Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Notices 68309 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 71657 

(Mar. 6, 2014), 79 FR 14092 (Mar. 12, 2014) (SR– 

NASDAQ–2014–020) (‘‘Notice’’). 

4See Letters to the Commission from Christopher 

Davis, President, Money Management Institute, 

dated March 27, 2014 (‘‘MMI Letter’’); Robert Tull, 

President, Robert Tull & Co., dated March 31, 2014 

(‘‘Tull Letter’’); Avi Nachmany, Co-Founder, 

Director of Research, E.V.P., Strategic Insight, dated 

Apr. 1, 2014 (‘‘Strategic Insight Letter’’); and Eric 

Noll, President and Chief Executive Officer, 

ConvergEx Group, LLC, dated Apr. 1, 2014 

(‘‘ConvergEx Letter’’). 

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

6See Securities Exchange Act Release No. 72007 

(Apr. 23, 2014), 79 FR 24045 (Apr. 29, 2014) (SR– 

NASDAQ–2014–020). The Commission determined 

that it was appropriate to designate a longer period 

within which to take action on the proposed rule 

change so that it had sufficient time to consider the 

proposed rule change. Accordingly, the 

Commission designated June 10, 2014 as the date 

by which it should approve, disapprove, or institute 

proceedings to determine whether to disapprove the 

proposed rule change. 

7See Securities Exchange Act Release No. 72350 

(Jun. 9, 2014), 79 FR 33959 (Jun. 13, 2014) (SR– 

NASDAQ–2014–020) (‘‘Order Instituting 

Proceedings’’). In the Order Instituting Proceedings, 

the Commission noted, among other things, that 

questions remained as to whether the Exchange’s 

proposal is consistent with the requirements of 

Section 6(b)(5) of the Act, specifically whether it is 

designed to prevent fraudulent and manipulative 

acts and practices, promotes just and equitable 

principles of trade, and protects investors and the 

public interest. 

8See Letter to the Commission from Thomas E. 

Faust, Jr., Chairman and Chief Executive Officer, on 

behalf of Eaton Vance Corporation and its 

subsidiaries Eaton Vance Management and Navigate 

Fund Solution LLC (collectively, ‘‘Eaton Vance’’), 

dated July 3, 2014 (‘‘Eaton Vance Letter’’). Eaton 

Vance Management and the Eaton Vance ETMF 

Continued 

For the Nuclear Regulatory Commission. 

Christopher G. Miller, 

Director, Division of License Renewal, Office 

of Nuclear Reactor Regulation. 

[FR Doc. 2014–27042 Filed 11–13–14; 8:45 am] 

BILLING CODE 7590–01–P 

NUCLEAR REGULATORY 

COMMISSION 

Advisory Committee on Reactor 

Safeguards (ACRS), Meeting of the 

ACRS Subcommittee on Fukushima; 

Notice of Meeting 

The ACRS Subcommittee on 

Fukushima will hold a meeting on 

November 20–21, 2014, Room T–2B1, 

11545 Rockville Pike, Rockville, 

Maryland. 

The meeting will be open to public 

attendance with the exception of 

portions that may be closed to protect 

unclassified safeguards information 

pursuant to 5 U.S.C. 552b(c)(3). The 

agenda for the subject meeting shall be 

as follows: 

Thursday, November 20, 2014–8:30 

a.m. Until 5:00 p.m.; Friday, November 

21, 2014–8:30 a.m. Until 12:00 p.m. 

The Subcommittee will discuss with 

the NRC staff and industry 

representatives their experience 

reviewing and responding to Order EA– 

12–049, ‘‘Order Modifying Licenses 

with Regard to Requirements for 

Mitigation Strategies for Beyond-DesignBasis External Events.’’ In addition, the 

Subcommittee will review draft 

proposed rule language and associated 

bases for codifying Order EA–12–049 as 

part of the Mitigation of Beyond-DesignBasis Events Rulemaking. The 

Subcommittee will hear presentations 

by and hold discussions with the NRC 

staff and other interested persons 

regarding this matter. The 

Subcommittee will gather information, 

analyze relevant issues and facts, and 

formulate proposed positions and 

actions, as appropriate, for deliberation 

by the Full Committee. 

Members of the public desiring to 

provide oral statements and/or written 

comments should notify the Designated 

Federal Official (DFO), Michael 

Snodderly (Telephone 301–415–2241 or 

Email: Michael.Snodderly@nrc.gov) five 

days prior to the meeting, if possible, so 

that appropriate arrangements can be 

made. Thirty-five hard copies of each 

presentation or handout should be 

provided to the DFO thirty minutes 

before the meeting. In addition, one 

electronic copy of each presentation 

should be emailed to the DFO one day 

before the meeting. If an electronic copy 

cannot be provided within this 

timeframe, presenters should provide 

the DFO with a CD containing each 

presentation at least thirty minutes 

before the meeting. Electronic 

recordings will be permitted only 

during those portions of the meeting 

that are open to the public. Detailed 

procedures for the conduct of and 

participation in ACRS meetings were 

published in the Federal Register on 

October 13, 2014 (79 FR 59307–59308). 

Detailed meeting agendas and meeting 

transcripts are available on the NRC 

Web site at http://www.nrc.gov/readingrm/doc-collections/acrs. Information 

regarding topics to be discussed, 

changes to the agenda, whether the 

meeting has been canceled or 

rescheduled, and the time allotted to 

present oral statements can be obtained 

from the Web site cited above or by 

contacting the identified DFO. 

Moreover, in view of the possibility that 

the schedule for ACRS meetings may be 

adjusted by the Chairman as necessary 

to facilitate the conduct of the meeting, 

persons planning to attend should check 

with these references if such 

rescheduling would result in a major 

inconvenience. 

If attending this meeting, please enter 

through the One White Flint North 

Building, 11555 Rockville Pike, 

Rockville, MD. After registering with 

security, please contact Mr. Theron 

Brown (Telephone 240–888–9835) to be 

escorted to the meeting room. 

Dated: November 5, 2014. 

Cayetano Santos, 

Chief, Technical Support Branch, Advisory 

Committee on Reactor Safeguards. 

[FR Doc. 2014–27035 Filed 11–13–14; 8:45 am] 

BILLING CODE 7590–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73562; File No. SR– 

NASDAQ–2014–020] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing of Amendment No. 1 and Order 

Granting Accelerated Approval of a 

Proposed Rule Change, as Modified by 

Amendment No. 1 Thereto, Relating to 

Listing and Trading of ExchangeTraded Managed Fund Shares 

November 7, 2014. 

I. Introduction 

On February 26, 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’’ or ‘‘Exchange Act’’) 1 and 

Rule 19b–4 thereunder,2 a proposed rule 

change to adopt Nasdaq Rule 5745, 

which would govern the listing and 

trading of Exchange-Traded Managed 

Fund Shares (‘‘ETMF Shares’’ or 

‘‘ETMFs’’), and to amend related 

references under Nasdaq Rules 4120, 

5615, IM–5615–4, and 5940. The 

proposed rule change was published for 

comment in the Federal Register on 

March 12, 2014.3 The Commission 

initially received four comment letters 

on the proposal.4 On April 23, 2014, 

pursuant to Section 19(b)(2) of the Act,5

the Commission designated a longer 

period within which to either approve 

the proposed rule change, disapprove 

the proposed rule change, or institute 

proceedings to determine whether to 

disapprove the proposed rule change.6

On June 9, 2014, the Commission 

instituted proceedings to determine 

whether to approve or disapprove the 

proposed rule change.7 In response to 

the Order Instituting Proceedings, the 

Commission received one comment 

letter on the proposal.8 On September 4, 

mstockstill on DSK4VPTVN1PROD with NOTICES

68310 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Notices 

Trust have, as co-applicants, filed an application 

with the Commission seeking relief from certain 

provisions of the Investment Company Act of 1940 

(‘‘1940 Act’’) to permit them to offer ETMFs. The 

Commission published notice of this application 

(‘‘Notice of Application for Exemptive Relief’’) on 

November 6, 2014. See Investment Company Act 

Release No. 31333 (Nov. 6, 2014) (Eaton Vance 

Management, et al.; Notice of Application). 

Navigate Fund Solutions LLC (‘‘Navigate’’) owns 

patent rights and other protected intellectual 

property relating to ETMFs and NAV-Based Trading 

that it intends to license to Nasdaq to support the 

listing and trading of ETMFs that have themselves 

entered into license agreements with Navigate. 

9See Securities Exchange Act Release No. 72987 

(Sept. 4, 2014), 79 FR 53808 (Sept. 10, 2014) (SR– 

NASDAQ–2014–020). 

10 In Amendment No. 1, Nasdaq confirmed that 

all ETMFs listed on the Exchange will have a 

unique identifier associated with their ticker 

symbols and that, in the systems used to transmit 

and process transactions in ETMF Shares, an 

ETMF’s next-determined NAV will be represented 

by a proxy price. Previously, the filing stated that 

Nasdaq expects all ETMFs listed on the Exchange 

to have a unique identifier associated with their 

ticker symbols and that Nasdaq expects an ETMF’s 

next-determined NAV to be represented by a proxy 

price. Additionally, the Exchange removed 

references to ETMF entry and annual fees as the 

Exchange intends to address such fees in a separate 

filing. 

