78524 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Notices 

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

16 17 CFR 240.19b–4(f)(6). 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 73141 

(Sept. 18, 2014), 79 FR 57161 (‘‘Notice’’). 

4 15 U.S. C. 78s(b)(2). 

5See Securities Exchange Act Release No. 73515, 

79 FR 66758 (Nov. 10, 2014). The Commission 

designated a longer period within which to take 

action on the proposed rule change and designated 

December 23, 2014, as the date by which it should 

approve, disapprove, or institute proceedings to 

determine whether to disapprove the proposed rule 

change. 

6 15 U.S. C. 78s(b)(2)(B). 

7The Trust is registered under the Investment 

Company Act of 1940 (‘‘1940 Act’’). According to 

the Exchange, on September 20, 2012, the Trust 

filed with the Commission an amendment to its 

registration statement on Form N–1A under the 

Securities Act of 1933 (‘‘Securities Act’’) and under 

the 1940 Act relating to the Fund (File Nos. 333– 

173276 and 811–22542) (‘‘Registration Statement’’). 

In addition, the Exchange states that the Trust has 

obtained from the Commission certain exemptive 

relief under the 1940 Act. See Investment Company 

Act Release No. 29524 (Dec. 13, 2010) (File No. 

812–13487). 

8Commentary .06 to Rule 8.600 provides that, if 

the investment adviser to the investment company 

issuing Managed Fund Shares is affiliated with a 

broker-dealer, such investment adviser shall erect a 

‘‘fire wall’’ between the investment adviser and the 

broker-dealer with respect to access to information 

concerning the composition of or changes to the 

investment company portfolio. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 15 and Rule 19b– 

4(f)(6) thereunder.16

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2014–140 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2014–140. 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 such 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NYSEArca–2014–140, and should be 

submitted on or before January 20, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30445 Filed 12–29–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73914; File No. SR–

NYSEArca–2014–100] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Instituting 

Proceedings to Determine Whether to 

Approve or Disapprove Proposed Rule 

Change Relating to Listing and Trading 

of Shares of the SPDR SSgA Global 

Managed Volatility ETF under NYSE 

Arca Equities Rule 8.600 

December 22, 2014. 

I. Introduction 

On September 5, 2014, NYSE Arca, 

Inc. (‘‘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 shares (‘‘Shares’’) of the 

SPDR SSgA Global Managed Volatility 

ETF (‘‘Fund’’) under NYSE Arca 

Equities Rule 8.600. The proposed rule 

change was published for comment in 

the Federal Register on September 24, 

2014.3 On November 4, 2014, pursuant 

to Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change.5 The Commission 

has received no comment letters on the 

proposed rule change. This Order 

institutes proceedings under Section 

19(b)(2)(B) of the Act 6 to determine 

whether to approve or disapprove the 

proposed rule change. 

II. Description of the Proposal 

A. Generally 

The Exchange proposes to list and 

trade Shares of the Fund under NYSE 

Arca Equities Rule 8.600, which governs 

the listing and trading of Managed Fund 

Shares. The Shares will be offered by 

SSgA Active ETF Trust (‘‘Trust’’), which 

is organized as a Massachusetts business 

trust and is registered with the 

Commission as an open-end 

management investment company.7

SSgA Funds Management, Inc. will 

serve as the investment adviser to the 

Fund (‘‘Adviser’’). State Street Global 

Markets, LLC will be the principal 

underwriter and distributor of the 

Fund’s Shares, and State Street Bank 

and Trust Company (‘‘Custodian’’ or 

‘‘Transfer Agent’’) will serve as 

administrator, custodian, and transfer 

agent for the Fund. The Exchange 

represents that the Adviser is not a 

registered broker-dealer but is affiliated 

with a broker-dealer and has 

implemented a ‘‘fire wall’’ with respect 

to such broker-dealer regarding access to 

information concerning the composition 

of or changes to the Fund’s portfolio.8

The Exchange further represents that, in 

the event (a) the Adviser or any submstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Notices 78525 

9The Exchange represents 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 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 non-public 

information by an investment adviser must be 

consistent with Rule 204A–1 under the Advisers 

Act. In addition, Rule 206(4)–7 under the Advisers 

Act makes it unlawful for an investment adviser to 

provide investment advice to clients unless such 

investment adviser has (i) adopted and 

implemented written policies and procedures 

reasonably designed to prevent 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. 

10The term ‘‘under normal circumstances’’ 

includes, but is not limited to, the absence of 

extreme volatility or trading halts in the equity 

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 manmade disaster, act of God, armed conflict, act of 

terrorism, riot or labor disruption, or any similar 

intervening circumstance. 

11 Volatility is a statistical measurement of the 

magnitude of up and down fluctuations in the value 

of a financial instrument or index over time. 

Volatility may result in rapid and dramatic price 

swings. 

12 Investments in common stock of foreign 

corporations may also be in the form of American 

Depositary Receipts (‘‘ADRs’’), Global Depositary 

Receipts (‘‘GDRs’’) and European Depositary 

Receipts (‘‘EDRs’’) (collectively ‘‘Depositary 

Receipts’’). Depositary Receipts are receipts, 

typically issued by a bank or trust company, which 

evidence ownership of underlying securities issued 

by a foreign corporation. For ADRs, the depository 

is typically a U.S. financial institution and the 

underlying securities are issued by a foreign issuer. 

For other Depositary Receipts, the depository may 

be a foreign or a U.S. entity, and the underlying 

securities may have a foreign or a U.S. issuer. 

Depositary Receipts will not necessarily be 

denominated in the same currency as their 

underlying securities. Generally, ADRs, in 

registered form, are designed for use in the U.S. 

securities market, and EDRs, in bearer form, are 

designated for use in European securities markets. 

GDRs are tradable both in the United States and in 

Europe and are designed for use throughout the 

world. The Portfolio may invest in unsponsored 

Depositary Receipts. The issuers of unsponsored 

Depositary Receipts are not obligated to disclose 

material information in the United States, and, 

therefore, there may be less information available 

regarding such issuers and there may not be a 

correlation between such information and the 

market value of the Depositary Receipts. 

