Document ID: SEC-2020-1009-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2020-06-29T04:00Z

[Federal Register Volume 85, Number 125 (Monday, June 29, 2020)]
[Notices]
[Pages 39000-39008]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13871]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89127; File No. SR-NYSEArca-2020-51]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change, as Modified by Amendment No. 2, Relating to 
the Listing and Trading of the Shares of Natixis Vaughan Nelson Select 
ETF and Natixis Vaughan Nelson MidCap ETF Under Proposed NYSE Arca Rule 
8.601-E

June 23, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on June 12, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. On June 
17, 2020, the Exchange filed Amendment No. 1 to the proposed rule 
change, which superseded and replaced the proposed rule change in its 
entirety. On June 19, 2020, the Exchange filed Amendment No. 2 to the 
proposed rule change, which superseded and replaced the proposed rule 
change, as modified by Amendment No. 1, in its entirety. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change, as modified by Amendment No. 2, 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 following 
under proposed NYSE Arca Rule 8.601-E: Natixis Vaughan Nelson Select 
ETF and Natixis Vaughan Nelson MidCap ETF. This Amendment No. 2 to SR-
NYSEArca-2020-51 replaces SR-NYSEArca-2020-51 as originally filed and 
Amendment 1 thereto and supersedes such filings in their entirety. The 
proposed change is available on the Exchange's website 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 has proposed to add new NYSE Arca Rule 8.601-E for the 
purpose of permitting the listing and trading, or trading pursuant to 
unlisted trading privileges (``UTP''), of Active Proxy Portfolio 
Shares, which are securities issued by an actively managed open-end 
investment management company.\4\ Proposed Commentary .01 to

[[Page 39001]]