11See Letters to the Commission from Daniel J. 

McCabe, Chief Executive Officer, Precidian 

Investments LLC (‘‘Precidian’’), dated October 30, 

2014 (‘‘Precidian Letter’’) and Thomas E. Faust, Jr., 

Chairman and Chief Executive Officer, on behalf of 

Eaton Vance, dated October 31, 2014 (‘‘Eaton Vance 

Response Letter’’). 

12The Commission notes that more detailed 

information regarding the proposal is included in 

the Notice. See Notice, supra note 3. 

13Nasdaq intends to enter into a license 

agreement to allow for the listing and trading of 

ETMF Shares on the Exchange. The Exchange states 

that aspects of ETMFs and NAV-Based Trading 

(described below) are protected intellectual 

property subject to issued and pending U.S. patents 

held by Navigate, a wholly owned subsidiary of 

Eaton Vance Corporation. Nasdaq will enter into a 

license agreement with Navigate to allow for NAVBased Trading on the Exchange of ETMFs that have 

themselves entered into license agreements with 

Navigate. 

14Nasdaq Rule 5745(b)(1) provides that Nasdaq 

will file separate proposals under Section 19(b) of 

the Act before the listing of any specific ETMF 

Shares. 

15Nasdaq lists actively-managed funds under 

Nasdaq Rule 5735, which requires the identities 

and quantities of the securities and other assets 

held by a fund to be disseminated at least once 

daily. See Nasdaq Rule 5735 (d)(2)(B)(i). 

16Nasdaq represents that all ETMFs listed on the 

Exchange will have a unique identifier associated 

with their ticker symbols, which would indicate 

that their Shares are traded using NAV-Based 

Trading. See Amendment No. 1, supra note 10. 

17As with other registered open-end investment 

companies, the NAV of ETMF Shares generally 

would be calculated daily Monday through Friday 

as of the close of regular trading on the New York 

Stock Exchange, normally 4:00 p.m. Eastern Time. 

NAV would be calculated by dividing the ETMF’s 

net asset value by the number of ETMF Shares 

outstanding. See Notice at note 9, supra note 3. 

18Because, in NAV-Based Trading, prices of 

executed trades are not determined until the 

reference NAV is calculated, buyers and sellers of 

ETMF Shares during the trading day will not know 

the final value of their purchases and sales until the 

end of the trading day. 

19See Amendment No. 1, supra note 10. Order 

transmission and processing systems currently in 

common use by exchanges and member firms are 

generally not designed to accommodate pricing 

arrangements, such as NAV-Based Trading, in 

which bids, offers, and execution prices are 

determined by reference to a price or value that is 

unknown at the time of trade execution. Compared 

to the alternative of building and maintaining (and 

requiring member firms to build and maintain) a 

dedicated NAV-Based Trading order transmission 

and processing system, the Exchange believes that 

the proposed approach (using, for processing 

purposes, a proxy price to represent nextdetermined NAV) offers major advantages in terms 

of cost, efficiency, and time to implement. To 

convert proxy prices used to represent intraday 

bids, offers, and execution prices into prices 

expressed in relation to the next-determined NAV, 

member firms would subtract from the reported 

proxy price (e.g., 99.99) the proxy for NAV (e.g., 

100.00) and insert ‘‘NAV’’ in front of the calculated 

number expressed in dollars (e.g., 99.99¥100.00 = 

¥0.01, expressed as ‘‘NAV¥$0.01’’). 

20The ETMF bid, offer, and trade information 

disseminated to the Consolidated Tape will be the 

same information disseminated though a 

proprietary Nasdaq data feed and will differ only 

in the format in which the information is provided 

(proxy price format on the Consolidated Tape 

versus NAV plus or minus format on the 

proprietary Nasdaq data feed). 

21All orders to buy or sell an ETMF Share that 

are not executed on the day the order is submitted 

would be automatically cancelled as of the close of 

trading on such day. 

2014, the Commission issued a notice of 

designation of a longer period for 

Commission action on proceedings to 

determine whether to approve or 

disapprove the proposed rule change.9

On September 12, 2014, the Exchange 

filed Amendment No. 1 to the proposed 

rule change.10 Thereafter, the 

Commission received two additional 

comment letters on the proposed rule 

change.11 The Commission is 

publishing this notice to solicit 

comments from interested persons on 

Amendment No. 1 to the proposed rule 

change and is approving the proposed 

rule change, as modified by Amendment 

No. 1 thereto, on an accelerated basis. 

II. Description of the Proposal 12

The Exchange proposes to adopt new 

Nasdaq Rule 5745 to govern the listing 

and trading of ETMF Shares.13 At this 

time, Nasdaq is not proposing to list any 

ETMF Shares under new Nasdaq Rule 

5745.14 Unlike actively-managed 

exchange-traded funds, ETMFs will not 

be required under Nasdaq Rule 5745 to 

disclose their holdings on a daily 

basis.15 The Exchange states that, as 

required for traditional open-end 

investment companies, ETMFs will 

disclose their full portfolio positions at 

least quarterly, with a delay (not to 

exceed 60 days). Nasdaq will deem 

ETMF Shares to be equity securities, 

thus rendering trading in ETMF Shares 

subject to Nasdaq’s existing rules 

governing the trading of equity 

securities. 

ETMF Shares will trade on Nasdaq 

using a new trading protocol called 

‘‘NAV-Based Trading.’’ 16 In NAV-Based 

Trading, as described in Nasdaq Rule 

5745(b)(3), all bids, offers, and 

execution prices will be expressed as a 

premium/discount (which may be zero) 

to the ETMF’s next-determined net asset 

value, or NAV 17 (e.g., NAV-$0.01; 

NAV+$0.01). An ETMF’s NAV will be 

determined each business day, normally 

as of 4:00 p.m. Eastern Time. Executions 

using NAV-Based Trading will be 

binding at the time orders are matched 

on Nasdaq’s facilities, with the 

transaction prices contingent upon the 

determination of the ETMF’s NAV at the 

end of the business day.18

Member firms will utilize existing 

order types and interfaces to transmit 

ETMF Share bids and offers to Nasdaq, 

which will process ETMF Share trades 

like trades in shares of ETFs and other 

listed securities. Nasdaq represents that 

an ETMF’s next-determined NAV will 

be represented by a proxy price (e.g., 

100.00) and a premium/discount of a 

stated amount to the next-determined 

NAV to be represented by the same 

increment/decrement from the proxy 

price used to denote NAV (e.g., 

NAV¥$0.01 would be represented as 

99.99; NAV+$0.01 as 100.01).19 To 

avoid potential investor confusion, 

Nasdaq will work with member firms 

and providers of market data services to 

seek to ensure that representations of 

intraday bids, offers, and execution 

prices for ETMFs that are made 

available to the investing public follow 

the ‘‘NAV¥$0.01/NAV+$0.01’’ (or 

similar) display format, rather than 

displaying proxy prices. 

Nasdaq will report intraday bids, 

offers, and trades for ETMFs in real-time 

to the Consolidated Tape using the 

proxy price format. In addition, Nasdaq 

will disseminate intraday ETMF bids, 

offers, and trades through a proprietary 

exchange data feed using the NAV + 

$.01/NAV¥$.01 format.20 The 

Exchange will also provide the member 

firms participating in each ETMF Share 

trade with a contemporaneous notice of 

trade execution, indicating the number 

of ETMF Shares bought or sold and the 

executed premium/discount to NAV.21

After the Reporting Authority 

(defined below) calculates an ETMF’s 

NAV and provides this information to 

the Exchange, Nasdaq will price each 

ETMF Share trade entered into during 

the day at the ETMF’s NAV plus/minus 

the trade’s executed premium/discount. 

Using the final trade price, each ETMF 

Share trade will then be disseminated 

through a proprietary exchange data 

feed and confirmed to the member firms 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Notices 68311 

22Nasdaq Rule 4120(b)(4) defines the Regular 

Market Session as the trading session from 9:30 a.m. 

to 4:00 p.m. or 4:15 p.m. ETMF Shares would trade 

until 4:00 p.m. 

participating in the trade, 

supplementing the previously provided 

information with final pricing 

information. After the final trade price 

is determined, Nasdaq will deliver the 

ETMF Share trading data to the National 

Securities Clearing Corporation 

(‘‘NSCC’’) for clearance and settlement, 

following the same processes used for 

the clearance and settlement of trades in 

other exchange-traded securities. 

Proposed Listing Rules for ExchangeTraded Managed Fund Shares 

Nasdaq Rule 5745(b)(1) provides that 

Nasdaq will file separate proposals 

under Section 19(b) of the Act before the 

listing of any specific ETMF Shares. 