Unsponsored Depositary Receipts will not exceed 

10% of the Fund’s net assets. 

13The Adviser represents that, in general, the 

Portfolio (i.e., the master fund) will be where 

investments will be held and that these investments 

will primarily consist of equity securities and may, 

to a lesser extent, include other investments as 

described under ‘‘Non-Principal Investment 

Policies’’ below. The Fund (i.e., the feeder fund) 

will invest in shares of the Portfolio and will not 

invest in investments described under ‘‘NonPrincipal Investment Policies,’’ but may be exposed 

to such investments by means of the Fund’s 

investment in shares of the Portfolio. In 

extraordinary instances, the Fund reserves the right 

to make direct investments in equity securities and 

other investments. 

adviser becomes registered as a brokerdealer or newly affiliated with a brokerdealer, or (b) any new adviser or subadviser is a registered broker-dealer or 

becomes affiliated with a broker-dealer, 

the Adviser or any new adviser or subadviser, as the case may be, will 

implement a fire wall with respect to its 

relevant personnel or broker-dealer 

affiliate, as applicable, regarding access 

to information concerning the 

composition of or changes to the 

portfolio, and will be subject to 

procedures designed to prevent the use 

and dissemination of material, nonpublic information regarding the 

portfolio.9

B. The Exchange’s Description of the 

Fund 

The statements made below are 

representations and assertions by the 

Exchange concerning the Fund. 

1. Principal Investment Policies 

According to the Exchange, the Fund 

will seek to provide competitive, longterm returns while maintaining low, 

long-term volatility relative to the broad 

global market. Under normal 

circumstances,10 the Fund will invest 

all of its assets in the SSgA Global 

Managed Volatility Portfolio 

(‘‘Portfolio’’), a separate series of the 

SSgA Master Trust with an identical 

investment objective as the Fund. As a 

result, the Fund will invest indirectly 

through the Portfolio. 

The Adviser will utilize a proprietary 

quantitative investment process to select 

a portfolio of exchange-listed and traded 

equity securities that the Adviser 

believes will exhibit low volatility and 

provide competitive, long-term returns 

relative to the broad global market.11

The Portfolio will invest its assets in 

both U.S. and foreign investments. The 

Portfolio will generally invest at least 

80% of its net assets in global equity 

securities and at least 30% of its net 

assets in global equity securities of 

issuers economically tied to countries 

other than the United States. The 

Portfolio will generally hold securities 

of issuers economically tied to at least 

three countries, including the United 

States. The Portfolio may purchase 

exchange-listed and traded common 

stocks and preferred securities of U.S. 

and foreign corporations.12 The Adviser 

expects to favor securities with low 

exposure to market risk factors and low 

security-specific risk. The Adviser will 

consider market risk factors to include, 

among others, a security’s size, 

momentum, value, liquidity, leverage, 

and growth. While the Adviser will 

attempt to manage the Fund’s volatility 

exposure to stabilize performance, there 

can be no guarantee that the Fund will 

reach its target volatility. Additionally, 

the Adviser will implement risk 

constraints at the security, industry, size 

exposure, and sector levels. Through 

this quantitative process of security 

selection and portfolio diversification, 

the Adviser expects that the Portfolio 

will be subject to a low level of absolute 

risk (as defined by standard deviation of 

returns) and thus should exhibit low 

volatility over the long term. 

The Fund is intended to be managed 

in a ‘‘master-feeder’’ structure, under 

which the Fund will invest substantially 

all of its assets in the Portfolio (i.e., a 

‘‘master fund’’), which is a separate 

1940 Act-registered mutual fund that 

has an identical investment objective.13

As a result, the Fund (i.e., the ‘‘feeder 

fund’’) will have an indirect interest in 

all of the securities owned by the 

corresponding Portfolio. Because of this 

indirect interest, the Fund’s investment 

returns should be the same as those of 

the Portfolio, adjusted for the expenses 

of the Fund. In extraordinary instances, 

the Fund reserves the right to make 

direct investments in securities. 

The Adviser will manage the 

investments of the Portfolio. Under the 

master-feeder arrangement, and 

pursuant to the investment advisory 

agreement between the Adviser and the 

Trust, investment advisory fees charged 

at the Portfolio level will be deducted 

from the advisory fees charged at the 

Fund level. This arrangement avoids a 

‘‘layering’’ of fees, i.e., the Fund’s total 

annual operating expenses would be no 

higher as a result of investing in a 

master-feeder arrangement than they 

would be if the Fund pursued its 

investment objectives directly. In 

addition, the Fund may discontinue 

investing through the master-feeder 

arrangement and pursue its investment 

objectives directly if the Fund’s Board of 

Trustees (‘‘Board’’) determines that 

doing so would be in the best interests 

of shareholders. 

The exchange-listed and traded equity 

securities in which the Portfolio would 

be permitted to invest will be limited to: 

(1) equity securities that trade in 

markets that are members of the 

Intermarket Surveillance Group (‘‘ISG’’) 

or are parties to a comprehensive 

surveillance sharing agreement 

(‘‘CSSA’’) with the Exchange; or (2) 

‘‘Actively-Traded Securities’’ as defined 

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14The Exchange states that Rule 101 under Reg 

M defines Actively-Traded Securities as securities 

that have an average daily trading volume of at least 

$1 million and are issued by an issuer whose 

common equity securities have a public float value 

of at least $150 million. Rule 102 includes an 

analogous definition for actively-traded reference 

securities. 

15 GICS classifications can be found on the 

Standard & Poor’s Web site at http://

www.us.spindices.com/search/?query=gics+map. 

16One type of U.S. Government obligation, U.S. 

