Document ID: SEC-2014-0501-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2014-03-28T04:00Z

[Federal Register Volume 79, Number 60 (Friday, March 28, 2014)]
[Notices]
[Pages 17625-17627]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-06967]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71779; File No. SR-NYSEArca-2014-26]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to Changes 
to the Means of Achieving the Investment Objective Applicable to the 
db-X Ultra-Short Duration Fund

March 24, 2014.
    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 March 18, 2014, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to reflect changes to the means of achieving 
the investment objective applicable to the db-X Ultra-Short Duration 
Fund (the ``Fund''). The Commission has approved listing and trading of 
shares of the Fund on the Exchange under NYSE Arca Equities Rule 
8.600.\4\ The text of 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.
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    \4\ See Securities Exchange Act Release No. 71617 (February 26, 
2014), 79 FR 12257 (March 4, 2014) (SR-NYSEArca-2013-135) (order 
approving listing and trading on the Exchange of the db-X Ultra-
Short Duration Fund and db-X Managed Municipal Bond Fund) (``Prior 
Order''). See also Securities Exchange Act Release No. 71269 
(January 9, 2014), 79 FR 2725 (January 15, 2014) (SR-NYSEArca-2013-
135) (``Prior Notice,'' and together with the Prior Order, the 
``Prior Release'').

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[[Page 17626]]

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 Commission has approved listing and trading on the Exchange of 
shares (``Shares'') of the Fund, a series of the DBX ETF Trust (the 
``Trust''),\5\ under NYSE Arca Equities Rule 8.600, which governs the 
listing and trading of Managed Fund Shares.
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    \5\ See note 4, supra.
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    The Shares are offered by the Trust, a statutory trust organized 
under the laws of the State of Delaware and registered with the 
Commission as an open-end management investment company.\6\ The Fund is 
a series of the DBX ETF Trust (``Trust''), a statutory trust organized 
under the laws of the State of Delaware and registered with the 
Commission as an open-end management investment company. The Fund will 
be managed by DBX Advisors LLC (the ``Adviser''). Deutsche Investment 
Management Americas Inc. will be the investment sub-adviser for the 
Fund (the ``Sub-Adviser'').
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    \6\ The Trust is registered under the Investment Company Act of 
1940 (``1940 Act'') (15 U.S.C. 80a-1). On December 19, 2012, the 
Trust filed with the Commission an amendment to its registration 
statement on Form N-1A under the Securities Act of 1933 (15 U.S.C. 
77a) (``Securities Act'') and the 1940 Act relating to the Fund 
(File Nos. 333-170122 and 811-22487) (the ``Registration 
Statement''). The description of the operation of the Trust and the 
Fund herein is based, in part, on the Registration Statement. In 
addition, the Commission has issued an order granting certain 
exemptive relief to the Trust under the 1940 Act. See Investment 
Company Act Release No. 30811 (November 26, 2013).
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    In this proposed rule change, the Exchange proposes to reflect 
changes to the description of the measures the Adviser and Sub-Adviser 
will utilize to implement the Fund's investment objective, as described 
below.\7\
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    \7\ The changes described herein will be effective upon filing 
with the Commission of another amendment to the Trust's Registration 
Statement. See note 6, supra. The Adviser represents that the 
Adviser and Sub-Adviser will manage the Fund in the manner described 
in the Prior Release, and will not implement the changes described 
herein until the instant proposed rule change is operative.
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    As described in the Prior Release, the investment objective of the 
Fund will be to seek to provide current income consistent with total 
return. Under normal market conditions,\8\ the Fund will seek to 
achieve its investment objective by investing at least 65% of its net 
assets in debt securities.\9\ As stated in the Prior Release, the Fund 
may invest its remaining assets in other securities and financial 
instruments, as described in the Prior Release. The Prior Release 
states that the Fund generally intends to use interest rate swaps and/
or small amounts of currency forwards for duration management.
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    \8\ The term ``under normal market conditions'' includes, but is 
not limited to, the absence of extreme volatility or trading halts 
in the fixed income 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 man-made disaster, act of God, armed conflict, act of 
terrorism, riot or labor disruption, or any similar intervening 
circumstance.
    \9\ As described in the Prior Release, debt securities will 
include: (1) Debt securities of U.S. and foreign government agencies 
and instrumentalities, and U.S. Government obligations (including 
U.S. agency mortgage pass-through securities, as described below); 
(2) U.S. and foreign corporate debt securities, mortgage-backed and 
asset-backed securities, adjustable rate loans that have a senior 
right to payment (``senior loans''), money market instruments, and 
fixed and other floating-rate debt securities; and (3) taxable 
municipal and tax-exempt municipal bonds. The Fund normally will 
target an average portfolio duration (a measure of sensitivity to 
interest rate changes) of no longer than one year.
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    The Exchange proposes to supplement the description in the Prior 
Release of other securities and financial instruments in which the Fund 
may invest for duration management to add interest rate futures and 
U.S. Treasury futures. Interest rate futures and U.S. Treasury futures 
will be included under the remaining assets in which the Fund may 
invest (i.e., securities and financial instruments other than the at 
least 65% of net assets invested in debt securities under normal market 
conditions). All interest rate futures and U.S. Treasury futures in 
which the Fund invests will be traded on a U.S. futures exchange 
regulated by the Commodity Futures Trading Commission.
    The Exchange notes that the Commission has approved similar 
representations relating to issues of Managed Fund Shares proposed to 
be listed and traded on the Exchange.\10\
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    \10\ See, e.g., Prior Order (approving use of U.S. Treasury 
futures by the db-X Managed Municipal Bond Fund), and Securities 
Exchange Act Release No. 67001 (May 16, 2012), 77 FR 30341 (May 22, 
2014) (SR-NYSEArca-2012-21) (order approving listing and trading on 
the Exchange of First Trust North American Infrastructure Fund under 
NYSE Arca Equities Rule 8.600).
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    In computing the Fund's net asset value per Share, U.S. Treasury 
futures and interest rate futures will be valued at the settlement 
price determined by the applicable exchange.
    Price information regarding U.S. Treasury futures and interest rate 
futures will be available from the applicable exchange and from major 
market data vendors.
    The Adviser represents that there is no change to the Fund's 
investment objective from that described in the Prior Release. The Fund 
will comply with all initial and continued listing requirements under 
NYSE Arca Equities Rule 8.600.
    Except for the changes noted above, all other facts presented and 
representations made in the Prior Release remain unchanged.
    All terms referenced but not defined herein are defined in the 
Prior Release.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \11\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest.
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    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in NYSE Arca Equities Rule 
8.600. With respect to the Fund investments in U.S. Treasury futures 
and interest rate futures, the Exchange notes that the Commission has 
approved similar representations relating to issues of Managed Fund 
Shares proposed to be listed and traded on the Exchange.\12\ All 
interest rate futures and U.S. Treasury futures in which the Fund 
invests will be traded on a U.S. futures exchange. In computing the 
Fund's net asset value per Share, U.S. Treasury futures and interest 
rate futures will be valued at the settlement price determined by the 
applicable exchange. Price information regarding U.S. Treasury futures 
and interest rate futures will be available from the applicable 
exchange and from major market data vendors, and the availability of 
such information will