Rule 8.601-E would require the Exchange to file separate proposals 
under Section 19(b) of the Act before listing and trading any series of 
Active Proxy Portfolio Shares on the Exchange. Therefore, the Exchange 
is submitting this proposal in order to list and trade shares 
(``Shares'') of Active Proxy Portfolio Shares of the Natixis Vaughan 
Nelson Select ETF and Natixis Vaughan Nelson MidCap ETF (each a 
``Fund'' and, collectively, the ``Funds'') under proposed Rule 8.601-E.
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    \4\ See Amendment 6 to SR-NYSEArca-2019-95, filed on June 19, 
2020. See also, Securities Exchange Act Release No. 87866 (December 
30, 2019), 85 FR 357 (January 3, 2020) (SR-NYSEArca-2019-95). 
Proposed Rule 8.601-E(c)(1) provides that ``[t]he term ``Active 
Proxy Portfolio Share'' means a security that (a) is issued by a 
investment company registered under the Investment Company Act of 
1940 (``Investment Company'') organized as an open-end management 
investment company that invests in a portfolio of securities 
selected by the Investment Company's investment adviser consistent 
with the Investment Company's investment objectives and policies; 
(b) is issued in a specified minimum number of shares, or multiples 
thereof, in return for a deposit by the purchaser of the Proxy 
Portfolio and/or cash with a value equal to the next determined net 
asset value (``NAV''); (c) when aggregated in the same specified 
minimum number of Active Proxy Portfolio Shares, or multiples 
thereof, may be redeemed at a holder's request in return for the 
Proxy Portfolio and/or cash to the holder by the issuer with a value 
equal to the next determined NAV; and (d) the portfolio holdings for 
which are disclosed within at least 60 days following the end of 
every fiscal quarter.'' Proposed Rule 8.601-E(c)(2) provides that 
``[t]he term ``Actual Portfolio'' means the identities and 
quantities of the securities and other assets held by the Investment 
Company that shall form the basis for the Investment Company's 
calculation of NAV at the end of the business day.'' Proposed Rule 
8.601-E(c)(3) provides that ``[t{time} he term ``Proxy Portfolio'' 
means a specified portfolio of securities, other financial 
instruments and/or cash designed to track closely the daily 
performance of the Actual Portfolio of a series of Active Proxy 
Portfolio Shares as provided in the exemptive relief pursuant to the 
Investment Company Act of 1940 applicable to such series.''
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Key Features of Active Proxy Portfolio Shares
    While funds issuing Active Proxy Portfolio Shares will be actively-
managed and, to that extent, will be similar to Managed Fund Shares, 
Active Proxy Portfolio Shares differ from Managed Fund Shares in the 
following important respects. First, in contrast to Managed Fund 
Shares, which are actively-managed funds listed and traded under NYSE 
Arca Rule 8.600-E \5\ and for which a ``Disclosed Portfolio'' is 
required to be disseminated at least once daily,\6\ the portfolio for 
an issue of Active Proxy Portfolio Shares will be publicly disclosed 
within at least 60 days following the end of every fiscal quarter in 
accordance with normal disclosure requirements otherwise applicable to 
open-end management investment companies registered under the 1940 
Act.\7\ The composition of the portfolio of an issue of Active Proxy 
Portfolio Shares would not be available at commencement of Exchange 
listing and trading. Second, in connection with the creation and 
redemption of Active Proxy Portfolio Shares, such creation or 
redemption may be exchanged for a Proxy Portfolio with a value equal to 
the next-determined NAV. A series of Active Proxy Portfolio Shares will 
disclose the Proxy Portfolio on a daily basis, which, as described 
above, is designed to track closely the daily performance of the Actual 
Portfolio of a series of Active Proxy Portfolio Shares, instead of the 
actual holdings of the Investment Company, as provided by a series of 
Managed Fund Shares.
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    \5\ The Commission has previously approved listing and trading 
on the Exchange of a number of issues of Managed Fund Shares under 
NYSE Arca Rule 8.600-E. See, e.g., Securities Exchange Act Release 
Nos. 57801 (May 8, 2008), 73 FR 27878 (May 14, 2008) (SR-NYSEArca-
2008-31) (order approving Exchange listing and trading of twelve 
actively-managed funds of the WisdomTree Trust); 60460 (August 7, 
2009), 74 FR 41468 (August 17, 2009) (SR-NYSEArca-2009-55) (order 
approving listing of Dent Tactical ETF); 63076 (October 12, 2010), 
75 FR 63874 (October 18, 2010) (SR-NYSEArca-2010-79) (order 
approving Exchange listing and trading of Cambria Global Tactical 
ETF); 63802 (January 31, 2011), 76 FR 6503 (February 4, 2011) (SR-
NYSEArca-2010-118) (order approving Exchange listing and trading of 
the SiM Dynamic Allocation Diversified Income ETF and SiM Dynamic 
Allocation Growth Income ETF). The Commission also has approved a 
proposed rule change relating to generic listing standards for 
Managed Fund Shares. Securities Exchange Act Release No. 78397 (July 
22, 2016), 81 FR 49320 (July 27, 2016) (SR-NYSEArca-2015-110) 
(amending NYSE Arca Equities Rule 8.600 to adopt generic listing 
standards for Managed Fund Shares).
    \6\ NYSE Arca Rule 8.600-E(c)(2) defines the term ``Disclosed 
Portfolio'' as the identities and quantities of the securities and 
other assets held by the Investment Company that will form the basis 
for the Investment Company's calculation of net asset value at the 
end of the business day. NYSE Arca Rule 8.600-E(d)(2)(B)(i) requires 
that the Disclosed Portfolio will be disseminated at least once 
daily and will be made available to all market participants at the 
same time.
    \7\ A mutual fund is required to file with the Commission its 
complete portfolio schedules for the second and fourth fiscal 
quarters on Form N-CSR under the 1940 Act. Information reported on 
Form N-PORT for the third month of a fund's fiscal quarter will be 
made publicly available 60 days after the end of a fund's fiscal 
quarter. Form N-PORT requires reporting of a fund's complete 
portfolio holdings on a position-by-position basis on a quarterly 
basis within 60 days after fiscal quarter end. Investors can obtain 
a series of Active Proxy Portfolio Shares' Statement of Additional 
Information (``SAI''), its Shareholder Reports, its Form N-CSR, 
filed twice a year, and its Form N-CEN, filed annually. A series of 
Active Proxy Portfolio Shares' SAI and Shareholder Reports will be 
available free upon request from the Investment Company, and those 
documents and the Form N-PORT, Form N-CSR, and Form N-CEN may be 
viewed on-screen or downloaded from the Commission's website at 
www.sec.gov.
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    The Exchange, after consulting with various Lead Market Makers 
(``LMMs'') \8\ that trade exchange-traded funds (``ETFs'') on the 
Exchange, believes that market makers will be able to make efficient 
and liquid markets priced near the ETF's intraday value, and market 
makers employ market making techniques such as ``statistical 
arbitrage,'' including correlation hedging, beta hedging, and 
dispersion trading, which is currently used throughout the financial 
services industry, to make efficient markets in exchange-traded 
products.\9\ For Active Proxy Portfolio Shares, market makers may use 
the knowledge of a fund's means of achieving its investment objective, 
as described in the applicable fund registration statement, as well as 
a fund's disclosed Proxy Portfolio, to construct a hedging proxy for a 
fund to manage a market maker's quoting risk in connection with trading 
fund shares. Market makers can then conduct statistical arbitrage 
between their hedging proxy (for example, the Russell 1000 Index) and 
shares of a fund, buying and selling one against the other over the 
course of the trading day. This ability should permit market makers to 
make efficient markets in an issue of Active Proxy Portfolio Shares 
without precise knowledge of a fund's underlying portfolio. This is 
similar to certain other existing exchange-traded products (for 
example, ETFs that invest in foreign securities that do not trade 
during U.S. trading hours), in which spreads may be generally wider in 
the early days of trading and then narrow as market makers gain more 
confidence in their real-time hedges.
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    \8\ The term ``Lead Market Maker'' is defined in Rule 1.1(w) to 
mean a registered Market Maker that is the exclusive Designated 
Market Maker in listings for which the Exchange is the primary 
market.
    \9\ Statistical arbitrage enables a trader to construct an 
accurate proxy for another instrument, allowing it to hedge the 
other instrument or buy or sell the instrument when it is cheap or 
expensive in relation to the proxy. Statistical analysis permits 
traders to discover correlations based purely on trading data 
without regard to other fundamental drivers. These correlations are 
a function of differentials, over time, between one instrument or 
group of instruments and one or more other instruments. Once the 
nature of these price deviations have been quantified, a universe of 
securities is searched in an effort to, in the case of a hedging 
strategy, minimize the differential. Once a suitable hedging proxy 
has been identified, a trader can minimize portfolio risk by 
executing the hedging basket. The trader then can monitor the 
performance of this hedge throughout the trade period making 
corrections where warranted. In the case of correlation hedging, the 
analysis seeks to find a proxy that matches the pricing behavior of 
a fund. In the case of beta hedging, the analysis seeks to determine 
the relationship between the price movement over time of a fund and 
that of another stock. Dispersion trading is a hedged strategy 
designed to take advantage of relative value differences in implied 
volatilities between an index and the component stocks of that 
index. Such trading strategies will allow market participants to 
engage in arbitrage between series of Active Proxy Portfolio Shares 
and other instruments, both through the creation and redemption 
process and strictly through arbitrage without such processes.
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Description of the Funds and the Trust
    Each Fund will be a series of Natixis ETF Trust II (``Trust''), 
which will be registered with the Commission as an open-end management 
investment company.\10\
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    \10\ The Trust is registered under the 1940 Act. On April 24, 
2020, the Trust filed a registration statement on Form N-1A under 
the Securities Act of 1933 (the ``1933 Act'') (15 U.S.C. 77a), and 
under the 1940 Act relating to the Funds (File Nos. 333-235466 and 
811-23500) (the ``Registration Statement''). The Trust and NYSE 
Group, Inc. filed a Seventh Amended and Restated Application for an 
Order under Section 6(c) of the 1940 Act for exemptions from various 
provisions of the 1940 Act and rules thereunder (File No. 812-
14870), dated October 21, 2019 (``Application''). On November 14, 
2019, the Commission issued a notice regarding the Application. 
Investment Company Release No. 33684 (File No. 812-14870). On 
December 10, 2019, the Commission issued an order (``Exemptive 
Order'') under the 1940 Act granting the exemptions requested in the 
Application (Investment Company Act Release No. 33711 (December 10, 
2019)). The description of the operation of the Trust and the Funds 
herein is based, in part, on the Registration Statement and the 
Application.