Treasury obligations, are backed by the full faith 

and credit of the U.S. Treasury and differ only in 

their interest rates, maturities, and times of 

issuance. U.S. Treasury bills have initial maturities 

of one-year or less; U.S. Treasury notes have initial 

maturities of one to ten years; and U.S. Treasury 

bonds generally have initial maturities of greater 

than ten years. Other U.S. Government obligations 

are issued or guaranteed by agencies or 

instrumentalities of the U.S. Government including, 

but not limited to, the Federal National Mortgage 

Association, the Government National Mortgage 

Association (‘‘Ginnie Mae’’), the Small Business 

Administration, the Federal Farm Credit 

Administration, the Federal Home Loan Mortgage 

Corporation, the Federal Home Loan Banks, Banks 

for Cooperatives (including the Central Bank for 

Cooperatives), the Federal Land Banks, the Federal 

Intermediate Credit Banks, the Tennessee Valley 

Authority, the Export-Import Bank of the United 

States, the Commodity Credit Corporation, the 

Federal Financing Bank, the National Credit Union 

Administration, and the Federal Agricultural 

Mortgage Corporation. Some obligations issued or 

guaranteed by U.S. Government agencies and 

instrumentalities, including, for example, Ginnie 

Mae pass-through certificates, are supported by the 

full faith and credit of the U.S. Treasury. 

17 In reaching liquidity decisions, the Adviser 

may consider the following factors: the frequency 

of trades and quotes for the security; the number of 

dealers wishing to purchase or sell the security and 

the number of other potential purchasers; dealer 

undertakings to make a market in the security; and 

the nature of the security and the nature of the 

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

needed to dispose of the security, the method of 

soliciting offers, and the mechanics of transfer). 

18For purposes of this filing, ETPs include 

Investment Company Units (as described in NYSE 

Arca Equities Rule 5.2(j)(3)); Index-Linked 

Securities (as described in NYSE Arca Equities Rule 

5.2(j)(6)); Portfolio Depositary Receipts (as 

described in NYSE Arca Equities Rule 8.100); Trust 

Issued Receipts (as described in NYSE Arca 

Equities Rule 8.200); Commodity-Based Trust 

Shares (as described in NYSE Arca Equities Rule 

8.201); Currency Trust Shares (as described in 

NYSE Arca Equities Rule 8.202); Commodity Index 

Trust Shares (as described in NYSE Arca Equities 

Rule 8.203); and Managed Fund Shares (as 

described in NYSE Arca Equities Rule 8.600). The 

Portfolio may invest in ETFs managed by the 

Adviser. The Adviser may receive management or 

other fees from the ETPs in which the Portfolio or 

Fund may invest, as well as a management fee for 

managing the Fund. The ETPs all will be listed and 

traded in the U.S. on national securities exchanges. 

19The Fund will invest substantially all of its 

assets in the Portfolio. The Exchange states that, 

pursuant to Section 12(d)(1) of the 1940 Act, a fund 

may invest in the securities of another investment 

company (the ‘‘acquired company’’) provided that 

the fund, immediately after such purchase or 

acquisition, does not own in the aggregate: (i) More 

than 3% of the total outstanding voting stock of the 

acquired company; (ii) securities issued by the 

acquired company having an aggregate value in 

excess of 5% of the value of the total assets of the 

fund; (iii) securities issued by the acquired 

company and all other investment companies (other 

than Treasury stock of the fund) having an aggregate 

value in excess of 10% of the value of the total 

assets of the fund; or (iv) in the case of investment 

in a closed-end fund, more than 10% of the total 

outstanding voting stock of the acquired company. 

The Fund may also invest in the securities of other 

investment companies if such securities are the 

only investment securities held by the Fund, such 

as through a master-feeder arrangement. The Fund 

currently will pursue its investment objective 

through such an arrangement. To the extent allowed 

by law, regulation, the Fund’s investment 

restrictions, and the Trust’s exemptive relief, the 

Fund may invest its assets in securities of 

investment companies that are money market 

funds, including those advised by the Adviser or 

otherwise affiliated with the Adviser, in excess of 

the limits discussed above. 

20Examples of such entities are the PowerShares 

DB Energy Fund, PowerShares DB Oil Fund, 

PowerShares DB Precious Metals Fund, 

PowerShares DB Gold Fund, PowerShares DB Silver 

Fund, PowerShares DB Base Metals Fund, and 

PowerShares DB Agriculture Fund, which are listed 

and traded on the Exchange pursuant to NYSE Arca 

Equities Rule 8.200. 

in Regulation M (‘‘Reg M’’) under the 

Act that are traded on U.S. and non-U.S. 

exchanges with last sale reporting.14

The Portfolio and Fund do not intend 

to concentrate their investments in any 

particular industry. The Portfolio and 

Fund will look to the Global Industry 

Classification Standard (‘‘GICS’’) Level 3 

(Industries) in making industry 

determinations.15

The Portfolio may invest in exchangetraded preferred securities. Preferred 

securities pay fixed or adjustable rate 

dividends to investors and have 

‘‘preference’’ over common stock in the 

payment of dividends and the 

liquidation of a company’s assets. 

2. Non-Principal Investment Policies 

In certain situations or market 

conditions, in order to take temporary 

defensive positions, the Fund may 

(either directly or through the Portfolio) 

temporarily depart from its normal 

investment policies and strategies, 

provided that the alternative is 

consistent with the Fund’s investment 

objective and is in the best interest of 

the Fund. For example, the Fund may 

hold a higher than normal proportion of 

its assets in cash in times of extreme 

market stress. 

According to the Registration 

Statement, in addition to the principal 

investments described above, the 

Portfolio may invest its remaining net 

assets in other investments, as described 

below. The investment practices of the 

Portfolio are the same in all material 

respects to those of the Fund. 

The Portfolio may invest in U.S. 

Government obligations. U.S. 

Government obligations are a type of 

bond. U.S. Government obligations 

include securities issued or guaranteed 

as to principal and interest by the U.S. 

Government, its agencies, or 

instrumentalities.16

The Portfolio may purchase U.S. 

registered, dollar-denominated bonds of 

foreign corporations, governments, 

agencies, and supra-national entities. 