Nasdaq Rule 5745(b)(2) provides that 

transactions in ETMF Shares will occur 

during Nasdaq’s Regular Market Session 

through 4:00 p.m.22 Nasdaq Rule 

5745(b)(3) provides that ETMF Shares 

will trade on Nasdaq at marketdetermined premiums or discounts to 

the next-determined NAV, and that the 

minimum price variation for quoting 

and entry of orders in ETMF Shares will 

be $0.01. Nasdaq Rule 5745(b)(4) 

provides that Nasdaq will implement 

written surveillance procedures for 

ETMF Shares. Nasdaq Rule 5745(b)(5) 

provides that, for ETMF Shares based on 

an international or global portfolio, the 

statutory prospectus or the application 

for exemption from provisions of the 

1940 Act for such series of ETMF Shares 

must state that such series must comply 

with the federal securities laws in 

accepting securities for deposit and 

satisfying redemptions with securities, 

including that the securities accepted 

for deposit and the securities used to 

satisfy redemption requests are sold in 

transactions that would be exempt from 

registration under the Securities Act of 

1933 (‘‘Securities Act’’). 

Definitions. Nasdaq Rule 5745(c)(1) 

defines the term ‘‘ETMF Share’’ as a 

security that: (1) Represents an interest 

in a registered investment company 

organized as an open-end management 

investment company that invests in a 

portfolio of securities and other assets 

selected and managed by the ETMF’s 

investment adviser consistent with the 

ETMF’s investment objectives and 

policies; (2) is issued in specified 

aggregate unit quantities in return for a 

deposit of a specified portfolio of 

securities and/or a cash amount with a 

value per Share equal to the ETMF’s 

NAV; (3) when aggregated in the same 

specified unit quantities, may be 

redeemed in exchange for a specified 

portfolio of securities and/or cash with 

a value per Share equal to the ETMF’s 

NAV; and (4) is traded on Nasdaq or 

another national securities exchange 

using NAV-Based Trading, including 

pursuant to unlisted trading privileges. 

In addition, Nasdaq Rule 5745(c)(2) 

defines the term ‘‘Intraday Indicative 

Value’’ (‘‘IIV’’) as the estimated 

indicative value of an ETMF Share 

based on current information regarding 

the value of the securities and other 

assets held by the ETMF. Nasdaq Rule 

5745(c)(3) defines the term 

‘‘Composition File’’ as the specified 

portfolio of securities and/or cash that 

an ETMF will accept as a deposit in 

issuing ETMF Shares and the specified 

portfolio of securities and/or cash that 

an ETMF will deliver in a redemption 

of ETMF Shares. The current 

Composition File will be disseminated 

through the NSCC once each business 

day before the open of trading in ETMF 

Shares on Nasdaq on such day. To 

maintain the confidentiality of current 

portfolio trading, an ETMF’s 

Composition File generally will not be 

a pro rata reflection of the ETMF’s 

securities positions. Each security 

included in the Composition File will 

be a current holding of the ETMF, but 

the Composition File generally will not 

include all of the securities in the 

ETMF’s portfolio or match the 

weightings of the included securities in 

the portfolio. The Composition File also 

may consist entirely of cash, in which 

case it would not include any of the 

securities in the ETMF’s portfolio. 

Nasdaq Rule 5745(c)(4) defines the 

term ‘‘Reporting Authority’’ as Nasdaq, 

an institution or a reporting service 

designated by Nasdaq as the official 

source for calculating and reporting 

information relating to such series of 

ETMF Shares, including, but not limited 

to, the IIV, the amount of any cash 

distribution to holders of ETMF Shares, 

NAV, the Composition File, or other 

information relating to the issuance, 

redemption, or trading of ETMF Shares. 

A series of ETMF Shares may have more 

than one Reporting Authority, each 

having different functions. 

Initial and Continued Listing. Nasdaq 

Rule 5745(d) sets forth the initial and 

continued listing criteria applicable to 

ETMF Shares. Nasdaq Rule 

5745(d)(1)(A) provides that, for each 

series of ETMF Shares, Nasdaq will 

establish a minimum number of ETMF 

Shares required to be outstanding at the 

time of commencement of trading. In 

addition, under Nasdaq Rule 

5745(d)(1)(B), Nasdaq will obtain a 

representation from the issuer of each 

series of ETMF Shares that the NAV for 

such series will be calculated on each 

business day that the New York Stock 

Exchange is open for trading and that 

the NAV will be made available to all 

market participants at the same time. 

Under Nasdaq Rule 5745(d)(1)(C), the 

Reporting Authority that provides the 

Composition File must implement and 

maintain, or be subject to, procedures 

designed to prevent the use and 

dissemination of material, non-public 

information regarding the ETMF’s 

portfolio positions and changes in 

positions. 

Nasdaq Rule 5745(d)(2)(A) provides 

that each series of ETMF Shares could 

continue to be listed and traded if the 

IIV for the ETMF Shares is widely 

disseminated by one or more major 

market data vendors at intervals of not 

more than 15 minutes during the 

Regular Market Session when the ETMF 

Shares trade on Nasdaq. As stated in the 

Notice, the purpose of IIVs in NAVBased Trading is to enable investors to 

determine the number of ETMF Shares 

to buy or sell if they want to transact in 

an approximate dollar amount. For this 

purpose, Nasdaq believes that 

dissemination of IIVs at intervals of not 

more than 15 minutes should generally 

be sufficient. The Exchange states that 

more frequent dissemination of IIVs 

may increase fund costs without 

apparent benefit and could focus 

unwarranted investor attention on these 

disclosures. Moreover, for certain 

strategies, more frequent IIV disclosure 

could provide unintended information 

about current portfolio trading activity 

to market participants who possess the 

requisite analytical capabilities, 

computation power, and motivation to 

reverse engineer the ETMF’s portfolio 

positions. An ETMF will be permitted to 

disseminate IIVs at intervals of less than 

15 minutes, but would not be required 

to do so to maintain trading on the 

Exchange. 

Nasdaq Rule 5745(d)(2)(B) provides 

that Nasdaq will consider the 

suspension of trading in, or removal 

from listing of, a series of ETMF Shares 

under any of the following 

circumstances: (1) If, following the 

initial twelve-month period after 

commencement of trading on the 

Exchange of a series of ETMF Shares, 

there are fewer than 50 beneficial 

holders of the series of ETMF Shares for 

30 or more consecutive trading days; (2) 

if the ETMF’s IIV or NAV is no longer 

calculated or if its IIV, NAV, or 

Composition File is no longer available 

to all market participants at the same 

time; (3) if the ETMF has failed to 

submit any filings required by the 

Commission or if Nasdaq is aware that 

the ETMF is not in compliance with the 

mstockstill on DSK4VPTVN1PROD with NOTICES

68312 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Notices 

23The Exchange also is making certain other 

minor technical changes to these rules unrelated to 

ETMFs. Specifically, the Exchange is amending 

Rules 4120(a)(9), (b)(4)(A), and (b)(4)(E) to include 

appropriate references to various derivative 

securities defined in Rule 5711, and to make certain 

other typographical corrections and clarifications. 

24See supra notes 4, 8, and 11. 

25See MMI Letter; Tull Letter; Strategic Insight 

Letter; ConvergEx Letter at 1; and Eaton Vance 

Letter at 2, supra notes 4 and 8. 

26See Tull Letter; Strategic Insight Letter; and 

ConvergEx Letter at 1, supra note 4. 

27See Tull Letter, supra note 4. 

conditions of any exemptive order or 

no-action relief granted by the 

Commission with respect to the series of 

ETMF Shares; or (4) if such other event 

shall occur or condition exists which, in 

the opinion of Nasdaq, makes further 

dealings on Nasdaq inadvisable. 

Nasdaq Rule 5745(d)(2)(C) provides 

that, if the IIV of a series of ETMF 

Shares is not being disseminated as 

required, Nasdaq may halt trading 

during the day in which the 

interruption to the dissemination of the 

IIV occurs. If the interruption to the 

dissemination of the IIV persists past 

the trading day in which it first 

occurred, Nasdaq will halt trading no 

later than the beginning of the trading 

day following the interruption. In 

addition, if the Exchange becomes 

aware that the NAV with respect to a 

series of ETMF Shares is not calculated 

on each business day that the New York 

Stock Exchange is open for trading and 

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 at 

the same time. If Nasdaq becomes aware 

that the Composition File with respect 

to a series of ETMF Shares is not 

disseminated to all market participants 

at the same time, it will halt trading in 

such series until such time as the 

Composition File is available to all 

market participants at the same time. 

In addition, Nasdaq Rule 

5745(d)(2)(D) provides that, upon 

termination of an ETMF, the ETMF 

Shares issued in connection with such 

entity must be removed from listing on 

Nasdaq. Nasdaq Rule 5745(d)(2)(E) 

provides that voting rights must be as 

set forth in the applicable ETMF 

prospectus. 