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[[Page 39002]]

    Natixis Advisors, L.P. (``Adviser'') will be the investment adviser 
to the Funds. Vaughan Nelson Investment Management, L.P. will be the 
subadviser (``Sub-Adviser'') for the Funds. ALPS Distributors, Inc. 
will act as the distributor and principal underwriter (``Distributor'') 
for the Funds.
    Proposed Commentary.04 provides that, if the investment adviser to 
the Investment Company issuing Active Proxy Portfolio Shares is 
registered as a broker-dealer or is affiliated with a broker-dealer, 
such investment adviser will erect and maintain a ``fire wall'' between 
the investment adviser and personnel of the broker-dealer or broker-
dealer affiliate, as applicable, with respect to access to information 
concerning the composition and/or changes to such Investment Company's 
Actual Portfolio and/or Proxy Portfolio. Any person related to the 
investment adviser or Investment Company who makes decisions pertaining 
to the Investment Company's Actual Portfolio and/or Proxy Portfolio or 
has access to non-public information regarding the Investment Company's 
Actual Portfolio and/or Proxy Portfolio or changes thereto must be 
subject to procedures reasonably designed to prevent the use and 
dissemination of material non-public information regarding the Actual 
Portfolio and/or Proxy Portfolio or changes thereto. Proposed 
Commentary .04 is similar to Commentary .03(a)(i) and (iii) to NYSE 
Arca Rule 5.2-E(j)(3); however, proposed Commentary .04, in connection 
with the establishment of a ``fire wall'' between the investment 
adviser and the broker-dealer, reflects the applicable open-end fund's 
portfolio, not an underlying benchmark index, as is the case with 
index-based funds.\11\ Proposed Commentary .04 is also similar to 
Commentary .06 to Rule 8.600-E related to Managed Fund Shares, except 
that proposed Commentary .04 relates to establishment and maintenance 
of a ``fire wall'' between the investment adviser and personnel of the 
broker-dealer or broker-dealer affiliate, as applicable, applicable to 
an Investment Company's Actual Portfolio and/or Proxy Portfolio or 
changes thereto, and not just to the underlying portfolio, as is the 
case with Managed Fund Shares.
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    \11\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). As a result, the Adviser and Sub-Adviser and their related 
personnel will be subject to the provisions of Rule 204A-1 under the 
Advisers Act relating to codes of ethics. This Rule requires 
investment advisers to adopt a code of ethics that reflects the 
fiduciary nature of the relationship to clients as well as 
compliance with other applicable securities laws. Accordingly, 
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with 
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under 
the Advisers Act makes it unlawful for an investment adviser to 
provide investment advice to clients unless such investment adviser 
has (i) adopted and implemented written policies and procedures 
reasonably designed to prevent violations, by the investment adviser 
and its supervised persons, of the Advisers Act and the Commission 
rules adopted thereunder; (ii) implemented, at a minimum, an annual 
review regarding the adequacy of the policies and procedures 
established pursuant to subparagraph (i) above and the effectiveness 
of their implementation; and (iii) designated an individual (who is 
a supervised person) responsible for administering the policies and 
procedures adopted under subparagraph (i) above.
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    In addition, proposed Commentary.05 provides that any person or 
entity, including a custodian, Reporting Authority, distributor, or 
administrator, who has access to non-public information regarding the 
Investment Company's Actual Portfolio or the Proxy Portfolio or changes 
thereto, must be subject to procedures reasonably designed to prevent 
the use and dissemination of material non-public information regarding 
the applicable Investment Company Actual Portfolio or the Proxy 
Portfolio or changes thereto. Moreover, if any such person or entity is 
registered as a broker-dealer or affiliated with a broker-dealer, such 
person or entity will erect and maintain a ``fire wall'' between the 
person or entity and the broker-dealer with respect to access to 
information concerning the composition and/or changes to such 
Investment Company Actual Portfolio or Proxy Portfolio.
    The Adviser is not registered as a broker-dealer but is affiliated 
with a broker-dealer. The Adviser has implemented and will maintain a 
``fire wall'' with respect to such broker-dealer affiliate regarding 
access to information concerning the composition of and/or changes to a 
Fund's Actual Portfolio and/or Proxy Portfolio. The Sub-Adviser is not 
registered as a broker-dealer but is affiliated with a broker-dealer. 
The Sub-Adviser has implemented and will maintain a ``fire wall'' with 
respect to its broker-dealer affiliate regarding access to information 
concerning the composition of and/or changes to the applicable Fund's 
Actual Portfolio and/or Proxy Portfolio.
    In the event (a) the Adviser or Sub-Adviser becomes registered as a 
broker-dealer or becomes newly affiliated with a broker-dealer, or (b) 
any new adviser or sub-adviser is a registered broker-dealer, or 
becomes affiliated with a broker-dealer, it will implement and maintain 
a fire wall with respect to its relevant personnel or its broker-dealer 
affiliate regarding access to information concerning the composition 
and/or changes to a Fund's Actual Portfolio and/or Proxy Portfolio, and 
will be subject to procedures designed to prevent the use and 
dissemination of material non-public information regarding a Fund's 
Actual Portfolio and/or Proxy Portfolio or changes thereto. Any person 
related to the Adviser, Sub-Adviser or a Fund who makes decisions 
pertaining to a Fund's Actual Portfolio or the Proxy Portfolio or has 
access to non-public information regarding a Fund's Actual Portfolio 
and/or the Proxy Portfolio or changes thereto are subject to procedures 
reasonably designed to prevent the use and dissemination of material 
non-public information regarding a Fund's Actual Portfolio and/or the 
Proxy Portfolio or changes thereto.
    In addition, any person or entity, including any service provider 
for a Fund, who has access to non-public information regarding a Fund's 
Actual Portfolio or the Proxy Portfolio or changes thereto, will be 
subject to procedures reasonably designed to prevent the use and 
dissemination of material non-public information regarding a Fund's 
Actual Portfolio and/or the Proxy Portfolio or changes thereto. 
Moreover, if any such person or entity is registered as a broker-dealer 
or affiliated with a broker-dealer, such person or entity has erected 
and will maintain a ``fire wall'' between the person or entity and the 
broker-dealer with respect to access to information concerning the 
composition and/or changes to a Fund's Actual Portfolio and/or Proxy 
Portfolio.
The Funds
    According to the Application, the Adviser believes a Fund would 
allow for efficient trading of Shares through an effective Fund 
portfolio transparency substitute and publication of related 
information metrics, while still shielding the identity of the full 
Fund portfolio contents to protect a Fund's performance-seeking 
strategies. Even