The Portfolio may invest in restricted 

securities. Restricted securities are 

securities that are not registered under 

the Securities Act, but which can be 

offered and sold to ‘‘qualified 

institutional buyers’’ under Rule 144A 

under the Securities Act. When Rule 

144A restricted securities present an 

attractive investment opportunity and 

meet other selection criteria, the 

Portfolio may make such investments 

depending on the market that exists for 

the particular security. The Board has 

delegated to the Adviser the 

responsibility for determining the 

liquidity of Rule 144A restricted 

securities that the Portfolio may invest 

in.17

The Portfolio may conduct foreign 

currency transactions on a spot (i.e., 

cash) or forward basis (i.e., by entering 

into forward contracts to purchase or 

sell foreign currencies). 

The Portfolio may invest in exchangetraded products (‘‘ETPs’’), including 

exchange-traded funds (‘‘ETFs’’) 

registered under the 1940 Act; exchange 

traded commodity trusts; and exchangetraded notes.18

In addition, the Portfolio may invest 

in the securities of other investment 

companies, including money market 

funds and exchange-traded closed-end 

funds, subject to applicable limitations 

under Section 12(d)(1) of the 1940 

Act.19 The Portfolio may invest up to 

25% of its total assets in one or more 

ETPs that are qualified publicly traded 

partnerships (‘‘QPTPs’’) and whose 

principal activities are the buying and 

selling of commodities or options, 

futures, or forwards with respect to 

commodities.20 A QPTP is an entity that 

is treated as a partnership for federal 

income tax purposes, subject to certain 

requirements. If such an ETP fails to 

qualify as a QPTP, the income generated 

from the Portfolio’s investment in the 

ETP may not comply with certain 

income tests necessary for the Portfolio 

to qualify as a regulated investment 

company under Subchapter M of the 

Internal Revenue Code. 

The Portfolio may invest in exchangetraded shares of real estate investment 

trusts (‘‘REITs’’). 

The Portfolio may invest in 

repurchase agreements with commercial 

banks, brokers, or dealers to generate 

income from its excess cash balances 

and to invest securities lending cash 

collateral. A repurchase agreement is an 

agreement under which a fund acquires 

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21Commercial paper consists of short-term, 

promissory notes issued by banks, corporations, 

and other entities to finance short-term credit 

needs. These securities generally are discounted but 

sometimes may be interest bearing. 

22A ‘‘non-diversified company,’’ as defined in 

Section 5(b)(2) of the 1940 Act, means any 

management company other than a diversified 

company (as defined in Section 5(b)(1) of the 1940 

Act). 

23FINRA surveils trading on the Exchange 

pursuant to a regulatory services agreement. The 

Exchange is responsible for FINRA’s performance 

under this regulatory services agreement. 

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

www.isgportal.org. The Exchange notes that not all 

components of the Disclosed Portfolio for the Fund 

may trade on markets that are members of ISG or 

with which the Exchange has in place a 

comprehensive surveillance sharing agreement. 

a financial instrument (e.g., a security 

issued by the U.S. government or an 

agency thereof, a banker’s acceptance, or 

a certificate of deposit) from a seller, 

subject to resale to the seller at an 

agreed upon price and date (normally, 

the next business day). A repurchase 

agreement may be considered a loan 

collateralized by securities. The resale 

price reflects an agreed upon interest 

rate effective for the period the 

instrument is held by a fund and is 

unrelated to the interest rate on the 

underlying instrument. 

The Portfolio may enter into reverse 

repurchase agreements, which involve 

the sale of securities with an agreement 

to repurchase the securities at an 

agreed-upon price, date, and interest 

payment and have the characteristics of 

borrowing. The securities purchased 

with the funds obtained from the 

agreement and securities collateralizing 

the agreement will have maturity dates 

no later than the repayment date. 

Generally, the effect of such transactions 

is that a fund can recover all or most of 

the cash invested in the portfolio 

securities involved during the term of 

the reverse repurchase agreement, while 

in many cases a fund is able to keep 

some of the interest income associated 

with those securities. 

In addition to repurchase agreements, 

the Portfolio may invest in short-term 

instruments, including money market 

instruments, (including money market 

funds advised by the Adviser), cash, and 

cash equivalents, on an ongoing basis to 

provide liquidity or for other reasons. 

Money market instruments are generally 

short-term investments that may include 

but are not limited to: (i) Shares of 

money market funds; (ii) obligations 

issued or guaranteed by the U.S. 

government, its agencies, or its 

instrumentalities (including 

government-sponsored enterprises); (iii) 

negotiable certificates of deposit, 

bankers’ acceptances, fixed time 

deposits, and other obligations of U.S. 

and foreign banks (including foreign 

branches) and similar institutions; (iv) 

commercial paper rated at the date of 

purchase ‘‘Prime–1’’ by Moody’s or 

‘‘A–1’’ by Standard & Poor’s, or if 

unrated, of comparable quality as 

determined by the Adviser; 21 (v) nonconvertible corporate debt securities 

(e.g., bonds and debentures) with 

remaining maturities at the date of 

purchase of not more than 397 days and 

that satisfy the rating requirements set 

forth in Rule 2a–7 under the 1940 Act; 

(vi) short-term U.S. dollar-denominated 

obligations of foreign banks (including 

U.S. branches) that, in the opinion of 

the Adviser, are of comparable quality 

to obligations of U.S. banks which may 

be purchased by the Portfolio; and (vii) 

variable rate demand notes. 

3. Investment Restrictions 

According to the Registration 

Statement, the Portfolio and the Fund 

will be classified as a ‘‘non-diversified’’ 

investment company under the 1940 

Act.22 A non-diversified classification 

means that the Portfolio or Fund is not 

limited by the 1940 Act with regard to 

the percentage of its assets that may be 

invested in the securities of a single 

issuer. This means that the Portfolio or 

Fund may invest a greater portion of its 

assets in the securities of a single issuer 

than a diversified fund. Although the 

Portfolio and Fund will be nondiversified for purposes of the 1940 Act, 

the Portfolio and Fund intend to 

maintain the required level of 

diversification and otherwise conduct 

its operations so as to qualify as a 

‘‘regulated investment company’’ for 

purposes of the Internal Revenue Code 

of 1986. 

