Document ID: SEC-2014-1849-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2014-11-04T05:00Z

[Federal Register Volume 79, Number 213 (Tuesday, November 4, 2014)]
[Notices]
[Pages 65437-65443]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26125]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73464; File No. SR-NYSEArca-2014-120]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to Listing and Trading Shares of the 
Sit Rising Rate Fund Under NYSE Arca Equities Rule 8.200

October 29, 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 October 16, 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, II, 
and III 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 list and trade shares of the Sit Rising 
Rate Fund under NYSE Arca Equities Rule 8.200. 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.

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NYSE Arca Equities Rule 8.200, Commentary .02 permits the trading 
of Trust Issued Receipts (``TIRs'') either by listing or pursuant to 
unlisted trading privileges (``UTP'').\4\ The Exchange proposes to list 
and trade shares (``Shares'') of the Sit Rising Rate Fund (``Fund'') 
pursuant to NYSE Arca Equities Rule 8.200. The Fund is a series of the 
ETF Managers Group Commodity Trust I (the ``Trust''), a Delaware 
statutory trust.\5\
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    \4\ Commentary .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.
    \5\ The Trust submitted a registration statement with respect to 
the Fund on Form S-1 under the Securities Act of 1933 (``1933 Act'') 
on October 7, 2014 (File No. 333-199190) (the ``Registration 
Statement''). The description of the Fund and the Shares contained 
herein are based, in part, on the Registration Statement.
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    The Exchange notes that the Commission has previously approved the 
listing and trading of other issues of TIRs on the American Stock 
Exchange LLC,\6\ trading on NYSE Arca pursuant to UTP,\7\ and listing 
on NYSE Arca.\8\ In

[[Page 65438]]

addition, the Commission has approved the listing and trading of other 
exchange-traded fund-like products linked to the performance of 
underlying currencies and commodities.\9\
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    \6\ See, e.g., Securities Exchange Act Release No. 58161 (July 
15, 2008), 73 FR 42380 (July 21, 2008) (SR-Amex-2008-39).
    \7\ See, e.g., Securities Exchange Act Release No. 58163 (July 
15, 2008), 73 FR 42391 (July 21, 2008) (SR-NYSEArca-2008-73).
    \8\ See, e.g., Securities Exchange Act Release No. 70209 (August 
15, 2013), 78 FR 51269 (June 24, 2013) (SR-NYSEArca-2013-60); 
Securities Exchange Act Release No. 58457 (September 3, 2008), 73 FR 
52711 (September 10, 2008) (SR-NYSEArca-2008-91).
    \9\ See, e.g., Securities Exchange Act Release Nos. 56131 (July 
25, 2007), 77 FR 42212 (August 1, 2007) (SR-NYSEArca-2007-57) (order 
approving listing and trading on NYSE Arca of shares of eight issues 
of Commodity Trust Shares); 57456 (March 7, 2008), 73 FR 13599 
(March 13, 2008) (SR-NYSEArca-2007-91) (order granting accelerated 
approval for NYSE Arca listing and trading of shares of the iShares 