[[Page 39003]]

though a Fund would not publish its full portfolio contents daily, the 
Adviser believes that the NYSE Proxy Portfolio Methodology would allow 
market participants to assess the intraday value and associated risk of 
a Fund's Actual Portfolio. As a result, the Adviser believes that 
investors would be able to purchase and sell Shares in the secondary 
market at prices that are close to their NAV.
    In this regard, the Funds will utilize a proxy portfolio 
methodology-- the ``NYSE Proxy Portfolio Methodology''--that would 
allow market participants to assess the intraday value and associated 
risk of a Fund's Actual Portfolio and thereby facilitate the purchase 
and sale of Shares by investors in the secondary market at prices that 
do not vary materially from their NAV.\12\ The NYSE Proxy Portfolio 
Methodology would utilize creation of a Proxy Portfolio for hedging and 
arbitrage purposes.\13\
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    \12\ The NYSE Proxy Portfolio Methodology is owned by the NYSE 
Group, Inc. and licensed for use by the Funds. NYSE Group, Inc. is 
not affiliated with the Funds, Adviser or Distributor. Not all 
series of Active Proxy Portfolio Shares will utilize the NYSE Proxy 
Portfolio Methodology.
    \13\ With respect to the Funds, the Funds will have in place 
policies and procedures regarding the construction and composition 
of their respective Proxy Portfolio. Such policies and procedures 
will be covered by a Fund's compliance program and other 
requirements under Rule 38a-1 under the 1940 Act.
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Natixis Vaughan Nelson Select ETF
    The Fund's holdings will conform to the permissible investments as 
set forth in the Application and Exemptive Order and the holdings will 
be consistent with all requirements in the Application and Exemptive 
Order.\14\ Any foreign common stocks held by the Fund will be traded on 
an exchange that is a member of the Intermarket Surveillance Group 
(``ISG'') or with which the Exchange has in place a comprehensive 
surveillance sharing agreement.
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    \14\ Pursuant to the Application and Exemptive Order, the 
permissible investments for each of the Funds include only the 
following instruments: ETFs traded on a U.S. exchange; exchange-
traded notes (``ETNs'') traded on a U.S. exchange; U.S. exchange-
traded common stocks; common stocks listed on a foreign exchange 
that trade on such exchange contemporaneously with the Shares 
(``foreign common stocks'') in the Exchange's Core Trading Session 
(normally 9:30 a.m. and 4:00 p.m. Eastern time (``E.T.'')); U.S. 
exchange-traded preferred stocks; U.S. exchange-traded American 
Depositary Receipts (``ADRs''); U.S. exchange-traded real estate 
investment trusts; U.S. exchange-traded commodity pools; U.S. 
exchange-traded metals trusts; U.S. exchange-traded currency trusts; 
and U.S. exchange-traded futures that trade contemporaneously with a 
Fund's Shares. In addition, a Fund may hold cash and cash 
equivalents (short-term U.S. Treasury securities, government money 
market funds, and repurchase agreements). A Fund will not hold short 
positions or invest in derivatives other than U.S. exchange-traded 
futures, will not borrow for investment purposes, and will not 
purchase any securities that are illiquid investments at the time of 
purchase.
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    According to the Registration Statement, the Fund's investment 
objective is to seek long-term capital appreciation. The Fund, under 
normal market conditions,\15\ will invest primarily in equity 
securities, including exchange-traded common stocks, exchange-traded 
preferred stocks and exchange-traded real estate investment trusts 
(``REITs'').
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    \15\ The term ``normal market conditions'' is defined in 
proposed Rule 8.601-E(c)(6).
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Natixis Vaughan Nelson MidCap ETF
    The Fund's holdings will conform to the permissible investments as 
set forth in the Application and Exemptive Order and the holdings will 
be consistent with all requirements in the Application and Exemptive 
Order.\16\ Any foreign common stocks held by the Fund will be traded on 
an exchange that is a member of the ISG or with which the Exchange has 
in place a comprehensive surveillance sharing agreement.
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    \16\ See note 14, supra.
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    According to the Registration Statement, the Fund's investment 
objective is to seek long-term capital appreciation. The Fund, under 
normal market conditions, will invest primarily in companies that, at 
the time of purchase, have market capitalizations either within the 
capitalization range of the Russell Midcap[supreg] Value Index, an 
unmanaged index that measures the performance of companies with lower 
price-to-book ratios and lower forecasted growth values within the 
broader Russell Midcap Index, or of $15 billion or less. Equity 
securities may take the form of exchange-traded stock in corporations 
and exchange-traded REITs or other exchange-traded trusts and similar 
securities representing direct or indirect ownership interests in 
business organizations.
Creations and Redemptions of Shares
    According to the Registration Statement, the Trust will offer, 
issue and sell Shares of the Funds to investors only in specified 
minimum size ``Creation Units'' through the Distributor on a continuous 
basis at the NAV per Share next determined after an order in proper 
form is received. The NAV of a Fund is expected to be determined as of 
4:00 p.m. E.T. on each Business Day. The Trust will sell and redeem 
Creation Units of a Fund only on a Business Day. Creation Units of a 
Fund may be purchased and/or redeemed entirely for cash, as permissible 
under the procedures described below.
    The ``Creation Basket'' (as defined below) for a Fund's Shares will 
be based on a Fund's Proxy Portfolio, which is designed to approximate 
the value and performance of the Actual Portfolio. All Creation Basket 
instruments will be valued in the same manner as they are valued for 
purposes of calculating a Fund's NAV, and such valuation will be made 
in the same manner regardless of the identity of the purchaser or 
redeemer. Further, the total consideration paid for the purchase or 
redemption of a Creation Unit of Shares will be based on the NAV of a 
Fund, as calculated in accordance with the policies and procedures set 
forth in the Registration Statement.
    According to the Application, Shares will be purchased and redeemed 
in Creation Units and generally on an in-kind basis. Accordingly, 
except where the purchase or redemption will include cash under the 
circumstances specified below, purchasers will be required to purchase 
Creation Units by making an in-kind deposit of specified instruments 
(``Deposit Instruments''), and shareholders redeeming their Shares will 
receive an in-kind transfer of specified instruments (``Redemption 
Instruments''). The names and quantities of the instruments that 
constitute the Deposit Instruments and the Redemption Instruments for a 
Fund (collectively, the ``Creation Basket'') will be the same as a 
Fund's Proxy Portfolio, except to the extent purchases and redemptions 
are made entirely or in part on a cash basis.
    If there is a difference between the NAV attributable to a Creation 
Unit and the aggregate market value of the Creation Basket exchanged 
for the Creation Unit, the party conveying instruments with the lower 
value will also pay to the other an amount in cash equal to that 
difference (the ``Cash Amount'').
    While a Fund normally will issue and redeem Shares in kind, a Fund 
may require purchases and redemptions to be made entirely or in part on 
a cash basis. In such an instance, a Fund will announce, before the 
open of trading in the Core Trading Session (normally, 9:30 a.m. to 
4:00 p.m. E.T.) on a given Business Day, that all purchases, all 
redemptions, or all purchases and redemptions on that day will be made 
wholly or partly in cash. A Fund may also determine, upon receiving a 
purchase or redemption order from an Authorized Participant, to have 
the purchase or redemption, as applicable,

