviser’s system 

incorporates 17 stock selection models, 

each intended to replicate the strategy of 

a legendary investor. The models 

incorporate over 300 unique 

fundamental metrics of companies, 

including measures relating to 

profitability, valuation, growth, cash 

flow, financing, and past performance, 

among others. The Adviser scores over 

6,000 companies based on the metrics of 

its investor models and expects that the 

Fund will generally hold approximately 

100 securities. 

According to the Exchange, the 

Adviser’s system, using historical data, 

evaluates the long term performance, 

risks, and correlation of each model, 

and blends some or all of the models to 

identify the composite strategy that the 

Adviser believes is most likely to 

achieve the Fund’s investment 

objectives while reducing volatility. By 

utilizing various stock picking methods 

in the creation of the composite strategy, 

the Adviser will seek to reduce the 

volatility of the Fund’s returns in 

different market environments and limit 

investment style specific risk. 

The Exchange notes that the Adviser 

expects that the Fund will regularly 

update or ‘‘rebalance’’ the securities that 

it holds, but no more often than once 

every 28 days and at least 5 times per 

year. On each such date, securities 

whose fundamental scores no longer 

meet the Fund’s requirements will be 

removed and replaced with higher 

scoring securities. A stock will only be 

sold in between rebalance dates if the 

stock has significantly underperformed 

the overall market since the time the 

stock was purchased. 

Other Investments and Restrictions 

While the Fund, under normal 

circumstances, will invest at least 80% 

of its assets in U.S. exchange-listed 

equity securities, the Fund may invest 

the remaining assets in a variety of other 

securities in support of its primary 

investment strategy, including, but not 

limited to: (a) Equity securities traded 

over-the-counter; 10 (b) equity securities 

of other U.S. registered investment 

companies, including open-end mutual 

funds, money market mutual funds and 

exchange-traded funds; and (c) money 

market instruments.11

While the Fund will generally invest 

in sponsored ADRs that are listed on 

ISG member exchanges and that the 

Adviser deems as liquid, in certain 

limited circumstances, as stated above, 

the Fund may invest in unlisted or 

unsponsored ADRs 12 or ADRs that the 

Adviser deems illiquid at the time of 

purchase or for which pricing 

information is not readily available.13

The issuers of unlisted or unsponsored 

ADRs are not obligated to disclose 

material information in the United 

States. As such, according to the 

Exchange, there may be less information 

available regarding such issuers and 

there may be no correlation between 

available information and the market 

value of the ADRs. 

The Fund may hold up to an aggregate 

amount of 15% of its net assets in 

illiquid securities or other illiquid assets 

(calculated at the time of investment).14

The Fund will monitor its portfolio 

liquidity on an ongoing basis to 

determine whether 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 the Fund’s net assets are held in 

illiquid assets. 

The Fund may not invest more than 

25% of the value of its total assets in 

securities of issuers in any one industry 

or group of industries. This restriction 

does not apply to obligations issued or 

guaranteed by the U.S. government, its 

agencies or instrumentalities, or 

securities of other registered investment 

companies. 

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the Exchange’s proposal to list 

and trade the Shares is consistent with 

the Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.15 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,16 which requires, 

among other things, that the Exchange’s 

rules be designed to prevent fraudulent 

and manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 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 Commission notes 

that the Fund and the Shares must 

comply with the requirements of 

Nasdaq Rule 5735 to be listed and 

traded on the Exchange. 

The Commission finds that the 

proposal to list and trade the Shares on 

the Exchange is consistent with Section 

11A(a)(1)(C)(iii) of the Act,17 which sets 

forth Congress’ finding that it is in the 

public interest and appropriate for the 

protection of investors and the 

maintenance of fair and orderly markets 

to assure the availability to brokers, 

dealers, and investors of information 

with respect to quotations for, and 

transactions in, securities. Quotation 

and last-sale information for the Shares 

will be available via Nasdaq proprietary 

quote and trade services and via the 

Consolidated Tape Association plans for 

the Shares. In addition, an estimated 

value, defined in Nasdaq Rule 

5735(c)(3) as the ‘‘Intraday Indicative 

Value,’’ 18 will be available on the 

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66024 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Notices 

upon the current value for the components of the 

Disclosed Portfolio. The Exchange states that the 

Intraday Indicative Value will be based on quotes 

and closing prices from the securities’ local market 

and may not reflect events that occur subsequent to 

the local market’s close, that premiums and 

discounts between the Intraday Indicative Value 

and the market price may occur, and that the 

Intraday Indicative Value should not be viewed as 

a ‘‘real time’’ update of the NAV per Share of the 

Fund, which is calculated only once a day. 