Additional Provisions. Nasdaq Rule 

5745(e) provides that neither Nasdaq, 

the Reporting Authority, nor any agent 

of Nasdaq shall have any liability for 

damages, claims, losses, or expenses 

caused by any errors, omissions, or 

delays in calculating or disseminating 

any of the following: The current 

portfolio value; the current value of the 

securities and other assets required to be 

deposited in connection with the 

issuance of ETMF Shares; the amount of 

any dividend-equivalent payment or 

cash distribution to holders of ETMF 

Shares; NAV; the Composition File; or 

other information relating to the 

purchase, redemption, or trading of 

ETMF Shares, resulting from any 

negligent act or omission by Nasdaq, the 

Reporting Authority, or any agent of 

Nasdaq, or any act, condition, or cause 

beyond the reasonable control of 

Nasdaq, 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. 

Nasdaq Rule 5745(f) applies only to 

series of ETMF Shares that are the 

subject of an order by the Commission 

exempting such series from certain 

prospectus delivery requirements under 

Section 24(d) of the 1940 Act and are 

not otherwise subject to prospectus 

delivery requirements under the 

Securities Act. Nasdaq will inform its 

members regarding application of 

Nasdaq Rule 5745(f) to a particular 

series of ETMF Shares by means of an 

information circular prior to 

commencement of trading in such 

series. Under the rule, Nasdaq requires 

that members provide to all purchasers 

of a series of ETMF Shares a written 

description of the terms and 

characteristics of those securities, in a 

form prepared by the open-end 

management investment company 

issuing such securities, not later than 

the time a confirmation of the first 

transaction in such series is delivered to 

such purchaser. In addition, members 

shall include such a written description 

with any sales material relating to a 

series of ETMF Shares that is provided 

to customers or the public. Any other 

written materials provided by a member 

to customers or the public making 

specific reference to a series of ETMF 

Shares as an investment vehicle must 

include a statement in substantially the 

following form: ‘‘A circular describing 

the terms and characteristics of (the 

series of ETMF Shares) has been 

prepared by the (open-end management 

investment company name) and is 

available from your broker. It is 

recommended that you obtain and 

review such circular before purchasing 

(the series of ETMF Shares).’’ A member 

carrying an omnibus account for a nonmember broker-dealer is required to 

inform such non-member that execution 

of an order to purchase a series of ETMF 

Shares for such omnibus account would 

be deemed to constitute agreement by 

the non-member to make such a written 

description available to its customers on 

the same terms as are directly applicable 

to members under this rule. Upon 

request of a customer, a member shall 

also provide a prospectus for the 

particular series of ETMF Shares. 

Nasdaq Rule 5745(g) provides that, if 

the investment adviser to an ETMF 

issuing Shares is a registered brokerdealer or affiliated with a broker-dealer, 

such investment adviser shall erect a 

‘‘fire wall’’ between the investment 

adviser and the broker-dealer personnel 

or broker-dealer affiliate, as applicable, 

with respect to access to information 

concerning the composition and/or 

changes to such ETMF’s portfolio 

holdings. Personnel who make 

decisions on the ETMF’s portfolio 

composition must be subject to 

procedures designed to prevent the use 

and dissemination of material, nonpublic information regarding the 

applicable ETMF portfolio. 

Other Rule Changes 

The Exchange is also making 

conforming changes to: (1) Nasdaq Rule 

4120(a)(9) and (10) to add provisions 

applicable to ETMF Shares with respect 

to trading halts; (2) Nasdaq Rule 

4120(b)(4)(A) and (E) to modify certain 

defined terms to include references to 

ETMF Shares; and (3) Nasdaq Rule 

5615(a)(5) and IM–5615–4 to add 

references to ETMFs for purposes of 

certain corporate governance 

requirements.23

III. Summary of Comment Letters 

As noted above, the Commission 

received a total of seven comment 

letters from six commenters concerning 

the Exchange’s proposal.24 Five of the 

commenters support the proposal, and 

one commenter opposes the proposal. 

Generally, the supporting commenters 

believe that ETMFs could offer 

investment managers and investors a 

tax-efficient alternative to today’s 

mutual funds.25 In addition to the 

benefits of tax-efficiency, some 

commenters state their belief that 

ETMFs would offer the benefits of lower 

costs to investors as a result of lower 

expenses,26 and one commenter states 

its belief that a benefit would be 

transparency of ETMF transaction 

costs.27 The same commenter also states 

its view that the non-disclosed nature of 

the ETMF portfolio would serve as a 

barrier to front-running of portfolio 

trades of actively managed funds and 

that the proposed ETMFs would 

promote renewed competition in the 

fund marketplace by encouraging 

investment managers concerned about 

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28 Id. 

29See Precidian Letter at 5–6, supra note 11. 

Precidian states its view that the fewer securities 

contained in the creation or redemption basket, the 

worse the problem becomes. 

30See Eaton Vance Response Letter at 6, supra 

note 11. 

31See Precidian Letter at 2, supra note 11. 

Precidian states its belief that intraday liquidity is 

a foundational principle of exchanges and the 

secondary market as a whole. 

32See Eaton Vance Response Letter at 3, supra 

note 11. Eaton Vance also responded to concerns 

about investor confusion in its first comment letter. 

See infra notes 43–51 and accompanying text. 

33Eaton Vance believes that the potential 

advantages ETMFs have over mutual funds are: (a) 

Protecting fund shareholders from the dilutive 

effects of other shareholders’ transactions; (b) 

protecting fund shareholders from tax realizations 

in connection with other shareholders’ transactions; 

(c) realizing savings in shareholder servicing and 

other fund expenses; and (d) enhancing the 

competitiveness of fund distribution. See Eaton 

Vance Response Letter at 3–4, supra note 11. 

34Eaton Vance believes that the potential 

advantages ETMFs have over actively managed 

ETFs are: (a) Maintaining the confidentiality of 

portfolio trading activity; (b) providing trade 

execution cost transparency and quality control to 

fund investors; and (c) facilitating tight bid-ask 

spreads and narrow premiums/discounts in 

secondary market trading. See Eaton Vance 

Response Letter at 3–4, supra note 11. 

35See Tull Letter, supra note 4. 

36See ConvergEx Letter at 2, supra note 4. 

37See Precidian Letter at 5, supra note 11. 

38See Eaton Vance Response Letter at 5, supra 

note 11. 

39See Eaton Vance Response Letter at 6, supra 

note 11. 

40See Strategic Insight Letter, supra note 4. 

41 Id. 

42 Id. 

43See Eaton Vance Letter at 3, supra note 8. 

44 Id. 

45See Eaton Vance Letter at 4, supra note 8. 

46 Id. 

47 Id. 

maintaining the confidentiality of their 

portfolio trading to offer their leading 

strategies in a better performing product 

structure.28 The opposing commenter, 

however, believes that ETMFs would 

likely not provide tax benefits and may 

cost more to operate than existing ETFs, 

because the ETMF will be forced to 

rebalance its portfolio every time there 

is a creation or redemption causing the 

fund to incur additional costs.29 In 

response to the opposing commenter, 

Eaton Vance, the sponsor of ETMFs, 

states its view that the more relevant 

comparison for ETMFs is mutual funds 

and that it expects ETMFs to achieve 

significant performance and tax 

efficiency advantages over similar 

mutual funds by utilizing in-kind 

purchases and redemptions and by 

imposing Creation Unit transaction fees 

to offset the associated processing and 

trading costs to the fund.30 The 

opposing commenter also states its view 

that NAV-Based Trading provides no 

discernable benefit to investors and 

would likely add to investor confusion 

because the proposal would allow the 

listing of products on an exchange that 

would not trade at current market 

prices.31 In response, Eaton Vance 

acknowledges that ETMF Shares will 

not trade at prices determined intraday, 

but notes that each ETMF’s registration 

statement, Web site, and any advertising 

or marketing materials will include 

prominent disclosure of this fact.32

Eaton Vance further responds with its 

view that ETMFs provide several 

advantages over traditional mutual 

funds 33 and actively managed ETFs.34

In addition, several commenters state 

their belief about the potential positive 

impact the proposed ETMF product may 

have on arbitrage and pricing. 