[[Page 39004]]

be made entirely or in part in cash.\17\ Each Business Day, before the 
open of trading on the Exchange, a Fund will cause to be published 
through the National Securities Clearing Corporation (``NSCC'') the 
names and quantities of the instruments comprising the Creation Basket, 
as well as the estimated Cash Amount (if any), for that day. The 
published Creation Basket will apply until a new Creation Basket is 
announced on the following Business Day, and there will be no intra-day 
changes to the Creation Basket except to correct errors in the 
published Creation Basket.
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    \17\ The Adviser represents that, to the extent the Trust 
effects the creation or redemption of Shares in cash on any given 
day, such transactions will be effected in the same manner for all 
Authorized Participants placing trades with a Fund on that day.
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    All orders to purchase Creation Units must be placed with the 
Distributor by or through an Authorized Participant, which is either: 
(1) A ``participating party'' (i.e., a broker or other participant), in 
the Continuous Net Settlement (``CNS'') System of the NSCC, a clearing 
agency registered with the Commission and affiliated with the 
Depository Trust Company (``DTC''), or (2) a DTC Participant, which in 
any case has executed a participant agreement with the Distributor and 
the transfer agent.
Timing and Transmission of Purchase Orders
    All orders to purchase (or redeem) Creation Units, whether using 
the NSCC Process or the DTC Process, must be received by the 
Distributor no later than the NAV calculation time (``NAV Calculation 
Time''), generally 4:00 p.m. E.T. on the date the order is placed 
(``Transmittal Date'') in order for the purchaser (or redeemer) to 
receive the NAV determined on the Transmittal Date.
Daily Disclosures
    With respect to the Funds, the following information will comprise 
the ``Proxy Portfolio Disclosures'' and, pursuant to the Application 
and Exemptive Order, will be publicly available on the Funds' website 
before the commencement of trading in Shares on each Business Day:
     The Proxy Portfolio holdings (including the identity and 
quantity of investments in the Proxy Portfolio) will be publicly 
available on the Funds' website before the commencement of trading in 
Shares on each Business Day.
     The historical ``Tracking Error'' between a Fund's last 
published NAV per share and the value, on a per Share basis, of a 
Fund's Proxy Portfolio calculated as of the close of trading on the 
prior Business Day will be publicly available on the Funds' website 
before the commencement of trading in Shares each Business Day.
     The ``Proxy Overlap'' will be publicly available on the 
Funds' website before the commencement of trading in Shares on each 
Business Day. The Proxy Overlap is the percentage weight overlap 
between the Proxy Portfolio's holdings compared to the Actual 
Portfolio's holdings that formed the basis for a Fund's calculation of 
NAV at the end of the prior Business Day. The Proxy Overlap will be 
calculated by taking the lesser weight of each asset held in common 
between the Actual Portfolio and the Proxy Portfolio and adding the 
totals.
Availability of Information
    The Funds' website (www.im.natixis.com), which will be publicly 
available prior to the public offering of Shares, will include a form 
of the prospectus for a Fund that may be downloaded. The Funds' website 
will include on a daily basis, per Share for a Fund, the prior Business 
Day's NAV and the ``Closing Price'' or ``Bid/Ask Price,'' \18\ and a 
calculation of the premium/discount of the Closing Price or Bid/Ask 
Price against such NAV. The Adviser has represented that the Funds' 
website will also provide: (1) Any other information regarding 
premiums/discounts as may be required for other ETFs under Rule 6c-11 
under the 1940 Act, as amended, and (2) any information regarding the 
bid/ask spread for a Fund as may be required for other ETFs under Rule 
6c-11 under the 1940 Act, as amended. The Funds' website also will 
disclose the information required under proposed Rule 8.601-
E(c)(3).\19\ The website and information will be publicly available at 
no charge.
---------------------------------------------------------------------------

