Federal Register / Vol. 82, No. 188 / Friday, September 29, 2017 / Notices 45643 

14 15 U.S.C. 78s(b)(3)(A)(ii). 

15 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. 79916 

(February 1, 2017), 82 FR 9608. 

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

5See Securities Exchange Act Release No. 80265, 

82 FR 14778 (March 22, 2017). 

6See Securities Exchange Act Release No. 80606, 

82 FR 22042 (May 11, 2017). Specifically, the 

Commission instituted 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.’’ See id. at 22043. 

7Amendment No. 1, which amended the replaced 

the original filing in its entirety, is available on the 

Commission’s Web site at: https://www.sec.gov/ 

comments/sr-nysearca-2017-05/nysearca201705- 

1822806-154288.pdf. 

8See Securities Exchange Act Release No. 81224, 

82 FR 36030 (August 2, 2017). 

9 In Amendment No. 2, which amended and 

replaced the proposed rule change, as modified by 

Amendment No. 1 thereto, in its entirety, the 

Exchange: (1) Supplemented its descriptions of the 

Funds’ investments in over-the-counter transactions 

and Short-Term Investments; (2) supplemented its 

description of the calculation of the daily value of 

each Fund’s net asset value (‘‘NAV’’); (3) provided 

information regarding the calculation and 

dissemination of the Indicative Fund Value of the 

Funds; (4) added a representation regarding the 

dissemination of the Benchmark; (5) clarified the 

information that will be made available on the 

Funds’ Web site regarding the Funds and their 

portfolio holdings; (6) supplemented its description 

of the Exchange’s surveillance procedures; (7) 

represented that the applicability of Exchange 

listing rules specified in the proposed rule change 

shall constitute continued listing requirements for 

listing the Shares on the Exchange; (8) clarified the 

type of information that will be available in the 

Information Bulletin regarding the Funds’ portfolio 

holdings; and (9) made other technical changes. 

Amendment No. 2 is not subject to notice and 

comment because it is a technical amendment that 

does not materially alter the substance of the 

proposed rule change or raise any novel regulatory 

issues. Amendment No. 2 to the proposed rule 

change is available on the Commission’s Web site 

at: https://www.sec.gov/comments/sr-nysearca2017-05/nysearca201705-2161993-157780.pdf. 

10 In Amendment No. 3, which partially amended 

the proposed rule change, as modified by 

Amendment No. 2 thereto, the Exchange made 

representations regarding the size and liquidity of 

the oil contract market. Amendment No. 3 is not 

subject to notice and comment because it does not 

materially alter the substance of the proposed rule 

change or raise any novel regulatory issues. 

Continued 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.14

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: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

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– 

NASDAQ–2017–095 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–2017–095. 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–2017–095 and should be 

submitted on or before October 20, 

2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–20886 Filed 9–28–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81686; File No. SR– 

NYSEArca–2017–05] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Granting Approval of 

a Proposed Rule Change, as Modified 

by Amendment Nos. 2 and 3 Thereto, 

To List and Trade Shares of Direxion 

Daily Crude Oil Bull 3x Shares and 

Direxion Daily Crude Oil Bear 3x 

Shares Under NYSE Arca Equities Rule 

8.200 

September 22, 2017. 

I. Introduction 

On January 23, 2017, 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’’ or ‘‘Exchange Act’’) 1 and 

Rule 19b–4 thereunder,2 a proposed rule 

change to list and trade shares 

(‘‘Shares’’) of Direxion Daily Crude Oil 

Bull 3x Shares and Direxion Daily 

Crude Oil Bear 3x Shares (individually, 

‘‘Fund,’’ and, collectively, ‘‘Funds’’) 

Under NYSE Arca Equities Rule 8.200. 

