Federal Register / Vol. 82, No. 161 / Tuesday, August 22, 2017 / Notices 39923 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(2). 

15 15 U.S.C. 78s(b)(2)(B). 16 17 CFR 200.30–3(a)(12). 

for market participants at other 

exchanges, such market participants are 

welcome to become ATP Holders. 

The Exchange notes that it operates in 

a highly competitive market in which 

market participants can readily favor 

competing venues. In such an 

environment, the Exchange must 

continually review, and consider 

adjusting, its fees and credits to remain 

competitive with other exchanges. For 

the reasons described above, the 

Exchange believes that the proposed 

rule change reflects this competitive 

environment. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 13 of the Act and 

subparagraph (f)(2) of Rule 19b–4 14

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such 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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B)15 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEAMER–2017–04 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 

Number SR–NYSEAMER–2017–04. 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– 

NYSEAMER–2017–04, and should be 

submitted on or before September 12, 

2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–17684 Filed 8–21–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81410; File No. TP 17–10] 

Order Granting Limited Exemptions 

From Exchange Act Rule 10b–17 and 

Rules 101 and 102 of Regulation M to 

IQ Real Return ETF Pursuant to 

Exchange Act Rule 10b–17(b)(2) and 

Rules 101(d) and 102(e) of Regulation 

M 

August 16, 2017. 

By letter dated August 16, 2017 (the 

‘‘Letter’’), as supplemented by 

conversations with the staff of the 

Division of Trading and Markets, 

counsel for IndexIQ ETF Trust (the 

‘‘Trust’’), on behalf of the Trust and one 

of its investment portfolios, the IQ Real 

Return ETF (the ‘‘Fund’’), NYSE Arca, 

Inc. (‘‘NYSE Arca’’) or other national 

securities exchanges on or through 

which shares issued by the Fund 

(‘‘Shares’’) may subsequently trade, 

ALPS Distributors, Inc. (the 

‘‘Distributor’’), and persons or entities 

engaging in transactions in Shares 

(collectively, the ‘‘Requestors’’), 

requested exemptions, or interpretive or 

no-action relief, from Rule 10b–17 of the 

Securities Exchange Act of 1934, as 

amended (‘‘Exchange Act’’), and Rules 

101 and 102 of Regulation M, in 

connection with secondary market 

transactions in Shares and the creation 

or redemption of aggregations of Shares 

of at least 50,000 shares (‘‘Creation 

Units’’). 

The Trust is registered with the 

Securities and Exchange Commission 

(‘‘Commission’’) under the Investment 

Company Act of 1940, as amended 

(‘‘1940 Act’’), as an open-end 

management investment company. The 

Fund is a ‘‘fund of funds’’ that is 

passively managed according to an 

index. The Fund is designed to track the 

performance of the IQ Real Return Index 

(‘‘Index’’), which seeks to provide 

investors with a hedge against the U.S. 

inflation rate by providing a ‘‘real 

return,’’ or a return above the rate of 

inflation, as represented by the 

Consumer Price Index (‘‘CPI’’). 

At least 80% of the Fund’s portfolio 

holdings are, and will be, shares of some 

or all of the exchange-traded products 

(‘‘ETPs’’) that constitute the Index. The 

Fund operates in a manner very similar 

to that of the ETPs held in its portfolio. 

Some or all of the remaining 20% may 

be invested in securities that are not 

Index constituents that the Fund’s 

adviser believes will help the Fund 

track the Index, as well as cash, cash 

equivalents and various types of 

financial instruments including, but not 


sradovich on DSK3GMQ082PROD with NOTICES
39924 Federal Register / Vol. 82, No. 161 / Tuesday, August 22, 2017 / Notices 

1See Order Granting Limited Exemptions from 

Exchange Act Rule 10b–17 and Rules 101 and 102 

of Regulation M, Exchange Act Rel. No. 77779 (May 

6, 2016); Letter from Josephine J. Tao, Esq., 

Assistant Director, Division of Trading and Markets, 

to Kathleen H. Moriarty, Esq., Katten Muchin 

Rosenman LLP (Mar. 25, 2009) (revised Apr. 2, 

2009). 

2Cf. Letter from James A. Brigagliano, Esq., 

Acting Associate Director, Division of Market 

Regulation, to Stuart M. Strauss, Esq., Clifford 

Chance US LLP (Oct. 24, 2006) (granting relief to 

exchange-traded funds (‘‘ETFs’’) that, among other 

things, consist of a basket of twenty or more 

‘‘Component Securities’’ with no one ‘‘Component 

Security’’ constituting more than 25% of the total 

value of the exchange-traded fund). 