    \18\ The records relating to Bid/Ask Prices will be retained by 
the Funds or their service providers. The ``Bid/Ask Price'' is the 
midpoint of the highest bid and lowest offer based upon the National 
Best Bid and Offer as of the time of calculation of a Fund's NAV. 
The ``National Best Bid and Offer'' is the current national best bid 
and national best offer as disseminated by the Consolidated 
Quotation System or UTP Plan Securities Information Processor. The 
``Closing Price'' of Shares is the official closing price of the 
Shares on the Exchange.
    \19\ See note 4, supra. Proposed Rule 8.601-E (c)(3) provides 
that the website for each series of Active Proxy Portfolio Shares 
shall disclose the information regarding the Proxy Portfolio as 
provided in the exemptive relief pursuant to the Investment Company 
Act of 1940 applicable to such series, including the following, to 
the extent applicable:
    (i) Ticker symbol;
    (ii) CUSIP or other identifier;
    (iii) Description of holding;
    (iv) Quantity of each security or other asset held; and
    (v) Percentage weighting of the holding in the portfolio.
---------------------------------------------------------------------------

    The Proxy Portfolio holdings for each Fund (including the identity 
and quantity of investments in the Proxy Portfolio) will be publicly 
available on the Funds' website before the commencement of trading in 
Shares on each Business Day.
    Typical mutual fund-style annual, semi-annual and quarterly 
disclosures contained in a Fund's Commission filings will be provided 
on the Funds' website on a current basis.\20\ Thus, each Fund will 
publish the portfolio contents of its Actual Portfolio on a periodic 
basis, and no less than 60 days after the end of every fiscal quarter.
---------------------------------------------------------------------------

    \20\ See note 7, supra.
---------------------------------------------------------------------------

    Investors can also obtain a Fund's SAI, Shareholder Reports, Form 
N-CSR, N-PORT and Form N-CEN. The prospectus, SAI and Shareholder 
Reports are available free upon request from the Trust, and those 
documents and the Form N-CSR, N-PORT, and Form N-CEN may be viewed on-
screen or downloaded from the Commission's website. The Exchange also 
notes that pursuant to its Exemptive Order, a Fund must comply with 
Regulation Fair Disclosure, which prohibits selective disclosure of any 
material non-public information.
    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. Quotation and last sale information for the 
Shares, ETFs, ETNs, U.S. exchange-traded common stocks, preferred 
stocks and ADRs will be available via the Consolidated Tape Association 
(``CTA'') high-speed line or from the exchange on which such securities 
trade. Price information for futures, foreign stocks and cash 
equivalents is available through major market data vendors. Intraday 
pricing information for all constituents of the Proxy Portfolio for 
each Fund that are exchange-traded, which includes all eligible 
instruments except cash and cash equivalents, will be available on the 
exchanges on which they are traded and through subscription services. 
Intraday pricing information for cash equivalents will be available 
through subscription services and/or pricing services.

[[Page 39005]]

Investment Restrictions
    The Shares of the Funds will conform to the initial and continued 
listing criteria under proposed Rule 8.601-E. Each Fund's holdings will 
be limited to and consistent with permissible holdings as described in 
the Application and all requirements in the Application and Exemptive 
Order.\21\
---------------------------------------------------------------------------

    \21\ See note 14, supra.
---------------------------------------------------------------------------

    Each Fund's investments, including derivatives, will be consistent 
with its investment objective and will not be used to enhance leverage 
(although certain derivatives and other investments may result in 
leverage). That is, a Fund's investments will not be used to seek 
performance that is the multiple or inverse multiple (e.g., 2X or -3X) 
of a Fund's primary broad-based securities benchmark index (as defined 
in Form N-1A).\22\
---------------------------------------------------------------------------

    \22\ A Fund's broad-based securities benchmark index will be 
identified in a future amendment to its Registration Statement 
following a Fund's first full calendar year of performance.
---------------------------------------------------------------------------

Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of a Fund.\23\ Trading in Shares of a Fund will 
be halted if the circuit breaker parameters in NYSE Arca Rule 7.12-E 
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. Trading in the Shares will be 
subject to NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth 
circumstances under which Shares of a Fund will be halted.
---------------------------------------------------------------------------

    \23\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------

    Specifically, proposed Rule 8.601-E(d)(2)(D) provides that the 
Exchange may consider all relevant factors in exercising its discretion 
to halt trading in a series of Active Proxy Portfolio Shares. Trading 
may be halted because of market conditions or for reasons that, in the 
view of the Exchange, make trading in the series of Active Proxy 
Portfolio Shares inadvisable. These may include: (a) The extent to 
which trading is not occurring in the securities and/or the financial 
instruments composing the Proxy Portfolio and/or Actual Portfolio; or 
(b) whether other unusual conditions or circumstances detrimental to 
the maintenance of a fair and orderly market are present. If the 
Exchange becomes aware that the NAV, Proxy Portfolio or Actual 
Portfolio with respect to a series of Active Proxy Portfolio Shares is 
not disseminated to all market participants at the same time, the 
Exchange shall halt trading in such series until such time as the NAV, 
Proxy Portfolio or Actual Portfolio is available to all market 
participants at the same time.
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 in all trading sessions in accordance with 
NYSE Arca Rule 7.34-E(a). As provided in NYSE Arca Rule 7.6-E, the 
minimum price variation (``MPV'') 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 proposed NYSE Arca Rule 8.601-E. The Exchange has 
appropriate rules to facilitate trading in the Shares during all 
trading sessions.
    A minimum of 100,000 Shares for each Fund will be outstanding at 
the commencement of trading on the Exchange. In addition, pursuant to 
proposed Rule 8.601-E(d)(1)(B), the Exchange, prior to commencement of 
trading in the Shares, will obtain a representation from the Adviser 
that the NAV per Share of each Fund will be calculated daily and that 
the NAV, Proxy Portfolio and the Actual Portfolio for each Fund will be 
made available to all market participants at the same time.
    With respect to Active Proxy Portfolio Shares, all of the Exchange 
member obligations relating to product description and prospectus 
delivery requirements will continue to apply in accordance with 
Exchange rules and federal securities laws, and the Exchange and the 
Financial Industry Regulatory Authority, Inc. (``FINRA'') will continue 
to monitor Exchange members for compliance with such requirements.
Surveillance
    The Exchange represents that 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.\24\ 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.
---------------------------------------------------------------------------

