Document ID: SEC-2015-1527-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2015-09-16T04:00Z

[Federal Register Volume 80, Number 179 (Wednesday, September 16, 2015)]
[Notices]
[Pages 55701-55704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-23217]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75888; File No. SR-NYSEArca-2015-74]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Regarding a Change to the Reference Index Relating to 
the Market Vectors Short High Yield Municipal Index ETF

September 10, 2015.
    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 August 26, 2015, 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 a change to the reference index 
relating to the Market Vectors Short High Yield Municipal Index ETF. 
Shares of the Fund are currently listed and traded on the Exchange 
under NYSE Arca Equities Rule 5.2(j)(3). 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.

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 listing and trading on the Exchange of 
shares (``Shares'') of the Market Vectors Short High Yield Municipal 
Index ETF (``Fund'') under NYSE Arca Equities Rule 5.2(j)(3), which 
governs the listing and trading of Investment Company Units 
(``Units'').\4\ Shares of the Fund are currently listed and traded on 
the Exchange.
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    \4\ See Securities Exchange Act Release No. 71232 (January 3, 
2014), 79 FR 1662 (January 9, 2014 (SR-NYSEArca-2013-118) (order 
approving listing and trading of shares of the Market Vectors Short 
High Yield Municipal Index ETF) (``Order''). See also, Securities 
Exchange Act Release No. 70871 (November 14, 2013), 78 FR 69503 
(November 19, 2013) (SR-NYSEArca-2013-118) (notice of proposed rule 
change relating to listing and trading of shares of the Market 
Vectors Short High Yield Municipal Index ETF) (``Notice'' and, 
together with the Order, the ``Release'').
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    The Fund is a series of the Market Vectors ETF Trust. Van Eck 
Associates Corporation is the investment adviser (``Adviser'') for the 
Fund. Van Eck Securities Corporation is the Fund's distributor 
(``Distributor''). Van Eck Associates Corporation also is the 
administrator for the Fund (the ``Administrator''). The Bank of New 
York Mellon is the custodian of the Fund's assets and provides transfer 
agency and fund accounting services to the Fund.
    As described in the Release, the investment objective of the Fund 
is to seek to replicate as closely as possible, before fees and 
expenses, the price and yield performance of the Barclays Municipal 
High Yield Short Duration Index (the ``Short High Yield Index'' or 
``Index'').\5\ The Index is a market size weighted index composed of 
publicly traded municipal bonds that cover the U.S. dollar denominated 
high yield short-term tax-exempt bond market. The majority of the 
Index's constituents are from the revenue sector, with some 
constituents being from the general obligation sector. The revenue 
sector is divided into industry sectors that

[[Page 55702]]