The Fund may hold up to an aggregate 

amount of 15% of its net assets in 

illiquid assets (calculated at the time of 

investment), including Rule 144A 

securities deemed illiquid by the 

Adviser. 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. 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. 

Neither the Fund nor the Portfolio 

will invest in options, futures contracts, 

or swaps agreements. The Fund’s and 

Portfolio’s investments will be 

consistent with its investment objective 

and will not be used to enhance 

leverage. 

4. Surveillance 

The Exchange represents that trading 

in the Shares will be subject to the 

existing trading surveillances, 

administered by 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.23 The Exchange 

represents that these procedures are 

adequate to properly monitor Exchange 

trading of the Shares in all trading 

sessions and to deter and detect 

violations of Exchange rules and federal 

securities laws applicable to trading on 

the Exchange. 

The surveillances referred to above 

generally focus on detecting securities 

trading outside their normal patterns, 

which could be indicative of 

manipulative or other violative activity. 

When such situations are detected, 

surveillance analysis follows and 

investigations are opened, where 

appropriate, to review the behavior of 

all relevant parties for all relevant 

trading violations. 

FINRA, on behalf of the Exchange, 

will communicate as needed regarding 

trading in the Shares, ETPs, and certain 

exchange-traded securities underlying 

the Shares with other markets and other 

entities that are members of the ISG, and 

FINRA, on behalf of the Exchange, may 

obtain trading information regarding 

trading in the Shares, ETPs, and certain 

exchange-traded securities underlying 

the Shares from such markets and other 

entities. In addition, the Exchange may 

obtain information regarding trading in 

the Shares, ETPs, and certain exchangetraded securities underlying the Shares 

from markets and other entities that are 

members of ISG or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement.24

FINRA, on behalf of the Exchange, is 

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. 

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

5. Information Sharing Procedures 

In the proposal, the Exchange states 

that the Commission requires that, in 

designing a new derivative securities 

product, the self-regulatory organization 

(‘‘SRO’’) determine that it has adequate 

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78528 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Notices 

25See, e.g., Securities Exchange Act Release No. 

40761 (Dec. 8, 1998) (S7–13–98) (‘‘New Products 

Release’’). The New Products Release was adopted 

in 1998 to expand the scope of SRO matters that 

do not constitute proposed rule changes in response 

to the need for flexibility in regulating new 

derivative securities products by developing 

streamlined filing procedures to ease the SROs’ 

regulatory burdens in many circumstances. 

26See, e.g., NYSE Arca Options Rule 5.3(e) 

(options on international closed end funds) 

(requiring the Exchange to have a market 

information sharing agreement with the primary 

exchange for each of the securities held by the fund 

or that such fund be classified as a diversified fund 

under Section 5(b) of the 1940 Act and that 

securities of the fund be issued by issuers in five 

or more countries); NYSE Arca Options Rule 5.3(g) 

(options on ETFs) (requiring that non-U.S. 

component securities of the underlying index or 

portfolio that are not subject to CSSAs not, in the 

aggregate, represent more than 50% of the weight 

of the index or portfolio; that component securities 

for which the primary market is in any one country 

that is not subject to a CSSA not represent 20% or 

more of the index weight; and that component 

securities for which the primary market is in any 

two countries not subject to CSSAs not represent 

33% or more of the index weight); NYSE Arca 

Options Rule 5.12 (requiring that non-U.S. 

component securities of the index not subject to 

CSSAs not, in the aggregate, represent more than 

20% of the index weight). 

27See, e.g., NYSE Arca Equities Rule 8.3 (a)(7) 

(Listing of Currency and Index Warrants) (Foreign 

Country Securities or American Depository Receipts 

thereon that: (A) Are not subject to a comprehensive 

surveillance agreement, and (B) have less than 50% 

of their global trading volume (in dollar value) 

within the United States, shall not, in the aggregate, 

represent more than 20% of the weight of the index, 

unless such index is otherwise approved for 

warrant or option trading). See, e.g., Securities 

Exchange Act Release Nos. 31121 (Aug. 28, 1992) 

(SR–PSE–92–09 and SR–PSE–92–10) (order 

granting accelerated approval of proposed rule 

changes relating to listing index warrants based on 

the FT–SE Eurotrack 200 Index and the Eurotop 100 

Index); 30462 (Mar. 11, 1992) (SR–Amex 91–10, 

SR–NYSE–91–13, SR–CBOE–91–09, SR–CBOE–91– 

13) (order approving proposed rule changes relating 

to listing of index options and index warrants based 

on the FT–SE Eurotrack 200 Index); 28544 (Oct. 17, 

1990) (SR–Amex–90–08; SR–NYSE–90–36; SR– 

PHLX–90–25; SR–PSE–90–18) (order approving 

proposed rule changes relating to the listing of 

index warrants based on the CAC–40 Index). 

28See, e.g., Securities Exchange Act Release No. 

54739 (Nov. 9, 2006) (SR–Amex–2006–78) (stating 

that CSSAs are not required in connection with 

listing of ETFs under the generic listing criteria of 

American Stock Exchange Rule 1000A given that 

the generic listing criteria otherwise require 

minimum levels of liquidity, concentration, and 

pricing transparency for index components). 

29See, e.g., Securities Exchange Act Release Nos. 

42748 (May 2, 2000), 65 FR 30155 (May 10, 2000) 

(SR–Amex–98–49) (order approving listing and 

trading of six series of World Equity Benchmark 

Shares based on foreign stock indexes); 42786 (May 

15, 2000), 65 FR 33586 (May 24, 2000) (SR–Amex– 

99–49) (order partially approving listing and trading 

of series of the iShares Trust based on foreign stock 

indexes); 44900 (Oct. 25, 2001), 66 FR 55712 (Nov. 

2, 2001) (SR–Amex–2001–45) (order approving 

listing and trading of seven series of funds of 

iShares, Inc. based on foreign indexes); 36947 (Mar. 