GS Commodity Trusts); 59781 (April 17, 2009), 74 FR 18771 (April 24, 
2009) (SR-NYSEArca-2009-28) (order granting accelerated approval for 
NYSE Arca listing and trading of shares of the ETFS Silver Trust); 
59895 (May 8, 2009), 74 FR 22993 (May 15, 2009) (SR-NYSEArca-2009-
40) (order granting accelerated approval for NYSE Arca listing the 
ETFS Gold Trust); 62527 (July 19, 2010), 75 FR 43606 (July 26, 2010) 
(SR-NYSEArca-2010-44) (order approving listing and trading on NYSE 
Arca of shares of the United States Commodity Index Fund).
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    According to the Registration Statement, the Fund's sponsor and 
investment manager is ETF Managers Capital LLC (``ETFMC'' or the 
``Sponsor''), a limited liability company that is a commodity pool 
operator (``CPO'') that is registered with the Commodity Futures 
Trading Commission (``CFTC'') \10\ and is a member of the National 
Futures Association (``NFA''). U.S. Bancorp Fund Services will be the 
transfer agent and for the Shares and administrator for the Fund. 
Esposito Securities LLC (the ``Distributor'') will provide statutory 
and wholesaling distribution services.
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    \10\ The Sponsor is not a broker-dealer or affiliated with a 
broker-dealer.
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Fund's Investment Objective and Strategy
    The Fund's investment objective will be to profit from rising 
interest rates by tracking the performance of a portfolio (the 
``Benchmark Portfolio'') consisting of exchange traded futures 
contracts and options on futures on 2, 5 and 10-year U.S. Treasury 
securities (``Treasury Instruments'') weighted to achieve a targeted 
negative 10-year average effective portfolio duration (the ``Benchmark 
Component Instruments''). The Fund will seek to achieve its investment 
objective by investing in the Benchmark Component Instruments currently 
constituting the Benchmark Portfolio. The Benchmark Portfolio will be 
maintained by Sit Fixed Income Advisors II, LLC (``Sit'') and will be 
rebalanced, reconstituted, or both, monthly, typically on the 15th of 
each month and on the next business day if the 15th is a holiday, 
weekend, or other day on which the national exchanges are closed, to 
maintain a negative 10-year average effective duration. The Benchmark 
Portfolio will maintain a net short position in Treasury Instruments. 
There will normally be substantially more net short exposure than net 
long exposure. The Fund will not use futures contracts or options to 
obtain leveraged investment results. The Benchmark Component 
Instruments constituting the Benchmark Portfolio and anticipated 
rebalancing dates, as well as the daily holdings of the Fund, will be 
available on the Fund's Web site at www.risingratefund.com.
    The weightings of the Treasury Instruments constituting the 
Benchmark Portfolio and the Fund will be based on each maturity's 
duration contribution. Longer duration treasuries will account for a 
more meaningful portion of the Fund's price sensitivity to changes in 
interest rates. As of October 9, 2014, the Benchmark Portfolio 
consisted of:

------------------------------------------------------------------------
                Treasury instrument  (%)                  % of Portfolio
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2 Year U.S. Treasury Futures............................              45
5 Year U.S. Treasury Futures............................              30
5 Year U.S. Treasury Call Options.......................              15
10 Year U.S. Treasury Put Options.......................              10
                                                         ---------------
                                                                     100
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    The relative weightings of the Benchmark Component Instruments will 
be shifted between maturities only when there are material changes in 
the shape of the yield curve, for example, if the Federal Reserve began 
raising short term interest rates more than long term interest rates. 
In such an instance, Sit, which maintains the Benchmark Portfolio, will 
increase the weightings of the 2-year and reduce the weighting in the 
10-year maturity Treasury Instruments. Conversely, Sit will do the 
opposite if the Federal Reserve began raising long term interest rates 
more than short term interest rates. Reconstitution and rebalancing 
each will occur monthly, on the 15th, unless there are radical changes 
in the yield curve such that effective duration is outside of a range 
from negative nine to negative 11-year average effective duration, in 
which case Sit will adjust the maturities of the Treasury Instruments 
before the next expected monthly reconstitution.
    The Benchmark Portfolio will be invested in Benchmark Component 
Instruments and rebalanced, as noted above, to maintain a negative 
average effective portfolio duration of approximately 10 years. 
Duration is a measure of estimated price sensitivity relative to 
changes in interest rates. Portfolios with longer durations are 
typically more sensitive to changes in interest rates. For example, if 
interest rates rise by 1%, the market value of a security with an 
effective duration of 5 years would decrease by 5%, with all other 
factors being constant, and likewise the market value of a security 
with an effective duration of negative 5 years would increase by 5%, 
with all other factors being constant. Duration estimates are based on 
certain assumptions by Sit and are subject to a number of limitations. 
Duration is a more accurate estimate of price sensitivity provided 
interest rate changes are small and occur equally in short-term and 
long-term securities. Investments in debt securities typically decrease 
in value when interest rates rise. The risk is usually greater for 
longer-term debt securities.
    The Fund will incur certain expenses in connection with its 
operations. The Fund will hold cash or cash equivalents such as U.S. 
Treasuries or other high credit quality, short-term fixed-income or 
similar securities (such as shares of money market funds and 
collateralized repurchase agreements) for direct investment or as 
collateral for the Treasury Instruments and for other liquidity 
purposes and to meet redemptions that may be necessary on an ongoing 
basis. These expenses and income from the cash and cash equivalent 
holdings may cause imperfect correlation between changes in the Fund's 
NAV and changes in the Benchmark Portfolio, because the Benchmark 
Portfolio does not reflect expenses or income.
Net Asset Value
    According to the Registration Statement, the net asset value 
(``NAV'') of the Fund will be calculated by taking the current market 
value of its total assets, subtracting any liabilities, and dividing 
that total by the total number of outstanding shares.
    The Administrator will calculate the NAV daily and the NAV will be 
released after 4:00 p.m. Eastern Time (``E.T.''), the end of the Core 
Trading Session on the Exchange. For purposes of calculating NAV, the 
Administrator will use the closing price of the Treasury Instruments on 
the U.S. exchanges on which the Treasury Instruments are traded 
(primarily on the exchanges within the Chicago Mercantile Exchange 
Group of exchanges (collectively, the ``CME'')).
    Reverse repurchase agreements will generally be valued at bid 
prices received from independent pricing services as of the announced 
closing time for trading in such instruments.