Specifically, one commenter states its 

view that NAV-Based Trading for 

ETMFs should expand market maker 

opportunities as the arbitrage moves 

towards order management control and 

away from sophisticated arbitrage 

pricing models using real-time pricing 

that makes it difficult for an investor to 

calculate personal market entry and exit 

costs.35 Another commenter states its 

view that, because ETMFs could 

promote competition in the fund 

marketplace, such competition might 

enable ETMFs to trade close to the 

underlying fund value on a consistent 

basis.36 The opposing commenter, 

however, believes that market 

professionals will be unable to 

effectively hedge their ETMF positions 

due to a stale and possibly inaccurate 

IIV that is published every 15 minutes.37

Eaton Vance responds to the opposing 

commenter by stating that the sole 

purpose of the IIV is to help investors 

determine the number of ETMF Shares 

to buy or sell if they want to transact in 

an approximate dollar amount and that 

market makers will never have any 

reason to refer to the IIV in connection 

with their market making function.38 In 

response to the need for a market maker 

to hedge their ETMF positions, Eaton 

Vance asserts that a market maker 

holding positions in ETMF Shares is not 

exposed to intraday market risk, and, as 

such, there would be no need for market 

makers to hedge their positions 

intraday.39

One commenter states its view that 

the promise of ETMFs can be realized if 

a ‘‘common Chassis’’ is adopted by 

multiple fund managers, who would 

then simultaneously educate the 

marketplace about the benefits of 

ETMFs.40 The same commenter also 

believes that the adoption curve of 

ETMFs might parallel the acceleration 

in the use of mutual funds triggered by 

the introduction in the early 1990s of 

the Schwab’s Mutual Fund OneSource®

supermarket, when numerous fund 

managers articulated the benefit of a 

common administrative platform.41 The 

commenter concludes that ETMFs have 

the potential to significantly improve 

returns to investors in actively-managed 

funds, and to encourage additional 

investment and savings by millions of 

American over the coming decades.42

In response to the questions raised in 

the Order Instituting Proceedings 

regarding the ability of market 

participants to fully understand NAVBased Trading and the public 

availability of information for ETMFs, 

Eaton Vance submitted a comment letter 

stating that the Exchange intends to 

provide members with a detailed 

explanation of NAV-Based Trading 

through a Trading Alert and will inform 

members of the special characteristics 

and risks associated with trading ETMF 

Shares in an information circular—both 

to be issued prior to the commencement 

of ETMF trading.43 Additionally, Eaton 

Vance states that, in conjunction with 

the Exchange’s communications to its 

members, it will also educate the 

marketplace through its Web site 

materials and disclosures in fund 

prospectuses and marketing literature 

by focusing on the key distinctions of 

ETMF investing which will include: (a) 

How to enter orders; (b) how to use IIV 

to help size ETMF orders; (c) the 

portfolio disclosures of ETMFs; and (d) 

the risks of NAV-Based Trading.44

Further, Eaton Vance emphasizes that it 

would make available an extensive 

library of ETMF educational materials 

and would maintain a Web site to 

provide a comprehensive, one-stop 

source of market information and 

investor education regarding ETMFs 

and NAV-Based Trading.45 Eaton Vance 

believes that these methods will provide 

adequate information to support NAVBased Trading.46

In response to the Commission’s 

concerns regarding public availability of 

ETMF trading information, Eaton Vance 

states that NAV-Based trade prices, best 

bids and offers for ETMF Shares, 

volume of ETMF Shares traded, and 

other intraday trading information will 

be continuously available for ETMFs on 

a real-time basis throughout each 

trading day on brokers’ computer 

terminals and electronic market data 

services.47 In addition, Eaton Vance 

represents that it and Nasdaq will work 

with the Exchange’s members and 

providers of market data services to 

ensure that representation of intraday 

bids, offers, and trade prices for ETMFs 

follow a ‘‘NAV¥$0.01/NAV+$0.01’’ 

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48 Id. The opposing commenter believes that 

ETMF pricing displayed in proxy prices will be 

confusing to investors. See Precidian Letter at 5, 

supra note 11. In response, Eaton Vance reiterates 

that it and the Exchange are working with member 

firms and providers of market data to ensure that 

representations of intraday bids, offers, and 

execution prices for ETMFs that are available to the 

public consistently follow the NAV + $.01/

NAV¥$.01 display format. See Eaton Vance 

Response Letter at 5, supra note 11. 

49See Eaton Vance Letter at 5, supra note 8. See 

also Eaton Vance Response Letter at 5, supra note 

11. 

50See Eaton Vance Letter at 5, supra note 8. 

51 Id. 

52The opposing commenter states its belief that 

ETMFs are not redeemable securities. See Precidian 

Letter at 2, supra note 11. In response, Eaton Vance 

states that it believes ETMFs satisfy the definition 

of a ‘‘redeemable security’’ as defined in the 1940 

Act, but because the shares would not be 

individually redeemable, Eaton Vance has 

requested exemptive relief under the 1940 Act. See 

Eaton Vance Response Letter at 2, supra note 11. 

Eaton Vance’s request for exemptive relief is 

currently before the Commission. See supra note 8. 

53See Precidian Letter at 2, supra note 11. 

54See Eaton Vance Response Letter at 3, supra 

note 11. 55See Precidian Letter at 2, supra note 11. 56See Eaton Vance Response Letter at 3, supra 

note 11. 57 Id. Eaton Vance’s response does not appear to 

take into account a trader holding a position 

overnight or longer. See infra notes 82–83 and 

accompanying text. 58See Precidian Letter at 3, supra note 11. 59See id. 

60See Eaton Vance Response Letter at 4, supra 

note 11. 

61See Precidian Letter at 4, supra note 11. 

62See Eaton Vance Response Letter at 4, supra 

note 11. 

63 Id. 

64See Precidian Letter at 3–4, supra note 11. 

65See id. at 3, supra note 11. 

66See id. at 4, supra note 11. 

67See Eaton Vance Response Letter at 4, supra 

note 11. 

68See Precidian Letter at 4, supra note 11. 

69See Eaton Vance Response Letter at 5, supra 

note 11. 

70See id. 

display format in an effort to avoid 

investor confusion.48 Eaton Vance 

further states that all ETMFs listed on 

Nasdaq will have a unique identifier 

associated with their ticker symbols 

indicating that the Shares are trading 

using NAV-Based Trading.49 Finally, 

Eaton Vance states that it will maintain 

a public Web site for ETMFs that will 

disclose, among other things, detailed 

fund information and contain links to 

current fund documents, including a 

fact sheet, summary and full 

prospectuses, statement of additional 

information, and shareholder reports for 

each fund.50 According to Eaton Vance, 

this Web site will also display per 

Share, the prior trading day’s NAV and 

the following trading information for 

such day: (a) Intraday high, low, 

average, and closing prices of Shares in 

exchange trading; (b) the midpoint of 

the highest bid and lowest offer prices 

as of the close of exchange trading 

(expressed as a premium/discount to 

NAV); (c) the spread between highest 

bid and lowest offer prices as of the 

close of exchange trading; and (d) 

volume of Shares traded. Eaton Vance 

believes that such trading information 

will provide useful guidance to current 

buyers and sellers of Shares and 

accordingly believes there will be 

minimal risk of investor confusion.51

The opposing commenter raises 

several other concerns.52 The opposing 

commenter states its belief that a market 

professional buying ETMF Shares from 

an investor would have an economic 

interest in providing the worst price to 

the investor.53 In response, Eaton Vance 

states that ETMF Shares are no different 

from other traded securities and that 

market forces exert pressure on market 

professionals to offer competitive prices 

to investors, so that a market maker who 

seeks to trade ETMF Shares at 

uncompetitive prices will not attract the 

volume of trading required to earn 

meaningful profits.54 The opposing 

commenter also states its view that 

traders who accumulate large ETMF 

positions will be incentivized to move 

the NAV in their favor.55 Eaton Vance 

responds with its view that this is 

‘‘completely false,’’ as the amount of 

profit a market maker or other trader 

earns by trading ETMFs is not affected 

by movements in the NAV.56 Eaton 

Vance argues that it doesn’t matter 

whether an ETMF’s NAV has moved 

higher or lower intraday as no level of 

NAV provides market makers with more 

profit than any other NAV.57

The opposing commenter also argues 

that because an ETMF’s trade price is 

not determined until the end of the day, 

there may be significant problems for 

brokers and investors with respect to 

determining the buying power of an 

investor’s account.58 For example, the 

commenter argues that an investor with 

a cash account may not have sufficient 

funds in the account to cover a purchase 

of an ETMF entered into during the day 

if the ETMF’s NAV at the end of the day 

is higher than the investor expected.59

In response, Eaton Vance states that, 

based on extensive discussions with 

multiple broker-dealers and a review of 

broker-dealer account funding 

guidelines, Eaton Vance believes that 

broker-dealer account control 

procedures are adequate to 

accommodate trading of ETMF Shares 

and to mitigate the associated risks of 

inadequate investor account funding.60

The opposing commenter further 

questions how brokers will be able to 

calculate their net capital at any point 

in time during the day, noting its view 

that a firm with ETMF positions would 

not be able to determine the value of its 

ETMF positions during the day as 

quotes and last-sale prices are based on 

a future price, and the IIV is only 

published at 15 minute intervals.61 In 

response, Eaton Vance states its belief 

that ETMFs are likely not the only asset 

held by broker-dealers that does not 

lend itself to minute-by-minute intraday 

updated valuations.62 Eaton Vance 

further states that, based on how it 

expects ETMF market making to 

function, it does not believe that market 

makers will hold large ETMF inventory 

positions and that an ETMF market 

maker operating within relatively tight 

limits of its net capital requirement may 

build a buffer into the valuation of its 

ETMF positions to ensure continued 

capital adequacy.63

Further, the opposing commenter 

states its view that inclusion of foreign 

stocks in an ETMF’s portfolio will create 

problems in calculating the ETMF’s 

NAV.64 The opposing commenter argues 

that if a portfolio includes stocks that 

trade in different time zones, it may be 

impossible to accurately set the NAV 

until the foreign market opens for 

trading.65 The opposing commenter 

believes that this would require the 

NSCC to reduce the settlement cycle for 

the portfolio’s securities and would 

lessen the time that brokers can prepare 

confirmations, resulting in a delay in 

calculating margin calls and other time 

critical problems, such as stale pricing 

of the IIV.66 In response, Eaton Vance 

states that mutual funds holding foreign 

securities routinely apply fair value 

pricing procedures to determine their 

daily NAV, and it expects ETMFs to do 

the same.67

Finally, the opposing commenter 

raises the concern that brokerage firms, 

vendors, the Consolidated Tape, and 

quote system operators will have to alter 

their systems to support the ETMFs’ 

price quotations of NAV+/NAV¥ 

notations.68 With regard to the 

Consolidated Tape, Eaton Vance does 

not believe that this is a valid concern, 

stating that ETMF trading prices and 

quotes will be reported in proxy price 

format requiring no special changes to 

the Consolidated Tape.69 Eaton Vance 

further states that the process of buying 

and selling ETMFs will be similar to 

buying and selling other exchangetraded securities, with the only 

significant distinction being that the 

price limits for limit orders will be 

expressed relative to NAV rather than as 

an absolute dollar price.70 Further, 

according to Eaton Vance, the 

execution, reporting, clearance, and 

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71See id. 