8, 1996) (SR–Amex–95–43) (order approving listing 

of Index Fund Shares based on 18 foreign indexes); 

52178 (July 29, 2005) (SR–NYSE–2005–41 (order 

approving listing of iShares MSCI EAFE Growth 

and iShares MSCI EAFE Value Funds); 52816 (Nov. 

21, 2005) (SR–NYSE–2005–70) (order approving 

listing of iShares MSCI Index Funds). A list of ISG 

members is available at https://www.isgportal.org/

isgPortal/public/members.htm. 

30 17 CFR 242.101(c)(1). 

31Non-ISG member exchanges include: Abu 

Dhabi Securities Exchange; Athens Exchange; 

BM&FBOVESPA S.A.; BME Spanish Exchanges; 

Bolsa Mexicana de Valores; Bourse de Luxembourg; 

Deutsche Bo ̈rse AG; Euronext Brussels N.V./S.A.; 

Euronext Lisbon—Sociedade Gestora de Mercados 

Regulamentados, S.A.; Euronext Paris S.A.; 

Indonesia Stock Exchange; Irish Stock Exchange; 

Johannesburg Stock Exchange; Moscow Exchange; 

Philippine Stock Exchange; Saudi Stock Exchange; 

Shanghai Futures Exchange; Shenzhen Stock 

Exchange; SIX Swiss Exchange; Stock Exchange of 

Thailand; Taiwan Futures Exchange; Taiwan Stock 

Exchange; Tel-Aviv Stock Exchange; The Egyptian 

Exchange; Wiener Bo ̈rse AG; and Zhengzhou 

Commodity Exchange. 

32 Information regarding the Prospectus Directive 

is available from the European Commission at 

http://ec.europa.eu/internal_market/securities/

prospectus/index_en.htm. 

33See The Forum of European Securities 

Commissions [FESCO], A ‘‘European Passport’’ For 

Issuers at 4–8, Fesco/99–098e (May 10, 2000), 

available at http://www.esma.europa.eu/system/

files/99_098e.PDF. 

information sharing procedures to 

detect and deter potential trading 

abuses,25 and the Exchange further 

states that in many, but not all, cases, 

this requirement is met through listing 

standards that require the securities 

underlying a new derivatives securities 

product to be listed on markets that are 

members of the ISG or with which the 

Exchange has a CSSA. For example, the 

generic listing standards for options on 

closed-end funds holding foreign stocks, 

options on foreign index ETFs, and 

foreign index options require 

information sharing agreements for the 

underlying index or portfolio 

securities.26 Similarly, the listing 

standards for stock index warrants 

contain a specific limitation on the 

percentage of foreign country securities 

that are not traded on markets that are 

not subject to CSSAs.27

However, the Exchange points out 

that the generic listing standards for 

ETFs based on foreign indexes in NYSE 

Arca Equities Rule 5.2(j)(3) (Investment 

Company Units), and for closed-end 

funds holding foreign securities, do not 

include specific CSSA requirements.28

Additionally, the Exchange argues that 

the American Stock Exchange and the 

New York Stock Exchange have 

proposed, and the Commission has 

approved, the listing or trading pursuant 

to unlisted trading privileges of shares 

of many foreign-index-based ETFs that 

hold securities listed and traded on 

markets with which the ETF-listing 

exchange did not have CSSAs.29

The Exchange believes that its ability 

to monitor trading in the Fund would 

not be impacted by the absence of 

CSSAs with, or ISG membership of, 

markets on which ‘‘Actively-Traded 

Securities’’ (as defined in Rule 101(c)(1) 

of Reg M) 30 are listed or traded. The 

Exchange states that many established 

and reputable markets are not members 

of ISG.31 The Exchange asserts that such 

markets have price transparency, 

regulatory surveillance, liquidity, and 

last-sale information, as well as 

numerous other regulatory requirements 

traditionally associated with national 

securities exchanges in the United 

States. However, the Exchange notes 

that, at times, local laws, such as 

privacy laws in certain European 

nations, preclude markets from 

becoming ISG members or would result 

in any CSSA entered into being severely 

limited with respect to the information 

that can be shared. The Exchange 

further notes that, while some 

exchanges in the European Union may 

not be ISG members, those exchanges 

have the obligation to share trading data 

with their national regulator, and these 

national regulators are parties to sharing 

agreements with each other. Therefore, 

while there may be instances where the 

exchanges in the European Union may 

not directly share trading data, the 

Exchange argues that regulators may 

share information with each other when 

necessary, to deter and detect market 

manipulation. 

The Exchange further states that, as 

the global marketplace has evolved and 

become more interconnected, an issuer’s 

securities may be traded on multiple 

markets. For example, thanks to 

harmonized European legislation, and, 

in particular, the Prospectus Directive of 

the Markets in Financial Instruments 

Directive (‘‘MiFID’’),32 issuers wishing 

to raise capital in the European Union 

may take advantage of ‘‘passporting’’ 

their prospectus, which allows an issuer 

to use one prospectus and raise capital 

across the European Economic Area 

(EEA).33 The Exchange notes that one of 

the consequences of this single 

prospectus is that an issuer’s securities 

can and often do trade across several 

markets in the EEA, some of which may 

be ISG members and others may not. 

Additionally, MiFID, introduced in 

2007, contains a transaction reporting 

requirement, under which various 

markets and trading firms are required 

to submit transaction reports to an 

‘‘Approved Reporting Mechanism.’’ 