The proposed rule change was 

published for comment in the Federal 

Register on February 7, 2017.3 On 

March 16, 2017, 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 On May 5, 2017, the 

Commission instituted proceedings to 

determine whether to approve or 

disapprove the proposed rule change.6

On June 23, 2017, the Exchange filed 

Amendment No. 1 to the proposed rule 

change.7 On July 27, 2017, the 

Commission designated a longer period 

for Commission action on the proposed 

rule change.8 On August 1, 2017, the 

Exchange filed Amendment No. 2 to the 

proposed rule change.9 On September 

19, 2017, the Exchange filed 

Amendment No. 3 to the proposed rule 

change.10 The Commission has received 


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Amendment No. 3 to the proposed rule change is 

available on the Commission’s Web site at: https:// 

www.sec.gov/comments/sr-nysearca-2017-05/ 

nysearca201705-2583842-161105.pdf. 

11A more detailed description of the Funds, the 

Shares, and the Benchmark, as well as investment 

risks, creation and redemption procedures, NAV 

calculation, availability of values and other 

information regarding the Funds’ portfolio 

holdings, and fees, among other things, is included 

in the Registration Statement (as defined herein), as 

well as Amendment No. 2 to the proposed rule 

change, as applicable. See infra note 13, and supra 

note 9, respectively. 

12Commentary .02 to NYSE Arca Equities Rule 

8.200 applies to Trust Issued Receipts that invest 

in ‘‘Financial Instruments.’’ The term ‘‘Financial 

Instruments,’’ as defined in Commentary .02(b)(4) to 

NYSE Arca Equities Rule 8.200, means any 

combination of investments, including cash; 

securities; options on securities and indices; futures 

contracts; options on futures contracts; forward 

contracts; equity caps, collars, and floors; and swap 

agreements. 

13The Trust is registered under the Securities Act 

of 1933 (‘‘Securities Act’’). According to the 

Exchange, on December 14, 2016, the Trust filed 

with the Commission a registration statement on 

Form S–1 under the Securities Act relating to the 

Funds (File No. 333–215091) (‘‘Registration 

Statement’’). 

14According to the Exchange, the Bloomberg WTI 

Crude Oil Subindex is a ‘‘rolling index,’’ which 

means that the index does not take physical 

possession of any commodities. The Exchange 

states that futures contracts held by the Funds near 

expiration are generally closed out and replaced by 

contracts with a later expiration as required by the 

Bloomberg WTI Crude Oil Subindex. The Exchange 

states that this process is referred to as ‘‘rolling.’’ 

See Amendment No. 2, supra note 9, at 5 n.6–7. 

15According to the Exchange, a single trading day 

is measured from the time a Fund calculates its 

NAV to the time of a Fund’s next NAV calculation. 

The Exchange states that the return of a Fund for 

a period longer than a single trading day is the 

result of its return for each day compounded over 

the period and thus will usually differ from a 

Fund’s multiple times the return of the Benchmark 

for the same period. See id. at 5 n.8–9. 

16The term ‘‘normal market conditions’’ includes, 

but is not limited to, the absence of trading halts 

in the applicable financial markets generally; 

operational issues (e.g., systems failure) causing 

dissemination of inaccurate market information; or 

force majeure type events such as natural or 

manmade disaster, act of God, armed conflict, act 

of terrorism, riot or labor disruption or any similar 

intervening circumstance. See id. at 6 n.10. 

17According to the Exchange, U.S. futures 

exchanges have established accountability levels 

and position limits on the maximum net long or net 

short Futures Contracts in commodity interests that 

any person or group of persons under common 

trading control (other than as a hedge, which an 

investment by a Fund is not) may hold, own or 

control. These levels and position limits apply to 

the Futures Contracts that each Fund would invest 

in to meet its investment objective. In addition to 

accountability levels and position limits, U.S. 

futures exchanges also set daily price fluctuation 

limits on Futures Contracts. The daily price 

fluctuation limit establishes the maximum amount 

that the price of a Futures Contract may vary either 

up or down from the previous day’s settlement 

price. See id. at 7–8. 

18See id. at 6–7. 

no comments on the proposed rule 

change. This order grants approval of 

the proposed rule change, as modified 

by Amendment Nos. 2 and 3 thereto. 

