Document ID: SEC-2016-1499-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2016-08-26T04:00Z

[Federal Register Volume 81, Number 166 (Friday, August 26, 2016)]
[Notices]
[Pages 59002-59004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20454]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78627; File No. SR-NYSEArca-2016-67]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting 
Proceedings To Determine Whether To Approve or Disapprove a Proposed 
Rule Change, as Modified by Amendment No. 3, To List and Trade Shares 
of the Natixis Seeyond International Minimum Volatility ETF Under NYSE 
Arca Equities Rule 8.600

August 22, 2016.
    On May 5, 2016, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 
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 Natixis Seeyond International 
Minimum Volatility ETF (``Fund'') under NYSE Arca Equities Rule 8.600. 
The proposed rule change was published for comment in the Federal 
Register on May 25, 2016.\3\ On June 13, 2016, the Exchange filed 
Amendment No. 1 to the proposed rule change, which replaced and 
superseded the proposed rule change as originally filed.\4\ On June 22, 
2016, the Exchange filed Amendment No. 2 to the proposed rule 
change.\5\ On July 1, 2016, the Exchange filed Amendment No. 3 to the 
proposed rule change, which replaced and superseded the proposed rule 
change as modified by Amendments No. 1 and No. 2.\6\ The Commission has 
received no comments on the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 77861 (May 19, 
2016), 81 FR 33291.
    \4\ In Amendment No. 1, the Exchange: (1) Narrows the universe 
of investments that may be held by the Fund; (2) discusses the types 
of corporate bonds of foreign issuers that the Fund would ordinarily 
hold; (3) clarifies potentially ambiguous language in the filing.
    \5\ In Amendment No. 2, the Exchange proposes standards for the 
corporate bonds of foreign issuers that may be held by the Fund and 
clarifies how spot foreign currency transactions would be priced for 
purposes of calculating the net asset value (``NAV'') of the Fund.
    \6\ In Amendment No. 3, the Exchange revises the standards for 
the Fund's investment in non-U.S. equity securities. Amendments No. 
1, No. 2, and No. 3 are available at: http://www.sec.gov/comments/sr-nysearca-2016-67/nysearca201667.shtml.
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    On June 30, 2016, pursuant to section 19(b)(2) of the Act,\7\ 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.\8\ The Commission has not received any comments on the 
proposal, as modified by Amendment No. 3.
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ See Securities Exchange Act Release No. 78204, 81 FR 44393 
(July 7, 2016). The Commission designated a longer period within 
which to take action on the proposed rule change and designated 
August 23, 2016, as the date by which it should approve, disapprove, 
or institute proceedings to determine whether to disapprove the 
proposed rule change.
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    This order institutes proceedings under section 19(b)(2)(B) of the 
Act \9\ to determine whether to approve or disapprove the proposed rule 
change, as modified by Amendment No. 3.
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    \9\ 15 U.S.C. 78s(b)(2)(B).
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I. The Exchange's Description of Proposal \10\
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    \10\ The Commission notes that additional information regarding 
Natixis ETF Trust (``Trust''), the Fund, its investments, and the 
Shares, including investment strategies, risks, creation and 
redemption procedures, fees, portfolio holdings disclosure policies, 
calculation of NAV, distributions, and taxes, among other things, 
can be found in Amendment No. 3, supra note 6, and the initial 
registration statement filed with the Commission on March 14, 2016 
on Form N-1A under the Securities Act of 1933 (15 U.S.C. 77a) and 
under the Investment Company Act of 1940 (15 U.S.C. 80a-1) relating 
to the Fund (File Nos. 333-210156 and 811-23146) (File Nos. 333-
210156 and 811-23146) (``Registration Statement''), as applicable.
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    The Exchange proposes to list and trade the Shares under NYSE Arca 
Equities Rule 8.600, which governs the listing and trading of Managed 
Fund Shares. The Shares will be offered by the Trust, which is 
registered with the Commission as an open-end management investment 
company. NGAM Advisors, L.P. will serve as the investment adviser and 
administrator to the Fund (``Adviser''). Natixis Asset Management U.S., 
LLC will serve as the Fund's sub-adviser (``Sub-Adviser''). State 
Street Bank and Trust Company will serve as custodian and transfer 
agent for the Fund.

Principal Investments

    The Exchange states that, under normal circumstances,\11\ the Fund 
will invest primarily in non-U.S. equity securities, which are common 
stocks and ``Depositary Receipts.'' \12\ The Fund

[[Page 59003]]

may invest in companies of any size and typically will invest in a 
number of different countries throughout the world. The Fund's 
investments may include non-U.S. equity securities traded over-the-
counter (``OTC'') as well as those traded on a U.S. or foreign 
securities exchange.\13\
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    \11\ The term ``under normal circumstances'' includes, but is 
not limited to, the absence of extreme volatility or trading halts 
in the securities markets or the financial markets generally; 
circumstances under which the Fund's investments are made for 
temporary defensive purposes; operational issues (e.g., systems 
failures) causing dissemination of inaccurate market information; or 
force majeure type events such as natural or man-made disaster, act 
of God, armed conflict, act of terrorism, riot or labor disruption, 
or any similar intervening circumstance.
    \12\ Investments in common stock of foreign corporations may be 
in the form of American Depositary Receipts (``ADRs'') and Global 
Depositary Receipts (collectively ``Depositary Receipts''). Not more 
than 10% of the Fund's assets will be invested in non-exchange-
listed ADRs.
    \13\ Non-U.S. equity securities in the Fund's portfolio will 
meet the following criteria on a continual basis: (1) Non-U.S. 
equity securities each shall have a minimum market value of at least 
$100 million; (2) non-U.S. equity securities each shall have a 
minimum global monthly trading volume of 250,000 shares, or minimum 
global notional volume traded per month of $25,000,000, averaged 
over the last six months; (3) the most heavily weighted non-U.S. 
equity security shall not exceed 25% of the weight of the Fund's 
entire portfolio, and, to the extent applicable, the five most 
heavily weighted non-U.S. equity securities shall not exceed 60% of 
the weight of the Fund's entire portfolio; and (4) each non-U.S. 
equity security shall be listed and traded on an exchange that has 
last-sale reporting. See Amendment No. 3, supra note 6, at 6, n.8.
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Other Investments

