Document ID: SEC-2018-0375-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2018-03-05T05:00Z

[Federal Register Volume 83, Number 43 (Monday, March 5, 2018)]
[Notices]
[Pages 9347-9349]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04340]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82788; File No. SR-NYSEArca-2018-13]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to the 
Wilshire Micro-Cap ETF

February 27, 2018.
    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 February 13, 2018, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to reflect changes to certain representations 
made in the proposed rule change previously filed with the Commission 
pursuant to Rule 19b-4 relating to the Wilshire Micro-Cap ETF (the 
``Fund''). Shares of the Fund are currently listed and traded on the 
Exchange under NYSE Arca Rule 5.2(j)(3)-E. The proposed rule 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 Commission has approved the listing and trading on the Exchange 
of shares (``Shares'') of the Fund, under NYSE Arca Rule 5.2-E(j)(3) 
(formerly NYSE Arca Equities Rule 5.2(j)(3)), which governs the listing 
and trading of Investment Company Units.\4\ The Fund's Shares are 
currently listed and traded on the Exchange under NYSE Arca Rule 5.2-
E(j)(3).\5\ The Fund is a series of the Claymore Exchange-Traded Fund 
Trust (``Trust'').\6\
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    \4\ An Investment Company Unit is a security that represents an 
interest in a registered investment company that holds securities 
comprising, or otherwise based on or representing an interest in, an 
index or portfolio of securities (or holds securities in another 
registered investment company that holds securities comprising, or 
otherwise based on or representing an interest in, an index or 
portfolio of securities). See NYSE Arca Rule 5.2-E(j)(3)(A).
    \5\ The Commission previously approved the listing and trading 
of the Shares of the Fund. The Exchange filed a proposed rule change 
relating to the Fund because Fund's underlying index--the Wilshire 
US Micro-Cap IndexSM (the ``Index'')--did not meet the criteria set 
forth in Commentaries .01(a)(A)(1) and .01(a)(A)(5) of NYSE Arca 
Rule 5.2-E(j)(3) applicable to Units based on U.S. indexes or 
portfolios. See Securities Exchange Act Release Nos. 62737 (August 
17, 2010), 75 FR 51863 (August 23, 2010) (SR-NYSEArca-2010-64) 
(Order Approving Proposed Rule Change Relating to Listing of the 
Wilshire Micro-Cap ETF) (``Approval Order''); 62471 (July 8, 2010) 
(SR-NYSEArca-2010-64) (Notice of Filing of Proposed Rule Change by 
NYSE Arca, Inc. Relating to Listing of the Wilshire Micro-Cap ETF) 
(the ``Notice'' and, together with the Approval Order, the 
``Releases'').
    \6\ See Claymore Exchange-Traded Fund Trust's registration 
statement on Form N-1A, dated December 29, 2017 (File Nos. 333-
134551; 811-21906).
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    PowerShares Exchange-Traded Fund Trust has filed a combined 
prospectus and proxy statement (the ``Proxy Statement'') with the 
Commission on Form N-14 describing a ``Plan of Reorganization'' 
pursuant to which, following approval of the Fund's shareholders, all 
or substantially all of the assets and all of the stated liabilities 
included in the financial statements of the Fund would be transferred 
to a corresponding, newly-formed fund of the PowerShares Exchange-
Traded Fund

[[Page 9348]]

