Document ID: SEC-2019-0263-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2019-03-08T05:00Z

[Federal Register Volume 84, Number 46 (Friday, March 8, 2019)]
[Notices]
[Pages 8553-8557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-04172]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85244; File No. SR-NYSEArca-2018-82]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1 and 
2, Regarding Certain Changes Relating to Investments of the PGIM Active 
High Yield Bond ETF

March 4, 2019.

I. Introduction

    On November 16, 2018, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-44 thereunder,\2\ a 
proposed rule change to continue to list and trade shares (``Shares'') 
of the PGIM Active High Yield Bond ETF (``Fund''), a series of PGIM ETF 
Trust (``Trust''), under NYSE Arca Rule 8.600-E. The proposed rule 
change was published for comment in the Federal Register on December 6, 
2018.\3\ On January 17, 2019, the Commission designated a longer period 
within which to approve the proposed rule change, disapprove the 
proposed rule change, or institute proceedings to determine whether to 
disapprove the proposed rule change.\4\ On February 6, 2019, the 
Exchange filed Amendment No. 1 to the proposed rule change, which 
replaced and superseded the proposed rule change as originally 
filed.\5\ On February 21, 2019, the Exchange filed Amendment No. 2 to 
the proposed rule change, which replaced and superseded the proposed 
rule change as modified by Amendment No.

[[Page 8554]]