    \24\ FINRA conducts cross-market surveillances on behalf of the 
Exchange pursuant to a regulatory services agreement. The Exchange 
is responsible for FINRA's performance under this regulatory 
services agreement.
---------------------------------------------------------------------------

    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.
    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares and underlying 
exchange-traded instruments 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 
such securities and underlying exchange-traded instruments from such 
markets and other entities. In addition, the Exchange may obtain 
information regarding trading in such securities and underlying 
exchange-traded instruments from markets and other entities that are 
members of ISG or with which the Exchange has in place a comprehensive 
surveillance sharing agreement.\25\
---------------------------------------------------------------------------

    \25\ For a list of the current members of ISG, see 
www.isgportal.org.
---------------------------------------------------------------------------

    The Adviser will make available daily to FINRA and the Exchange the 
Actual Portfolio of a Fund, upon request, in order to facilitate the 
performance of the surveillances referred to above.
    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
    Proposed Commentary .03 to NYSE Arca Rule 8.601-E provides that the 
Exchange will implement and maintain written surveillance procedures 
for Active Proxy Portfolio Shares. As part of these surveillance 
procedures, the Investment Company's investment adviser will upon 
request by the Exchange or FINRA, on behalf of the Exchange, make 
available to the Exchange or FINRA the daily Actual Portfolio holdings 
of each series of Active Proxy Portfolio Shares. The Exchange believes 
that the ability to access the information on an as needed basis will 
provide it with sufficient information to perform the necessary 
regulatory functions associated with listing and trading series of 
Active

[[Page 39006]]

Proxy Portfolio Shares on the Exchange, including the ability to 
monitor compliance with the initial and continued listing requirements 
as well as the ability to surveil for manipulation of Active Proxy 
Portfolio Shares.
    The Exchange will utilize its existing procedures to monitor issuer 
compliance with the requirements of proposed Rule 8.601-E. For example, 
the Exchange will continue to use intraday alerts that will notify 
Exchange personnel of trading activity throughout the day that may 
indicate that unusual conditions or circumstances are present that 
could be detrimental to the maintenance of a fair and orderly market. 
The Exchange will require from the issuer of Active Proxy Portfolio 
Shares, upon initial listing and periodically thereafter, a 
representation that it is in compliance with Rule 8.601-E. The Exchange 
notes that proposed Commentary .01 to Rule 8.601-E would require an 
issuer of Active Proxy Portfolio Shares to notify the Exchange of any 
failure to comply with the continued listing requirements of Rule 
8.601-E. In addition, the Exchange will require issuers to represent 
that they will notify the Exchange of any failure to comply with the 
terms of applicable exemptive and no-action relief. As part of its 
surveillance procedures, the Exchange will rely on the foregoing 
procedures to become aware of any non-compliance with the requirements 
of Rule 8.601-E.
    With respect to the Funds, all statements and representations made 
in this filing regarding (a) the description of the portfolio or 
reference asset, (b) limitations on portfolio holdings or reference 
assets, 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 Exchange will obtain a 
representation from the Adviser, prior to commencement of trading in 
the Shares of a Fund, that it will advise the Exchange of any failure 
by a Fund 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. If a Fund is not in compliance with the applicable 
listing requirements, the Exchange will commence delisting procedures 
under NYSE Arca Rule 5.5-E(m).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\26\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\27\ in particular, in that it 
is 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 
a national market system, and, in general, to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    With respect to the proposed listing and trading of Shares of the 
Funds, 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 proposed NYSE Arca Rule 
8.601-E.\28\
---------------------------------------------------------------------------

    \28\ The Exchange represents that, for initial and continued 
listing, the Funds will be in compliance with Rule 10A-3 under the 
Act, as provided by NYSE Arca Rule 5.3-E.
---------------------------------------------------------------------------

    Each Fund's holdings will conform to the permissible investments as 
set forth in the Application and the Exemptive Order and the holdings 
will be consistent with all requirements in the Application and 
Exemptive Order.\29\
---------------------------------------------------------------------------

    \29\ See note 14, supra.
---------------------------------------------------------------------------

    Each Fund's investments, including derivatives, will be consistent 
with its investment objective and will not be used to enhance leverage 
(although certain derivatives and other investments may result in 
leverage). That is, a Fund's investments will not be used to seek 
performance that is the multiple or inverse multiple (e.g., 2X or -3X) 
of a Fund's primary broad-based securities benchmark index (as defined 
in Form N-1A).
    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares and underlying 
exchange-traded instruments 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 underlying exchange-traded instruments from such markets 
and other entities. In addition, the Exchange may obtain information 
regarding trading in the Shares and underlying exchange-traded 
instruments from markets and other entities that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement. Any foreign common stocks held by a Fund will be 
traded on an exchange that is a member of the ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement.
    The Exchange, after consulting with various LMMs that trade ETFs on 
the Exchange, believes that market makers will be able to make 
efficient and liquid markets priced near the ETF's intraday value, and 
market makers employ market making techniques such as ``statistical 
arbitrage,'' including correlation hedging, beta hedging, and 
dispersion trading, which is currently used throughout the financial 
services industry, to make efficient markets in exchange-traded 
products.\30\ For Active Proxy Portfolio Shares, market makers may use 
the knowledge of a fund's means of achieving its investment objective, 
as described in the applicable fund registration statement, as well as 
a fund's disclosed Proxy Portfolio, to construct a hedging proxy for a 
fund to manage a market maker's quoting risk in connection with trading 
fund shares. Market makers can then conduct statistical arbitrage 
between their hedging proxy and shares of a fund, buying and selling 
one against the other over the course of the trading day. This ability 
should permit market makers to make efficient markets in an issue of 
Active Proxy Portfolio Shares without precise knowledge of a fund's 
underlying portfolio. This is similar to certain other existing 
exchange-traded products (for example, ETFs that invest in foreign 
securities that do not trade during U.S. trading hours), in which 
spreads may be generally wider in the early days of trading and then 
narrow as market makers gain more confidence in their real-time hedges.
---------------------------------------------------------------------------