72 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). 

73 15 U.S.C. 78f(b)(5). 

74 In contrast, Nasdaq Rule 5735 requires 

Managed Fund Shares to disclose publicly their full 

portfolio positions at least once daily. 

75According to the Exchange, whether an ETMF’s 

underlying value goes up or down over the course 

of a trading day would not affect how much profit 

a market maker earns by selling (or buying) ETMF 

Shares in the market at a net premium (discount) 

to NAV, and then creating (redeeming) an offsetting 

number of ETMF Shares at the end of the day in 

transactions with the ETMF. The Exchange states 

that no intraday market risk means no requirement 

for intraday hedging, and therefore no associated 

requirement for portfolio disclosure to maintain a 

tight relationship between ETMF Share trading 

prices and the NAV of the ETMF. 

76The Exchange states that an ETMF market 

maker that creates (redeems) a Creation Unit at the 

end of a trading day to offset its net intraday sales 

(purchases) of a Creation Unit quantity of ETMF 

Shares would earn profits to the extent that it either 

sells (buys) Shares at an aggregate premium 

(discount) to NAV or buys (sells) a Creation Unitequivalent quantity of Composition File 

instruments at an aggregate discount (premium) to 

their end-of-day values, and the net amount of 

ETMF premium (discount) plus Composition File 

instruments discount (premium) exceeds the 

transaction fee that applies to a creation 

(redemption) of a Creation Unit of ETMF Shares. 

Nasdaq further states that this process is simplified 

for cash creations and redemptions, stating that an 

ETMF market maker that creates (or redeems) a 

Creation Unit in cash to offset its net intraday sales 

(purchases) of a Creation Unit quantity of ETMF 

Shares would earn profits to the extent that it sells 

(buys) ETMF Shares in the secondary market at an 

aggregate premium (discount) to NAV that exceeds 

the transaction fee that applies to a cash creation 

(redemption) of a Creation Unit of ETMF Shares. 

77According to the Exchange, market makers are 

expected generally to seek to minimize their 

exposure to price risk in ETMF Shares by holding 

little or no overnight inventory. The Exchange 

states that establishing Creation Unit sizes for 

ETMFs that are somewhat smaller (i.e., in a range 

of 5,000 to 50,000 Shares) than is customary for 

ETFs should facilitate tighter market maker 

inventory management. To the extent that market 

makers hold small positions in ETMF Shares 

overnight, they are expected to aggregate such 

holdings with other risk positions and transact at 

or near the market close to buy or sell offsetting 

positions in appropriate, broad-based hedging 

instruments. Nasdaq states that such hedging of 

overnight inventory risk on a macro basis does not 

require disclosure of non-Composition File 

portfolio positions. 

78See supra notes 76 and 77 and accompanying 

text. 

79See Precidian Letter at 2, supra note 11. 

settlement of ETMF trades will be 

substantially the same as for other 

exchange-traded securities. Separately, 

based on discussions with brokerdealers and providers of market data 

services, Eaton Vance believes that any 

systems modifications to accommodate 

ETMFs will be relatively modest and 

can readily be achieved in a timely 

manner.71

IV. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rule and regulations 

thereunder applicable to a national 

securities exchange.72 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,73 which requires that 

the rules of an exchange be designed, 

among other things, to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, and to protect 

investors and the public interest. The 

Commission finds that Nasdaq’s 

proposal contains adequate rules and 

procedures to govern the listing and 

trading of ETMFs on the Exchange. 

Except for certain requirements relating 

to the daily disclosure of the fund 

portfolio, dissemination of the IIV, and 

NAV-Based trading (as discussed further 

below), the proposed listing standards 

of new Nasdaq Rule 5745 are 

substantively identical to the provisions 

of Nasdaq Rule 5735, which governs the 

listing of Managed Fund Shares on the 

Exchange. Further, all securities listed 

under proposed Nasdaq Rule 5745 will 

be subject to the full panoply of Nasdaq 

rules and procedures that currently 

govern the trading of equity securities 

on the Exchange, except that ETMFs 

will trade using NAV-Based Trading. 

As noted, ETMF Shares will not 

provide a ‘‘Disclosed Portfolio’’ on a 

daily basis.74 According to the 

Exchange, the purpose of the daily 

portfolio disclosure requirement for 

actively-managed ETFs is to provide 

market makers in those products with 

the portfolio information needed to 

hedge the intraday market risk they 

assume as they take inventory positions 

in the ETF shares in connection with 

their market making activities. Nasdaq 

states that, in ETF trading, a condition 

to maintaining a tight relationship 

between market-based trading prices for 

the ETF shares and contemporaneous 

ETF underlying portfolio values is that 

market makers have sufficient 

information regarding portfolio 

positions to enable them to earn reliable 

arbitrage profits by entering into long (or 

short) positions in ETF shares and 

offsetting short (or long) positions in the 

underlying holdings (or a suitable 

proxy). Nasdaq states that, in ETMF 

trading, by contrast, a market maker will 

assume no intraday market risk in 

connection with its inventory positions 

in ETMF shares because all ETMF Share 

transaction prices are based on the nextdetermined NAV.75 According to the 

Exchange, the process that connects 

ETMF trading prices to the NAV of the 

shares of ETMFs is effected at the end 

of each trading day when a market 

maker creates (redeems) Creation Units 

of ETMF Shares through an Authorized 

Participant to offset the net amount of 

ETMF Shares it has sold (bought) over 

the course of the trading day, and buys 

(sells) the quantity of Composition File 

instruments corresponding to the 

number of Creation Units created 

(redeemed).76

The Exchange states that, different 

from actively-managed ETFs, ETMFs 

offer market makers a profit opportunity 

that does not depend on either 

corresponding intraday adjustments in 

ETMF Share and underlying portfolio 

positions or the use of a hedge portfolio 

to manage intraday market risk.77

According to the Exchange, because the 

mechanism that underlies ETMF trading 

is simpler, more reliable, and exposes 

market makers to less risk than activelymanaged ETF arbitrage, market makers 

should require less profit inducement to 

establish and maintain markets in ETMF 

Shares than for actively-managed ETFs, 

thereby enabling ETMFs to routinely 

trade at smaller premiums/discounts 

and narrower bid-ask spreads. 

The Commission agrees that ETMFs 

will offer market makers a profit 

opportunity that does not require 

intraday hedging of ETMF Share price 

movements or changes in the value of 

the underlying portfolio positions. 

Because market makers will not need to 

engage in intraday hedging, the 

Commission believes that daily portfolio 

disclosure is not necessary. The 

Commission believes that NAV-Based 

Trading removes the need for market 

makers to hedge their ETMF positions 

intraday. Because all ETMF Share 

transaction prices are based on the nextdetermined NAV, a market maker will 

assume no intraday market risk in 

connection with its ETMF inventory 

positions and will not need to hedge the 

position. At the end of each day, a 

market maker will be able to offset its 

position of ETMF Shares by creating or 

redeeming through an authorized 

participant.78

The opposing commenter also raises a 

concern that market professionals will 

have an economic incentive to provide 

the worst price to an investor for ETMF 

Shares.79 In response, Eaton Vance 

states that ETMF Shares are no different 

from other traded securities and that 

market forces exert pressure on market 

professionals to offer competitive prices 

to investors, so that a market maker who 

seeks to trade ETMF Shares at 

uncompetitive prices will not attract the 

volume of trading required to earn 

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80See Eaton Vance Response Letter at 3, supra 

note 11. 

81See Precidian Letter at 2, supra note 11. 

82See Eaton Vance Response Letter at 3, supra 

note 11. 

83 Id. 

84The Commission also notes that the Exchange 

Act and the rules thereunder prohibit manipulative 

trading activity. See e.g., 15 U.S.C. 78j(b) and 17 

CFR 240.10b–5. 

85 In contrast, Nasdaq Rule 5735 requires the IIV 

for Managed Fund Shares to be widely 

disseminated by one or more major market data 

vendors at least every 15 seconds during the time 

when the Managed Fund Shares trade on Nasdaq. 