1.\6\ The Commission has received no comments on the proposal. This 
order grants approval of the proposed rule change, as modified by 
Amendment Nos. 1 and 2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-44.
    \3\ See Securities Exchange Act Release No. 84696 (Nov. 30, 
2018), 83 FR 62915.
    \4\ See Securities Exchange Act Release No. 84987, 84 FR 0855 
(Jan. 31, 2019). The Commission designated March 6, 2019, as the 
date by which the Commission shall approve or disapprove, or 
institute proceedings to determine whether to disapprove, the 
proposed rule change.
    \5\ Amendment No. 1 to the proposed rule change is available at: 
https://www.sec.gov/comments/sr-nysearca-2018-82/srnysearca201882-4891452-177603.pdf.
    \6\ In Amendment No. 2, which replaced and superseded the 
proposed rule change as modified by Amendment No. 1, the Exchange: 
(1) Provided additional information regarding certain of the Fund's 
permitted investments; (2) changed references to ``affiliated short-
term bond funds'' to the ``Affiliated Short Term Bond Fund''; (3) 
added as permitted ``Non-Principal Investments'' repurchase 
agreements and reverse repurchase agreements other than those 
included as cash equivalents under Commentary .01(c) to NYSE Arca 
Rule 8.600-E; (4) clarified that the Fund's investments will be 
consistent with the Fund's investment objective and will not be used 
to enhance leverage; (5) described the availability of price 
information for certain of the Fund's permitted investments; (6) 
specified when the NAV for the Shares will be calculated and 
disseminated; and (7) made changes of a technical nature. Because 
Amendment No. 2 does not materially alter the substance of the 
proposed rule change or raise unique or novel regulatory issues 
under the Act, Amendment No. 2 is not subject to notice and comment. 
Amendment No. 2 to the proposed rule change is available at: https://www.sec.gov/comments/sr-nysearca-2018-82/srnysearca201882-4962016-178627.pdf.
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II. Description of the Proposal, as Modified by Amendment Nos. 1 and 2 
7
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    \7\ Additional information regarding, among other things, the 
Shares, the Fund, investment objective, permitted investments, 
investment restrictions, investment adviser and subadviser, creation 
and redemption procedures, availability of information, trading 
halts and rules, and surveillance procedures can be found in 
Amendment No. 2 and in the Registration Statement. See Amendment No. 
2, supra note 6, and Registration Statement, infra note 8, 
respectively.
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    The Trust is registered under the 1940 Act.\8\ The Shares \9\ are 
currently listed and traded on the Exchange under Commentary .01 to 
NYSE Arca Rule 8.600-E,\10\ which provides generic criteria applicable 
to the listing and trading of Managed Fund Shares.\11\ However, the 
Fund intends to change its investment strategy such that the Shares 
would no longer qualify for generic listing on the Exchange. 
Specifically, the Fund's portfolio would continue to satisfy all of the 
generic listing requirements except that:
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    \8\ On June 28, 2018, 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 Fund (File Nos. 333-222469 and 
811-23324) (``Registration Statement''). The Commission has issued 
an order granting certain exemptive relief to the Trust under the 
1940 Act. See Investment Company Act Release No. 31095 (Jun. 24, 
2014) (File No. 812-14267).
    \9\ 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.
    \10\ The Shares commenced trading on the Exchange on April 10, 
2018. See Amendment No. 2, supra note 6, at 4, n.1.
    \11\ A Managed Fund Share is a security that: (1) Represents an 
interest in a registered investment company (``Investment Company'') 
organized as an open-end management investment company or similar 
entity, 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 aggregate minimum number in return for a 
deposit of a specified portfolio of securities and/or a cash amount 
with a value equal to the next determined net asset value; and (c) 
when aggregated in the same specified minimum number, may be 
redeemed at a holder's request, which holder will be paid a 
specified portfolio of securities and/or cash with a value equal to 
the next determined net asset value. See NYSE Arca Rule 8.600-
E(c)(1).
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     Investments in non-agency, non-government sponsored entity 
and privately issued mortgage-related and other asset-backed securities 
(``Private ABS/MBS'') may account for up to 20% of the total assets of 
the Fund (rather than 20% of the weight of the fixed income portion of 
the portfolio, as required under Commentary .01(b)(5));
     fixed income securities that do not meet any of the 
criteria in Commentary .01(b)(4) will not exceed 10% of the total 
assets of the Fund (rather than such securities not comprising more 
than 10% of the fixed income weight of the portfolio, as prescribed by 
that criterion);
     the Fund's investments in shares of the Affiliated Short 
Term Bond Fund \12\ and other non-exchange-traded open-end management 
investment company securities would not meet the requirements of 
Commentary .01(a)(1)(A) through (E) to Rule 8.600-E.\13\
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    \12\ Shares of the ``Affiliated Short Term Bond Fund'' are 
shares of the PGIM Core Ultra Short Bond Fund or, if the PGIM Core 
Ultra Short Bond Fund is no longer offered with the same investment 
objective, shares of any successor fund or other affiliated open-end 
investment company registered under the 1940 Act with a 
substantially similar investment objective. See Amendment No. 2, 
supra note 6, at 6-7.
    \13\ Investments in shares of the Affiliated Short Term Bond 
Fund will not exceed 25% of the total assets of the Fund, and 
investments in other non-exchange-traded open-end management 
investment company securities will not exceed 10% of the total 
assets of the Fund. See id. at 9.
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     the Fund's investments in convertible and non-convertible 
preferred stocks, warrants, and Work Out Securities \14\ may account 
for up to 10% of the Fund's assets in the aggregate, and would not meet 
the requirements of Commentary .01(a)(1) to NYSE Arca Rule 8.600-E and/
or Commentary .01(a)(2) to NYSE Arca Rule 8.600-E with respect to the 
Fund's equity securities holdings.
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    \14\ For purposes of this proposed rule change, Work Out 
Securities include U.S. or foreign equity securities of any type 
acquired in connection with restructurings or incidental to the 
purchase or ownership related to issuers of Principal Investment 
Instruments held by the Fund. Work Out Securities are generally 
traded over-the-counter (``OTC''), but may be traded on a U.S. or 
foreign exchange. See id. at 8. The term ``Principal Investment 
Instruments'' is defined in Amendment No. 2, supra note 6, at 6.
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    According to the Exchange, these deviations from the generic 
requirements are necessary for the Fund to achieve its investment 
objective in a manner that is cost-effective and that maximizes 
investors' returns.\15\
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    \15\ See id. at 14.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the Exchange's 
proposal to list and trade the Shares, as modified by Amendment Nos. 1 
and 2, is consistent with the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\16\ In 
particular, the Commission finds that the proposed rule change, as 
modified by Amendment Nos. 1 and 2, is consistent with Section 6(b)(5) 
of the Act,\17\ which requires, among other things, that the Exchange's 
rules be 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. As mentioned above, the Fund's portfolio would 
continue to meet all of the generic listing criteria except for the 
requirements of: (1) Commentary .01(a)(1) \18\ and/or Commentary

[[Page 8555]]

