Document ID: SEC-2017-1657-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2017-10-05T04:00Z

[Federal Register Volume 82, Number 192 (Thursday, October 5, 2017)]
[Notices]
[Pages 46552-46554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21410]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81775; File No. SR-NYSEArca-2017-115]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Extend the 
Implementation Date for Certain Changes to the NYSE Arca Rule 5 and 
Rule 8 Series

September 29, 2017.
    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 September 28, 2017, 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 extend the date on which certain changes 
to the NYSE Arca Rule 5 and Rule 8 series are implemented. The proposed 
rule change is available on the Exchange's Web site at www.nyse.com, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

[[Page 46553]]

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On January 6, 2017, the Exchange filed a proposed rule change, as 
subsequently amended by Amendments No. 1 and 2 thereto (as amended, the 
``Proposed Rule Change''), to adopt certain changes to the NYSE Arca 
Rules 5 and 8 series to add additional continued listing standards for 
exchange-traded funds (``ETFs'') as well as clarify the procedures that 
the Exchange will undertake when an ETF is noncompliant with applicable 
rules. Given the scope of the amendments specified in the Proposed Rule 
Change, the Exchange proposed that such amendments not be implemented 
until October 1, 2017. On March 9, 2017, the Commission granted 
accelerated approval of the Proposed Rule Change, including the October 
1, 2017 implementation date.\4\ The Exchange now proposes to extend the 
implementation date of the amendments specified in the Proposed Rule 
Change to January 1, 2018.
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    \4\ See Securities Exchange Act Release No. 80189 (March 9, 
2017), 82 FR 13889 (March 15, 2017) (SR-NYSEArca-2017-01).
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    Since the Proposed Rule Change was approved, the Exchange has 
engaged in extensive conversations with issuers of listed ETFs, 
industry advocacy groups and index providers to discuss the new rule 
requirements and offer guidance on rule interpretation and application. 
As a result of these conversations, ETF issuers have expressed concern 
about their ability to have in place systems and procedures to ensure 
compliance by the current October 1, 2017 implementation date. In 
particular, listed ETF issuers, and industry advocacy groups on their 
behalf, have explained that issuers require additional time to engage 
with listing exchanges to better understand how elements of the 
Proposed Rule Change will be interpreted and applied as well as to 
design and test new compliance systems. The Exchange has been engaged 
with its listed issuers and will continue to engage with them on topics 
of rule interpretation and application. In addition, issuers require 
time to engage in discussions with third-party providers to source and 
track new data elements required for rule compliance.\5\ Because 
indices are, in most cases, managed and maintained by third-party index 
providers, issuers need to ensure that they have procedures in place to 
obtain required index files on an ongoing basis so they can test such 
files for compliance with applicable continued listing rules. Further, 
issuers may need to contract with third party data providers to obtain 
necessary trading information about securities included in an index. 
The Exchange understands that issuers have been engaged in dialogue 
with index providers on these topics. Once all required information has 
been obtained, issuers have informed the Exchange that they require 
additional time to test their systems and procedures to ensure they are 
accurate and efficient.
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    \5\ See, for example, Letter, dated July 11, 2017, from Dorothy 
Donohue, Acting General Counsel, Investment Company Institute to 
Brent J. Fields, Secretary, Securities and Exchange Commission, 
available at https://www.sec.gov/comments/sr-nasdaq-2016-135/nasdaq2016135-1846208-155175.pdf.
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    The Exchange believes it is appropriate to extend the 
implementation date of the Proposed Rule Change to January 1, 2018 to 
provide listed ETF issuers with the time needed to finish developing 
and testing their compliance procedures. In support of its proposal, 
the Exchange notes that the Proposed Rule Change imposes significant 
new compliance requirements on issuers that they have not been subject 
to previously. To meet these new compliance requirements, issuers must 
develop internal systems as well as coordinate with third-party service 
providers, such as index providers, to develop procedures by which they 
can obtain essential data. Listed issuers have informed the Exchange 
that they are unable to complete this extensive project by the pending 
October 1, 2017 implementation date. The Exchange believes that it is 
critical for listed ETF issuers to have the appropriate procedures and 
systems in place to monitor and evidence ETF compliance with the new 
continued listing rules before such rules are implemented because 
failure to comply with Exchange rules could lead to delisting. 
Therefore, the Exchange proposes to extend the implementation date for 
the Proposed Rule Change until January 1, 2018. During the proposed 
extension period, the Exchange will communicate with issuers, as 
needed, with respect to any questions about interpretation and 
application of the Proposed Rule Change and in order to better 
understand the progress being made by issuers in completing the 
development of their compliance testing and procedures.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Sections [sic] 6(b)(5) \7\ of the Act, in particular, in 
that it is designed to promote just and equitable principles of trade, 
to foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect to, 
and facilitating transactions in securities, 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. The Exchange believes that the proposed amendment is 
consistent with the protection of investors because failure to comply 
with Exchange rules could lead to delisting and the proposed amendment 
will enable listed issuers to have the systems and procedures needed to 
monitor and evidence compliance with the Proposed Rule Change prior to 
such rule being implemented. Providing listed issuers with additional 
time to ensure that they have adequate compliance systems in place 
furthers the protection of investors and the public interest because it 
will enhance investor confidence that listed issuers are complying with 
Exchange rules.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act, as amended. The Exchange notes 
that the proposed rule change will facilitate listed issuer ability to 
monitor and evidence compliance with approved continued listing rules 
by providing issuers with additional time to finish developing and 
testing their internal systems and procedures prior to the 
implementation date.

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

    The Exchange received a copy of a letter from the Investment 
Company Institute, on behalf of listed ETF issuers, to the Securities 
and Exchange Commission.\8\ As described in Item 3 [sic], above, the 
Investment Company Institute detailed challenges that listed ETF 
issuers are facing in developing compliance systems to address the 
amendments contained in the Proposed Rule Change and have requested 
that

[[Page 46554]]

the implementation date for such amendments be extended.
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    \8\ See Footnote 5, supra.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.\9\
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    \9\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \10\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The 
Commission notes that waiver of the operative delay will allow the 
Exchange to immediately extend the implementation date of the Proposed 
Rule Change, and avoid the potential confusion and disruption that 
could result if the extension did not become operative until after 
October 1, 2017. The Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Therefore, the Commission hereby waives the 30-day 
operative delay and designates the proposal operative upon filing.\12\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2017-115 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-2017-115. 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-2017-115 and should 
be submitted on or before October 26, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21410 Filed 10-4-17; 8:45 am]
 BILLING CODE 8011-01-P