86See Precidian Letter at 5, supra note 11. 

87See Eaton Vance Response Letter at 5, supra 

note 11. 

88See Eaton Vance Response Letter at 6, supra 

note 11. 

89The term ‘‘Reporting Authority’’ in respect of 

a particular series of ETMF Shares means Nasdaq, 

an institution, or a reporting service designated by 

Nasdaq as the official source for calculating and 

reporting information relating to such series of 

ETMF Shares, including, but not limited to, the IIV, 

the amount of any cash distribution to holders of 

ETMF Shares, NAV per share, and the Composition 

File or other information relating to the issuance, 

redemption, or trading of ETMF Shares. A series of 

ETMF Shares may have more than one Reporting 

Authority, each having different functions. See 

Nasdaq Rule 5745(c)(4). 

meaningful profits.80 The Commission 

believes that competitive forces will 

provide incentives for market 

professionals to provide competitive 

prices to investors and that ETMFs, in 

this respect, are not any different than 

other exchange-traded securities. 

The opposing commenter also raises a 

concern that traders who accumulate 

large ETMF positions will be 

incentivized to move the NAV in their 

favor.81 Eaton Vance responds with its 

view that the amount of profit a market 

maker or other trader will earn by 

trading ETMFs will not be affected by 

movements in the NAV.82 Eaton Vance 

explains that it does not matter whether 

an ETMF’s NAV has moved higher or 

lower intraday, as no level of NAV 

provides market makers with more 

profit than any other NAV.83 The 

Commission agrees with Eaton Vance’s 

response with respect to a trader’s 

incentives on an intraday basis because 

the amount of profit a trader could earn 

on an intraday basis will not be affected 

by movements in the NAV. However, 

traders that hold a large ETMF position 

overnight or longer could have an 

incentive to move the NAV in their 

favor (i.e., to move the NAV up so that 

they can sell their position at a profit). 

This, however, is not any different than 

the incentive a trader would have 

holding a large position in any 

exchange-traded security or mutual 

fund. Under the proposal, Nasdaq Rule 

5745(b)(4) requires that Nasdaq 

implement written surveillance 

procedures for ETMF Shares. Exchanges 

routinely conduct surveillance activities 

to identify manipulative trading activity 

such as that described by the opposing 

commenter.84 And, with an ETMF, a 

trader would have less ability to 

influence the ETMF’s NAV by trading in 

the underlying securities because of the 

lack of daily portfolio disclosure. 

Nasdaq Rule 5745(d)(2)(A) requires 

that the IIV for ETMF Shares be widely 

disseminated by one or more major 

market data vendors at intervals of not 

more than 15 minutes during the 

Regular Market Session when the ETMF 

Shares trade on Nasdaq.85 According to 

the Exchange, the purpose of IIVs in 

NAV-Based Trading is to enable 

investors to estimate the number of 

ETMF Shares to buy or sell if they want 

to transact in an approximate dollar 

amount. For this purpose, Nasdaq 

believes that dissemination of IIVs at 

intervals of not more than 15 minutes 

should generally be sufficient. An ETMF 

will be permitted to disseminate IIVs at 

intervals of less than 15 minutes, but 

will not be required to do so to maintain 

trading on the Exchange. The 

Commission agrees that IIV 

dissemination in intervals of not more 

than 15 minutes should be sufficient to 

permit investors to determine the 

number of ETMF Shares they want to 

buy or sell associated with an 

approximate dollar amount. 

As noted above, the opposing 

commenter believes that market 

professionals will be unable to 

effectively hedge their ETMF positions 

due to a stale and possibly inaccurate 

IIV that is published every 15 minutes.86

Eaton Vance responds to the opposing 

commenter by stating that the sole 

purpose of the IIV is to help investors 

determine the number of ETMF Shares 

roughly corresponding to a given dollar 

amount and that market makers will 

never have any reason to refer to the IIV 

in connection with their market making 

function.87 In response to the need for 

market makers to hedge their ETMF 

positions, Eaton Vance asserts that 

market makers holding positions in 

ETMF Shares are not exposed to 

intraday market risk, and, as such, there 

would be no need for market makers to 

hedge their positions intraday.88 As 

detailed above, ETMFs will trade 

intraday at prices based on NAV and, 

unlike ETFs, ETMFs would not provide 

pricing signals for market intermediaries 

or other buyers or sellers of ETMF 

Shares seeking to estimate the difference 

between the value of the ETMF’s 

portfolio and the price at which ETMF 

Shares are currently trading. As such, 

the Commission believes that a more 

frequently-disseminated IIV is not 

necessary for market participants to 

estimate the value of the ETMF’s 

underlying portfolio for hedging 

purposes or the management of intraday 

market risk. 

The Commission believes that the 

proposed listing standards under new 

Nasdaq Rule 5745 are designed to 

promote just and equitable principles of 

trade and to protect investors and the 

public interest. Under proposed Nasdaq 

Rule 5745(d)(1)(B), the Exchange will 

obtain a representation from the issuer 

of each series of ETMF Shares that the 

NAV per share for the series will be 

calculated on each business day that the 

New York Stock Exchange is open for 

trading and that the NAV per share will 

be made available to all market 

participants at the same time. In 

addition, under Nasdaq Rule 

5745(d)(1)(C), the Reporting Authority 

(as defined in proposed Nasdaq Rule 

5745(c)(4)) 89 must implement and 

maintain or be subject to procedures 

designed to prevent the use and 

dissemination of material, non-public 

information regarding the ETMF’s 

portfolio positions and changes in the 

positions. 

Under Nasdaq Rule 5745(d)(2)(B)(ii), 

the Exchange will consider suspension 

of trading in, or removal from listing of, 

a series of ETMF Shares if the IIV or the 

NAV is no longer calculated, or if the 

IIV, NAV, or Composition File is no 

longer available to all market 

participants at the same time. In 

addition, Nasdaq Rule 5745(d)(2)(C) 

provides additional circumstances that 

could result in a trading halt of ETMF 

Shares on the Exchange. If the IIV of a 

series of ETMF Shares is not being 

disseminated as required, Nasdaq may 

halt trading during the day in which the 

interruption to the dissemination of the 

IIV occurs. If the interruption to the 

dissemination of the IIV persists past 

the trading day in which it first 

occurred, Nasdaq will halt trading no 

later than the beginning of the trading 

day following the interruption. If 

Nasdaq becomes aware that the NAV 

per share with respect to a series of 

ETMF Shares is not calculated on each 

business day that the New York Stock 

Exchange is open for trading and 

disseminated to all market participants 

at the same time, it will halt trading in 

such series until such time as the NAV 

per share is available to all market 

participants. In addition, if Nasdaq 

becomes aware that the Composition 

File with respect to a series of ETMF 

Shares is not disseminated to all market 

participants at the same time, it will halt 

trading in such series until such time as 

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Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Notices 68317 

90See Nasdaq Rule 5745(d)(2)(C). 

91See Precidian Letter at 2, supra note 11. 

92See Precidian Letter at 4–5, supra note 11. 

93See Notice, supra note 3. 

94 Id. 

95 Id. 

96See Eaton Vance Letter at 3, supra note 8. 

97See Eaton Vance Letter at 4, supra note 8. 

98As noted above, the opposing commenter also 

stated its belief that ETMFs would likely not 

provide tax benefits and may cost more to operate 

than existing ETFs, while other commenters stated 

their views that ETMFs could offer investors a taxefficient alternative to mutual funds and lower 

costs. See supra notes 25–30 and accompanying 

text. Similar to other investment decisions, 

investors will need to determine whether the taxefficiency and costs are appropriate for them based 

on the particular facts and circumstances. 

99See Precidian Letter at 5, supra note 11. 

100See Eaton Vance Response Letter at 5, supra 

note 11. 

101See Notice at notes 12–13 and accompanying 

text, supra note 3. 

the Composition File is available to all 

market participants.90

Further, under Nasdaq Rule 5745(g), if 

the investment adviser to an ETMF 

issuing ETMF Shares is a registered 

broker-dealer or is affiliated with a 

broker-dealer, such investment adviser 

must erect a ‘‘fire wall’’ between the 

investment adviser and the brokerdealer personnel or broker-dealer 

affiliate, as applicable, with respect to 

access to information concerning the 

composition and/or changes to such 

ETMF’s portfolio holdings. Nasdaq Rule 

5745(g) further requires personnel who 

make decisions on the ETMF’s portfolio 

composition to be subject to procedures 

designed to prevent the use and 

dissemination of material, non-public 

information regarding the applicable 

ETMF portfolio. Lastly, Nasdaq Rule 

5745(b)(4) requires that Nasdaq 

implement written surveillance 

procedures for ETMF Shares. 