.01(a)(2) \19\ to Rule 8.600-E; (2) Commentary .01(a)(1)(A) through (E) 
to NYSE Arca Rule 8.600-E; \20\ (3) Commentary .01(b)(4) to NYSE Arca 
Rule 8.600-E; \21\ and (4) Commentary .01(b)(5) to NYSE Arca Rule 
8.600-E.\22\ The Commission believes that the Fund's proposed maximum 
level of investment in private ABS/MBS is consistent with the 
Commission's previous approval of the listing of shares of other 
actively managed ETFs that could invest up to 20% of their total assets 
in non-U.S. Government, non-agency, non-GSE and other privately issued 
ABS and MBS.\23\
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    \16\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ Commentary .01(a)(1) to Rule 8.600-E provides that the 
component stocks of the equity portion of a portfolio that are U.S. 
Component Stocks shall meet the following criteria initially and on 
a continuing basis: (A) Component stocks (excluding Derivative 
Securities Products and Index-Linked Securities) that in the 
aggregate account for at least 90% of the equity weight of the 
portfolio (excluding such Derivative Securities Products and Index-
Linked Securities) each shall have a minimum market value of at 
least $75 million; (B) Component stocks (excluding Derivative 
Securities Products and Index-Linked Securities) that in the 
aggregate account for at least 70% of the equity weight of the 
portfolio (excluding such Derivative Securities Products and Index-
Linked Securities) each shall have a minimum monthly trading volume 
of 250,000 shares, or minimum notional volume traded per month of 
$25,000,000, averaged over the last six months; (C) The most heavily 
weighted component stock (excluding Derivative Securities Products 
and Index-Linked Securities) shall not exceed 30% of the equity 
weight of the portfolio, and, to the extent applicable, the five 
most heavily weighted component stocks (excluding Derivative 
Securities Products and Index-Linked Securities) shall not exceed 
65% of the equity weight of the portfolio; (D) Where the equity 
portion of the portfolio does not include Non-U.S. Component Stocks, 
the equity portion of the portfolio shall include a minimum of 13 
component stocks; provided, however, that there shall be no minimum 
number of component stocks if (i) one or more series of Derivative 
Securities Products or Index-Linked Securities constitute, at least 
in part, components underlying a series of Managed Fund Shares, or 
(ii) one or more series of Derivative Securities Products or Index-
Linked Securities account for 100% of the equity weight of the 
portfolio of a series of Managed Fund Shares; (E) Except as provided 
herein, equity securities in the portfolio shall be U.S. Component 
Stocks listed on a national securities exchange and shall be NMS 
Stocks as defined in Rule 600 of Regulation NMS under the Securities 
Exchange Act of 1934; and (F) American Depositary Receipts 
(``ADRs'') in a portfolio may be exchange-traded or non-exchange-
traded. However, no more than 10% of the equity weight of a 
portfolio shall consist of non-exchange-traded ADRs.
    \19\ Commentary .01(a)(2) to Rule 8.600-E provides that the 
component stocks of the equity portion of a portfolio that are Non-
U.S. Component Stocks shall meet the following criteria initially 
and on a continuing basis: (A) Non-U.S. Component Stocks each shall 
have a minimum market value of at least $100 million; (B) Non-U.S. 
Component Stocks each shall have a minimum global monthly trading 
volume of 250,000 shares, or minimum global notional volume traded 
per month of $25,000,000, averaged over the last six months; (C) The 
most heavily weighted Non-U.S. Component stock shall not exceed 25% 
of the equity weight of the portfolio, and, to the extent 
applicable, the five most heavily weighted Non-U.S. Component Stocks 
shall not exceed 60% of the equity weight of the portfolio; (D) 
Where the equity portion of the portfolio includes Non-U.S. 
Component Stocks, the equity portion of the portfolio shall include 
a minimum of 20 component stocks; provided, however, that there 
shall be no minimum number of component stocks if (i) one or more 
series of Derivative Securities Products or Index-Linked Securities 
constitute, at least in part, components underlying a series of 
Managed Fund Shares, or (ii) one or more series of Derivative 
Securities Products or Index-Linked Securities account for 100% of 
the equity weight of the portfolio of a series of Managed Fund 
Shares; and (E) Each Non-U.S. Component Stock shall be listed and 
traded on an exchange that has last-sale reporting.
    \20\ See supra note 18.
    \21\ Commentary .01(b)(4) provides that component securities 
that in the aggregate account for at least 90% of the fixed income 
weight of the portfolio must be either: (a) From issuers that are 
required to file reports pursuant to Sections 13 and 15(d) of the 
Act; (b) from issuers that have a worldwide market value of its 
outstanding common equity held by non-affiliates of $700 million or 
more; (c) from issuers that have outstanding securities that are 
notes, bonds debentures, or evidence of indebtedness having a total 
remaining principal amount of at least $1 billion; (d) exempted 
securities as defined in Section 3(a)(12) of the Act; or (e) from 
issuers that are a government of a foreign country or a political 
subdivision of a foreign country.
    \22\ Commentary .01(b)(5) to NYSE Arca Rule 8.600-E provides 
that non-agency, non-government sponsored entity and privately 