3Letter from Josephine Tao, Assistant Director, 

Division of Trading and Markets, to Domenick 

Pugliese, Esq., Paul, Hastings, Janofsky and Walker 

LLP (June 27, 2007); Letter from James A. 

Brigagliano, Associate Director, Division of Market 

Regulation, to Benjamin Haskin, Esq., Willkie, Farr 

& Gallagher LLP (Apr. 9, 2007); Letter from James 

A. Brigagliano, Acting Associate Director, Division 

of Market Regulation, to Stuart M. Strauss, Esq., 

Clifford Chance US LLP (Oct. 24, 2006); Letter from 

Racquel L. Russell, Branch Chief, Division of 

Market Regulation, to George T. Simon, Esq., Foley 

& Lardner LLP (June 21, 2006); Letter from 

Catherine McGuire, Esq., Chief Counsel, Division of 

Market Regulation, to the Securities Industry 

Association Derivative Products Committee (Nov. 

21, 2005); see also Staff Legal Bulletin No. 9, 

‘‘Frequently Asked Questions About Regulation M’’ 

(Apr. 12, 2002) (regarding actively managed ETFs). 

4While ETFs operate under exemptions from the 

definitions of ‘‘open-end company’’ under section 

5(a)(1) of the 1940 Act and ‘‘redeemable security’’ 

under section 2(a)(32) of the 1940 Act, the Fund 

and its securities do not meet those definitions. 

5Additionally, we confirm the interpretation that 

a redemption of Creation Unit size aggregations of 

Shares of the Fund and the receipt of securities in 

exchange by a participant in a distribution of Shares 

of the Fund would not constitute an ‘‘attempt to 

induce any person to bid for or purchase, a covered 

security during the applicable restricted period’’ 

within the meaning of Rule 101 of Regulation M 

and, therefore, would not violate that rule. 

limited to, futures contracts, swap 

agreements, forward contracts, reverse 

repurchase agreements, and options on 

securities, indices, and futures 

contracts. In no case will the Fund hold 

any non-ETP equity security issued by 

a single issuer in excess of 20% of the 

Fund’s portfolio holdings. 

The Letter states that the Fund is 

relying on Class Relief Letters (as 

defined in the Letter), but is seeking 

individual relief for the same reasons as 

did nine other investment portfolios of 

the Trust 1—that is, to manage a 

portfolio with less than twenty 

‘‘Component Securities’’ that, from time 

to time, might also hold also hold a 

Component Security in excess of 25% of 

the total value of such portfolio.2

The Requestors represent, among 

other things, the following: 

• Shares of the Fund will be issued 

by the Trust, an open-end management 

investment company that is registered 

with the Commission; 

• The Trust will continuously redeem 

Creation Units at net asset value 

(‘‘NAV’’), and the secondary market 

price of the Shares should not vary 

substantially from the NAV of such 

Shares; 

• Shares of the Fund will be listed 

and traded on the NYSE Arca (the 

‘‘Exchange’’) or other exchange in 

accordance with exchange listing 

standards that are, or will become, 

effective pursuant to Section 19(b) of the 

Exchange Act; 

• Each ETP in which the Fund is 

invested will meet all conditions set 

forth in a relevant class relief letter,3 or 

will have received individual relief from 

the Commission; 

• The value of the Index will be 

publicly disseminated by a major 

market data vendor throughout the 

trading day, and all of the components 

of the Index will have publicly available 

last sale trade information; 

• On each business day before the 

opening of business on the Exchange, 

the Fund’s custodian, through the 

National Securities Clearing 

Corporation, will make available the list 

of the names and the numbers of 

securities and other assets of the Fund’s 

portfolio that will be applicable that day 

to creation and redemption requests; 

• The Exchange or other market 

information provider will disseminate 

every 15 seconds throughout the trading 

day through the facilities of the 

Consolidated Tape Association an 

amount representing the current value 

of the cash and securities held in the 

portfolio of the Fund (not including 

corporate actions, expenses, and other 

adjustments made to such portfolio 

throughout the day) (‘‘Estimated NAV’’); 

• At least 80% of the Fund’s portfolio 

holdings are, and will be, shares of some 

or all of the ETPs that are the Index 

constituents; 

• The Fund will invest in securities 

that will facilitate an effective and 

efficient arbitrage mechanism and the 

ability to create workable hedges; 

• The Requestors believe that 

arbitrageurs can be expected to take 

advantage of price variations between 

the Fund’s market price and its NAV; 

• The arbitrage mechanism will be 

facilitated by the transparency of the 

Fund’s portfolio and the availability of 

the Estimated NAV, the liquidity of 

securities and other assets held by the 

Fund, and the ability to acquire such 

securities, as well as arbitrageurs’ ability 

to create workable hedges; and 

• A close alignment between the 

market price of Shares and the Fund’s 

NAV is expected. 