consist of but may not be limited to electric, health care, 
transportation, education, water and sewer, resource recovery, leasing 
and special tax. The Index is calculated using a market value weighting 
methodology, provided the allocation to issuers from the territories of 
the United States, including: Puerto Rico, Guam, the U.S. Virgin 
Islands, American Samoa and the Northern Mariana Islands, each 
individually does not exceed 8%. The market value of each bond over the 
limit is adjusted on a pro-rata basis.\6\
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    \5\ As described in the Release, the Exchange submitted a 
proposed rule change to permit listing and trading of Shares of the 
Fund because the Index did not meet all of the ``generic'' listing 
requirements of Commentary .02(a) to NYSE Arca Equities Rule 
5.2(j)(3) applicable to the listing of Units based on fixed income 
securities indexes. The Index met all such requirements except for 
those set forth in Commentary .02(a)(2). Commentary .02(a)(2) to 
NYSE Arca Equities Rule 5.2(j)(3) provides that components that in 
the aggregate account for at least 75% of the weight of the index or 
portfolio each shall have a minimum original principal amount 
outstanding of $100 million or more.
    \6\ The Index is published by Barclays Capital, Inc. (``Index 
Provider''). The Index Provider is a registered broker-dealer and 
has implemented a fire wall with respect to its relevant personnel 
regarding access to information concerning the composition and/or 
changes to the Index. In addition, the Index Provider is affiliated 
with a broker-dealer and has implemented a fire wall with respect to 
its broker-dealer affiliate regarding access to information 
concerning the composition and/or changes to the Index. The Index 
Provider and its broker-dealer affiliate have implemented procedures 
designed to prevent the use and dissemination of material, non-
public information regarding the Index.
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    The Index Provider is proposing to slightly revise the Index 
methodology as described in the Release as follows. The revised Short 
High-Yield Index (``Revised Index'') will have a targeted 40% weight in 
the Muni High Yield/$100 Million Deal Size Index (reduced from 50% 
weight). In addition, the Revised Index will have a 10% weight in the 
Muni A-Rated Index, which is comprised of investment grade components, 
as described below. The Revised Index will continue to have a 25% 
weight in the Muni High Yield/Under $100 Million Deal Size Index and a 
25% weight in the Muni Baa-Rated/$100 Million Deal Size Index, as 
described in the Release.
    The Revised Index will be comprised of four total return, market 
size weighted benchmark indexes with target weights as follows:
     40% weight in Muni High Yield/$100 Million Deal Size 
Index. To be included in the Muni High Yield/$100 Million Deal Size 
Index, bonds must be unrated or rated Ba1/BB+ or lower by at least two 
of the following rating agencies if all three rate the bond: Moody's 
Investors Service, Inc. (``Moody's''), Standard & Poor's, Inc. 
(``S&P'') and Fitch, Inc. (``Fitch''). If only two of the three 
agencies rate the security, the lower rating is used to determine index 
eligibility. If only one of the three agencies rates a security, the 
rating must be Ba1/BB+ or lower. Bonds in the Muni High Yield/$100 
Million Deal Size Index must have an outstanding par value of at least 
$3 million and be issued as part of a transaction of at least $100 
million.\7\
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    \7\ As described in the Release, currently 50% of the Index 
weight is in the Muni High Yield/$100 Million Deal Size Index.
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     25% weight in Muni High Yield/Under $100 Million Deal Size 
Index. To be included in the Muni High Yield/Under $100 Million Deal 
Size Index, bonds must be unrated or rated Ba1/BB+ or lower by at least 
two of the following rating agencies if all three rate the bond: 
Moody's, S&P and Fitch. If only two of the three agencies rate the 
security, the lower rating is used to determine index eligibility. If 
only one of the three agencies rates a security, the rating must be 
Ba1/BB+ or lower. Bonds in the Muni High Yield/Under $100 Million Deal 
Size Index must have an outstanding par value of at least $3 million 
and be issued as part of a transaction of under $100 million but over 
$20 million.\8\