issued mortgage-related and other asset-backed securities components 
of a portfolio may not account, in the aggregate, for more than 20% 
of the weight of the fixed income portion of the portfolio.
    \23\ See, e.g., Securities Exchange Act Release No. 80946 (Jun. 
15, 2017) 82 FR 28126 (Jun. 20, 2017) (SR-NASDAQ-2017-039); 
Securities Exchange Act Release No. 76412 (Nov. 10, 2015), 80 FR 
71880 (Nov. 17, 2015) (SR-NYSEArca-2015-111).
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    With respect to the Fund's investments in shares of the 
``Affiliated Short Term Bond Fund'' and other non-exchange traded open-
end management investment company securities, the Commission notes 
that: (1) Such securities must satisfy applicable 1940 Act 
diversification requirements; and (2) the value of such securities is 
based on the value of securities and financial assets held by those 
investment companies.\24\ The Commission therefore believes that the 
Fund's investments in shares of the Affiliated Short Term Bond Fund and 
non-exchange-traded open-end management investment company securities 
\25\ would not make the Shares susceptible to fraudulent or 
manipulative acts and practices. Similarly, the Commission believes 
that the level of investment by the Fund in securities that do not 
satisfy the requirements of Commentary .01(b)(4) to NYSE Arca Rule 
8.600-E, and Commentary .01(a)(1) to NYSE Arca Rule 8.600-E and/or 
Commentary .01(a)(2) to NYSE Arca Rule 8.600-E--i.e., no more than 10% 
of the Fund's total assets--would not make the Shares susceptible to 
fraudulent or manipulative acts and practices.
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    \24\ See Amendment No. 2, supra note 6, at 17.
    \25\ See supra note 13.
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    The Exchange states that it has a general policy prohibiting the 
distribution of material, non-public information by its employees. The 
Exchange represents that the Fund's Adviser and Subadviser are not 
registered as broker-dealers, but the Adviser and Subadviser are 
affiliated with the Fund's Distributor, which is a broker-dealer, and 
have implemented and will maintain a ``fire wall'' with respect to such 
broker-dealer regarding access to information concerning the 
composition and/or changes to the Fund's portfolio.\26\
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    \26\ See Amendment No. 2, supra note 6, at 5. Additionally, the 
Exchange represents that, in the event (a) the Adviser or the 
Subadviser becomes registered as a broker-dealer or newly affiliated 
with a broker-dealer, or (b) any new adviser or sub-adviser is a 
registered broker-dealer or becomes affiliated with a broker-dealer, 
it will implement and maintain a ``fire wall'' with respect to its 
relevant personnel or broker-dealer affiliate regarding access to 
information concerning the composition and/or changes to the 
portfolio, and will be subject to procedures, each designed to 
prevent the use and dissemination of material non-public information 
regarding such portfolio. See id.
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    Trading in the Shares will be subject to the existing trading 
surveillances administered by the Exchange, as well as cross-market 
surveillances administered by Financial Industry Regulatory Authority 
(``FINRA'') on behalf of the Exchange, which are designed to detect 
violations of Exchange rules and applicable federal securities laws. 
The Exchange, or FINRA, or both, may obtain information regarding 
trading in the Shares, ETFs, certain exchange-traded options and 
certain futures from markets and other entities that are members of 
Intermarket Surveillance Group (``ISG'') or with which the Exchange has 
in place a comprehensive surveillance sharing agreement. The Exchange 
is able to access from FINRA, as needed, trade information for certain 
fixed income securities held by the Fund reported to the Trade 
Reporting and Compliance Engine (``TRACE'') of FINRA. FINRA also can 
access data obtained from the Municipal Securities Rulemaking Board 
relating to certain municipal bond trading activity for surveillance 
purposes in connection with trading in the Shares.
    The Commission also finds that the proposal to list and trade the 
Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of 
the Exchange Act,\27\ which sets forth Congress' finding that it is in 
the public interest and appropriate for the protection of investors and 
the maintenance of fair and orderly markets to assure the availability 
to brokers, dealers, and investors of information with respect to 
quotations for and transactions in securities. Quotation and last sale 
information for the Shares, ETFs, and U.S. exchange-listed Work Out 
Securities, convertible and non-convertible securities, warrants, and 
preferred securities will be available via the Consolidated Tape 
Association (``CTA'') high-speed line. Intraday price quotations will 
generally be available from broker-dealers and major market data 
vendors for OTC Work Out Securities, OTC convertible and non-
convertible securities, OTC warrants, and OTC preferred securities. 
Exchange-traded options quotation and last sale information for options 
cleared via the Options Clearing Corporation are available via the 
Options Price Reporting Authority. In addition, the Portfolio 
Indicative Value, as defined in NYSE Arca Rule 8.600-E(c)(3), will be 
widely disseminated by one or more