II. Exchange’s Description of the 

Proposal 11

The Exchange proposes to list and 

trade the Shares under NYSE Arca 

Equities Rule 8.200, Commentary .02, 

which governs the listing and trading of 

Trust Issued Receipts.12 Each Fund is a 

series of the Direxion Shares ETF Trust 

II (‘‘Trust’’), a Delaware statutory trust.13

The Trust and the Funds are managed 

and controlled by Direxion Asset 

Management, LLC (‘‘Sponsor’’). The 

Sponsor is registered as a commodity 

pool operator with the Commodity 

Futures Trading Commission (‘‘CFTC’’) 

and is a member of the National Futures 

Association. Bank of New York Mellon 

will be the custodian and transfer agent 

for the Funds. U.S. Bancorp Fund 

Services, LLC serves as administrator for 

the Funds, and Foreside Fund Services, 

LLC serves as the distributor of the 

Funds. 

Overview of the Funds 

The investment objective of Direxion 

Daily Crude Oil Bull 3X Shares is to 

seek, on a daily basis, investment results 

that correspond (before fees and 

expenses) to a multiple of three times 

(3x) of the daily performance of the 

Bloomberg WTI Crude Oil Subindex, a 

subindex of the Bloomberg Commodity 

Index (‘‘Benchmark’’).14 The investment 

objective of Direxion Daily Crude Oil 

Bear 3X Shares is to seek, on a daily 

basis, investment results that 

correspond (before fees and expenses) to 

three times (3x) the inverse of the 

performance of the Benchmark. The 

Benchmark is intended to reflect the 

performance of crude oil as measured by 

the price of West Texas Intermediate 

crude oil futures contracts traded on the 

New York Mercantile Exchange 

(‘‘NYMEX’’), including the impact of 

rolling, without regard to income earned 

on cash positions. The Funds will not 

be directly linked to the ‘‘spot’’ price of 

crude oil. The Exchange states that a 

Fund will not seek to achieve its 

investment objective over a period 

greater than a single trading day.15

In seeking to achieve the Funds’ 

investment objectives, the Sponsor will 

utilize a mathematical approach to 

determine the type, quantity, and mix of 

investment positions that the Sponsor 

believes, in combination, should 

produce daily returns consistent with 

the Funds’ respective objectives. The 

Sponsor will rely on a pre-determined 

model to generate orders that result in 

repositioning the Funds’ investments in 

accordance with their respective 

investment objectives. 

Investments of the Funds 

Each Fund will seek to achieve its 

respective investment objective by 

investing, under normal market 

conditions,16 substantially all of its 

assets in oil futures contracts traded in 

the U.S. and listed options on such 

contracts (collectively, ‘‘Futures 

Contracts’’). The Funds’ investments in 

Futures Contracts will be used to 

produce economically ‘‘leveraged’’ or 

‘‘inverse leveraged’’ investment results 

for the Funds. 

In the event position, price, or 

accountability limits are reached with 

respect to Futures Contracts,17 each 

Fund may obtain exposure to the 

Benchmark through investment in swap 

transactions and forward contracts 

referencing such Benchmark or other 

benchmarks the Sponsor believes 

should be closely correlated to the 

performance of each Fund’s benchmark 

such as the Energy Select Sector Index 

or the S&P Oil & Gas Exploration & 

Production Select Industry Index 

(‘‘Financial Instruments’’). To the extent 

that the Trust invests in Financial 

Instruments, it would first make use of 

exchange-traded Financial Instruments, 

if available. If an investment in 

exchange-traded Financial Instruments 

is unavailable, then the Trust would 

invest in Financial Instruments that 

clear through derivatives clearing 

organizations that satisfy the Trust’s 

criteria, if available. If an investment in 

cleared Financial Instruments is 

unavailable, then the Trust would invest 

in other Financial Instruments, 

including uncleared Financial 

Instruments in the over-the-counter 

(‘‘OTC’’) market. The Funds may also 

invest in Financial Instruments if the 

market for a specific futures contract 

experiences emergencies (e.g., natural 

disaster, terrorist attack, or an act of 

God) or disruptions (e.g., a trading halt 

or a flash crash) that prevent or make it 

impractical for a Fund to obtain the 

appropriate amount of investment 

exposure using Futures Contracts. 