MiFID also makes it possible for any 

transferable security that has been 

admitted to trading on a regulated 

market of an ‘‘EU Member State’’ to be 

admitted to trading on other Member 

States’ regulated markets or on any 

other trading venues. As a result, it is 

difficult to predict where the liquidity 

in any particular security will primarily 

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Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Notices 78529 

34See generally The Committee of European 

Securities Regulators [CESR], Best Execution Under 

MiFID; Questions and Answers, CESR/07–320 (May 

2007), available at http://www.cmvm.pt/CMVM/

Cooperacao%20Internacional/Docs_ESMA_Cesr/

Documents/07_320.pdf (MiFID’s best execution 

regime requires investment firms to take all 

reasonable steps to obtain the best possible result 

for their clients, taking into account price, costs, 

speed, likelihood of execution and settlement, size, 

nature or any other consideration relevant to order 

execution. CESR considers this requirement to be of 

a general and overarching nature.); see also The 

Committee of European Securities Regulators 

(CESR), Best Execution Under MiFID; Public 

Consultation, CESR/07–050b (Feb. 2007), available 

at http://www.esma.europa.eu/system/files/07_

050b.pdf; Financial Services Authority (FSA), 

Implementing MiFID’s Best Execution Requirement 

(May 2006), available at http://www.fsa.gov.uk/

pubs/discussion/dp06_03.pdf. 

35Rule 102 similarly excepts from its provisions 

actively-traded reference securities. 

36See Release Nos. 33–7375; 34–38067; IC 22412: 

International Series Release Nos. 1039; File No. S7– 

11–96, 62 FR 520 (Jan. 3, 1997) (Anti-manipulation 

Rules concerning Securities Offerings), at 62 FR 

527. 

37See 26 U.S.C. 851. 

38See Letter from Michael A. Macchiaroli, 

Associate Director, Division of Trading and Markets 

(‘‘Division’’), Commission, to Grace B. Vogel, 

Executive Vice President, FINRA (November 28, 

2012) (the ‘‘Ready Market No-Action Letter’’) 

available at http://www.sec.gov/divisions/

marketreg/mr-noaction/2012/finra-112812.pdf. 

39The primary purpose of the Net Capital Rule is 

to protect customers and other market participants 

from broker-dealer failures by ensuring that brokerdealers maintain sufficient liquid assets to satisfy 

their liabilities and to provide a cushion in excess 

of liabilities to cover select risks in the event of 

liquidation. The Net Capital Rule enhances 

investor/customer confidence in the financial 

integrity of broker-dealers and the securities market. 

40Paragraph (c)(11)(i) of the Net Capital Rule 

states that the term ‘‘ready market’’ shall include ‘‘a 

market in which there exists independent bona fide 

offers to buy and sell so that a price reasonably 

related to the last sales price or current bona fide 

competitive bid and offer quotations can be 

determined for a particular security almost 

instantaneously and where payment will be 

received in settlement of a sale at such price within 

a relatively short time conforming to trade custom.’’ 

The ready market designation implies that for the 

purposes of broker-dealer net capital calculations, 

securities with such a designation held by the 

broker-dealer would be subject to a 15% haircut as 

opposed to a 100% haircut for non-marketable 

securities. 

41 In the Ready Market No Action Letter, the 

Division stated that it would not recommend 

enforcement action to the Commission if a brokerdealer treats an equity security of a foreign issuer 

as having a ready market under Rule 15c3–1(c)(11) 

and subject to haircuts under paragraph (c)(2)(vi)(J), 

if the following conditions are met: (1) The security 

is listed for trading on a foreign securities exchange 

located within a country that is recognized on the 

FTSE World Index, where the security has been 

trading on that exchange for at least the previous 

90 days; (2) Daily quotations for both bid and ask 

or last sale prices for security provided by the 

foreign securities exchange on which the security 

is traded are continuously available to brokerdealers in the United States, through an electronic 

quotation system; (3) The median daily trading 

volume (calculated over the preceding 20 business 

day period) of the foreign equity security on the 

foreign securities exchange on which the security 

is traded is either at least 100,000 shares or 

$500,000; and (4) The aggregate unrestricted market 

capitalization in shares of such security exceeds 

$500 million over each of the preceding 10 business 

days. 

42As noted above, international index ETFs are 

listed under NYSE Arca Equities Rule 5.2(j)(3), 

which does not include a requirement that index 

components trade on markets that are members of 

ISG or with which the Exchange has a CSSA. 

reside. Moreover, the MiFID best 

execution requirement 34 may require an 

executing broker to trade on markets 

that are not ISG members. The Exchange 

argues that these developments would 

make it challenging for the Fund to limit 

the trading of foreign securities on 

markets that are members of ISG or with 

which the Exchange has a CSSA. 

In addition, the Exchange believes 

that it is not necessary to its ability to 

detect and deter manipulation in Shares 

of the Fund for equity securities in 

which the Fund invests to be listed and 

traded on markets that are members of 

ISG or with which the Exchange has a 

CSSA, provided that such equity 

securities are Actively-Traded 

Securities. As the Commission noted in 

adopting Reg M, Actively-Traded 

Securities are less likely to be 

manipulated because the costs of such 

manipulation is high, aberrations in 

price are more likely to be discovered 

and quickly corrected, and such 

securities are generally traded on 

markets with high levels of transparency 

and surveillance. For this reason, the 

Exchange asserts that Actively-Traded 

Securities were excepted from the 

prophylactic provisions of Rule 101 of 

Reg M 35 and, thus, would not be subject 

to the restrictions imposed upon 

distribution participants or issuers and 

selling security holders during the 

restricted period, as those terms are 

defined in Reg M. 

The Exchange argues that, as the 

Commission recognized in adopting Reg 

M, the detection of manipulation of 

Actively-Traded Securities is aided 

substantially by the widespread 

coverage by analysts, news outlets, 

investors, and other market participants 

around the world of these securities.36

This close scrutiny and increased 

transparency of the secondary markets 

means that unusual market activity is 

likely to be observed and quickly 

corrected. 