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    \8\ The 25% weighting in the Muni High Yield/Under $100 Million 
Deal Size Index is identical to such weighting as set forth in the 
Release.
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     25% weight in Muni Baa-Rated/$100 Million Deal Size Index. 
To be included in the Muni Baa-Rated/$100 Million Deal Size Index, 
bonds must have a Barclays credit quality classification between Baa1/
BBB+ and Baa3/BBB-. Barclays credit quality classification is based on 
the three rating agencies, Moody's, S&P and Fitch. If two of the three 
agencies rate the bond equivalently, then that rating is used. If all 
three rate the bond differently, the middle rating is used. If only two 
of the three agencies rate the security, the lower rating is used to 
determine index eligibility. If only one of the three agencies rates a 
security, the rating must be Baa1/BBB+, Baa2/BBB, or Baa3/BBB-. The 
bonds must have an outstanding par value of at least $7 million and be 
issued as part of a transaction of at least $100 million.\9\
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    \9\ The 25% weighting in the Muni Baa-Rated/$100 Million Deal 
Size Index is identical to such weighting as set forth in the 
Release.
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     10% weight in Muni A-Rated Index. To be included in the 
Muni A-Rated Index, bonds must have a Barclays credit quality 
classification between A1/A+ and A3/A-. The Barclays credit quality 
classification is based on the three rating agencies, Moody's, S&P and 
Fitch. If two of the three agencies rate the bond equivalently, then 
that rating is used. If all three rate the bond differently, the middle 
rating is used. If only two of the three agencies rate the security, 
the lower rating is used to determine index eligibility. If only one of 
the three agencies rates a security, the rating must be A1/A+, A2/A, or 
A3/A-. The bonds must have an outstanding par value of at least $7 
million and be issued as part of a transaction of at least $75 million.
    Remarketed issues are not allowed in the benchmark. All bonds must 
have a fixed rate, a dated-date (i.e., the date when interest begins to 
accrue) after December 31, 1990 and a nominal maturity of 1 to 12 
years. Taxable municipal bonds, bonds with floating rates and 
derivatives are excluded from the Short High-Yield Index.
    The composition of the Revised Index will be rebalanced monthly. 
Interest and principal payments earned by the component securities will 
be held in the Revised Index without a reinvestment return until month 
end when they are removed from the Revised Index.
    Total returns will be calculated based on the sum of price changes, 
gain/loss on repayments of principal, and coupons received or accrued, 
expressed as a percentage of beginning market value. The Revised Index 
will be calculated and will be available once a day.
    The Exchange is submitting this proposed rule change because the 
Revised Index does not meet all of the ``generic'' listing requirements 
of Commentary .02(a) to NYSE Arca Equities Rule 5.2(j)(3) applicable to 
the listing of Units based on fixed income securities indexes. The 
Revised Index meets all such requirements except for those set forth in 
Commentary .02(a)(2).\10\ Specifically, as of June 30, 2015, 30.10% of 
the weight of the Revised Index components have a minimum original 
principal amount outstanding of $100 million or more.
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    \10\ Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3) 
provides that components that in the aggregate account for at least 
75% of the weight of the index or portfolio each shall have a 
minimum original principal amount outstanding of $100 million or 
more.
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    As of June 30, 2015, 69.73% of the weight of the Revised Index 
components was composed of individual maturities that were part of an 
entire municipal bond offering with a minimum original principal amount 
outstanding of $100 million or more for all maturities of the offering. 
In addition, the total dollar amount outstanding of issues in the 
Revised Index was approximately $224.6 billion and the average dollar 
amount outstanding of issues in the Index was approximately $23.7 
million. Further, the most heavily weighted component represents 2.44% 
of the weight of the Revised Index and the five most heavily weighted 
components represent 9.47% of the weight of the Revised Index.\11\ 
Therefore, the

