Document ID: SEC-2021-1591-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2021-11-12T05:00Z

[Federal Register Volume 86, Number 216 (Friday, November 12, 2021)]
[Notices]
[Pages 62855-62858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-24620]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93528; File No. SR-NYSEArca-2021-93]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Reflect a 
Modification to the Permitted Components of the Tracking Baskets of the 
Putnam Focused Large Cap Growth ETF, Putnam Focused Large Cap Value 
ETF, Putnam Sustainable Future ETF, and Putnam Sustainable Leaders ETF

November 5, 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 October 29, 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 Putnam Focused Large Cap Growth ETF, 
Putnam Focused Large Cap Value ETF, Putnam Sustainable Future ETF, and 
Putnam Sustainable Leaders ETF, which are listed and traded on the 
Exchange under NYSE Arca Rule 8.601-E. The proposed rule change is 
available on the Exchange's website at www.nyse.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

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

Purpose
    The Exchange adopted NYSE Arca Rule 8.601-E for the purpose of 
permitting the listing and trading, or trading pursuant to unlisted 
trading privileges (``UTP''), of Active Proxy Portfolio Shares, which 
are securities issued by an actively managed open-end investment 
management company.\4\

[[Page 62856]]

Commentary .01 to Rule 8.601-E requires the Exchange to file separate 
proposals under Section 19(b) of the Act before listing and trading any 
series of Active Proxy Portfolio Shares on the Exchange. Pursuant to 
this provision, the Exchange submitted a proposal to list and trade 
shares (``Shares'') of Active Proxy Portfolio Shares of the Putnam 
Focused Large Cap Growth ETF, Putnam Focused Large Cap Value ETF, 
Putnam Sustainable Future ETF, and Putnam Sustainable Leaders ETF \5\ 
(each a ``Fund'' and, collectively, the ``Funds'') on the Exchange 
under NYSE Arca Rule 8.601-E. The Shares are listed and traded on the 
Exchange pursuant to their listing rule.\6\
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    \4\ See Securities Exchange Act Release No. 89185 (June 29, 
2020), 85 FR 40328 (July 6, 2020) (SR-NYSEArca-2019-95). Rule 8.601-
E(c)(1) provides that ``[t]he term ``Active Proxy Portfolio Share'' 
means a security that (a) is issued by a investment company 
registered under the Investment Company Act of 1940 (``Investment 
Company'') organized as an open-end management investment company 
that invests in a portfolio of securities selected by the Investment 
Company's investment adviser consistent with the Investment 
Company's investment objectives and policies; (b) is issued in a 
specified minimum number of shares, or multiples thereof, in return 
for a deposit by the purchaser of the Proxy Portfolio and/or cash 
with a value equal to the next determined net asset value (``NAV''); 
(c) when aggregated in the same specified minimum number of Active 
Proxy Portfolio Shares, or multiples thereof, may be redeemed at a 
holder's request in return for the Proxy Portfolio and/or cash to 
the holder by the issuer with a value equal to the next determined 
NAV; and (d) the portfolio holdings for which are disclosed within 
at least 60 days following the end of every fiscal quarter.'' Rule 
8.601-E(c)(2) provides that ``[t]he term ``Actual Portfolio'' means 
the identities and quantities of the securities and other assets 
held by the Investment Company that shall form the basis for the 
Investment Company's calculation of NAV at the end of the business 
day.'' Rule 8.601-E(c)(3) provides that ``[t]he term ``Proxy 
Portfolio'' means a specified portfolio of securities, other 
financial instruments and/or cash designed to track closely the 
daily performance of the Actual Portfolio of a series of Active 
Proxy Portfolio Shares as provided in the exemptive relief pursuant 
to the Investment Company Act of 1940 applicable to such series.''
    \5\ On May 13, 2021, the Commission published the notice of 
filing and immediate effectiveness relating to the listing and 
trading of shares of the Putnam Focused Large Cap Growth ETF, Putnam 
Focused Large Cap Value ETF, Putnam Sustainable Future ETF, and 
Putnam Sustainable Leaders ETF. See Securities Exchange Act Release 
No. 91895 (May 13, 2021), 86 FR 27126 (May 19, 2021) (SR-NYSEArca-
2021-39) (the ``Notice'').
    \6\ See id. The Putnam ETF Trust filed an application for an 
order under Section 6(c) of the 1940 Act for exemptions from various 
provisions of the 1940 Act and rules thereunder (File No. 812-
15203), dated February 19, 2021 (the ``Application''). On May 10, 
2021, the Commission issued an order (the ``Exemptive Order'') under 
the 1940 Act granting the exemptions requested in the Application 
(Investment Company Act Release No. 34266, May 10, 2021). 
Investments made by the Funds will comply with the conditions set 
forth in the Application and the Exemptive Order. See Notice, 86 FR 
at 27127-28 n. 9.
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    The Application and Exemptive Order incorporate by reference the 
terms and conditions of the exemptive order granted to Fidelity Beach 
Street Trust (``Beach Street''), Fidelity Management & Research Company 
(``FMR''), Fidelity Distributors Corporation (``FDC''), as such order 
may be amended from time to time, and the purpose of this filing is to 
reflect an amendment to such relief, as described below.
The Fidelity Exemptive Relief
    Beach Street, FMR, and FDC filed a ninth amended application for an 
