Document ID: SEC-2021-1320-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2021-09-29T04:00Z

[Federal Register Volume 86, Number 186 (Wednesday, September 29, 2021)]
[Notices]
[Pages 53993-53995]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-21110]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93108; File No. SR-NYSEArca-2021-81]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Reflect an 
Amendment to the Application and Exemptive Order Governing the Fidelity 
Women's Leadership ETF and Fidelity Sustainability U.S. Equity ETF

September 23, 2021.
    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 13, 2021, NYSE Arca, Inc. (``NYSE Arca'' or 
``Exchange'') 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 Exchange. 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 an amendment to the Application 
and Exemptive Order governing the Fidelity Women's Leadership ETF and 
Fidelity Sustainability U.S. Equity ETF that are listed and traded on 
the Exchange under NYSE Arca Rule 8.601-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 Exchange adopted NYSE Arca Rule 8.601-E for the purpose of 
permitting the listing and trading, or trading pursuant to unlisted 
trading privileges (``UTP''), of Active Proxy Portfolio Shares, which 
are securities issued by an actively managed open-end investment 
management company.\4\

[[Page 53994]]

Commentary .01 to Rule 8.601-E requires the Exchange to file separate 
proposals under Section 19(b) of the Act before listing and trading any 
series of Active Proxy Portfolio Shares on the Exchange. Pursuant to 
this provision, the Exchange submitted a proposal to list and trade 
shares (``Shares'') of Active Proxy Portfolio Shares of the Fidelity 
Women's Leadership ETF and Fidelity Sustainability U.S. Equity ETF \5\ 
(each a ``Fund'' and, collectively, the ``Funds'') on the Exchange 
under NYSE Arca Rule 8.601-E: T. The Exchange proposes to reflect an 
amendment to the Application and Exemptive Order (as defined below) 
governing the listing and trading of the Funds, as follows.
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    \4\ See Securities Exchange Act Release No. 89185 (June 29, 
2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95). Rule 8.601-
E(c)(1) provides that ``[t]he term ``Active Proxy Portfolio Share'' 
means a security that (a) is issued by a investment company 
registered under the Investment Company Act of 1940 (``Investment 
Company'') organized as an open-end management investment company 
that invests in a portfolio of securities selected by the Investment 
Company's investment adviser consistent with the Investment 
Company's investment objectives and policies; (b) is issued in a 
specified minimum number of shares, or multiples thereof, in return 
for a deposit by the purchaser of the Proxy Portfolio and/or cash 
with a value equal to the next determined net asset value (``NAV''); 
(c) when aggregated in the same specified minimum number of Active 
Proxy Portfolio Shares, or multiples thereof, may be redeemed at a 
holder's request in return for the Proxy Portfolio and/or cash to 
the holder by the issuer with a value equal to the next determined 
NAV; and (d) the portfolio holdings for which are disclosed within 
at least 60 days following the end of every fiscal quarter.'' Rule 
8.601-E(c)(2) provides that ``[t]he term ``Actual Portfolio'' means 
the identities and quantities of the securities and other assets 
held by the Investment Company that shall form the basis for the 
Investment Company's calculation of NAV at the end of the business 
day.'' Rule 8.601-E(c)(3) provides that ``[t]he term ``Proxy 
Portfolio'' means a specified portfolio of securities, other 
financial instruments and/or cash designed to track closely the 
daily performance of the Actual Portfolio of a series of Active 
Proxy Portfolio Shares as provided in the exemptive relief pursuant 
to the Investment Company Act of 1940 applicable to such series.''
    \5\ On April 14, 2021, the Commission published the notice of 
filing and immediate effectiveness relating to the listing and 
trading of shares of the Fidelity Women's Leadership ETF and 
Fidelity Sustainability U.S. Equity ETF. See Securities Exchange Act 
Release No. 91514 (April 8, 2021), 86 FR 19657 (April 14, 2021) (SR-
NYSEArca-2021-23) (Notice).
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    Fidelity Beach Street Trust (``Beach Street''), Fidelity Management 
& Research Company (``FMR''), and Fidelity Distributors Corporation 
(``FDC''), filed a ninth amended application for an order under Section 
6(c) of the 1940 Act for exemptions from various provisions of the 1940 
Act and rules thereunder (the ``Prior Application'').\6\ On December 
10, 2019, the Commission issued an order (the ``Prior Exemptive 
Order'') under the 1940 Act granting the exemptions requested in the 
Application.\7\
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    \6\ See File No. 812-14364, dated November 8, 2019.
    \7\ See Investment Company Act Release No. 33712, December 10, 
2019.
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    Under the Prior Exemptive Order, the Funds are required to publish 
a basket of securities and cash that, while different from a Fund's 
portfolio, is designed to closely track its daily performance (``Proxy 
Portfolio'').\8\ The Prior Application stated that the Proxy Portfolio 
is comprised of (1) select recently disclosed portfolio holdings 
(``Strategy Components''); (2) liquid ETFs that convey information 