19Currently, the NASDAQ OMX Global Index 

Data Service (‘‘GIDS’’) is the NASDAQ OMX global 

index data feed service. The Exchange represents 

that GIDS offers real-time updates, daily summary 

messages, and access to widely followed indexes 

and Intraday Indicative Values for ETFs, and that 

GIDS provides investment professionals with the 

daily information needed to track or trade NASDAQ 

OMX indexes, listed ETFs, or third-party partner 

indexes and ETFs. 

20See Nasdaq Rule 4120(b)(4) (describing the 

three trading sessions on the Exchange: (1) PreMarket Session from 4:00 a.m. to 9:30 a.m., Eastern 

Time; (2) Regular Market Session from 9:30 a.m. to 

4:00 p.m. or 4:15 p.m., Eastern Time; and (3) PostMarket Session from 4:00 p.m. or 4:15 p.m. to 8:00 

p.m., Eastern Time). 

21On a daily basis, the Fund will disclose the 

following information regarding each portfolio 

holding, as applicable to the type of holding: Ticker 

symbol, CUSIP number or other identifier, if any; 

a description of the holding (including the type of 

holding); the identity of the security, index, or other 

asset or instrument underlying the holding, if any; 

quantity held (as measured by, for example, number 

of shares); maturity date, if any; coupon rate, if any; 

effective date, if any; market value of the holding; 

and the percentage weighting of the holding in the 

Fund’s portfolio. The Web site information will be 

publicly available at no charge. 

22NAV per Share will be calculated for the Fund 

by taking the market price of the Fund’s total assets, 

less all liabilities, dividing such amount by the total 

number of Shares outstanding, and rounding to the 

nearest cent. The value of the securities, other 

assets, and liabilities held by the Fund will be 

determined pursuant to valuation policies and 

procedures approved by the Trust’s Board. 

Exchange-traded equities, exchange-traded ADRs, 

and other exchange-traded securities will be valued 

at the official closing price on their principal 

exchange or board of trade, or lacking any current 

reported sale at the time of valuation, at the mean 

between the most recent bid and asked quotations 

on its principal exchange or board of trade. 

Portfolio securities traded on more than one 

securities exchange will be valued at the last sale 

price or official closing price, as applicable, on the 

business day as of which such value is being 

determined at the close of the exchange 

representing the principal market for such 

securities. Equity securities traded over-the-counter 

and ADRs traded over-the-counter will be valued at 

the mean between the most recent bid and asked 

quotations received from pricing services; if the 

most recent bid and asked quotations are not 

available, these securities will be valued in 

accordance with the Fund’s fair valuation 

procedures. Money market instruments with 

maturities of less than 60 days will be valued at 

amortized cost; money market instruments with 

longer maturities will be valued at the mid-point of 

the bid-ask prices. Investment company shares will 

be valued at NAV, unless the shares are exchangetraded, in which case they will be valued at the last 

sale or official closing price on the market on which 

they primarily trade. 

23According to the Exchange, quotation and lastsale information for any underlying exchangetraded products will also be available via the quote 

and trade services of their respective primary 

exchanges, as well as in accordance with the 

Unlisted Trading Privileges and the Consolidated 

Tape Association plans, as applicable. 

24These reasons may include: (1) The extent to 

which trading is not occurring in the securities and 

other financial instruments constituting the 

Disclosed Portfolio of the Fund; or (2) whether 

other unusual conditions or circumstances 

detrimental to the maintenance of a fair and orderly 

market are present. With respect to trading halts, 

the Exchange may consider all relevant factors in 

exercising its discretion to halt or suspend trading 

in the Shares of the Fund. 

25See Nasdaq Rule 5735(d)(2)(B)(ii). 

