Document ID: SEC-2014-1938-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2014-11-20T05:00Z

[Federal Register Volume 79, Number 224 (Thursday, November 20, 2014)]
[Notices]
[Pages 69173-69179]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-27456]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73602; File No. SR-NYSEArca-2014-120]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Amendment No. 2 to Proposed Rule Change Relating to Listing and 
Trading Shares of the Sit Rising Rate Fund Under NYSE Arca Equities 
Rule 8.200

November 14, 2014.
    On October 16, 2014, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1)\1\ of the Securities 
Exchange Act of 1934 (``Exchange Act'') \2\ and Rule 19b-4 
thereunder,\3\ a proposed rule change to list and trade shares of the 
Sit Rising Rate Fund under NYSE Arca Equities Rule 8.200. The proposed 
rule change was published for comment in the Federal Register on 
November 4, 2014.\4\ The Commission received no comments on the 
proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 73464 (Oct. 29, 
2014), 79 FR 65437.
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    Pursuant to Section 19(b)(1) of the Act \5\ and Rule 19b-4 
thereunder,\6\ notice is hereby given that, on November 6, 2014, the 
Exchange filed with the Commission Amendment No. 2 to the proposed rule 
change, as described in Sections I and II below, which Sections have 
been prepared by the Exchange.\7\ The Commission is publishing this 
notice to solicit comments from interested persons on the proposed rule 
change, as modified by Amendment No. 2 thereto.
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    \5\ 15 U.S.C. 78s(b)(1).
    \6\ 17 CFR 240.19b-4.
    \7\ Amendment No. 2 replaces SR-NYSEArca-2014-120 and supersedes 
such filing in its entirety. Amendment No. 1 was filed on November 
3, 2014 and withdrawn on November 6, 2014.
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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 the 
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'').\8\ 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.\9\
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    \8\ 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.
    \9\ 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,\10\ trading on NYSE Arca pursuant to UTP,\11\ and listing 
on NYSE Arca.\12\ In 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.\13\
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    \10\ See, e.g., Securities Exchange Act Release No. 58161 (July 
15, 2008), 73 FR 42380 (July 21, 2008) (SR-Amex-2008-39).
    \11\ See, e.g., Securities Exchange Act Release No. 58163 (July 
15, 2008), 73 FR 42391 (July 21, 2008) (SR-NYSEArca-2008-73).
    \12\ 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).
    \13\ 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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[[Page 69174]]

    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'') \14\ and is a member of the National 
Futures Association (``NFA''). U.S. Bancorp Fund Services will be the 
transfer agent, custodian and administrator for the Fund (``Custodian'' 
or ``Administrator''). Esposito Securities LLC (the ``Distributor'') 
will provide statutory and wholesaling distribution services.\15\
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    \14\ The Sponsor is not a broker-dealer or affiliated with a 
broker-dealer.
    \15\ This Amendment No. 2 to SR-NYSEArca-2014-120 replaces SR-
NYSEArca-2014-120 as originally filed and supersedes such filing in 
its entirety. The Exchange has withdrawn Amendment No. 1 to SR-
NYSEArca-2014-120.
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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 Fund will invest in the 
Treasury Instruments in the same weighting as the Benchmark Portfolio.
    The Benchmark Portfolio will be maintained by Sit Fixed Income 
Advisors II, LLC (``Sit'') \16\ 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 and the Fund will 
each maintain a short position in Treasury Instruments. 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.
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    \16\ Sit is not affiliated with the Sponsor. Sit is not a 
broker-dealer or affiliated with a broker-dealer.
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    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:

------------------------------------------------------------------------
                                                              Percent of
                  Treasury instrument  (%)                    portfolio
------------------------------------------------------------------------
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
------------------------------------------------------------------------

    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, or on the nest [sic] business day 
if the 15th is a holiday, weekend, or other day on which the national 
exchanges are closed, 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 Sponsor anticipates that approximately 5% to 15% of the Fund's 
assets will be used as payment for or collateral for Treasury 
Instruments. In order to collateralize its Treasury Instrument 
positions the Fund will hold such assets, from which it will post 
margin to its futures commission merchant (``FCM''), in an amount equal 
to the margin required by the relevant exchange, and transfer to its 
FCM any additional amounts that may be separately required by the 
FCM.\17\ Any assets not required to be posted as margin with the FCM 
will be held at the Fund's administrator in cash or cash equivalents as 
discussed below.
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    \17\ When establishing positions in Treasury Instruments, the 
Fund will be required to deposit initial margin with a value of 
approximately 3% to 10% of the value of each Treasury Instrument 
position at the time it is established. These margin requirements 
are subject to change from time to time by the exchange or the FCM. 
On a daily basis, the Fund will be obligated to pay, or entitled to 
receive, variation margin in an amount equal to the change in the 
daily settlement level of its Treasury Instruments positions.
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    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) 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.