The Exchange represents that each 

Fund will enter into swap agreements 

and other OTC transactions only with 

large, established, and well capitalized 

financial institutions that meet certain 

credit quality standards and monitoring 

policies. The Exchange states that each 

Fund will use various techniques to 

minimize credit risk including early 

termination or reset and payment, using 

different counterparties and limiting the 

net amount due from any individual 

counterparty.18

Although the Funds will invest such 

that each Fund’s exposure to the 

Benchmark will consist substantially of 


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19The Exchange states that the pattern of higher 

futures prices for longer expiration Futures 

Contracts is referred to as ‘‘contango.’’ 

Alternatively, when the market for these contracts 

is such that the prices are higher in the nearer 

months than in the more distant months, the sale 

during the course of the ‘‘rolling process’’ of the 

more nearby contract would take place at a price 

that is higher than the price of the more distant 

contract. The Exchange states that the pattern of 

higher futures prices for shorter expiration Futures 

Contracts is referred to as ‘‘backwardation.’’ 

According to the Exchange, the presence of 

contango in certain Futures Contracts at the time of 

rolling could adversely affect a Fund with long 

positions, and positively affect a Fund with short 

positions. Similarly, the Exchange states that the 

presence of backwardation in certain Futures 

Contracts at the time of rolling such contracts could 

adversely affect a Fund with short positions and 

positively affect a Fund with long positions. See id. 

at 7. 

20See id. at 8. 

21See id. at 13. 

22 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). 23 15 U.S.C. 78f(b)(5). 24 15 U.S.C. 78k–1(a)(1)(C)(iii). 

25The Funds’ Web site will include (1) daily 

trading volume, the prior business day’s reported 

NAV and closing price, and a calculation of the 

premium and discount of the closing price or midpoint of the bid/ask spread at the time of NAV 

calculation (‘‘Bid/Ask Price’’) against the NAV; and 

(2) data in chart format displaying the frequency 

distribution of discounts and premiums of the daily 

closing price or Bid/Ask Price against the NAV, 

within appropriate ranges, for at least each of the 

four previous calendar quarters. 

26The IFV will be calculated by using the prior 

day’s closing net assets of a Fund as a base and 

updating throughout the Exchange’s Core Trading 

Session of 9:30 a.m. E.T. to 4:00 p.m. E.T. changes 

in the value of the Futures Contracts and Financial 

Instruments held by a Fund based on the most 

recently available prices for the Fund’s investments. 

According to the Exchange, circumstances may 

arise in which the NYSE Arca Core Trading Session 

is in progress, but trading in Futures Contracts is 

not occurring. Such circumstances may result from 

reasons including, but not limited to, a futures 

exchange having a separate holiday schedule than 

the NYSE Arca, a futures exchange closing prior to 

the close of the NYSE Arca, price fluctuation limits 

being reached in a Futures Contract, or a futures 

exchange, imposing any other suspension or 

limitation on trading in a Futures Contract. In such 

instances, for IFV calculation purposes, the price of 

the applicable Futures Contracts, as well as 

Financial Instruments whose price is derived from 

the Futures Contracts, would be static or priced by 

the Fund at the applicable early cut-off time of the 

exchange trading the applicable Futures Contract. 

See Amendment No. 2, supra note 9, at 7 n.13. 

27The Exchange notes that several major market 

data vendors display and/or make widely available 

IFVs taken from the CTA or other data feeds. See 

id. 

Futures Contracts, the Funds’ remaining 

net assets may be invested in cash or 

cash equivalents and/or U.S. Treasury 

securities or other high credit quality, 

short-term fixed-income or similar 

securities (such as shares of money 

market funds and collateralized 

repurchase agreements, collectively, 

‘‘Short-Term Investments’’) for direct 

investment or as collateral for the 

Funds’ investments. 