    \30\ See note 9, supra.
---------------------------------------------------------------------------

    The Funds will utilize the NYSE Proxy Portfolio Methodology that 
would allow market participants to assess the intraday value and 
associated risk of a Fund's Actual Portfolio and thereby facilitate the 
purchase and sale of Shares by investors in the secondary market at 
prices that do not vary materially from their NAV.
    The daily dissemination of the identity and quantity of Proxy 
Portfolio component investments, together with the right of Authorized 
Participants to create and redeem each day at the NAV, will be 
sufficient for market participants to value and trade Shares in a 
manner that will not lead to significant deviations between the Shares' 
Bid/Ask Price and NAV.
    With respect to Active Proxy Portfolio Shares generally, the 
pricing efficiency with respect to trading a series of Active Proxy 
Portfolio Shares will generally rest on the ability of market 
participants to arbitrage between the shares and a

[[Page 39007]]

fund's portfolio, in addition to the ability of market participants to 
assess a fund's underlying value accurately enough throughout the 
trading day in order to hedge positions in shares effectively. 
Professional traders can buy shares that they perceive to be trading at 
a price less than that which will be available at a subsequent time and 
sell shares they perceive to be trading at a price higher than that 
which will be available at a subsequent time. It is expected that, as 
part of their normal day-to-day trading activity, market makers 
assigned to shares by the Exchange, off-exchange market makers, firms 
that specialize in electronic trading, hedge funds and other 
professionals specializing in short-term, non-fundamental trading 
strategies will assume the risk of being ``long'' or ``short'' shares 
through such trading and will hedge such risk wholly or partly by 
simultaneously taking positions in correlated assets \31\ or by netting 
the exposure against other, offsetting trading positions--much as such 
firms do with existing ETFs and other equities. Disclosure of a fund's 
investment objective and principal investment strategies in its 
prospectus and SAI should permit professional investors to engage 
easily in this type of hedging activity.
---------------------------------------------------------------------------

    \31\ Price correlation trading is used throughout the financial 
industry. It is used to discover both trading opportunities to be 
exploited, such as currency pairs and statistical arbitrage, as well 
as for risk mitigation such as dispersion trading and beta hedging. 
These correlations are a function of differentials, over time, 
between one or multiple securities pricing. Once the nature of these 
price deviations have been quantified, a universe of securities is 
searched in an effort to, in the case of a hedging strategy, 
minimize the differential. Once a suitable hedging basket has been 
identified, a trader can minimize portfolio risk by executing the 
hedging basket. The trader then can monitor the performance of this 
hedge throughout the trade period, making corrections where 
warranted.
---------------------------------------------------------------------------

    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 Exchange will obtain a representation from the Adviser that 
the NAV per Share of each Fund will be calculated daily and that the 
NAV, Proxy Portfolio and the Actual Portfolio for each Fund will be 
made available to all market participants at the same time. Investors 
can obtain a Fund's SAI, shareholder reports, and its Form N-CSR, Form 
N-PORT and Form N-CEN. A Fund's SAI and shareholder reports will be 
available free upon request from the a Fund, and those documents and 
the Form N-CSR, Form N-PORT and Form N-CEN may be viewed on-screen or 
downloaded from the Commission's website. In addition, with respect to 
each Fund, a large amount of information will be publicly available 
regarding the Funds and the Shares, thereby promoting market 
transparency. Quotation and last sale information for the Shares, ETFs, 
ETNs, U.S. exchange-traded common stocks, preferred stocks and ADRs 
will be available via the CTA high-speed line or from the exchange on 
which such securities trade. Price information for futures, foreign 
stocks and cash equivalents is available through major market data 
vendors. The website for the Funds will include a form of the 
prospectus for each Fund that may be downloaded, and additional data 
relating to NAV and other applicable quantitative information, updated 
on a daily basis. Trading in Shares of the Funds will be halted if the 
circuit breaker parameters in NYSE Arca Rule 7.12-E have been reached 
or because of market conditions or for reasons that, in the view of the 
Exchange, make trading in the Shares inadvisable. Trading in the Shares 
will be subject to NYSE Arca Rule 8.601-E (d)(2)(D), which sets forth 
circumstances under which Shares of the Fund will be halted. In 
addition, as noted above, investors will have ready access to the Proxy 
Portfolio and quotation and last sale information for the Shares. The 
Proxy Portfolio holdings for each Fund (including the identity and 
quantity of investments in the Proxy Portfolio) will be publicly 
available on the Funds' website before the commencement of trading in 
Shares on each Business Day. The Shares will conform to the initial and 
continued listing criteria under proposed Rule 8.601-E.\32\
---------------------------------------------------------------------------

    \32\ See Amendment 6 to SR-NYSEArca-2019-95, referenced in note 
4, supra.
---------------------------------------------------------------------------

    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 actively-managed exchange-traded product that 
will enhance competition among market participants, to the benefit of 
investors and the marketplace. The Exchange will obtain a 
representation from the Adviser, prior to commencement of trading in 
the Shares of a Fund, that it will advise the Exchange of any failure 
by a Fund 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. If a Fund is not in compliance with the applicable 
listing requirements, the Exchange will commence delisting procedures 
under NYSE Arca Rule 5.5-E(m).
    As noted above, the Exchange has in place surveillance procedures 
relating to trading in the Shares 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 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 purposes of the Act. The Exchange believes the 
proposed rule change would permit listing and trading of another type 
of actively-managed ETF that has characteristics different from 
existing actively-managed and index ETFs and would introduce additional 
competition among various ETF products to the benefit of investors.

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 up to 90 days (i) as the Commission may designate 
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, as modified by Amendment No. 2, 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

[[Page 39008]]

     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2020-51 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-2020-51. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEArca-2020-51, and should be 
submitted on or before July 20, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
---------------------------------------------------------------------------

    \33\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-13871 Filed 6-26-20; 8:45 am]
BILLING CODE 8011-01-P