Trust, described below. According to the Proxy Statement, the 
investment objective of the Fund will be the same following 
implementation of the Plan of Reorganization (``Reorganization'').\7\ 
Following shareholder approval and closing of the Reorganization, 
investors will receive shares of beneficial interest of the PowerShares 
Wilshire Micro-Cap Portfolio (and cash with respect to any fractional 
shares held, if any) with an aggregate net asset value equal to the 
aggregate net asset value of the Shares of the Fund of the Trust 
calculated as of the close of business on the business day before the 
closing of the Reorganization.
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    \7\ See registration statement on Form N-14 under the Securities 
Act of 1933 (15 U.S.C. 77a) (``1933 Act''), dated November 21, 2017 
(File No. 333-221699). The definitive, final version of the Proxy 
Statement was filed with the Commission pursuant to Rule 497 under 
the 1933 Act on January 5, 2018.
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    In this proposed rule change, the Exchange proposes to reflect a 
change to certain representations made in the proposed rule change 
previously filed with the Commission pursuant to Rule 19b-4 relating to 
the Fund, as described above,\8\ which changes would be implemented as 
a result of the Plan of Reorganization.\9\
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    \8\ See note 5, supra.
    \9\ The Fund's investment adviser, Guggenheim Funds Investment 
Advisors, LLC, represents that it will manage the Fund in the manner 
described in the proposed rule change for the Fund as referenced in 
note 4, supra, and the changes described herein will not be 
implemented until this proposed rule change is operative.
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Wilshire Micro-Cap ETF \10\
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    \10\ On October 20, 2017 the PowerShares Exchange-Traded Fund 
Trust filed with the Commission a pre-effective amendment to its 
registration statement on Form N-1A under the 1933 Act and under the 
1940 Act relating to the Fund (File Nos. 333-147622 and 811-22148). 
The October 20, 2017 filing is intended to create a new entity to 
serve as the vehicle into which the Fund will be reorganized through 
the Plan of Reorganization contained in the Proxy Statement. In 
addition, the Commission has issued an order granting certain 
exemptive relief to the PowerShares Exchange-Traded Fund Trust under 
the 1940 Act. See Investment Company Act Release No. 28171 (February 
27, 2008) (File No. 812-13386, as amended by Investment Company 
Release No. 28467) (October 27, 2008) (File No. 812-13491).
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    The Notice stated the name of the Fund as Wilshire MicroCap ETF. 
Following the Reorganization, the name of the Fund will be PowerShares 
Wilshire Micro-Cap Portfolio.
    The Notice stated that the Fund is a series of the Claymore 
Exchange-Traded Fund Trust. Following the Reorganization, the Fund's 
trust will be PowerShares Exchange-Traded Fund Trust. The Fund's 
investment adviser is Guggenheim Funds Investment Advisors, LLC. 
Following the Reorganization, the Fund's investment adviser will be 
Invesco PowerShares Capital Management LLC.\11\
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    \11\ Invesco PowerShares Capital Management LLC is not 
registered as a broker-dealer but is affiliated with a broker-
dealer. Invesco PowerShares Capital Management LLC has implemented 
and will maintain a fire wall with respect to its affiliated broker-
dealer regarding access to information concerning the composition 
and/or changes to the Fund's portfolio. In the event (a) Invesco 
PowerShares Capital Management LLC becomes registered as a broker-
dealer or newly affiliated with a broker-dealer, or (b) any new 
adviser or sub-adviser becomes registered as a broker-dealer or 
newly affiliated with a broker-dealer, it will implement and 
maintain a fire wall with respect to its relevant personnel or such 
broker-dealer affiliate regarding access to information concerning 
the composition and/or changes to the Fund's portfolio, and will be 
subject to procedures designed to prevent the use and dissemination 
of material non-public information regarding such portfolio. In 
addition, personnel who make decisions on the Fund's portfolio 
composition must be subject to procedures designed to prevent the 
use and dissemination of material nonpublic information regarding 
the Fund's portfolio.
    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, with respect to PowerShares Wilshire Micro-Cap 
Portfolio, Invesco PowerShares Capital Management LLC, as adviser, 
and its related personnel, are 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 violation, 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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    The Fund's current distributor is Guggenheim Funds Distributors, 
LLC. Following the Reorganization, the Fund's distributor will be 
Invesco Distributors, Inc.
    The investment objective of the Fund will remain unchanged. In 
addition, the Index underlying the Fund meets and will continue to meet 
the representations regarding the Index as described in the Releases.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \12\ 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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    \12\ 15 U.S.C. 78f (b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices, and is designed 
to promote just and equitable principles of trade and to protect 
investors and the public interest.
    PowerShares Exchange-Traded Fund Trust has filed the Proxy 
Statement describing the Reorganization pursuant to which, following 
approval of the Fund's shareholders, all assets of the Fund would be 
transferred to a corresponding fund of the PowerShares Exchange-Traded 
Fund Trust. This filing proposes to reflect organizational and 
administrative changes that would be implemented as a result of the 
Reorganization, including changes to the Fund's names, the trust entity 
issuing shares of the Fund, the adviser to the Fund and the distributor 
for the Fund. As noted above, Invesco PowerShares Capital Management 
LLC is not registered as a broker-dealer but is affiliated with a 
broker-dealer. Invesco PowerShares Capital Management LLC has 
implemented and will maintain a fire wall with respect to its 
affiliated broker-dealer regarding access to information concerning the 
composition and/or changes to the Fund's portfolio. In the event (a) 
Invesco PowerShares Capital Management LLC becomes registered as a 
broker-dealer or newly affiliated with a broker-dealer, or (b) any new 
adviser or sub-adviser becomes registered as a broker-dealer or newly 
affiliated with a broker-dealer, it will implement and maintain a fire 
wall with respect to its relevant personnel or such broker-dealer 
affiliate regarding access to information concerning the composition 
and/or changes to the portfolio, and will be subject to procedures 
designed to prevent the use and dissemination of material non-public 
information regarding such portfolio. According to the Proxy Statement, 
the investment objective of the Fund will be the same following 
implementation of the Reorganization. The Exchange believes these 
changes will not adversely impact investors or Exchange trading. In 
addition, the Index underlying the Fund meets and will continue to meet 
the representations regarding the Index as described in the Releases.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose

[[Page 9349]]

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 will enhance competition and benefit of investors 
and the marketplace by permitting continued listing and trading of 
Shares of the Fund following implementation of the changes described 
above that would follow the Reorganization, which changes would not 
impact the investment objective of the Fund.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change does not: (i) Significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, it has become effective pursuant to 
Section 19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) 
thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The proposal would allow the Exchange to reflect organizational 
and administrative changes to the Fund that would be implemented as a 
result of the Reorganization, including changes to the Fund's name, the 
trust entity issuing shares of the Fund, the adviser to the Fund, and 
the distributor for the Fund. The Exchange represents that the 
investment objective of the Fund will remain the same, and the Index 
underlying the Fund meets and will continue to meet the representations 
regarding the Index as described in the Releases. The Commission 
believes that the proposal raises no new or novel regulatory issues and 
waiver of the 30-day operative delay is consistent with the protection 
of investors and the public interest. Accordingly, the Commission 
hereby waives the 30-day operative delay and designates the proposed 
rule change to be operative upon filing.\15\
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    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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 [email protected]. Please include 
File Number SR-NYSEArca-2018-13 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-2018-13. 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 the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. 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-2018-13 and should be submitted 
on or before March 26, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-04340 Filed 3-2-18; 8:45 am]
 BILLING CODE 8011-01-P