[[Page 65439]]

Intraday Indicative Value (``IIV'')
    According to the Registration Statement, the Exchange will 
calculate and disseminate throughout the core trading session on each 
trading day an updated IIV for the Fund. The IIV will be calculated by 
using the Fund's prior day's closing NAV per share as a base and 
updating that value throughout the trading day to reflect changes in 
the most recently reported trade price for the Benchmark Component 
Instruments. The net asset value of the Fund's cash and cash equivalent 
holdings, on the other hand, will not be updated throughout the day.
    The IIV will be calculated on a per share basis every 15 seconds on 
a delayed basis during the Core Trading Session (9:30 a.m. E.T. to 4:00 
p.m. E.T.) on the Exchange. The normal trading hours of the CME are 
10:00 a.m. to 2:30 p.m. E.T. This means that there is a gap in time at 
the beginning and the end of each day during which the Fund's Shares 
are traded on the Exchange but real-time CME trading prices for 
contracts traded on the CME are unavailable. During such gaps in time 
the IIV will be calculated based on the end of day price of such 
contracts from the CME's immediately preceding trading session.
    According to the Registration Statement, the Fund will provide the 
independent third party calculator with information to calculate the 
IIV, but the Fund will not be involved in the actual calculation of the 
IIV and is not responsible for the calculation or dissemination of the 
IIV. The Fund makes no warranty as to the accuracy of the IIV. The IIV 
should not be viewed as a ``real-time'' update of NAV because the IIV 
is not calculated in the same manner as NAV, which will be computed 
once per day.
    The Exchange disseminates the IIV through the facilities of CTA/CQ 
High Speed Lines. In addition, the IIV is published on the NYSE Arca's 
Web site and is available through on-line information services such as 
Bloomberg and Reuters.
    According to the Registration Statement, dissemination of the IIV 
provides additional information that is not otherwise available to the 
public and is useful to investors and market professionals in 
connection with the trading of the Fund Shares on the Exchange. 
Investors and market professionals are able throughout the trading day 
to compare the market price of the Fund and the IIV. If the market 
price of the Fund Shares diverges significantly from the IIV, market 
professionals will have an incentive to execute arbitrage trades. Such 
arbitrage trades can tighten the tracking between the market price of 
the Fund and the IIV and thus can be beneficial to all market 
participants.
    The IIV should not be viewed as an actual real time update of the 
NAV, because the NAV is calculated only once at the end of each trading 
day based upon the relevant end of day values of the Fund's 
investments. The IIV also should not be viewed as a precise value of 
the Shares.
    In addition to the IIV, the value of the Benchmark Portfolio 
(excluding the cash and cash equivalent holdings) will be calculated 
every 15 seconds on a delayed basis and disseminated through similar 
means as the IIV.
Creation and Redemption of Shares
    The Fund will offer and issue Shares only in aggregations of a 
specified number of Shares (each, a ``Creation Unit''). Creation Unit 
sizes will be 25,000 Shares per Creation Unit. The Creation Unit size 
for a Fund may change. The Fund will create and redeem Shares from time 
to time in one or more ``Creation Baskets'' or ``Redemption Baskets'' 
as described below. The creation and redemption of baskets will only 
made in exchange for delivery to the Fund or the distribution by the 
Fund of the amount of Treasuries and any cash represented by the 
baskets being created or redeemed, the amount of which is based on the 
combined NAV of the number of shares included in the baskets being 
created or redeemed determined as of 4:00 p.m. E.T. on the day the 