Regulation M 

While redeemable securities issued by 

an open-end management investment 

company are excepted from the 

provisions of Rule 101 and 102 of 

Regulation M, the Requestors may not 

rely upon that exception for the Shares.4

However, we find that it is appropriate 

in the public interest, and is consistent 

with the protection of investors, to grant 

a limited exemption from Rules 101 and 

102 to persons who may be deemed to 

be participating in a distribution of 

Shares and the Fund as described in 

more detail below. 

Rule 101 of Regulation M 

Generally, Rule 101 of Regulation M 

is an anti-manipulation rule that, 

subject to certain exceptions, prohibits 

any ‘‘distribution participant’’ and its 

‘‘affiliated purchasers’’ from bidding for, 

purchasing, or attempting to induce any 

person to bid for or purchase, any 

security which is the subject of a 

distribution until after the applicable 

restricted period, except as specifically 

permitted in the rule. Rule 100 of 

Regulation M defines ‘‘distribution’’ to 

mean any offering of securities that is 

distinguished from ordinary trading 

transactions by the magnitude of the 

offering and the presence of special 

selling efforts and selling methods. The 

provisions of Rule 101 of Regulation M 

apply to underwriters, prospective 

underwriters, brokers, dealers, or other 

persons who have agreed to participate 

or are participating in a distribution of 

securities. The Shares are in a 

continuous distribution and, as such, 

the restricted period in which 

distribution participants and their 

affiliated purchasers are prohibited from 

bidding for, purchasing, or attempting to 

induce others to bid for or purchase 

extends indefinitely. 

Based on the representations and facts 

presented in the Letter, particularly that 

the Trust is a registered open-end 

management investment company that 

will continuously redeem at the NAV 

Creation Unit size aggregations of the 

Shares of the Fund and that a close 

alignment between the market price of 

Shares and the Fund’s NAV is expected, 

the Commission finds that it is 

appropriate in the public interest, and 

consistent with the protection of 

investors, to grant the Trust an 

exemption under paragraph (d) of Rule 

101 of Regulation M with respect to 

Shares of the Fund, thus permitting 

persons participating in a distribution of 

Shares of the Fund to bid for or 

purchase such Shares during their 

participation in such distribution.5


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 82, No. 161 / Tuesday, August 22, 2017 / Notices 39925 

6We also note that timely compliance with Rule 

10b–17(b)(1)(v)(a) and (b) would be impractical 

because it is not possible for the Fund to accurately 

project ten days in advance what dividend, if any, 

would be paid on a particular record date. Further, 

the Commission finds, based upon the 

representations in the Letter, that the provision of 

the notices as described in the Letter would not 

constitute a manipulative or deceptive device or 

contrivance comprehended within the purpose of 

Rule 10b–17. 

7 17 CFR 200.30–3(a)(6) and (9). 

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

2 17 CFR 240.19b–4. 

3A Registered Options Trader or ROT is a regular 

member of the Exchange located on the trading 

floor who has received permission from the 

Exchange to trade in options for his own account. 

See Exchange Rule 1014(b)(i). 

Rule 102 of Regulation M 

Rule 102 of Regulation M prohibits 

issuers, selling security holders, or any 

affiliated purchaser of such person from 

bidding for, purchasing, or attempting to 

induce any person to bid for or purchase 

a covered security during the applicable 

restricted period in connection with a 

distribution of securities effected by or 

on behalf of an issuer or selling security 

holder. 

Based on the representations and facts 

presented in the Letter, particularly that 

the Trust is a registered open-end 

management investment company that 

will redeem at the NAV Creation Units 

of Shares of the Fund and that a close 

alignment between the market price of 

Shares and the Fund’s NAV is expected, 

the Commission finds that it is 

appropriate in the public interest, and 

consistent with the protection of 

investors, to grant the Trust an 

exemption under paragraph (e) of Rule 

102 of Regulation M with respect to 

Shares of the Fund, thus permitting the 

Fund to redeem Shares of the Fund 

during the continuous offering of such 

Shares. 