order under Section 6(c) of the 1940 Act for exemptions from various 
provisions of the 1940 Act and rules thereunder (the ``Prior Fidelity 
Application'').\7\ On December 10, 2019, the Commission issued an order 
(the ``Prior Fidelity Exemptive Order'') under the 1940 Act granting 
the exemptions requested in the Prior Fidelity Application.\8\ The 
Exchange previously submitted a proposal to list and trade shares of 
Active Proxy Portfolio Shares of the Fidelity Women's Leadership ETF 
and Fidelity Sustainability U.S. Equity ETF (the ``Fidelity Funds''), 
which are subject to the Prior Fidelity Exemptive Order.\9\
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    \7\ See File No. 812-14364, dated November 8, 2019.
    \8\ See Investment Company Act Release No. 33712, December 10, 
2019.
    \9\ On April 14, 2021, the Commission published the notice of 
filing and immediate effectiveness relating to the listing and 
trading of shares of the Fidelity Funds. See Securities Exchange Act 
Release No. 91514 (April 8, 2021), 86 FR 19657 (April 14, 2021) (SR-
NYSEArca-2021-23) (the ``Fidelity Notice'').
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    Under the Prior Fidelity Exemptive Order, the Fidelity Funds are 
required to publish a basket of securities and cash that, while 
different from a fund's portfolio, is designed to closely track its 
daily performance (the ``Fidelity Proxy Portfolio''). The Prior 
Fidelity Application stated that the Fidelity Proxy Portfolio is 
comprised of (1) select recently disclosed portfolio holdings 
(``Strategy Components''); (2) liquid ETFs that convey information 
about the types of instruments in which the fund invests that are not 
otherwise fully represented by Strategy Components (``Representative 
ETFs''); and (3) cash and cash equivalents. As set forth in the 
Fidelity Notice, investments made by the Fidelity Funds will comply 
with the conditions set forth in the Prior Application and the Prior 
Exemptive Order.\10\
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    \10\ See Fidelity Notice, 86 FR at 19658, n. 8.
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    On October 30, 2020, and as amended on April 2, 2021, June 11, 2021 
and June 30, 2021, Beach Street, FMR, FDC, and Fidelity Covington Trust 
sought to amend the Prior Fidelity Exemptive Order to, among other 
things, permit the Fidelity Funds to include select securities from the 
universe from which a fund's investments are selected such as a broad-
based market index in the fund's Proxy Portfolio.\11\ On August 5, 
2021, the Commission issued an order granting the relief requested (the 
``Updated Fidelity Exemptive Order'').\12\ The Exchange subsequently 
submitted a proposal with respect to the listing and trading of the 
Fidelity Funds to reflect the conditions set forth in the Updated 
Fidelity Exemptive Order.\13\
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    \11\ See File No. 812-15175.
    \12\ See Investment Company Act Release No. 34350, August 5, 
2021. Although the Updated Fidelity 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 Fidelity Exemptive Order is 
not part of this proposed rule change.
    \13\ See Securities Exchange Act Release No. 93108 (September 
23, 2021), 86 FR 53993 (September 29, 2021), (SR-NYSEArca-2021-81).
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The Funds
    As set forth in the Exchange's previous rule filing to list and 
trade Shares of the Funds, under the Exemptive Order, the Funds are 
required to publish a Tracking Basket \14\ of securities and cash that, 
while different from a Fund's portfolio, is designed to closely track 
its daily performance. Like the Fidelity Funds, the Tracking Basket for 
each of the Funds will be comprised of Strategy Components, 
Representative ETFs, and cash and cash equivalents.
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    \14\ The Funds use the term ``Tracking Basket'' to mean the 
Proxy Portfolio for purposes of Rule 8.601-E(c)(3). See Notice, 86 
FR at 27128 n. 12.
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    As set forth in the Notice, investments made by the Funds will 
comply with the conditions set forth in the Application and the 
Exemptive Order, which incorporate by reference the terms and 
conditions of the exemptive order granted to Beach Street, FMR, and 
FDC, as such order may be amended from time to time.\15\ Accordingly, 
the Exchange proposes to update the listing rule for the Shares to 
reflect the amendment of the Prior Fidelity Exemptive Order and the 
updated conditions set forth in the Updated Fidelity Exemptive Order as 
they relate to the Funds. Specifically, the Exchange proposes to 
reflect the condition in the Updated Fidelity Exemptive Order that 
permits the Funds to include select securities from the universe from 
which a Fund's investments are selected such as a broad-based market 
index in the Fund's Tracking Basket.
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    \15\ See Notice, 86 FR at 27127-28 n. 9; Application at 2 n. 1; 
Exemptive Order at 1 n. 1.
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    Except for the change noted above, all other representations made 
in the Exchange's previous rule filing to list and trade Shares of the 
Funds 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,\16\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\17\ 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.\18\
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ The Exchange represents that, for initial and continued 
listing, the Funds 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