26See supra note 6. The Exchange states that an 

investment adviser to an open-end fund is required 

to be registered under the Investment Advisers Act 

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

NASDAQ OMX Information LLC 

proprietary index data service and will 

be updated, widely disseminated, and 

broadly displayed at least every 15 

seconds during the Regular Market 

Session.19 On each business day, before 

commencement of trading in Shares in 

the Regular Market Session 20 on the 

Exchange, the Fund will disclose on its 

Web site the Disclosed Portfolio, as 

defined in Nasdaq Rule 5735(c)(2), that 

will form the basis for the Fund’s 

calculation of NAV at the end of the 

business day.21 A basket composition 

file, which includes the security names, 

amounts, and share quantities, as 

applicable, required to be delivered in 

exchange for the Fund’s Shares, together 

with estimates and actual cash 

components, will be publicly 

disseminated daily prior to the opening 

of Nasdaq via the National Securities 

Clearing Corporation. The NAV of the 

Fund’s Shares generally will be 

calculated once daily Monday through 

Friday as of the close of regular trading 

on the New York Stock Exchange, 

generally 4:00 p.m. Eastern time.22

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. Quotation and 

last-sale information for any underlying 

exchange-traded products will be 

available via the quote and trade service 

of their respective primary exchanges. 

Intra-day, executable price quotations 

on the securities and other assets held 

by the Fund will be available from 

major broker-dealer firms. Intra-day 

price information on the securities and 

other assets held by the Fund will also 

be available through subscription or free 

services that can be accessed by 

Authorized Participants and other 

investors: (a) Pricing information for 

exchange-traded equity securities; 

investment company securities; 

exchange-traded ADRs; or other 

exchange-traded securities will be 

publicly available from the Web sites of 

the exchanges on which they trade,23 on 

public financial Web sites, and through 

subscription services such as Bloomberg 

and Thompson Reuters; and (b) pricing 

information regarding over-the-counter 

equities (including over-the-counter 

ADRs and certain investment company 

securities) and money market 

instruments, will be available through 

subscription services such as Markit, 

Bloomberg, and Thompson Reuters. The 

Fund’s Web site, which will be publicly 

available prior to the public offering of 

Shares, will include a form of the 

prospectus for the Fund and additional 

quantitative information. 

The Commission further believes that 

the proposal to list and trade the Shares 

is reasonably designed to promote fair 

disclosure of information that may be 

necessary to price the Shares 

appropriately and to prevent trading 

when a reasonable degree of 

transparency cannot be assured. The 

Exchange will obtain a representation 

from the issuer of the Shares that the 

NAV per Share will be calculated daily 

and that the NAV and the Disclosed 

Portfolio will be made available to all 

market participants at the same time. 

Trading in Shares of the Fund will be 

halted under the conditions specified in 

Nasdaq Rules 4120 and 4121, including 

the trading pause provisions under 

Nasdaq Rules 4120(a)(11) and (12). 

Trading in the Shares may be halted 

because of market conditions or for 

reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable,24 and trading in the Shares 

will be subject to Nasdaq Rule 

5735(d)(2)(D), which sets forth 

additional circumstances under which 

trading in Shares of the Fund may be 

halted. The Exchange states that it has 

a general policy prohibiting the 

distribution of material, non-public 

information by its employees. Further, 

the Commission notes that the 

Reporting Authority, as defined in 

Nasdaq Rule 5735(c)(4), that provides 

the Disclosed Portfolio must implement 

and maintain, or be subject to, 

procedures designed to prevent the use 

and dissemination of material, nonpublic information regarding the actual 

components of the portfolio.25 In 

addition, the Exchange states that the 

Adviser is not registered as a brokerdealer and is not affiliated with a 

broker-dealer and has no present intent 

or arrangement to become newly 

affiliated with any broker-dealer. The 

Fund does not currently intend to use 

a sub-adviser.26

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Notices 66025 

and its related personnel are 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 nonpublic 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 violation, 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. 

27The Exchange states that FINRA surveils 

trading on the Exchange pursuant to a regulatory 

services agreement and that the Exchange is 

responsible for FINRA’s performance under this 

regulatory services agreement. 28See 17 CFR 240.10A–3. 

29 15 U.S.C. 78f(b)(5). 

30 15 U.S.C. 78s(b)(2). 

31 17 CFR 200.30–3(a)(12). 

The Exchange represents that trading 

in the Shares will be subject to the 

existing trading surveillances, 

administered by both Nasdaq and the 

Financial Industry Regulatory Authority 

(‘‘FINRA’’) on behalf of the Exchange, 

which are designed to detect violations 

of Exchange rules and applicable federal 

securities laws.27 Prior to the 

commencement of trading, the Exchange 

states that it will inform its members in 

an Information Circular of the special 

characteristics and risks associated with 

trading the Shares. 