Rule 10b–17 

Rule 10b–17, with certain exceptions, 

requires an issuer of a class of publicly 

traded securities to give notice of certain 

specified actions (for example, a 

dividend distribution) relating to such 

class of securities in accordance with 

Rule 10b–17(b). Based on the 

representations and facts presented in 

the Letter, and subject to the conditions 

below, we find that it is appropriate in 

the public interest, and consistent with 

the protection of investors, to grant the 

Trust a conditional exemption from 

Rule 10b–17 because market 

participants will receive timely 

notification of the existence and timing 

of a pending distribution, and thus the 

concerns that the Commission raised in 

adopting Rule 10b–17 will not be 

implicated.6

Conclusion 

It is hereby ordered, pursuant to Rule 

101(d) of Regulation M, that the Trust, 

based on the representations and the 

facts presented in the Letter, is exempt 

from the requirements of Rule 101 with 

respect to Shares of the Fund, thus 

permitting persons who may be deemed 

to be participating in a distribution of 

Shares of the Fund to bid for or 

purchase such Shares during their 

participation in such distribution. 

It is further ordered, pursuant to Rule 

102(e) of Regulation M, that the Trust, 

based on the representations and the 

facts presented in the Letter, is exempt 

from the requirements of Rule 102 with 

respect to Shares of the Fund, thus 

permitting the Fund to redeem Shares of 

the Fund during the continuous offering 

of such Shares. 

It is further ordered, pursuant to Rule 

10b–17(b)(2), that the Trust, based on 

the representations and the facts 

presented in the Letter, and subject to 

the conditions below, is exempt from 

the requirements of Rule 10b–17 with 

respect to transactions in the Shares of 

the Fund. 

This exemptive relief is subject to the 

following conditions: 

• The Trust will comply with Rule 

10b–17 except for Rule 10b– 

17(b)(1)(v)(a) and (b); and 

• The Trust will provide the 

information required by Rule 10b– 

17(b)(1)(v)(a) and (b) to the Exchange as 

soon as practicable before trading begins 

on the ex-dividend date, but in no event 

later than the time when the Exchange 

last accepts information relating to 

distributions on the day before the exdividend date. 

This exemptive relief is subject to 

modification or revocation at any time 

the Commission determines that such 

action is necessary or appropriate in 

furtherance of the purposes of the 

Exchange Act. This exemption is based 

on the facts presented and the 

representations made in the Letter. Any 

different facts or representations may 

require a different response. Persons 

relying upon this exemptive relief shall 

discontinue transactions involving the 

Shares of the Fund, pending 

presentation of the facts for the 

Commission’s consideration, in the 

event that any material change occurs 

with respect to any of the facts or 

representations made by the Requestors 

and, as is the case with all preceding 

letters, particularly with respect to the 

close alignment between the market 

price of Shares and the Fund’s NAV. In 

addition, persons relying on this 

exemptive relief are directed to the antifraud and anti-manipulation provisions 

of the Exchange Act, particularly 

Sections 9(a) and 10(b), and Rule 10b– 

5 thereunder. Responsibility for 

compliance with these and any other 

applicable provisions of the federal 

securities laws must rest with the 

persons relying on this exemptive relief. 

This Order should not be considered 

a view with respect to any other 

question that the proposed transactions 

may raise, including, but not limited to 

the adequacy of the disclosure 

concerning, and the applicability of 

other federal or state laws to, the 

proposed transactions. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2017–17688 Filed 8–21–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81409; File No. SR–Phlx– 

2017–67)] 

Self-Regulatory Organizations; 

NASDAQ PHLX LLC; Notice of Filing of 

Proposed Rule Change Related to the 

Floor Requirements 

August 16, 2017. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on August 3, 

2017, NASDAQ PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Commentary .01 of Rule 1014, 

Obligations and Restrictions Applicable 

to Specialists and Registered Options 

Traders, to change quarterly trading 

requirements applicable to Registered 

Options Traders (‘‘ROTs’’), as described 

below.3

The text of the proposed rule change 

is set forth below. Proposed new 

language is italicized; deletions are 

bracketed. 

* * * * * 


sradovich on DSK3GMQ082PROD with NOTICES