    The Exchange states that, while the Fund, under normal 
circumstances, will invest primarily (more than 50% of its assets) in 
non-U.S. equity securities, as described above, the Fund will invest 
its remaining assets in the securities and financial instruments 
described below (``Non-Principal Investments'').
    The Fund may invest in: certificates of deposit; time deposits, 
which are non-negotiable deposits maintained in a bank for a specified 
period of time up to seven days at a stated interest rate; and bankers' 
acceptances, which are credit instruments evidencing the obligation of 
a bank to pay a draft drawn on it by a customer.
    The Fund also may purchase U.S. dollar-denominated obligations 
issued by foreign branches of domestic banks or foreign branches of 
foreign banks (``Eurodollar'' obligations) and domestic branches of 
foreign banks (``Yankee dollar'' obligations).
    The Fund may invest in the following U.S. government securities: 
U.S. Treasury Bills; U.S. Treasury Notes and Bonds; U.S. Treasury 
Floating Rate Notes; and Treasury Inflation-Protected Securities.
    The Fund may invest in other investment companies, including 
exchange-traded funds. The Fund may invest in U.S. or foreign exchange-
traded real estate investment trusts (``REITs'').
    The Fund may invest in preferred stock traded on a U.S. or foreign 
exchange or OTC.
    The Fund may invest in the following foreign debt securities, all 
or a portion of which may be non-U.S. dollar-denominated: (1) Debt 
obligations issued or guaranteed by non-U.S. national, provincial, 
state, municipal or other governments or by their agencies or 
instrumentalities, including ``Brady Bonds''; (ii) debt obligations of 
supranational entities; (iii) debt obligations of the U.S. government 
issued in non-dollar securities; (iv) debt obligations and other fixed-
income securities of foreign corporate issuers; \14\ and (v) non-U.S. 
dollar-denominated securities of U.S. corporate issuers.
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    \14\ Under normal circumstances, the Fund will invest in 
corporate bond issuances that have at least $100,000,000 par amount 
outstanding in developed countries and at least $200,000,000 par 
amount outstanding in emerging market countries. See Amendment No. 
3, supra note 6, at 11.
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    The Fund may engage in foreign currency transactions for both 
hedging and investment purposes. To protect against a change in the 
foreign currency exchange rate between the date on which the Fund 
contracts to purchase or sell a security and the settlement date for 
the purchase or sale, to gain exposure to one or more foreign 
currencies or to ``lock in'' the equivalent of a dividend or interest 
payment in another currency, the Fund might purchase or sell a foreign 
currency on a spot (i.e., cash) basis at the prevailing spot rate.
    The Fund may enter into repurchase agreements.
    The Fund may invest in money market instruments. Money market 
instruments are high-quality, short-term securities.
    The Fund may invest in U.S. equity securities (other than 
Depositary Receipts) that are traded on a U.S. exchange or OTC.

II. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEArca-2016-67 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to section 
19(b)(2)(B) of the Act \15\ to determine whether the proposed rule 
change, as modified by Amendment No. 3, 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 modified by Amendment No. 3. 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, as modified by Amendment No. 3.
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    \15\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to section 19(b)(2)(B) of the Act,\16\ 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.'' \17\
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    \16\ Id.
    \17\ 15 U.S.C. 78f(b)(5).
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III. 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.\18\
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    \18\ Section 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).
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    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by September 16, 2016. Any person who wishes to file a 
rebuttal to any other person's submission must file that rebuttal by 
September 30, 2016.
    The Commission asks that commenters address the sufficiency of the 
Exchange's statements in support of the proposal, which are set forth 
in the Notice,\19\ in addition to any other comments they may wish to 
submit about the proposed rule change, as modified by Amendment No. 3. 
In

[[Page 59004]]

particular, the Commission seeks comment on the following:
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    \19\ See Notice, supra note 3.
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    1. In general, do commenters believe that the proposal is 
consistent with the requirements of section 6(b)(5) of the Act, which 
requires that the rules of a national securities exchange be designed, 
among other things, 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?
    2. What are commenters' views regarding the lack of quantitative 
requirements proposed with respect to certain Non-Principal Investments 
(e.g., U.S. equity securities other than Depositary Receipts, preferred 
stock, and foreign REITs), which may constitute up to 50% of the Fund's 
portfolio? Is the proposal adequate, with respect to Non-Principal 
Investments, to ensure that the price of the Shares is not susceptible 
to manipulation?
    3. What are commenters' views regarding whether the proposal is 
adequate, with respect to Non-Principal Investments, to ensure adequate 
pricing transparency for assets held in the Fund's portfolio?
    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-2016-67 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-2016-67. 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-2016-67 and should 
be submitted on or before September 16, 2016. Rebuttal comments should 
be submitted by September 30, 2016.
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    \20\ 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-20454 Filed 8-25-16; 8:45 am]
 BILLING CODE 8011-01-P