The Exchange represents that the 

Shares are deemed to be equity 

securities, thus rendering trading in the 

Shares subject to the Exchange’s 

existing rules governing the trading of 

equity securities. In support of this 

proposal, the Exchange has made the 

following representations: 

(1) The Shares will be subject to Rule 

5735, which sets forth the initial and 

continued listing criteria applicable to 

Managed Fund Shares. 

(2) The Exchange has appropriate 

rules to facilitate transactions in the 

Shares during all trading sessions. 

(3) The Exchange’s surveillance 

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 

applicable federal securities laws. 

FINRA, on behalf of the Exchange, will 

communicate as needed regarding 

trading in the Shares and the exchangetraded securities and instruments held 

by the Fund, which include ADRs, 

exchange-listed investment companies, 

or other exchange-traded securities with 

other markets and other entities that are 

members of ISG, and FINRA may obtain 

trading information regarding trading in 

the Shares and such exchange-traded 

equities held by the Fund from such 

markets and other entities. In addition, 

the Exchange may obtain information 

regarding trading in the Shares and such 

exchange-traded equities held by the 

Fund from markets and other entities 

that are members of ISG, or with which 

the Exchange has in place a 

comprehensive surveillance sharing 

agreement. Moreover, FINRA, on behalf 

of the Exchange, will be able to access, 

as needed, trade information for certain 

fixed income securities held by the 

Fund reported to FINRA’s Trade 

Reporting and Compliance Engine. 

(4) Not more than 10% of the net 

assets of the Fund, in the aggregate, will 

be invested in (a) unlisted or 

unsponsored ADRs, (b) ADRs not listed 

on an exchange that is a member of ISG 

or a party to a comprehensive 

surveillance sharing agreement with the 

Exchange, or (c) unlisted common 

stocks or common stocks not listed on 

an exchange that is a member of the ISG 

or a party to a comprehensive 

surveillance sharing agreement with the 

Exchange. 

(5) Prior to the commencement of 

trading, the Exchange will inform its 

members in an Information Circular of 

the special characteristics and risks 

associated with trading the Shares. 

Specifically, the Information Circular 

will discuss the following: (a) The 

procedures for purchases and 

redemptions of Shares in creation units 

(and that Shares are not individually 

redeemable); (b) Nasdaq Rule 2111A, 

which imposes suitability obligations on 

Nasdaq members with respect to 

recommending transactions in the 

Shares to customers; (c) the 

dissemination of information regarding 

the Intraday Indicative Value through 

major index service providers such as 

NASDAQ OMX proprietary index data 

services or other major market 

proprietary index services; (d) the risks 

involved in trading the Shares during 

the Pre-Market and Post-Market 

Sessions when an updated Intraday 

Indicative Value will not be calculated 

or publicly disseminated; (e) the 

requirement that members deliver a 

prospectus to investors purchasing 

newly issued Shares prior to or 

concurrently with the confirmation of a 

transaction; (f) trading information; and 

(g) the dissemination of the Disclosed 

Portfolio though the Fund’s Web site. 

(6) For initial and continued listing, 

the Fund must be in compliance with 

Rule 10A–3 under the Act.28

(7) The Fund may hold up to an 

aggregate amount of 15% of its net 

assets in illiquid assets (calculated at 

the time of investment). The 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 the 

Fund’s net assets are held in illiquid 

assets. 

(8) A minimum of 100,000 Shares will 

be outstanding at the commencement of 

trading on the Exchange. 

This approval order is based on all of 

the Exchange’s representations, 

including those set forth above and in 

the Notice, and the Exchange’s 

description of the Fund. 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act 29 and the rules and 

regulations thereunder applicable to a 

national securities exchange. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,30 that the 

proposed rule change (SR–NASDAQ– 

2014–090), as modified by Amendment 

No. 1 thereto, be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26343 Filed 11–5–14; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

Agency Information Collection 

Activities: Requests for Comments; 

Clearance of Renewed Approval of 

Information Collection: Commercial 

Space Transportation Licensing 

Regulations 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice and request for 

comments. 

SUMMARY: In accordance with the 

Paperwork Reduction Act of 1995, FAA 

invites public comments about our 

mstockstill on DSK4VPTVN1PROD with NOTICES