The Funds do not intend to hold 

Futures Contracts through expiration, 

but instead intend to either close or 

‘‘roll’’ their respective positions. When 

the market for these contracts is such 

that the prices are higher in the more 

distant delivery months than in the 

nearer delivery months, the sale during 

the course of the ‘‘rolling process’’ of the 

more nearby contract would take place 

at a price that is lower than the price of 

the more distant contract.19

The Exchange states that the Funds do 

not expect to have leveraged exposure 

greater than three times (3x) the Funds’ 

net assets. Thus, the maximum margin 

held at a Future Commission Merchant 

would not exceed three times the 

margin requirement for either Fund.20

The Exchange represents that not more 

than 10% of the net assets of a Fund in 

the aggregate invested in Futures 

Contracts shall consist of Futures 

Contracts whose principal market is not 

a member of the Intermarket 

Surveillance Group (‘‘ISG’’) or is a 

market with which the Exchange does 

not have a comprehensive surveillance 

sharing agreement (‘‘CSSA’’).21

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the Exchange’s proposal to list 

and trade the Shares is consistent with 

the Exchange Act and the rules and 

regulations thereunder applicable to a 

national securities exchange.22 In 

particular, the Commission finds that 

the proposed rule change, as modified 

by Amendment Nos. 2 and 3 thereto, is 

consistent with Section 6(b)(5) of the 

Exchange Act,23 which requires, among 

other things, that the Exchange’s rules 

be designed to promote just and 

equitable principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. The Commission also 

finds that the proposal to list and trade 

the Shares on the Exchange is consistent 

with Section 11A(a)(1)(C)(iii) of the 

Exchange Act,24 which sets forth 

Congress’ finding that it is in the public 

interest and appropriate for the 

protection of investors and the 

maintenance of fair and orderly markets 

to assure the availability to brokers, 

dealers and investors of information 

with respect to quotations for and 

transactions in securities. 

According to the Exchange, quotation 

and last-sale information regarding the 

Shares will be disseminated through the 

facilities of the Consolidated Tape 

Association (‘‘CTA’’). Quotation 

information for Short-Term Investments 

and OTC swaps may be obtained from 

brokers and dealers who make markets 

in such instruments, and intra-day price 

information for forward contracts will 

be available from major market data 

vendors. Quotation information for 

exchange-traded swaps will be available 

from the applicable exchange and major 

market vendors. The intraday, closing 

prices, and settlement prices of the 

Futures Contracts will be readily 

available from the applicable futures 

exchange Web sites, automated 

quotation systems, published or other 

public sources, or major market data 

vendors. Complete real-time data for the 

Futures Contracts also is available by 

subscription through on-line 

information services. ICE Futures U.S. 

and NYMEX also provide delayed 

futures and options on futures 

information on current and past trading 

sessions and market news free of charge 

on their respective Web sites. The 

specific contract specifications for 

Futures Contracts would also be 

available on such Web sites, as well as 

other financial informational sources. 

The Funds’ Web site will display the 

applicable end of day closing NAV. 

Each Fund’s total portfolio composition 

will be disclosed on the Funds’ Web site 

each business day that the Exchange is 

open for trading. The Funds’ Web site 

also will include a form of the 

prospectus for the Funds that may be 

downloaded. The Web site will include 

the Shares’ ticker and CUSIP 

information, along with additional 

quantitative information updated on a 

daily basis for each Fund.25 The Web 

site disclosure of portfolio holdings will 

be made daily and will include, as 

applicable, (i) the name, quantity, value, 

expiration and strike price of Futures 

Contracts and Financial Instruments, (ii) 

the counterparty to and value of 

Financial Instruments, and (iii) the 

aggregate net value of the Short-Term 

Investments held in each Fund’s 

portfolio, if applicable. 

The Benchmark will be disseminated 

by one or more major market data 

vendors every 15 seconds during the 

NYSE Arca Core Trading Session of 9:30 

a.m. to 4:00 p.m. Eastern Time (‘‘E.T.’’). 

The Indicative Fund Value (‘‘IFV’’) 26

will be widely disseminated by one or 

more major market data vendors during 

the NYSE Arca Core Trading Session 

Share will be widely disseminated by 

one or more major market data vendors 

every 15 seconds during the Exchange’s 

Core Trading Session.27 Each Fund will 

compute its NAV at 2:30 p.m. E.T., 

which is the designated closing time of 


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28The Exchange states that the daily value of the 

NAV is calculated as of 2:30 p.m. E.T. to coincide 

with the designated closing time. Futures Contracts, 

however, continue to trade past 2:30 p.m. E.T. and 

through the end of the NYSE Arca Core Trading 

Session at 4:00 p.m. E.T. See id. at 8 n.12. 

