Document ID: SEC-2017-0704-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2017-05-02T04:00Z

[Federal Register Volume 82, Number 83 (Tuesday, May 2, 2017)]
[Notices]
[Pages 20525-20527]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08815]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80534; File No. SR-NYSEArca-2017-41]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Reflect Changes 
in the Name of, the Investment Objective for, and the Means of 
Achieving the Investment Objective Applicable to the PIMCO Total Return 
Active Exchange-Traded Fund

April 26, 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 April 17, 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 reflect changes in the name of, the 
investment objective for, and the means of achieving the investment 
objective applicable to, the PIMCO Total Return Active Exchange-Traded 
Fund (the ``Fund''). The Fund is currently listed and traded on the 
Exchange under NYSE Arca Equities Rule 8.600. The proposed rule change 
is available on the Exchange's Web site at www.nyse.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

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

A. Self-Regulatory Organization's Statement of the Purpose of, and 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,\4\ under NYSE Arca Equities Rule 
8.600, which governs the listing and trading of Managed Fund Shares.\5\ 
The Shares are

[[Page 20526]]

offered by PIMCO ETF Trust (the ``Trust''), a statutory trust organized 
under the laws of the State of Delaware and registered with the 
Commission as an open-end management investment company.\6\ The 
investment manager to the Fund is Pacific Investment Management Company 
LLC (``PIMCO'' or the ``Adviser''). The Fund's Shares are currently 
listed and traded on the Exchange under NYSE Arca Equities Rule 8.600.
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    \4\ See Securities Exchange Act Release Nos. 65988 (December 16, 
2011), 76 FR 79741 (December 22, 2011) (SR-NYSEArca-2011-95) (notice 
of filing of proposed rule change relating to listing and trading of 
Shares of the Fund on the Exchange) (``First Prior Notice''); 66321 
(February 3, 2012), 77 FR 6850 (February 9, 2012) (SR-NYSEArca-2011-
95) (order approving listing and trading of Shares of the Fund on 
the Exchange) (``First Prior Order''). See also Securities Exchange 
Act Release Nos. 70905 (November 20, 2013) (SR-NYSEArca-2013-122) 
(notice of filing of proposed rule change relating to use of 
derivative instruments by the Fund) (``Second Prior Notice''); 72666 
(July 24, 2014), 79 FR 44224 (July 30, 2014) (SR-NYSEArca-2013-122) 
(order approving proposed rule change as modified by Amendment No. 2 
thereto relating to use of derivative instruments by the Fund) 
(``Second Prior Order''); 73331 (October 9, 2014), 79 FR 62213 
(October 16, 2014) (SR-NYSEArca-2014-104) (notice of filing and 
immediate effectiveness of proposed rule change relating to use of 
derivatives by certain PIMCO exchange traded funds); 75475 (July 16, 
2015), 80 FR 43507 (July 22, 2015) (SR-NYSEArca-2015-63) (notice of 
filing and immediate effectiveness of proposed rule change relating 
to a change in the size of a Creation Unit applicable to Shares of 
the Fund) (collectively, the ``Prior Releases'').
    \5\ A Managed Fund Share is a security that represents an 
interest in an investment company registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a-1) (``1940 Act'') organized as an 
open-end investment company or similar entity that invests in a 
portfolio of securities selected by its investment adviser 
consistent with its investment objectives and policies. In contrast, 
an open-end investment company that issues Investment Company Units, 
listed and traded on the Exchange under NYSE Arca Equities Rule 
5.2(j)(3), seeks to provide investment results that correspond 
generally to the price and yield performance of a specific foreign 
or domestic stock index, fixed income securities index or 
combination thereof.
    \6\ The Trust is registered under the 1940 Act. On October 31, 
2016 the Trust filed with the Commission the most recent post-
effective amendment to its registration statement under the 
Securities Act of 1933 (15 U.S.C. 77a) (``1933 Act'') and under the 
1940 Act relating to the Fund (File Nos. 333-155395 and 811-22250) 
(the ``Registration Statement''). The description of the operation 
of the Trust and the Fund herein is based, in part, on the 
Registration Statement. In addition, the Commission has issued an 
order granting certain exemptive relief to the Trust under the 1940 
Act. See Investment Company Act Release No. 28993 (November 10, 
2009) (File No. 812-13571) (``Exemptive Order'').
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    In this proposed rule change, the Exchange proposes to reflect 
changes in the name of the Fund, the Fund's investment objective, and 
the means of seeking the Fund's investment objective, as described 
below.\7\
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    \7\ The changes described herein have been filed with the 
Commission in a supplement, dated March 7, 2017, to the Trust's 
Registration Statement. See note 5 [sic], supra. The Adviser 
represents that it will manage the Fund in the manner described in 
the Prior Releases, and will not implement the changes described 
herein until the proposed rule change is operative.
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Name of the Fund
    The Adviser proposes that the name of the Fund be changed from that 
stated in the Prior Releases to the PIMCO Active Bond Exchange-Traded 
Fund. The Adviser represents that the Fund's name is changing to better 
reflect the Fund's revised investment objective and the Fund's revised 
investment strategy.
Investment Objective
    The Prior Releases stated that the Fund would seek maximum total 
return, consistent with preservation of capital and prudent investment 
management. The Adviser proposes revise [sic] the investment objective 