[[Page 17627]]

help deter fraudulent and manipulative acts and practices.
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    \12\ See note 10, supra.
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    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that the Adviser represents that the proposed change will permit the 
Adviser to use additional means to achieve the Fund's investment 
objective through investments in interest rate futures and U.S. 
Treasury futures for duration management. The Fund will comply with all 
initial and continued listing requirements under NYSE Arca Equities 
Rule 8.600.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that the Fund will comply with all initial and 
continued listing requirements under NYSE Arca Equities Rule 8.600. The 
Adviser represents that the purpose of this change is to permit Fund 
investments in U.S. Treasury futures and interest rate futures for 
duration management. The Commission has previously approved investments 
in such futures contracts for other issues of Managed Fund Shares.\13\ 
The Adviser represents that there is no change to the Fund's investment 
objective. Except for the change noted above, all other representations 
made in the Prior Release remain unchanged.
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    \13\ See note 10, supra.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed change to the 
Fund's means of achieving the investment objective will permit the Fund 
to adjust its portfolio to allow the Fund to meet its investment 
objectives by investing in U.S. Treasury futures and interest rate 
futures and will enhance competition among issues of Managed Fund 
Shares that invest in fixed income securities.

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

    Because the 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, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6) 
thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The Exchange states that waiver of this requirement will: (1) 
Facilitate duration management by the Fund; (2) provide additional 
means for the Adviser to meet the Fund's investment objective, which 
remains unchanged; and (3) allow the Fund to meet its investment 
objective in the most efficient manner possible. For these reasons, the 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
The Commission also notes that all the interest rate and U.S. Treasury 
futures in which the Fund will invest will be listed on U.S. futures 
exchanges regulated by the Commodity Futures Trading Commission. 
Therefore, the Commission designates the proposed rule change to be 
operative upon filing.\16\
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    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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 No. SR-NYSEArca-2014-26 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 No. SR-NYSEArca-2014-26. 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 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 No. SR-NYSEArca-2014-26 and should be 
submitted on or before April 18, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-06967 Filed 3-27-14; 8:45 am]
BILLING CODE 8011-01-P