29See id. at 13. 

30For a list of the current members of ISG, see 

www.isgportal.org. According to the Exchange, not 

all components of a Fund may trade on markets that 

are members of ISG or with which the Exchange has 

in place a CSSA. See id. at 13 n.18. 31 17 CFR 240.10A–3. 

the crude oil futures market on 

NYMEX,28 or if the New York Stock 

Exchange (‘‘NYSE’’) closes earlier than 

2:30 p.m. E.T., each Fund will compute 

its NAV at the time the NYSE closes. 

The NAV for the Funds’ Shares will be 

disseminated daily to all market 

participants at the same time. 

The Commission further believes that 

the proposal to list and trade the Shares 

is reasonably designed to promote fair 

disclosure of information that may be 

necessary to price the Shares 

appropriately and to prevent trading 

when a reasonable degree of 

transparency cannot be assured. If the 

Exchange becomes aware that the NAV 

with respect to the Shares is not 

disseminated to all market participants 

at the same time, it will halt trading in 

the Shares until such time as the NAV 

is available to all market participants. 

Further, the Exchange may halt trading 

during the day in which an interruption 

to the dissemination of the IFV or the 

value of the Benchmark occurs. If the 

interruption to the dissemination of the 

IFV or the value of the Benchmark 

persists past the trading day in which it 

occurred, the Exchange will halt trading 

no later than the beginning of the 

trading day following the interruption. 

Trading in Shares of a Fund will be 

halted if the circuit breaker parameters 

in NYSE Arca Equities Rule 7.12 have 

been reached. Trading also may be 

halted because of market conditions or 

for reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. The Exchange states that it 

has a general policy prohibiting the 

distribution of material, non-public 

information by its employees.29

Moreover, trading of the Shares will be 

subject to NYSE Arca Equities Rule 

8.200, Commentary .02(e), which sets 

forth certain restrictions on Equity 

Trading Permit (‘‘ETP’’) Holders acting 

as registered market makers in Trust 

Issued Receipts to facilitate 

surveillance. 

The Commission notes that the 

Exchange or the Financial Industry 

Regulatory Authority (‘‘FINRA’’), on 

behalf of the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares and certain 

Futures Contracts with other markets 

and other entities that are members of 

the ISG, and the Exchange or FINRA, on 

behalf of the Exchange, or both, may 

obtain trading information regarding 

trading in the Shares and certain 

Futures Contracts from such markets 

and other entities. In addition, the 

Exchange may obtain information 

regarding trading in the Shares and 

certain Futures Contracts from markets 

and other entities that are members of 

ISG or with which the Exchange has in 

place a CSSA.30 The Exchange is also 

able to obtain information regarding 

trading in the Shares, the physical 

commodities underlying Futures 

Contracts through ETP Holders, in 

connection with such ETP Holders’ 

proprietary or customer trades which 

they effect through ETP Holders on any 

relevant market. The Exchange can 

obtain market surveillance information, 

including customer identity 

information, with respect to transactions 

(including transactions in cash-settled 

options on Futures Contracts) occurring 

on U.S. futures exchanges, which are 

members of the ISG. 

The Exchange deems the Shares to be 

equity securities, thus rendering trading 

in the Shares subject to the Exchange’s 

existing rules governing the trading of 

equity securities. In support of this 

proposal, the Exchange represented that: 

(1) The Shares will conform to the 

initial and continued listing criteria 

under NYSE Arca Equities Rule 8.200. 

(2) The Exchange has appropriate 

rules to facilitate transactions in the 

Shares during all trading sessions. 

(3) Trading in the Shares will be 

subject to the existing trading 

surveillances administered by the 

Exchange, as well as cross-market 

surveillances administered by FINRA on 

behalf of the Exchange, which are 

designed to detect violations of 

Exchange rules and applicable federal 

securities laws, and 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. 