order to create or redeem baskets is properly received.
    On any business day other than a day when any of the NYSE Arca, the 
CME or the New York Stock Exchange are closed for regular trading 
(``Business Day''), an Authorized Purchaser \11\ may place an order 
with the Distributor to create one or more baskets. Purchase orders 
must be placed by 12:00 p.m. E.T. or the close of regular trading on 
the NYSE Arca, whichever is earlier. The day on which the Distributor 
receives a valid purchase order is referred to as the purchase order 
date. By placing a purchase order, an Authorized Purchaser agrees to 
deposit Treasuries, cash or a combination of Treasuries and cash, as 
described below. Prior to the delivery of baskets for a purchase order, 
the Authorized Purchaser must also have wired to the Custodian the non-
refundable transaction fee due for the purchase order.
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    \11\ Authorized Purchasers will be the only persons that may 
place orders to create and redeem baskets. Authorized Purchasers 
must be (1) registered broker-dealers or other securities market 
participants, and (2) have an account with the Depository Trust 
Company. To become an Authorized Purchaser, a person must enter into 
an Authorized Purchaser Agreement with ETFMC. The Authorized 
Purchaser Agreement provides the procedures for the creation and 
redemption of baskets and for the delivery of the Treasuries and any 
cash required for such creation and redemptions. The Authorized 
Purchaser Agreement and the related procedures attached thereto may 
be amended by the Fund, without the consent of any limited partner 
or shareholder or Authorized Purchaser.
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    The total deposit required to create each basket (``Creation Basket 
Deposit'') is the amount of Treasuries and/or cash that is in the same 
proportion to the total assets of the Fund (net of estimated accrued 
but unpaid fees, expenses and other liabilities) on the purchase order 
date as the number of shares to be created under the purchase order is 
in proportion to the total number of shares outstanding on the purchase 
order dates. ETFMC determines, directly in its sole discretion or in 
consultation with the Administrator, the requirements for Treasuries 
and the amount of cash, including the maximum permitted remaining 
maturity of a Treasury and proportions of Treasury and cash that may be 
included in deposits to create baskets. The Distributor will publish 
such requirements at the beginning of each Business Day. The amount of 
cash deposit required is the difference between the aggregate market 
value of the Treasuries required to be included in a Creation Basket 
Deposit as of 4:00 p.m. E.T. on the date the order to purchase is 
properly received and the total required deposit.
    The procedures by which an Authorized Purchaser can redeem one or 
more baskets mirror the procedures for the creation of baskets. On any 
Business Day, an Authorized Purchaser may place an order with the 
Distributor to redeem one or more baskets. Redemption orders must be 
placed by 12:00 p.m. E.T. or the close of regular trading on the NYSE 
Arca, whichever is earlier. A redemption order so received will be 
effective on the date it is received in satisfactory form by the 
Distributor. The redemption procedures allow Authorized Purchasers to 
redeem baskets and do not entitle an individual shareholder to redeem 
any Shares in an amount less than a Redemption Basket, or to redeem 
baskets other than through an Authorized Purchaser.
    The redemption distribution due from the Fund will be delivered to 
the Authorized Purchaser by 3:00 p.m. E.T. on the third business day 
following the redemption order date if, by 3:00 p.m. E.T. on such third 
business day, the Fund's account at the Depositary Trust Company 
(``DTC'') has been credited