Further, that Exchange argues that, as 

also noted by the Commission in 

adopting Reg M, because the costs 

associated with manipulating an 

Actively-Traded Security will be higher, 

the likelihood of manipulation of 

Actively-Traded Securities is low. This 

potential for improper activity in an 

Actively-Traded Security to be used to 

manipulate, or otherwise impact, 

trading in the Shares of the Fund is 

further diluted by the fact that a single 

Actively-Traded Security represents 

only part of the value of the Fund. This 

limited impact is guaranteed by 

diversification requirements applicable 

to the Fund in the Exchange’s listing 

rules and the Internal Revenue Code, 

which requires certain diversification to 

qualify as a regulated investment 

company (‘‘RIC’’).37

The Exchange also notes that other 

provisions of the securities laws 

encourage disparate treatment for active, 

large capitalization securities. In its no 

action letter 38 to FINRA in 2012 

regarding Rule 15c3–1 under the Act 

(‘‘Net Capital Rule’’),39 the Commission 

expanded the universe of foreign equity 

securities that were deemed to have a 

ready market.40 Similar to the 

exemptions afforded Actively-Traded 

Securities, the beneficial attributes of 

liquidity and size were once again 

acknowledged and formed the basis for 

the Commission’s interpretation of this 

fundamental customer protection 

provision of the securities laws.41

The Exchange asserts that permitting 

the Fund to invest in Actively-Traded 

Securities, even if they trade on markets 

that are not member of ISG, will allow 

investors to benefit from the Fund’s 

portfolio managers’ expertise as well as 

potentially reducing costs to 

shareholders. In addition, the Exchange 

asserts that investing directly in 

Actively-Traded Securities would, in 

many cases, be a less expensive 

alternative than other investments used 

by the Fund’s portfolio managers when 

they are restricted to trading in markets 

that are members of ISG or with which 

the Exchange has a CSSA. For example, 

investing in international index ETFs 42

is a common way fund managers 

provide investors with exposure to 

regions whose markets are not members 

of ISG. These international index ETFs 

can be a less efficient and less targeted 

proxy for direct investment in foreign 

security components of those indexes. 

The fees imbedded in such ETFs would 

be borne directly by a fund and 

indirectly by investors in shares of a 

fund. Thus, the Exchange concludes 

that the ability of the Fund to directly 

invest in Actively-Traded Securities 

listed or traded on markets that may not 

be members of ISG or with which the 

Exchange has a CSSA would be a less 

expensive alternative for the Fund’s 

portfolio managers, which lower costs to 

the benefit of shareholders of the Fund. 

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78530 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Notices 

43 15 U.S.C. 78s(b)(2)(B). 

44 15 U.S.C. 78s(b)(2)(B). 

45 15 U.S.C. 78f(b)(5). 

46See supra note 14. 

47Section 19(b)(2) of the Act, as amended by the 

Securities Act Amendments of 1975, Pub. L. 94–29 

(June 4, 1975), grants the Commission flexibility to 

determine what type of proceeding—either oral or 

notice and opportunity for written comments—is 

appropriate for consideration of a particular 

proposal by a self-regulatory organization. See 

Securities Act Amendments of 1975, Senate Comm. 

on Banking, Housing & Urban Affairs, S. Rep. No. 

75, 94th Cong., 1st Sess. 30 (1975). 

48See Notice, supra note 3. 49 17 CFR 200.30–3(a)(57). 

III. Proceedings To Determine Whether 

To Approve or Disapprove SR– 

NYSEArca–2014–100 and Grounds for 

Disapproval Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 43 to determine 

whether the proposed rule change 

should be approved or disapproved. 

Institution of such proceedings is 

appropriate at this time in view of the 

legal and policy issues raised by the 

proposed rule change, as discussed 

below. Institution of proceedings does 

not indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, as 

described below, the Commission seeks 

and encourages interested persons to 

provide comments on the proposed rule 

change. 

Pursuant to Section 19(b)(2)(B) of the 

Act,44 the Commission is providing 

notice of the grounds for disapproval 

under consideration. The Commission is 

instituting proceedings to allow for 

additional analysis of the proposed rule 

change’s consistency with Section 

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

among other things, that the rules of a 

national securities exchange be 

‘‘designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade,’’ and ‘‘to protect investors and the 

public interest.’’ 45

As discussed above, as part of the 

Fund’s principal investment strategy, 

the exchange-listed and traded equity 

securities in which the Portfolio would 

be permitted to invest would include 

‘‘Actively-Traded Securities,’’ as 

defined in Reg M under the Act, that are 

traded on U.S. and non-U.S. exchanges 

with last sale reporting.46 The proposed 

rule change would permit the listing 

and trading of an actively managed ETF 

based on a portfolio of equity securities 

that may trade on exchanges or markets 

that are neither members of ISG nor 

parties to a CSSA with the Exchange, 

and the Commission believes that 

proceedings are appropriate to consider, 

among other matters, whether the 

Exchange would be able to obtain the 

information necessary to detect and 

deter market manipulation, illegal 

trading, and other abuses involving the 

new derivative securities product, 

including trading in the new derivative 

securities product and its underlying 

securities. 

IV. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

proposal. In particular, the Commission 

invites the written views of interested 

persons concerning whether the 

proposal is consistent with Section 

6(b)(5) or any other provision of the Act, 

or the rules and regulations thereunder. 

Although there do not appear to be any 

issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.47

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposal should be approved or 

disapproved by January 20, 2015. Any 

person who wishes to file a rebuttal to 

any other person’s submission must file 

that rebuttal by February 3, 2015. 

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in the 

proposal, in addition to any other 

comments they may wish to submit 

about the proposed rule change. In 

particular, the Commission seeks 

comment on the statements of the 

Exchange contained in the Notice,48

including the statements made in 

connection with information sharing 

procedures with respect to certain nonU.S. equity security holdings, the 

Exchange’s arguments regarding the 

applicability of the definition of 

‘‘Actively-Traded Securities’’ under Reg 

M with respect to the securities in 

which an ETF may invest, and any other 

issues raised by the proposed rule 

change. 

Comments may be submitted by any 

of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2014–100 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Numbers SR–NYSEArca–2014–100. 

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 these 

filings 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– 

NYSEArca–2014–100 and should be 

submitted on or before January 20, 2015. 

Rebuttal comments should be submitted 

by February 3, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.49

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30440 Filed 12–29–14; 8:45 am] 

BILLING CODE 8011–01–P 

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