[[Page 8556]]

major market data vendors at least every 15 seconds during the Core 
Trading Session.
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    \27\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    Intra-day and closing price information regarding futures, 
exchange-traded options, exchange-traded swaps and exchange-traded Work 
Out Securities will be available from the exchanges on which such 
instruments are traded. Intra-day and closing price information 
regarding the Principal Investment Instruments \28\ will be available 
from major market data vendors. Price information relating to forwards, 
OTC options and swaps, OTC Work Out Securities, OTC convertible and 
non-convertible securities, OTC warrants, and OTC preferred securities 
will also be available from major market data vendors. Intra-day and 
closing price information for exchange-traded derivative instruments 
will be available from the applicable exchange and from major market 
data vendors. For exchange-listed securities (including ETFs), intraday 
price quotations will generally be available from broker-dealers and 
trading platforms (as applicable). Intraday and other price information 
for the fixed income securities in which the Fund invests will be 
available through subscription services, such as Bloomberg, Markit and 
Thomson Reuters, which can be accessed by Authorized Participants and 
other market participants. Additionally, TRACE will be a source of 
price information for corporate bonds, privately-issued securities, MBS 
and ABS, to the extent transactions in such securities are reported to 
TRACE.\29\ Money Market Funds and the Affiliated Short Term Bond Fund 
are typically priced once each Business Day and their prices will be 
available through the applicable fund's website or from major market 
data vendors. Electronic Municipal Market Access (``EMMA'') will be a 
source of price information for municipal bonds. Price information 
regarding U.S. government securities, repurchase agreements, reverse 
repurchase agreements and cash equivalents generally may be obtained 
from brokers and dealers who make markets in such securities or through 
nationally recognized pricing services through subscription agreements.
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    \28\ See supra note 14.
    \29\ Broker-dealers that are FINRA member firms have an 
obligation to report transactions in specified debt securities to 
TRACE to the extent required under applicable FINRA rules. 
Generally, such debt securities will have at issuance a maturity 
that exceeds one calendar year. For fixed income securities that are 
not reported to TRACE, (i) intraday price quotations will generally 
be available from broker-dealers and trading platforms (as 
applicable) and (ii) price information will be available from feeds 
from market data vendors, published or other public sources, or 
online information services, as described above.
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    The Commission believes that the proposal to list and trade the 
Shares is reasonably designed to promote fair disclosure of information 
that may be necessary to price the Shares appropriately and to prevent 
trading when a reasonable degree of transparency cannot be assured. On 
each Business Day, before commencement of trading in Shares in the Core 
Trading Session on the Exchange,\30\ the Fund discloses on its website 
the Disclosed Portfolio as defined in NYSE Arca Rule 8.600-E(c)(2) that 
forms the basis for the Fund's calculation of the net asset value 
(``NAV'') at the end of the Business Day.\31\ The Exchange has obtained 
a representation from the issuer of the Shares that the NAV per Share 
will be calculated daily and that the NAV and the Disclosed Portfolio 
will be made available to all market participants at the same time.
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    \30\ The ``Core Trading Session'' is defined in NYSE Arca Rule 
7.34-E(a)(2).
    \31\ Under accounting procedures followed by the Fund, trades 
made on the prior Business Day (``T'') will be booked and reflected 
in NAV on the current Business Day (``T+1''). Accordingly, the Fund 
will be able to disclose at the beginning of the Business Day the 
portfolio that will form the basis for the NAV calculation at the 
end of the Business Day.
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    In addition, the Portfolio Indicative Value, as defined in NYSE 
Arca Rule 8.600-E(c)(3), will be widely disseminated by one or more 
major market data vendors at least every 15 seconds during the Core 
Trading Session. The Transfer Agent, through the National Securities 
Clearing Corporation, makes available on each Business Day, immediately 
prior to the opening of business on the Exchange (currently 9:30 a.m. 
E.T.), the list of the names and the required number of securities for 
each Deposit Instrument to be included in the current Portfolio Deposit 
(based on information at the end of the previous Business Day), as well 
as information regarding the Cash Amount for the Fund. Such Portfolio 
Deposit is applicable, subject to any adjustments as described below, 
in order to effect creations of Creation Units of the Fund until such 
time as the next-announced Portfolio Deposit composition is made 
available.
    The Exchange represents that trading in Shares will be halted if 