[[Page 55703]]

Exchange believes that, notwithstanding that the Index does not satisfy 
the criterion in NYSE Arca Equities Rule 5.2(j)(3), Commentary 
.02(a)(2), the Revised Index is sufficiently broad-based to deter 
potential manipulation, given that it is composed of approximately 
9,481 issues and 900 unique issuers. In addition, the Revised Index 
securities are sufficiently liquid to deter potential manipulation in 
that a substantial portion (69.73%) of the Revised Index weight is 
composed of maturities that are part of a minimum original principal 
amount outstanding of $100 million or more, and in view of the 
substantial total dollar amount outstanding and the average dollar 
amount outstanding of Revised Index issues, as referenced above.
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    \11\ Commentary .02(a)(4) to NYSE Arca Equities Rule 5.2(j)(3) 
provides that no component fixed-income security (excluding Treasury 
Securities and GSE Securities, as defined therein) shall represent 
more than 30% of the weight of the index or portfolio, and the five 
most heavily weighted component fixed-income securities in the index 
or portfolio shall not in the aggregate account for more than 65% of 
the weight of the index or portfolio.
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    In addition, the average daily notional trading volume for Revised 
Index components for the period from June 30, 2014 to June 30, 2015 was 
approximately $323.6 million and the sum of the notional trading 
volumes for the same period was $82.2 billion.
    The Revised Index value, calculated and disseminated at least once 
daily, as well as the components of the Revised Index and their 
percentage weighting, will be available from major market data vendors. 
In addition, the portfolio of securities held by the Fund will be 
disclosed daily on the Fund's Web site at www.marketvectorsetfs.com.
    The Exchange represents that: (1) except for Commentary .02(a)(2) 
to NYSE Arca Equities Rule 5.2(j)(3), the Shares of the Fund currently 
satisfy all of the generic listing standards under NYSE Arca Equities 
Rule 5.2(j)(3); (2) the continued listing standards under NYSE Arca 
Equities Rules 5.2(j)(3) and 5.5(g)(2) applicable to Units shall apply 
to the Shares; and (3) the Trust is required to comply with Rule 10A-3 
under the Act \12\ for the initial and continued listing of the Shares. 
In addition, the Exchange represents that the Shares will comply with 
all other requirements applicable to Units including, but not limited 
to, requirements relating to the dissemination of key information such 
as the value of the Index and the applicable Intraday Indicative Value 
(``IIV''),\13\ rules governing the trading of equity securities, 
trading hours, trading halts, surveillance, and the Information 
Bulletin to Equity Trading Permit Holders (``ETP Holders''), as set 
forth in Exchange rules applicable to Units and prior Commission orders 
approving the generic listing rules applicable to the listing and 
trading of Units.\14\
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    \12\ 17 CFR 240.10A-3.
    \13\ The IIV will be widely disseminated by one or more major 
market data vendors at least every 15 seconds during the Exchange's 
Core Trading Session of 9:30 a.m. to 4:00 p.m., Eastern time. 
Currently, it is the Exchange's understanding that several major 
market data vendors display and/or make widely available IIVs taken 
from the Consolidated Tape Association (``CTA'') or other data 
feeds.
    \14\ See, e.g., Securities Exchange Act Release Nos. 55783 (May 
17, 2007), 72 FR 29194 (May 24, 2007) (SR-NYSEArca-2007-36) (order 
approving NYSE Arca generic listing standards for Units based on a 
fixed income index); 44551 (July 12, 2001), 66 FR 37716 (July 19, 
2001) (SR-PCX-2001-14) (order approving generic listing standards 
for Units and Portfolio Depositary Receipts); 41983 (October 6, 
1999), 64 FR 56008 (October 15, 1999) (SR-PCX-98-29) (order 
approving rules for listing and trading of Units).
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    The current value of the Revised Index will be widely disseminated 
by one or more major market data vendors at least once per day, as 
required by NYSE Arca Equities Rule 5.2(j)(3), Commentary .02 (b)(ii). 
The IIV for Shares of the Fund will be disseminated by one or more 
major market data vendors, updated at least every 15 seconds during the 
Exchange's Core Trading Session, as required by NYSE Arca Equities Rule 
5.2(j)(3), Commentary .02 (c).
    The Adviser represents that there is no change to the Fund's 
investment objective. The Fund will continue to comply with all initial 
and continued listing requirements under NYSE Arca Equities Rule 
5.2(j)(3).
    Except for the changes noted above, all other facts presented and 
representations made in the Release remain unchanged.
    All terms referenced but not defined herein are defined in the 
Release.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \15\ 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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    \15\ 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 is no change to the Fund's investment objective. Under the 
revised Index methodology, there will be a 40% weight in the Muni High 
Yield/$100 Million Deal Size Index (reduced from 50% weight). In 
addition, the Revised Index will have a 10% weight in the Muni A-Rated 
Index, which is comprised of investment grade components. The Revised 
Index will continue to have a 25% weight in the Muni High Yield/Under 
$100 Million Deal Size Index and a 25% weight in the Muni Baa-Rated/
$100 Million Deal Size Index, as described in the Release. Therefore, 
the benchmark indexes would include a higher overall percentage in 
investment grade and, specifically, higher rated investment grade 
municipal issues, than under the current Index methodology. The 
Exchange believes that, as with the current Index, the Revised Index 
will be sufficiently broad-based to deter potential manipulation, and 
the Revised Index components will be sufficiently liquid to deter 
potential manipulation in that a substantial portion (69.73%) of the 
Revised Index weight will be composed of maturities that are part of a 
minimum original principal amount outstanding of $100 million or more. 
In addition, because 90% of the Revised Index weight will consist of 
the same benchmark index weightings as described in the Release, there 
will continue to be substantial total dollar amount outstanding and 
average dollar amount outstanding of Revised Index issues. As with the 
current Index, the Revised Index value, calculated and disseminated at 
least once daily, as well as the components of the Revised Index and 
their respective percentage weightings, will be available from major 
market data vendors. In addition, the portfolio of securities held by 
the Fund will be disclosed on the Fund's Web site. The IIV for Shares 
of the Fund will be disseminated by one or more major market data 
vendors, updated at least every 15 seconds during the Exchange's Core 
Trading Session.
    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 Fund will continue to comply with all 
initial and continued listing requirements under NYSE Arca Equities 
Rule 5.2(j)(3). As noted above, the Revised Index meets all such 
requirements except for those set forth in Commentary .02(a)(2).\16\ 
Specifically, as of as of June 30, 2015, 30.10% of the weight of the 
Revised Index components have a minimum original principal amount 
outstanding of $100 million or more. In addition, the total dollar

