Document ID: SEC-2021-1018-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2021-07-26T04:00Z

[Federal Register Volume 86, Number 140 (Monday, July 26, 2021)]
[Notices]
[Pages 40102-40104]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15811]

[[Page 40102]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92449; File No. SR-NYSEArca-2021-61]

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 Shares of 
Active Proxy Portfolio Shares Issued by T. Rowe Price Exchange-Traded 
Funds, Inc. Which Are Listed and Traded on the Exchange

July 20, 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 July 7, 2021, NYSE Arca, Inc. (``NYSE Arca'' or the 
``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 following funds, shares of which are 
listed and traded on the Exchange under NYSE Arca Rule 8.601-E: T. Rowe 
Price Blue Chip Growth ETF, T. Rowe Price Dividend Growth ETF, T. Rowe 
Price Growth Stock ETF, T. Rowe Price Equity Income ETF, and T. Rowe 
Price U.S. Equity Research ETF. 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\ 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 
proposals to list and trade shares (``Shares'') of Active Proxy 
Portfolio Shares of the following Funds listed and traded on the 
Exchange under NYSE Arca Rule 8.601-E: T. Rowe Price Blue Chip Growth 
ETF, T. Rowe Price Dividend Growth ETF, T. Rowe Price Growth Stock ETF, 
T. Rowe Price Equity Income ETF, and, separately, T. Rowe Price U.S. 
Equity Research ETF \5\ (each, a ``Fund'' and, together, the 
``Funds''). The Exchange proposes to reflect an amendment to the Prior 
Exemptive Order (as defined below) governing the listing and trading of 
these Funds filed by, among others, T. Rowe Price Exchange-Traded 
Funds, Inc. (the ``Issuer''), 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 an 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 June 30, 2020, the Commission approved the proposed rule 
change relating to the listing and trading of shares of T. Rowe 
Price Blue Chip Growth ETF, T. Rowe Price Dividend Growth ETF, T. 
Rowe Price Growth Stock ETF, T. Rowe Price Equity Income ETF. See 
Securities Exchange Act Release No. 89191 (June 30, 2020), 85 FR 
40358 (July 6, 2020) (SR-NYSEArca-2019-92) (Notice of Filing of 
Amendment No. 3 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment No. 3, to List and 
Trade Four Series of Active Proxy Portfolio Shares Issued by T. Rowe 
Price Exchange-Traded Funds, Inc. Under NYSE Arca Rule 8.601-E) 
(``Approval Order'')). The Commission published the notice of filing 
and immediate effectiveness relating to the rule change to list and 
trade shares of the T. Rowe Price U.S. Equity Research ETF on March 
15, 2021. See Securities Exchange Act Release No. 91322 (March 15, 
2021), 86 FR 14980 (March 19, 2021) (SR-NYSEArca-2021-17) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating 
to Listing and Trading of Shares of the T. Rowe Price U.S. Equity 
Research ETF under NYSE Arca Rule 8.601-E (``Notice'')).
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    The Issuer filed a seventh 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. 812-14214, dated October 16, 2019.
    \7\ See Investment Company Act Release No. 33713, 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 the Fund's 
portfolio, is designed to closely track its daily performance (``Proxy 
Portfolio''). The Prior Application stated that each Fund's Proxy 
Portfolio will be determined such that at least 80% of its total assets 
will overlap with the portfolio weightings of the Fund (the ``Portfolio 
Overlap''). As set forth in the Approval Order and in the Notice, 
investments made by the T. Rowe Price Blue Chip Growth ETF, T. Rowe 
Price Dividend Growth ETF, T. Rowe Price Growth Stock ETF, T. Rowe 
Price Equity Income ETF, and T. Rowe Price U.S. Equity Research ETF 
will comply with the conditions set forth in the Prior Application and 
the Prior Exemptive Order.\8\
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    \8\ See Approval Order, 85 FR at 40360, n. 18; Notice, 86 FR at 
14981, n.9.
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    On February 4, 2021, as amended on March 30, 2021, the Issuer 
sought to amend the Prior Exemptive Order to permit use of creation 
baskets \9\ that

[[Page 40103]]

include instruments that are not included, or are included with 
different weightings, in the Funds' Proxy Portfolio (the ``Updated 
Application'').\10\ In addition, the Updated Application noted that the 
Portfolio Overlap may be less than 80%.
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    \9\ As set forth in the Notice, Shares of the Funds are 
purchased and redeemed in specified minimum size ``Creation Units'' 
and generally on an in-kind basis. Except where the purchase or 
redemption includes cash under the circumstances specified in the 
Notice, purchasers must purchase Creation Units by making an in-kind 
deposit of specified instruments (``Deposit Instruments''), and 
shareholders redeeming Shares will receive an in-kind transfer of 
specified instruments (``Redemption Instruments''). The names and 
quantities of the instruments that constitute the Deposit 
Instruments and the Redemption Instruments for a Fund are known 
collectively as a ``Creation Basket'' and are the same as a Fund's 
designated Proxy Portfolio, except to the extent that a Fund 
requires purchases and redemptions to be made entirely or in part on 
a cash basis, as described below. See Notice, 86 FR at 14980.
    \10\ See File No. 812-15197, dated March 30, 2021.
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    On May 18, 2021, the Commission issued an amended order that, among 
other things, permits each Fund's Portfolio Overlap to be less than 80% 
(the ``Updated Exemptive Order'').\11\ Accordingly, investments made by 
the T. Rowe Price Blue Chip Growth ETF, T. Rowe Price Dividend Growth 
ETF, T. Rowe Price Growth Stock ETF, T. Rowe Price Equity Income ETF, 
and T. Rowe Price U.S. Equity Research ETF will comply with this 
condition of the Updated Application and the Updated Exemptive Order.
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    \11\ See Investment Company Act Release No. 34272, May 18, 2021. 
Although the Updated Exemptive Order permits the use of Creation 
Baskets that include instruments that are not included, or are 
included with different weightings, in a Fund's Proxy Portfolio, 
that aspect of the Updated Exemptive Order is not part of this 
proposed rule change.
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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,\12\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\13\ 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.\14\
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ 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 reflect the 
change in the Updated Application and the Updated Exemptive Order that 
permits each of the Funds' Portfolio Overlap to be less than 80%. As 
noted, the Approval Order and the Notice reflected that the Funds' 
Portfolio Overlap would be at least 80%. 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 Prior 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 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 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 \15\ and Rule 19b-
4(f)(6) thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 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) \17\ 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 
states that the Funds will continue to comply with the requirements of 
Rule 8.601-E and that waiver of the operative delay would allow the 
Funds to operate in a manner consistent with the Updated Application 
and Updated Exemptive Order. 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.\18\
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    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ 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-2021-61 on the subject line.

[[Page 40104]]

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-2021-61. 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-2021-61 and should be submitted 
on or before August 16, 2021.

    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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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-15811 Filed 7-23-21; 8:45 am]
BILLING CODE 8011-01-P