(4) Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders in an Information Bulletin 

of the special characteristics and risks 

associated with trading the Shares. 

Specifically, the Information Bulletin 

will discuss the following: (a) The risks 

involved in trading the Shares during 

the Early and Late Trading Sessions 

when an updated IFV will not be 

calculated or publicly disseminated; (b) 

the procedures for purchases and 

redemptions of Shares in Creation Units 

(and that Shares are not individually 

redeemable); (c) NYSE Arca Equities 

Rule 9.2(a), which imposes a duty of 

due diligence on its ETP Holders to 

learn the essential facts relating to every 

customer prior to trading the Shares; (d) 

how information regarding the IFV is 

disseminated; (e) how information 

regarding portfolio holdings is 

disseminated; (f) that a static IFV will be 

disseminated, between the close of 

trading on the ICE Futures U.S. and 

NYMEX and the close of the NYSE Arca 

Core Trading Session; (g) the 

requirement that ETP Holders deliver a 

prospectus to investors purchasing 

newly issued Shares prior to or 

concurrently with the confirmation of a 

transaction; and (h) trading information. 

(5) For initial and continued listing, 

each Fund will be in compliance with 

Rule 10A–3 under the Act,31 as 

provided by NYSE Arca Equities Rule 

5.3. 

(6) Each Fund will seek to achieve its 

respective investment objective by 

investing, under normal market 

conditions, substantially all of its assets 

in Futures Contracts. In the event 

position, price or accountability limits 

are reached with respect to Futures 

Contracts, each Fund may obtain 

exposure to the Benchmark through 

investments in Financial Instruments. 

To the extent that the Trust invests in 

Financial Instruments, it would first 

make use of exchange-traded Financial 

Instruments, if available. If an 

investment in exchange-traded 

Financial Instruments is unavailable, 

then the Trust would invest in Financial 

Instruments that clear through 

derivatives clearing organizations that 

satisfy the Trust’s criteria, if available. If 

an investment in cleared Financial 

Instruments is unavailable, then the 

Trust would invest in other Financial 

Instruments, including uncleared 

Financial Instruments in the OTC 

market. 

(7) The oil contract market is of 

significant size and liquidity, and has 

average daily volume of 650,000 

contracts and daily open interest of 

450,000 contracts. The Sponsor is 

registered as a commodity pool operator 

with the CFTC and is a member of the 

National Futures Association, and the 

Information Bulletin will reference that 

the CFTC has regulatory jurisdiction 

over the trading of Futures Contracts 

traded on U.S. markets. 

(8) Not more than 10% of the net 

assets of a Fund in the aggregate 

invested in Futures Contracts shall 

consist of Futures Contracts whose 

principal market is not a member of the 


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Federal Register / Vol. 82, No. 188 / Friday, September 29, 2017 / Notices 45647 

32The Commission notes that certain other 

proposals for the listing and trading of Managed 

Fund Shares include a representation that the 

exchange will ‘‘surveil’’ for compliance with the 

continued listing requirements. See, e.g., Securities 

Exchange Act Release No. 77499 (April 1, 2016), 81 

FR 20428 (April 7, 2016) (Notice of Filing of 

Amendment No. 2, and Order Granting Accelerated 

Approval of a Proposed Rule Change, as Modified 

by Amendment No. 2, to List and Trade Shares of 

the SPDR DoubleLine Short Duration Total Return 

Tactical ETF of the SSgA Active Trust), available 

at: http://www.sec.gov/rules/sro/bats/2016/34- 

77499.pdf. In the context of this representation, it 

is the Commission’s view that ‘‘monitor’’ and 

‘‘surveil’’ both mean ongoing oversight of the 

Fund’s compliance with the continued listing 

requirements. Therefore, the Commission does not 

view ‘‘monitor’’ as a more or less stringent 

obligation than ‘‘surveil’’ with respect to the 

continued listing requirements. 

33 15 U.S.C. 78f(b)(5). 

34 15 U.S.C. 78s(b)(2). 

35 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 80929 

(June 14, 2017), 82 FR 28157 (June 20, 2017) (SR– 

NYSEArca–2017–40) (‘‘Notice’’). 