As explained in more detail above, 

ETMFs will be traded using a novel and 

unique trading protocol called NAVBased Trading. Orders to buy and sell 

ETMFs will be submitted to, and 

processed by, the Exchange in the 

customary manner for other exchangetraded securities, with the exception 

that the price limits for limit orders will 

be expressed relative to NAV rather than 

as an absolute dollar price. Further, the 

execution, reporting, clearance, and 

settlement of ETMF trades will be 

substantially the same as for other 

exchange-traded securities, except that 

the price of an execution will be 

expressed relative to NAV rather than as 

an absolute dollar price until the actual 

price is determined at the end of the 

day. Specifically, in NAV-Based 

Trading, all bids, offers, and execution 

prices will be expressed as a premium/ 

discount (which may be zero) to the 

ETMF’s next-determined NAV. Trades 

using NAV-Based Trading will be 

binding at the time orders are matched 

on Nasdaq’s facilities, with the 

transaction prices contingent upon the 

determination of the ETMF’s NAV at the 

end of the business day. All ETMF bids, 

offers, and trades will be reported 

intraday in real-time by the Exchange to 

the Consolidated Tape and separately 

disseminated to member firms and 

market data services through a 

proprietary Nasdaq data feed. 

The opposing commenter raises 

several concerns about the potential for 

NAV-Based Trading to lead to investor 

confusion. Specifically, the opposing 

commenter believes that investors will 

be confused because they will not be 

trading at current market prices.91 In 

addition, the opposing commenter 

believes that investors will be confused 

by the proxy price format.92 The 

Commission believes that Nasdaq and 

Eaton Vance have made a number of 

representations regarding steps that will 

be taken to diminish the risk of investor 

confusion. For example, Nasdaq has 

committed to providing certain 

information regarding NAV-Based 

Trading to Nasdaq’s members and other 

market participants. The Exchange will 

provide members with a detailed 

explanation of NAV-Based Trading 

through a Trading Alert and will inform 

members of the special characteristics 

and risks associated with trading ETMF 

Shares in an information circular—both 

to be issued prior to the commencement 

of ETMF trading.93

Also with regard to the public 

availability of ETMF trading 

information, the Exchange represents 

that information regarding NAV-Based 

Trading prices and volumes will be 

continuously available for ETMFs on a 

real-time basis throughout each trading 

day on brokers’ computer terminals and 

through established electronic market 

data services.94 Additionally, to avoid 

investor confusion, the Exchange and 

organizations offering ETMFs will work 

with the Exchange’s member firms and 

providers of market data services to 

ensure that representations of intraday 

bids, offers, and execution prices 

consistently follow an ‘‘NAV plus or 

minus’’ display format.95 Further, the 

Commission notes that Nasdaq has 

represented that all ETMFs listed on the 

Exchange will have a unique identifier 

associated with their ticker symbols to 

clearly indicate that the Shares are 

traded using NAV-Based Trading. 

With regard to the public availability 

of information on ETMFs for investors 

and other market participants, Eaton 

Vance represents that it will educate 

market participants about the features of 

ETMFs, the potential risks and benefits 

of investing in ETMFs, the features of 

NAV-Based Trading, and the distinction 

between IIV and NAV by posting 

educational materials on its Web site 

and by including disclosure in fund 

prospectuses and marketing literature.96

Further, Eaton Vance states that it is 

committed, along with distribution 

partners among major broker-dealers, 

registered investment advisors, and 

other fund sponsors to support and 

provide the marketplace with the 

materials, education, and training to 

ensure a successful ETMF investor 

experience.97

The Commission acknowledges the 

concerns expressed by the opposing 

commenter regarding investor 

understanding of how ETMFs will be 

priced and how they will trade.98 As 

described above, however, the Exchange 

makes detailed representations 

regarding the education and information 

that will be available regarding ETMFs 

and the manner in which NAV-Based 

Trading will occur. Given all of the 

above representations, which are 

designed to address concerns about 

investor understanding of the products 

and how they will trade, the 

Commission believes that the proposal 

to allow for the listing and trading of 

ETMFs is consistent with the protection 

of investors and the public interest. 

The opposing commenter also 

believes that NAV-Based Trading will 

cause all brokerage firms, vendors, the 

Consolidated Tape, and quotation 

system operators to have to significantly 

alter their systems.99 The Commission 

recognizes that the implementation of 

NAV-Based Trading will necessitate 

some system modifications. Eaton 

Vance states its view, based on its 

extensive discussions with brokerdealers and providers of market data 

services, that system modifications to 

accommodate the introduction of ETMF 

trading will be modest and can be 

achieved in a timely manner.100 Nasdaq 

represents that the use of a proxy price 

format to facilitate NAV-Based Trading 

and to report intraday bids, offers, and 

trades for ETMFs to the Consolidated 

Tape will help to minimize the number 

of system modifications needed.101 As 

such, the Commission notes that the 

Consolidated Tape should not require 

any changes to accommodate the trading 

of ETMFs. With respect to customer and 

brokerage order entry screens, the 

Commission notes that participating in 

ETMF trading is voluntary and only 

broker-dealers and market participants 

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68318 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Notices 

102See Precidian Letter at 3–4, supra note 11. 

103See Precidian Letter at 3–4, supra note 11. 

104See id. at 3, supra note 11. 

105See Eaton Vance Response Letter at 4, supra 

note 11. 

106See supra note 10. 

107See id. 

108 15 U.S.C. 78s(b)(2). 

109 15 U.S.C. 78s(b)(2). 

interested in trading ETMF Shares will 

need to perform any system changes. 

The opposing commenter raises a 

concern that the pricing of ETMF Shares 

at the end of the day may cause funding 

problems for investor brokerage 

accounts and may cause difficulties for 

broker-dealers in calculating their net 

capital.102 While the Commission 

recognizes that NAV-Based Trading 

presents certain issues for brokers to 

address with respect to managing their 

customer accounts and their net capital, 

the Commission does not believe that 

these issues are unique or 

insurmountable. For example, there are 

current order types, such as the marketon-close order type, where the final 

trade price is not determined until the 

end of the trading day, and brokerdealers have been able to implement 

procedures to manage their customer 

accounts and their net capital, despite 

the lack of an intraday trade price. 

Finally, the opposing commenter 

raises a concern that inclusion of foreign 

stocks in an ETMF’s portfolio will create 

problems in calculating the ETMF’s 

NAV.103 The opposing commenter states 

its view that, if a portfolio includes 

stocks that trade in different time zones, 

it may be impossible to accurately set 

the NAV until the foreign market opens 

for trading.104 In response, Eaton Vance 

states that, comparable to mutual funds 

that contain foreign securities, ETMFs 

holding foreign securities would use fair 

value pricing procedures to determine 

the NAV.105 The Commission agrees 

that ETMFs holding foreign securities 

would be able to use fair value pricing 

procedures to determine the NAV. 

However, the Commission notes that 

Nasdaq is not, at this time, proposing to 

list and trade any specific ETMF Shares 

under its ETMF listing standards and 

that, as required under proposed Nasdaq 

Rule 5745(b)(1), the Exchange must file 

separate proposals under Section 19(b) 

of the Act to list and trade ETMF Shares 

on Nasdaq. 

The Commission further believes that 

the corresponding changes to other 

existing Nasdaq Rules appropriately 

accommodate the listing and trading of 

ETMF Shares on the Exchange and 

provide additional clarity regarding the 

applicability of Nasdaq Rules and 

therefore are consistent with the Act. 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rule and 

regulations thereunder applicable to a 

national securities exchange. 

V. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether Amendment No. 1 to 

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 rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2014–020 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–NASDAQ–2014–020. 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 Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

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– 

NASDAQ–2014–020 and should be 

submitted on or before December 5, 

2014. 

VI. Accelerated Approval of Proposed 

Rule Change, as Modified by 

Amendment No. 1 

As discussed above, the Exchange 

submitted Amendment No. 1 to confirm 

that all ETMFs listed on the Exchange 

will have a unique identifier associated 

with their ticker symbols and that, in 

the systems used to transmit and 

process transactions in ETMF Shares, an 

ETMF’s next-determined NAV will be 

represented by a proxy price.106

Previously, the filing stated that Nasdaq 

expects all ETMFs listed on the 

Exchange to have a unique identifier 

associated with their ticker symbols and 

that Nasdaq expects an ETMF’s nextdetermined NAV to be represented by a 

proxy price. Additionally, the Exchange 

removed references to ETMF entry and 

annual fees as the Exchange intends to 

address such fees in a separate filing.107

The Commission believes that 

Amendment No. 1 provides certainty 

with respect to the ticker symbol and 

proxy price aspects of the proposed rule 

change. The Commission further 

believes that Amendment No. 1 does not 

materially affect the substance of the 

proposed rule change or raise any novel 

or unique regulatory issues. 

Accordingly, the Commission finds 

good cause, pursuant to Section 19(b)(2) 

of the Act,108 for approving the 

proposed rule change, as modified by 

Amendment No. 1, prior to the 30th day 

after the date of publication of notice in 

the Federal Register. 

VII. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,109 that the 

proposed rule change (SR–NASDAQ– 

2014–020), as modified by Amendment 

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

approved on an accelerated basis. 

By the Commission. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26949 Filed 11–13–14; 8:45 am] 

BILLING CODE 8011–01–P 

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