of the Fund to state that the Fund will seek current income and long-
term capital appreciation, consistent with prudent investment 
management.
Investment Strategies
    The First Prior Notice stated that the Fund will invest primarily 
(under normal market circumstances, at least 65% of its total assets) 
in investment-grade Fixed Income Instruments,\8\ but may invest up to 
10% of its total assets in high yield Fixed Income Instruments rated B3 
through Ba1 by Moody's Investors Service, Inc. (``Moody's''), or 
equivalently rated by Standard & Poor's Ratings Services (``S&P'') or 
Fitch, Inc. (``Fitch''), or, if unrated, determined by PIMCO to be of 
comparable quality. In the Second Prior Order, the Commission approved 
a revision to this statement to provide that the Fund will invest under 
normal market circumstances at least 65% of its total assets in a 
diversified portfolio of Fixed Income Instruments of varying 
maturities, which may be represented by derivatives related to Fixed 
Income Instruments. The Adviser proposes to revise the descriptions to 
state that the Fund will primarily (under normal market circumstances, 
at least 65% of its total assets) invest in a diversified portfolio of 
Fixed Income Instruments of varying maturities, which may be 
represented by derivatives related to Fixed Income Instruments, but may 
invest up to 30% of its total assets in high yield Fixed Income 
Instruments (which may be represented by derivatives related to Fixed 
Income Instruments) rated B3 through Ba1by [sic] Moody's, or 
equivalently rated by S&P or Fitch, or, if unrated, determined by PIMCO 
to be of comparable quality. The Adviser represents that the proposed 
change to the Fund's investment in such high yield Fixed Income 
Instruments is consistent with the Fund's proposed revised investment 
objective, and will further assist the Adviser to achieve such 
investment objective.
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    \8\ See First Prior Notice, note 9, and Second Prior Notice, 
note 10, for a description of Fixed Income Instruments.
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    Also, the First Prior Notice stated the average portfolio duration 
of the Fund normally will vary within two years (plus or minus) of the 
duration of the Bloomberg Barclays U.S. Aggregate Index (formerly, the 
Barclays Capital U.S. Aggregate Index). The Adviser proposes to change 
this representation to provide that the average portfolio duration of 
the Fund will no longer be measured against the duration of the 
Bloomberg Barclays U.S. Aggregate Index, but instead normally will vary 
from zero to eight years based on PIMCO's market forecasts. The Adviser 
represents that the proposed change to the average portfolio duration 
of the Fund is consistent with the Fund's proposed revised investment 
objective, and will further assist the Adviser to achieve such 
investment objective.
    Except for the changes noted above, all other representations made 
in the Prior Releases remain unchanged.
    All terms referenced but not defined herein are defined in the 
Prior Releases.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \9\ 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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    \9\ 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, in that the change in the Fund's 
investment objective will specify that the Fund will seek current 
income and long-term capital appreciation, consistent with prudent 
investment management. The Adviser believes such change will enable 
investors to better understand the Fund's expected investment 
activities and determine if and/or to what extent an investment in the 
Fund is appropriate for their portfolios. With respect to the proposed 
change to the Fund's name, the Adviser represents that the Fund's name 
is changing to better reflect the Fund's revised investment objective 
and the Fund's revised investment strategy.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market, and, in general, to promote just and equitable 
principles of trade and to protect investors and the public interest, 
in that the change in the Fund's ability to invest in high yield Fixed 
Income Instruments from up to 10% to up to 30% of its total assets will 
afford the Fund greater flexibility to invest in such high-yield 
instruments, and will further assist the Adviser to achieve the Fund's 
investment objective. In addition, the Exchange believes that the 
change to the average portfolio duration of the Fund will not adversely 
impact investors or Exchange trading. Such change would accommodate a 
duration that will provide the Fund with additional flexibility in 
managing the duration of the Fund's holdings using the average 
portfolio duration normally of zero to eight years based on PIMCO's 
market forecasts. Further, a more flexible duration bandwidth will 
allow the Fund to respond more effectively to

[[Page 20527]]

changing market conditions. Except for the changes noted above, all 
other representations in the Prior Releases remain unchanged.

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 will enhance competition among issues of exchange-
traded funds that invest in fixed income securities 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

    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, if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\10\ and Rule 19b-4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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 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. The Exchange has satisfied this requirement.
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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 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-2017-41 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-2017-41. 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-2017-41 and should 
be submitted on or before May 23, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-08815 Filed 5-1-17; 8:45 am]
 BILLING CODE 8011-01-P