[[Page 62857]]

open market and, in general, to protect investors and the public 
interest. The proposed revision is intended to allow the Funds to 
comply with the Updated Fidelity Exemptive Order, which is incorporated 
by reference in the Application and Exemptive Order. Specifically, the 
proposed rule change would permit the Funds to include select 
securities from the universe from which a Fund's investments are 
selected such as a broad-based market index in such Fund's Tracking 
Basket. The Exchange also believes that the proposed change is designed 
to perfect the mechanism of a free and open market and, in general, to 
protect investors and the public interest because it would permit each 
Fund to make certain adjustments to the components of its Tracking 
Basket, thereby continuing to promote competition among various ETF 
products. 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 Fidelity Exemptive 
Order, the terms and conditions of which are incorporated by reference 
in the Application and Exemptive Order governing the listing and 
trading of the Funds. To the extent that the proposed rule change would 
continue to permit listing and trading of other types of actively-
managed ETF that have 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 \19\ and Rule 19b-
4(f)(6) thereunder.\20\
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of 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 satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \21\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\22\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may take effect upon filing. The Exchange states that the 
proposed rule change raises no novel regulatory issues because the 
proposed rule change would reflect an aspect of exemptive relief that 
the Commission has already granted. The Exchange also notes that 
similar proposals to amend the listing rules of other shares that NYSE 
Arca also lists and trades pursuant to Rule 8.601-E currently are in 
effect.\23\ 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 waives 
the 30-day operative delay and designates the proposal operative upon 
filing.\24\
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    \21\ 17 CFR 240.19b-4(f)(6).
    \22\ 17 CFR 240.19b-4(f)(6)(iii).
    \23\ See Securities Exchange Act Release No. 92449 (July 20, 
2021), 86 FR 40102 (July 26, 2021) (SR-NYSEArca-2021-61) and No. 
93108 (September 23, 2021) (SR-NYSEArca-2021-81).
    \24\ For purposes only of waiving the 30-day operative delay, 
the Commission has 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
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 [email protected]. Please include 
File Number SR-NYSEArca-2021-93 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2021-93. 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-2021-93 and should be submitted 
on or before December 3, 2021.

[[Page 62858]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021-24620 Filed 11-10-21; 8:45 am]
BILLING CODE 8011-01-P