Document ID: SEC-2014-1733-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2014-10-15T04:00Z

[Federal Register Volume 79, Number 199 (Wednesday, October 15, 2014)]
[Notices]
[Pages 61922-61924]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24422]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73321; File No. SR-NYSEArca-2014-113]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Reflecting Changes 
in the Concentration Policies of ARK Innovation ETF and ARK Genomic 
Revolution ETF as Well as a Change in the Name of the ARK Genomic 
Revolution ETF to the ARK Genomic Revolution Multi-Sector ETF

October 8, 2014.
    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 25, 2014, 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 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 changes in the concentration 
policies of ARK Innovation ETF and ARK Genomic Revolution ETF, as well 
as a change in the name of the ARK Genomic Revolution ETF to the ARK 
Genomic Revolution Multi-Sector ETF. 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 
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 61923]]

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

1. Purpose
    The Commission has approved listing and trading on the Exchange of 
shares (``Shares'') of the ARK Innovation ETF and ARK Genomic 
Revolution ETF, (each, a ``Fund'' and collectively, the ``Funds'') 
under NYSE Arca Equities Rule 8.600, which governs the listing and 
trading of Managed Fund Shares.\4\ Shares of the Funds have not 
commenced trading on the Exchange.
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    \4\ See Securities Exchange Act Release No. 72641 (July 18, 
2014), 79 FR 43108 (July 24, 2014) (SR-NYSEArca-2014-64) (order 
approving listing and trading on the Exchange of the ARK Innovation 
ETF, ARK Genomic Revolution ETF, ARK Industrial Innovation ETF, and 
ARK Web x.0 ETF under NYSE Arca Equities Rule 8.600) (``Prior 
Order''). See also Securities Exchange Act Release No. 72314 (June 
4, 2014), 79 FR 33229 (June 10, 2014) (SR-NYSEArca-2014-64) (``Prior 
Notice,'' and together with the Prior Order, the ``Prior Release'').
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    The Funds are series of the ARK ETF Trust (``Trust''). The Shares 
are offered by the Trust, which is registered with the Commission as an 
open-end management investment company.\5\ The investment adviser to 
the Funds is ARK Investment Management LLC (``Adviser'').
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    \5\ The Trust is registered under the Investment Company Act of 
1940 (15 U.S.C. 80a-1) (``1940 Act''). On September 11, 2014, the 
Trust filed with the Commission an amendment to its registration 
statement on Form N-1A under the Securities Act of 1933 (15 U.S.C. 
77a) (``Securities Act''), and under the 1940 Act relating to the 
Funds (File Nos. 333-191019 and 811-22883) (``Registration 
Statement''). The description of the operation of the Trust and the 
Funds 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 the1940 Act. See Investment 
Company Act Release No. 31009 (April 7, 2014) (File No. 812-14172) 
(``Exemptive Order'').
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    In this proposed rule change, the Exchange proposes to reflect a 
change to the Funds' concentration policies as well as the descriptions 
of the health care sector, which the Adviser will utilize to implement 
each Fund's investment objective, as described below.\6\
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    \6\ The changes described herein will be filed with the 
Commission in an amendment to the Funds' Registration Statement. See 
note 5, supra. The Adviser represents that it will manage the Funds 
in the manner described in the Prior Release, and will not implement 
the changes described herein until the instant proposed rule change 
is operative.
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ARK Genomic Revolution Multi-Sector ETF
    As described in the Prior Release, the investment objective of the 
ARK Genomic Revolution Multi-Sector ETF \7\ is long-term growth of 
capital. The Fund will invest under normal circumstances \8\ primarily 
(at least 80% of its assets) in domestic and foreign equity securities 
of companies that are relevant to the Fund's investment theme of 
genomics.\9\ As stated in the Prior Release, the Fund may invest its 
remaining assets in other securities and financial instruments, as 
described in the Prior Release.
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    \7\ The name of the ARK Genomic Revolution Multi-Sector ETF has 
been changed from the ARK Genomic Revolution ETF.
    \8\ The term ``under normal circumstances'' includes, but is not 
limited to, the absence of extreme volatility or trading halts in 
the equity markets or the financial markets generally; operational 
issues causing dissemination of inaccurate market information; or 
force majeure type events such as systems failure, natural or man-
made disaster, act of God, armed conflict, act of terrorism, riot or 
labor disruption or any similar intervening circumstance.
    \9\ As described in the Prior Release, companies relevant to 
this theme are those that are focused on and are expected to benefit 
from extending and enhancing the quality of human and other life by 
incorporating technological and scientific developments, 
improvements and advancements in genetics into their business, such 
as by offering new products or services that rely on genetic 
sequencing, analysis, synthesis or instrumentation. These companies 
may include ones that develop, produce, manufacture or significantly 
rely on bionic devices, bio-inspired computing, bioinformatics, 
molecular medicine, and agricultural biology.
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    The Prior Release stated that the Fund will be concentrated in 
issuers in any industry or group of industries in the health care 
sector. The Adviser wishes to supplement the description of the Fund's 
concentration policy to state that the Fund will be concentrated in 
issuers in any industry or group of industries in the health care 
sector, including, in particular, issuers having their principal 
business activities in the biotechnology industry.
    The Prior Release stated that the issuers in the health care sector 
include manufacturers and distributors of health care equipment and 
supplies, owners and operators of health care facilities, health 
maintenance organizations and managed health care plans, health care 
providers and issuers that provide services to health care providers. 
The Adviser wishes to revise the description of the health care sector 
to state that, while the health care sector includes the biotechnology 
industry, other industries in the health care sector include medical 
laboratories and research and drug manufacturers.
ARK Innovation ETF
    As described in the Prior Release, the ARK Innovation ETF's 
investment objective is long-term growth of capital. The Fund will 
invest under normal circumstances \10\ primarily (at least 65% of its 
assets) in domestic and foreign equity securities of companies that are 
relevant to the Fund's investment theme of disruptive innovation.\11\ 
As stated in the Prior Release, the Fund may invest its remaining 
assets in other securities and financial instruments, as described in 
the Prior Release.
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    \10\ See note 8, supra.
    \11\ As described in the Prior Release, companies relevant to 
this theme are those that rely on or benefit from the development of 
new products or services, technological improvements and 
advancements in scientific research relating to the areas of 
genomics, industrial innovation or the increased use of shared 
technology, infrastructure, and services.
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    The Prior Release stated that the Fund will be concentrated in 
issuers in any industry or group of industries in the industrials and 
information technology sectors. The Adviser wishes to revise the 
description of the Fund's concentration policy to state that it will 
not be concentrated in any industry.
Other Investments
    The Prior Release stated that each Fund will be classified as a 
``non-diversified'' investment company under the 1940 Act \12\ and 
therefore may concentrate its investments in any particular industry or 
group of industries, such that: (i) ARK Genomic Revolution Multi-Sector 
ETF will concentrate in securities of issuers having their principal 
business activities in any industry or group of industries in the 
health care sector; and (ii) ARK Innovation ETF will concentrate in 
securities of issuers having their principal business activities in any 
industry or group of industries in the health care sector, the 
industrials sector, the information technology sector, or the 
telecommunications services sector.\13\
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    \12\ The diversification standard is set forth in Section 
5(b)(1) of the 1940 Act.
    \13\ See Form N-1A, Item 9. The Commission has taken the 
position that a fund is concentrated if it invests more than 25% of 
the value of its total assets in any one industry. See, e.g., 
Investment Company Act Release No. 9011 (October 30, 1975), 40 FR 
54241 (November 21, 1975).
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    The Adviser wishes to revise the description of the Funds' 
concentration to state that each Fund will be classified as a ``non-
diversified'' investment company under the 1940 Act \14\ and that 
neither of the Funds will be concentrated in any industry, except that 
ARK Genomic Revolution Multi-Sector ETF will concentrate in securities 
of issuers having their principal business activities in any industry 
or group of industries in the health care sector, including issuers 
having their principal business activities in the biotechnology 
industry.\15\
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    \14\ See note 12, supra.
    \15\ See note 13, supra.
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    The Adviser represents that there is no change to the Funds' 
investment