[[Page 69175]]

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 and other national exchanges (collectively, the 
``Futures Exchanges'')). The Administrator will value all other 
holdings of the Fund at (1) current market value, if quotations for 
such property are readily available, or (2) fair value, as reasonably 
determined by the Administrator, if the current market value cannot be 
determined. Once the value of the Treasury Instruments and interest 
earned on the Fund's cash and cash equivalents has been determined, the 
Administrator will subtract all accrued expenses and liabilities of the 
Fund as of the time of calculation in order to calculate the net asset 
value of the Fund.
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 
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 Futures Exchanges 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 Futures Exchanges trading 
prices for contracts traded on the Futures Exchanges are unavailable. 
During such gaps in time the IIV will be calculated based on the end of 
day price of such contracts from the Futures Exchanges' 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 the 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 
Futures Exchanges or the New York Stock Exchange are closed for regular 
trading (``Business Day''), an Authorized Purchaser \18\ 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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    \18\ 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

[[Page 69176]]

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 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 \19\ under the Act, 
the Fund will rely on the exception contained in Rule 10A-3(c)(7).\20\ 
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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    \19\ 17 CFR 240.10A-3.
    \20\ 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 National Securities Clearing Corporation. 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.
    The Exchange represents that quotation and last sale information 
for the Treasury Instruments will be widely disseminated through a 
variety of major market data vendors worldwide, such as Bloomberg and 
Reuters. In addition, the Exchange further represents that complete 
real-time price (and volume) data for such contracts is available by 
subscription from Reuters and Bloomberg. The Futures Exchanges also 
provide delayed futures price (and volume) information on current and 
past trading sessions and market news free of charge on their Web sites 
for Treasury Instruments. The specific contract specifications for such 
contracts are also available at the Futures Exchanges Web sites, as 
well as other financial informational sources. The price of Treasury 
Instruments also is available on a 24-hour basis from major market data 
vendors. Information relating to trading, including price and volume 
information, in Treasury Instruments will be available from major 
market data vendors and from the exchanges on which Treasury 
Instruments trade.
    The Fund will provide Web site disclosure of its portfolio holdings 
daily and will include the names, quantity, price and market value of 
the Treasury Instruments held by the Fund and other financial 
instruments such as Treasury Bills, if any, and the characteristics of 
such instruments and cash equivalents, and amount of cash held in the 
portfolio of the Fund. 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

[[Page 69177]]

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.\21\
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    \21\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available IIVs 
taken from the CTA or other data feeds.
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    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 Futures Exchanges on which Treasury Instruments are 
traded. 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 U.S. Treasuries or other high credit 
quality, short-term fixed-income or similar securities (such as shares 
of money market funds).
    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. The 
intraday value of the Benchmark Portfolio, updated every 15 seconds, 
will also be available through major market data vendors.
    Pricing information regarding the Treasury Instruments will also be 
available from the Futures Exchanges Web sites. Similar information 
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'') 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 \22\ 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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    \22\ 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 Treasury Instruments, 
(2) if the creation or redemption of Shares is suspended for a period 
that, in the judgment of the Exchange, may detrimentally impact 
Exchange trading of the Shares, or (3) 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 \23\ or by the halt or suspension 
of trading of the underlying Treasury Instruments.
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    \23\ 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, the 
Benchmark Portfolio or the value of the underlying Treasury Instruments 
occurs. If an interruption to the dissemination of the IIV, the 
Benchmark Portfolio or the value of the underlying Treasury Instruments 
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.\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.
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    \24\ 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

[[Page 69178]]

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.\25\ 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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    \25\ 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 
components traded on exchanges 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.
    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) \26\ 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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    \26\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in NYSE Arca Equities Rule 8.200 
and Commentary .02 thereto. The Fund will seek to achieve its 
investment objective by tracking the performance of the Benchmark 
Portfolio. The Fund will invest in the Treasury Instruments in the same 
weighting as the Benchmark Portfolio. The Sponsor represents that the 
Fund will invest in Treasury Instruments in a manner consistent with 
the Fund'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. 
Sit, which maintains the Benchmark Portfolio, is not affiliated with 
the Sponsor and is not a broker-dealer or affiliated with a broker-
dealer.
    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 components 
traded on exchanges 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. 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 
Futures Exchanges on which Treasury Instruments are traded. The Futures 
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 U.S. Treasuries or 
other high credit quality, short-term fixed-income or similar 
securities (such as shares of money market funds).
    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. The 
intraday value of the Benchmark Portfolio, updated every 15 seconds, 
will also available on a major market data vendor. Pricing information 
regarding the Treasury Instruments will also available from the Futures 
Exchanges Web sites. Similar information 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.

[[Page 69179]]

    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 Treasury Instruments, (2) if the creation 
or redemption of Shares is suspended for a period that, in the judgment 
of the Exchange, may detrimentally impact Exchange trading of the 
Shares, or (3) 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 Treasury 
Instruments. The Exchange represents that the Exchange may halt trading 
during the day in which an interruption to the dissemination of the 
IIV, the Benchmark Portfolio or the value of the underlying Treasury 
Instruments occurs. If an interruption to the dissemination of the IIV, 
the Benchmark Portfolio or the value of the underlying Treasury 
Instruments 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, 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 November 4, 2014 (the date of publication in the 
Federal Register of notice of the proposed rule change as initially 
filed with the Commission), or within such longer period up to 90 days 
of that date (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
     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 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; 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 December 11, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27456 Filed 11-19-14; 8:45 am]
BILLING CODE 8011-01-P