[[Page 65440]]

with the baskets to be redeemed. If the Fund's DTC account has not been 
credited with all of the baskets to be redeemed by such time, the 
redemption distribution will be delivered to the extent of whole 
baskets received. Any remainder of the redemption distribution will be 
delivered on the next business day to the extent of remaining whole 
baskets received if the Fund receives the fee applicable to the 
extension of the redemption distribution date which ETFMC may, from 
time to time, determine and the remaining baskets to be redeemed are 
credited to the Fund's DTC account by 3:00 p.m. E.T. on such next 
business day. Any further outstanding amount of the redemption order 
shall be cancelled.
    The Exchange will obtain a representation prior to listing of the 
Fund from the Trust that the NAV per Share will be calculated daily and 
made available to all market participants at the same time.
    The Fund will meet the initial and continued listing requirements 
applicable to TIRs in NYSE Arca Equities Rule 8.200 and Commentary .02 
thereto. With respect to application of Rule 10A-3 \12\ under the Act, 
the Fund will rely on the exception contained in Rule 10A-3(c)(7).\13\ 
A minimum of 100,000 Shares of the Fund will be outstanding as of the 
start of trading on the Exchange.
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    \12\ 17 CFR 240.10A-3.
    \13\ 17 CFR 240.10A-3(c)(7).
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    The Fund's investments will be consistent with the Fund's 
investment objective and will not be used to enhance leverage. That is, 
the Fund's investments will not be used to seek performance that is a 
multiple (e.g., 2x or 3x) or inverse multiple of the Fund's Benchmark 
Portfolio.
    A more detailed description of the Fund as well as investment 
risks, creation and redemption procedures and fees is set forth in the 
Registration Statement.
Availability of Information Regarding the Shares
    The Fund's Web site, www.risingratefund.com, will be publicly 
accessible at no charge prior to the public offering of Shares and will 
include a form of the prospectus for that may be downloaded. The Web 
site will include additional quantitative information updated on a 
daily basis, including (a) the current NAV per Share daily and the 
prior Business Day's NAV and the reported closing price; (b) the mid-
point of the bid-ask price in relation to the NAV as of the time the 
NAV is calculated (the ``Bid-Ask Price''); (c) calculation of the 
premium or discount of such price against such NAV; (d) the Bid-Ask 
Price of Shares determined using the highest bid and lowest offer as of 
the time of calculation of the NAV; (e) data in chart form displaying 
the frequency distribution of discounts and premiums of the Bid-Ask 
Price against the NAV, within appropriate ranges for each of the four 
(4) previous calendar quarters; (f) the prospectus; and (g) other 
applicable quantitative information.
    In addition, a basket composition file, which includes the security 
names and share quantities required to be delivered in exchange for 
Fund Shares, together with estimates and actual cash components, will 
be publicly disseminated daily prior to the opening of the Exchange via 
the NSCC. The basket represents one Creation Unit of the Fund.
    Investors can also obtain the Trust's Statement of Additional 
Information (``SAI''), Shareholder Reports and Form N-CSR. The Trust's 
SAI and Shareholder Reports are available free upon request from the 
Trust, and those documents and the Form N-CSR may be viewed on-screen 
or downloaded from the Commission's Web site at www.sec.gov. 
Information regarding market price and trading volume of the Shares 
will be continually available on a real-time basis throughout the day 
on brokers' computer screens and other electronic services. Information 
regarding the previous day's closing price and trading volume 
information for the Shares will be published daily in the financial 
section of newspapers.
    This Web site disclosure of the portfolio composition of the Fund 
will occur at the same time as the disclosure by the Sponsor of the 
portfolio composition to authorized participants so that all market 
participants are provided portfolio composition information at the same 
time. Therefore, the same portfolio information will be provided on the 
public Web site as well as in electronic files provided to authorized 
participants. Accordingly, each investor will have access to the 
current portfolio composition of the Fund through the Fund's Web site.
    The IIV will be calculated by using the Fund's prior day's closing 
NAV per share as a base and updating that value throughout the trading 
day to reflect changes in the most recently reported trade price for 
the Treasury Instruments. The IIV per Share will be widely disseminated 
by one or more major market data vendors at least every 15 seconds 
during the Core Trading Session.
    The NAV for the Shares will be disseminated to all market 
participants at the same time. The Exchange will also make available on 
its Web site daily trading volume of the Shares and the closing prices 
of such Shares. The intra-day closing prices and settlement prices of 
the Treasury Instruments are or will be readily available from the Web 
sites of the relevant exchanges on which Treasury Instruments are 
traded (primarily the CME). The relevant exchanges trading Treasury 
Instruments also provide delayed futures information on current and 
past trading sessions and market news free of charge on their 
respective Web sites.
    Quotation information from brokers and dealers or major market data 
vendors will be available for money market instruments and U.S. 
Treasuries.
    Quotation and last-sale information regarding the Shares will be 
disseminated through the facilities of the CTA. In addition, the Fund's 
Web site, www.risingratefund.com, will display the applicable end of 
day closing NAV.
Availability of Information About the Benchmark Portfolio
    The daily closing Benchmark Portfolio level and the percentage 
change in the daily closing level for the Benchmark Portfolio will be 
publicly available from one or more major market data vendors. Data 
regarding the Benchmark Portfolio, updated every 15 seconds, will also 
be available through a major market data vendor.
    Data regarding the Treasury Instruments will also be available from 
the CME Web site. Data regarding the Treasury securities underlying the 
Treasury Instruments will be publicly available from various financial 
information service providers. Information relating to the weighting of 
Treasury Instruments and the Benchmark Portfolio methodology is also 
available on the Web site for Fund at www.risingratefund.com.
Trading Rules
    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. Shares will trade on 
the NYSE Arca Marketplace from 4:00 a.m. to 8:00 p.m. E.T. in 
accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late 
Trading Sessions). The Exchange has appropriate rules to facilitate 
transactions in the Shares during all trading sessions. As provided in 
NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price 
variation (``MPV'')