[[Page 55704]]

amount outstanding of issues in the Revised Index was approximately 
$224.6 billion and the average dollar amount outstanding of issues in 
the Index was approximately $23.7 million. Further, the most heavily 
weighted component represents 2.44% of the weight of the Revised Index 
and the five most heavily weighted components represent 9.47% of the 
weight of the Revised Index.\17\ Therefore, the Exchange believes that, 
notwithstanding that the Index does not satisfy the criterion in NYSE 
Arca Equities Rule 5.2(j)(3), Commentary .02(a)(2), the Revised Index 
is sufficiently broad-based to deter potential manipulation, given that 
it is composed of approximately 9,481issues and 900 unique issuers. In 
addition, the Revised Index securities are sufficiently liquid to deter 
potential manipulation in that a substantial portion (69.73%) of the 
Revised Index weight is composed of maturities that are part of a 
minimum original principal amount outstanding of $100 million or more, 
and in view of the substantial total dollar amount outstanding and the 
average dollar amount outstanding of Revised Index issues, as 
referenced above.
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    \16\ See note 10, supra.
    \17\ See note 11, supra.
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    In addition, the average daily notional trading volume for Revised 
Index components for the period from June 30, 2014 to June 30, 2015 was 
approximately $323.6 million and the sum of the notional trading 
volumes for the same period was $82.2 billion.
    The Revised Index value, calculated and disseminated at least once 
daily, as well as the components of the Revised Index and their 
percentage weighting, will be available from major market data vendors. 
In addition, the portfolio of securities held by the Fund will be 
disclosed daily on the Fund's Web site at www.marketvectorsetfs.com.
    The Adviser represents that there is no change to the Fund's 
investment objective. Except for the changes noted above, all other 
representations made in the 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 proposed changes will 
accommodate continued listing and trading of an issue of Managed Fund 
Shares that holds municipal securities.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register, or such later date up to 90 days from the date of 
publication (i) as the Commission may designate if it finds such longer 
period to be appropriate and publishes its reasons for so finding or 
(ii) as to which the self-regulatory organization consents, the 
Commission will:
    (A) by order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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-2015-74 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2015-74. 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 Section, 100 F Street 
NE., Washington, DC 20549 on official business days between 10 a.m. and 
3 p.m. Copies of the filing will also be available for inspection and 
copying at the NYSE's principal office and on its Internet Web site at 
www.nyse.com. 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-2015-74 and should be submitted on or before October 7, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-23217 Filed 9-15-15; 8:45 am]
 BILLING CODE 8011-01-P