5See Partial Amendment 2 to SR–NYSEArca– 

2017–40 (August 15, 2017). The Amendment also 

was submitted to the Commission as a comment 

letter on the Original Filing. See letter from Martha 

Redding, Associate General Counsel, NYSE Group, 

to Brent J. Fields, Secretary, Commission (August 

15, 2017), available at https://www.sec.gov/ 

Continued 

ISG or is a market with which the 

Exchange does not have a CSSA. 

(9) Each Fund will enter into swap 

agreements and other OTC transactions 

only with large, established and well 

capitalized financial institutions that 

meet certain credit quality standards 

and monitoring policies. Each Fund will 

use various techniques to minimize 

credit risk including early termination 

or reset and payment, using different 

counterparties and limiting the net 

amount due from any individual 

counterparty. 

(10) A minimum of 100,000 Shares of 

each Fund will be outstanding at the 

commencement of trading on the 

Exchange. 

The Exchange represents that all 

statements and representations made in 

this filing regarding (a) the description 

of the portfolios of the Funds or 

Benchmark, (b) limitations on portfolio 

holdings or the Benchmark, or (c) the 

applicability of Exchange listing rules 

specified in this rule filing shall 

constitute continued listing 

requirements for listing the Shares on 

the Exchange. The issuer has 

represented to the Exchange that it will 

advise the Exchange of any failure by 

the Funds to comply with the continued 

listing requirements, and, pursuant to 

its obligations under Section 19(g)(1) of 

the Act, the Exchange will monitor for 

compliance with the continued listing 

requirements.32 If a Fund is not in 

compliance with the applicable listing 

requirements, the Exchange will 

commence delisting procedures under 

NYSE Arca Equities Rule 5.5(m). 

This approval order is based on all of 

the Exchange’s representations and 

description of the Funds, including 

those set forth above and in Amendment 

No. 2 to the proposed rule change. The 

Commission notes that the Shares must 

comply with the requirements of NYSE 

Arca Equities Rule 8.200 and 

Commentary .02 thereto to be listed and 

traded on the Exchange on an initial and 

continuing basis. 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change, as modified by Amendment 

Nos. 2 and 3 thereto, is consistent with 

Section 6(b)(5) of the Act 33 and the 

rules and regulations thereunder 

applicable to a national securities 

exchange. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act,34

that the proposed rule change (SR– 

NYSEArca–2017–05), as modified by 

Amendment Nos. 2 and 3 thereto, be, 

and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.35

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–20896 Filed 9–28–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81713; File No. SR– 

NYSEArca–2017–109] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending NYSE Arca 

Rule 14.2 To Make Technical and 

Conforming Updates in Connection 

With the Recent Merger of NYSE Arca 

Equities, Inc. With and Into the 

Exchange 

September 25, 2017. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

September 12, 2017, NYSE Arca, Inc. 

(the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed 

with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I and II below, which Items 

have been prepared by the selfregulatory organization. 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 

NYSE Arca Rule 14.2 (Liability of 

Exchange) to make technical and 

conforming updates in connection with 

the recent merger of NYSE Arca 

Equities, Inc. (‘‘NYSE Arca Equities’’) 

with and into the Exchange. 

The proposed rule change is available 

on the Exchange’s Web site at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

NYSE Arca Rule 14.2 to make technical 

and conforming updates in connection 

with the recent merger of its whollyowned subsidiary NYSE Arca Equities, 

Inc. (‘‘NYSE Arca Equities’’) with and 

into the Exchange (the ‘‘Merger’’). 

On June 2, 2017, the Exchange filed 

rule changes with the Securities and 

Exchange Commission (‘‘Commission’’) 

in connection with the proposed Merger 

(the ‘‘Original Filing’’).4 On August 15, 

2017, the Exchange filed a partial 

amendment to the Original Filing (the 

‘‘Amendment’’), which, among other 

things, amended the Original Filing to 

reflect changes to the proposed rule text 

that resulted from changes to the NYSE 

Arca and NYSE Arca Equities rules that 

became operative after June 2, 2017.5 On 


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