about the types of instruments in which the fund invests that are not 
otherwise fully represented by Strategy Components (``Representative 
ETFs''); and (3) cash and cash equivalents. As set forth in the Notice, 
investments made by the Funds will comply with the conditions set forth 
in the Prior Application and the Prior Exemptive Order.\9\
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    \8\ The Funds use the term ``Tracking Basket.'' ``Tracking 
Basket'' is the Proxy Portfolio for purposes of Rule 8.601-E(c)(3). 
See Notice, 86 FR 19659, n. 10.
    \9\ See Notice, 86 FR 19658, n. 8.
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    On October 30, 2020, as amended on April 2, 2021, June 11, 2021 and 
June 30, 2021, Beach Street, FMR, FDC and Fidelity Covington Trust \10\ 
(together, ``Fidelity'') sought to amend the Prior Order to, among 
other things, permit the Funds to include select securities from the 
universe from which a Fund's investments are selected such as a broad-
based market index (``Investment Universe'') in the Fund's Proxy 
Portfolio (the ``Updated Application'').\11\
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    \10\ Fidelity Covington Trust, a business trust under the laws 
of The Commonwealth of Massachusetts registered with the Commission 
as an open-end management investment company, was not part of the 
Prior Application.
    \11\ See File No. 812-15175.
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    On August 5, 2021, the Commission issued an order permitting the 
Funds to include select securities from a Fund's Investment Universe in 
the Fund's Proxy Portfolio (the ``Updated Exemptive Order'').\12\ 
Accordingly, investments made by the Fidelity Women's Leadership ETF 
and Fidelity Sustainability U.S. Equity ETF will comply with this 
condition in the Updated Application and the Updated Exemptive Order.
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    \12\ See Investment Company Act Release No. 34350, August 5, 
2021.
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    Except for the change noted above, all other representations made 
in the respective rule filings remain unchanged and will continue to 
constitute continuing listing requirements for the Funds. The Funds 
will also continue to comply with the requirements of Rule 8.601-E.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\13\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\14\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest.\15\
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ The Exchange represents that, for initial and continued 
listing, the Fund will be in compliance with Rule 10A-3 under the 
Act, as provided by NYSE Arca Rule 5.3-E.
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    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. The proposed revision is intended to ensure that each 
of the Funds will comply with the conditions set forth in the Updated 
Application and the Updated Exemptive Order that permits the Funds to 
use Creation Baskets that include instruments that are not included, or 
are included with different weightings, in the Fund's Proxy Portfolio. 
The proposed rule change would permit the Funds to operate consistent 
with this updated condition in the Updated Application and the Updated 
Exemptive Order. Except for the changes noted above, all other 
representations made in the respective rule filings remain unchanged 
and, as noted, will continue to constitute continuing listing 
requirements for the Funds.

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. As noted, the purpose of the 
filing is to reflect an amendment to the Application and Exemptive 
Order governing the listing and trading of these Funds. To the extent 
that the proposed rule change would continue to permit listing and 
trading of another type of actively-managed ETF that has 
characteristics different from existing actively-managed and index 
ETFs, the Exchange believes that the proposal would benefit of 
investors by continuing to promote competition among various ETF 
products.

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

[[Page 53995]]

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 \16\ and Rule 19b-4(f)(6) thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act normally does not become operative for 30 days after the date of 
its filing. However, Rule 19b-4(f)(6)(iii) \18\ 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 
requested that the Commission waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
notes that the Funds are currently listed and traded on the Exchange, 
and that pursuant to the proposed rule change, the Funds will comply 
with the provision discussed above as set forth in the Updated 
Application and the Updated Exemptive Order. Accordingly, this proposed 
rule change raises no novel regulatory issues. For these reasons, the 
Commission believes that 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 operative upon filing.\19\
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    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ 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 rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2021-81 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-2021-81. 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-2021-81 and should be submitted 
on or before October 20, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-21110 Filed 9-28-21; 8:45 am]
BILLING CODE 8011-01-P