[[Page 65441]]

for quoting and entry of orders in equity securities traded on the NYSE 
Arca Marketplace is $0.01, with the exception of securities that are 
priced less than $1.00 for which the MPV for order entry is $0.0001.
    The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.200. The Exchange represents 
that, for initial and/or continued listing, the Fund will be in 
compliance with Rule 10A-3 \14\ under the Act, as provided by NYSE Arca 
Equities Rule 5.3. A minimum of 100,000 Shares for the Fund will be 
outstanding at the commencement of trading on the Exchange.
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    \14\ 17 CFR 240.10A-3.
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    The 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 TIRs to facilitate surveillance. See ``Surveillance'' below 
for more information.
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares. Trading may be halted because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Shares inadvisable. These may include: (1) The extent to 
which trading is not occurring in the underlying securities, or (2) 
whether other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present. In addition, 
trading in Shares will be subject to trading halts caused by 
extraordinary market volatility pursuant to the Exchange's ``circuit 
breaker'' rule \15\ or by the halt or suspension of trading of the 
underlying securities.
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    \15\ See NYSE Arca Equities Rule 7.12.
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    The Exchange represents that the Exchange may halt trading during 
the day in which an interruption to the dissemination of the IIV 
occurs. If an interruption to the dissemination of the IIV 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. In addition, 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.
Surveillance
    The Exchange represents that trading in the Shares will be subject 
to the existing trading surveillances, administered by the Financial 
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange, 
which are designed to detect violations of Exchange rules and 
applicable federal securities laws.\16\ The Exchange represents that 
these procedures are adequate to properly monitor Exchange trading of 
the Shares in all trading sessions and to deter and detect violations 
of Exchange rules and federal securities laws applicable to trading on 
the Exchange.
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    \16\ FINRA surveils trading on the Exchange pursuant to a 
regulatory services agreement. The Exchange is responsible for 
FINRA's performance under this regulatory services agreement.
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    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations.
    FINRA, on behalf of the Exchange, will communicate as needed 
regarding trading in the Shares and underlying Treasury Instruments 
with other markets and entities that are members of the Intermarket 
Surveillance Group (``ISG''), and FINRA, on behalf of the Exchange, may 
obtain trading information regarding trading in the Shares and 
underlying Treasury Instruments from such markets and other entities. 
In addition, the Exchange may obtain information regarding trading in 
the Shares and underlying Treasury Instruments from markets and other 
entities that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.\17\ FINRA, on 
behalf of the Exchange, is able to access, as needed, trade information 
for certain fixed income securities held by the Fund reported to 
FINRA's Trade Reporting and Compliance Engine (``TRACE'').
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    \17\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all instruments 
traded by the Fund may trade on markets that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement.
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    For components traded on exchanges, not more than 10% of the net 
assets of the Fund shall consist of components whose principal trading 
market is not a member of ISG or is a market with which the Exchange 
does not have a comprehensive surveillance sharing agreement. 
Furthermore, not more than 10% of the net assets of a Fund in the 
aggregate shall consist of futures contracts or options contracts whose 
principal market is not a member of ISG or is a market with which the 
Exchange does not have a comprehensive surveillance sharing agreement.
    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its 
ETP Holders in an Information Bulletin (``Bulletin'') of the special 
characteristics and risks associated with trading the Shares. 
Specifically, the Bulletin will discuss the following: (1) The 
procedures for purchases and redemptions of Shares in Creation Basket 
aggregations (and that Shares are not individually redeemable); (2) 
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; (3) the risks involved in trading 
the Shares during the Opening and Late Trading Sessions when an updated 
IIV will not be calculated or publicly disseminated; (4) how 
information regarding the IIV is disseminated; (5) 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 (6) trading information.
    In addition, the Bulletin will reference that the Fund is subject 
to various fees and expenses described in the Registration Statement. 
The Bulletin will discuss any exemptive, no-action, and interpretive 
relief granted by the Commission from any rules under the Act. The 
Bulletin will also disclose that the NAV for the Shares will be 
calculated after 4:00 p.m. E.T. each trading day.
    The Information Circular will disclose that information about the 
Shares of the Fund will be publicly available on the Fund's Web site.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \18\ 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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    \18\ 15 U.S.C. 78f(b)(5).

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[[Page 65442]]