the circuit breaker parameters in NYSE Arca Rule 7.12-E have been 
reached. Trading also may be halted because of market conditions or for 
reasons that, in the view of the Exchange, make trading in the Shares 
inadvisable.\32\ NYSE Arca Rule 8.600-E(d)(2)(D) also sets forth 
circumstances under which trading in the Shares may be halted.
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    \32\ These may include: (1) The extent to which trading is not 
occurring in the securities and/or the financial instruments 
comprising the Disclosed Portfolio of the Fund; or (2) whether other 
unusual conditions or circumstances detrimental to the maintenance 
of a fair and orderly market are present. See Amendment No. 2, supra 
note 6, at 22.
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    In support of this proposal, the Exchange has also made the 
following representations:
    (1) The Shares will be subject to NYSE Arca Rule 8.600-E, which 
sets forth the initial and continued listing criteria applicable to 
Managed Fund Shares.\33\
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    \33\ See id.
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    (2) All statements and representations made in this filing 
regarding (a) the description of the portfolio, (b) limitations on 
portfolio holdings or reference assets, or (c) the applicability of 
Exchange listing rules specified in this rule filing shall constitute 
continued listing requirements for listing the Shares on the 
Exchange.\34\
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    \34\ See id. at 23.
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    (3) The issuer will advise the Exchange of any failure by the Fund 
to comply with the continued listing requirements, and, pursuant to its 
obligations under Section 19(g)(1) of the Act, the Exchange will 
monitor for compliance with the continued listing requirements. If the 
Fund is not in compliance with the applicable listing requirements, the 
Exchange will commence delisting procedures under NYSE Arca Rule 
5.5(m)-E.\35\
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    \35\ See id.
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    (4) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.\36\
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    \36\ See id. at 22.
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    (5) 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 
federal securities laws applicable to trading on the Exchange.\37\
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    \37\ See id. at 22-23.
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    (6) 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. \38\
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    \38\ See id. at 22. See also 17 CFR 240.10A-3.
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    (7) A minimum of 100,000 Shares will be outstanding at the 
commencement of trading on the Exchange.\39\
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    \39\ See Amendment No. 2, supra note 6, at 22.
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    (8) Investments in shares of the Affiliated Short Term Bond Fund 
will not exceed 25% of the total assets of the Fund.\40\
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    \40\ See id. at 16.
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    (9) Investments in non-exchange-traded open-end management 
investment company securities will not

[[Page 8557]]

exceed 10% of the total assets of the Fund.\41\
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    \41\ See id.
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    (10) Investments in private ABS/MBS will, in the aggregate, not 
exceed more than 20% of the total assets of the Fund.\42\
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    \42\ See id. at 15.
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    (11) Fixed income securities that do not meet any of the criteria 
in Commentary .01(b)(4) to NYSE Arca Rule 8.600-E will not exceed 10% 
of the total assets of the Fund.\43\
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    \43\ See id.
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    (12) Not more than 10% of the Fund's assets in the aggregate will 
be held in convertible and non-convertible preferred stocks, warrants 
and Work Out Securities.\44\
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    \44\ See id. at 19.
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    This approval order is based on all of the Exchange's 
representations, including those set forth above and in Amendment Nos. 
1 and 2.
    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendment Nos. 1 and 2, is consistent with 
Section 6(b)(5) of the Act \45\ and the rules and regulations 
thereunder applicable to a national securities exchange.
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    \45\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\46\ that the proposed rule change (SR-NYSEArca-2018-82), as 
modified by Amendment Nos. 1 and 2, be, and it hereby is, approved.
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    \46\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\47\
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    \47\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-04172 Filed 3-7-19; 8:45 am]
BILLING CODE 8011-01-P