[[Page 61924]]

objectives. The Shares will conform to the initial and continued 
listing criteria under NYSE Arca Equities Rule 8.600.
    Except for the changes noted above, all other facts presented and 
representations made in the Prior Release remain unchanged.
    All terms referenced but not defined herein are defined in the 
Prior Release.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \16\ 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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    \16\ 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 Adviser represents that 
there are no changes to the Funds' investment objectives and the 
proposed changes will clarify the Funds' concentration policies and the 
descriptions of the health care sector. There are no changes to the 
Funds' statements regarding how their assets primarily will be invested 
in normal circumstances and how they may invest remaining assets.
    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 name of 
the ARK Genomic Revolution Multi-Sector ETF is designed to clarify that 
such Fund invests, on a multi-sector basis, in genomic revolution 
companies.
    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 the Shares will be listed and traded on the 
Exchange pursuant to the initial and continued listing requirements in 
NYSE Arca Equities Rule 8.600. The Adviser represents that there is no 
change to the Funds' investment objectives. Except for the changes 
noted above, all other representations made in the Prior Release 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 notes that the 
proposed rule change will facilitate the listing and trading of 
additional types of actively-managed exchange-traded products that hold 
equity securities and 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

    Because the proposed rule change does not: (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative 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 \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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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    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-2014-113 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-2014-113. 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-2014-113 and should 
be submitted on or before November 5, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24422 Filed 10-14-14; 8:45 am]
BILLING CODE 8011-01-P