    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 8.200 
and Commentary .02 thereto. The Fund will seek to achieve its 
investment objective by tracking the performance of the Benchmark 
Portfolio. The Sponsor represents that the Trust will invest in 
Treasury Instruments in a manner consistent with the Trust's investment 
objective and will not use futures contracts or options to obtain 
leveraged investment results. The Sponsor is not broker-dealer or 
affiliated with a broker-dealer. The Sponsor represents that it will 
implement and maintain procedures designed to prevent the use and 
dissemination of material non-public information. The Exchange has in 
place surveillance procedures that are adequate to properly monitor 
trading in the Shares in all trading sessions and to deter and detect 
violations of Exchange rules and applicable federal securities laws. 
FINRA, on behalf of the Exchange, will communicate as needed regarding 
trading in the Shares and underlying Treasury Instruments with other 
markets and other entities that are members of the ISG, and FINRA, on 
behalf of the Exchange, may obtain trading information regarding 
trading in the Shares and underlying Treasury Instruments from such 
markets and other entities. In addition, the Exchange may obtain 
information regarding trading in the Shares and underlying Treasury 
Instruments from markets and other entities that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement. FINRA, on behalf of the Exchange, is able to access, 
as needed, trade information for certain fixed income securities held 
by the Fund reported to TRACE. For components traded on exchanges, not 
more than 10% of the net assets of the Fund shall consist of components 
whose principal trading market is not a member of ISG or is a market 
with which the Exchange does not have a comprehensive surveillance 
sharing agreement. Furthermore, not more than 10% of the net assets of 
a Fund in the aggregate shall consist of futures contracts or options 
contracts whose principal market is not a member of ISG or is a market 
with which the Exchange does not have a comprehensive surveillance 
sharing agreement. The NAV for the Shares will be disseminated to all 
market participants at the same time. The Exchange will also make 
available on its Web site daily trading volume of the Shares and the 
closing prices of such Shares. The intra-day closing prices and 
settlement prices of the Treasury Instruments are or will be readily 
available from the Web sites of the relevant exchanges on which 
Treasury Instruments are traded (primarily the CME). The relevant 
exchanges trading Treasury Instruments also provide delayed futures 
information on current and past trading sessions and market news free 
of charge on their respective Web sites.
    In addition, quotation information from brokers and dealers or 
major market data vendors will be available for money market 
instruments.
    Quotation and last-sale information regarding the Shares will be 
disseminated through the facilities of the CTA. In addition, the Fund's 
Web site, www.risingratefund.com, will display the applicable end of 
day closing NAV.
    The daily closing Benchmark Portfolio level and the percentage 
change in the daily closing level for the Benchmark Portfolio will be 
publicly available from one or more major market data vendors. Data 
regarding the Benchmark Portfolio, updated every 15 seconds, will also 
available on a major market data vendor. Data regarding the Treasury 
Instruments will also available from the CME Web site. Data regarding 
the Treasury securities underlying the Treasury Instruments will be 
publicly available from various financial information service 
providers. Information relating to the weighting of Treasury 
Instruments and the Benchmark Portfolio methodology is also available 
on the Web site for Fund at www.risingratefund.com.
    Trading may be halted because of market conditions or for reasons 
that, in the view of the Exchange, make trading in the Shares 
inadvisable. These may include: (1) The extent to which trading is not 
occurring in the underlying securities, or (2) whether other unusual 
conditions or circumstances detrimental to the maintenance of a fair 
and orderly market are present. Trading in Shares will be subject to 
trading halts caused by extraordinary market volatility pursuant to the 
Exchange's ``circuit breaker'' rule or by the halt or suspension of 
trading of the underlying securities. The Exchange represents that the 
Exchange may halt trading during the day in which an interruption to 
the dissemination of the IIV occurs. If an interruption to the 
dissemination of the IIV 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. In addition, 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.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that a large amount of information is publicly available regarding the 
Shares, thereby promoting market transparency. The Fund's NAV will be 
disseminated to all market participants at the same time. The IIV will 
be disseminated at least every 15 seconds during the Core Trading 
Session. Trading in the Shares will be halted if the circuit breaker 
parameters in NYSE Arca Equities Rule 7.12 have been reached or because 
of market conditions or for reasons that, in the view of the Exchange, 
make trading in the Shares inadvisable. Moreover, 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.
    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 it will facilitate the listing and trading of 
an additional type of trust issued receipts that will enhance 
competition among market participants, to the benefit of investors and 
the marketplace. As noted above, FINRA, on the Exchange's behalf, has 
in place surveillance procedures relating to trading in the Shares and 
underlying Treasury Instruments and may obtain information via ISG from 
other exchanges that are members of ISG or with which the Exchange has 
entered into a comprehensive surveillance sharing agreement. In 
addition, as noted above, investors will have ready access to 
information regarding the Fund's holdings, IIV, and quotation and last 
sale information for the Shares.

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 purpose of the Act. The Exchange notes that the 
proposed rule change will facilitate the listing and trading of an 
additional type of Trust Issued Receipts product that will principally 
hold fixed income securities and derivatives thereon, and that will 
enhance competition among market participants,

[[Page 65443]]

to the benefit of investors and the marketplace.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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-NYSEArca-2014-120 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-NYSEArca-2014-120. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEArca-2014-120, and 
should be submitted on or before November 25, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26125 Filed 11-3-14; 8:45 am]
BILLING CODE 8011-01-P