Document ID: SEC-2020-1607-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2020-10-13T04:00Z

[Federal Register Volume 85, Number 198 (Tuesday, October 13, 2020)]
[Notices]
[Pages 64598-64603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22630]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90104; File No. SR-NYSEArca-2020-84]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change, as Modified by Amendment No. 1, Amending NYSE 
Arca Rule 8.900-E To Adopt Generic Listing Standards for Managed 
Portfolio Shares

October 7, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on September 22, 2020, NYSE Arca, Inc. (``NYSE Arca'' or 
``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 self-regulatory 
organization. On October 2, 2020, the Exchange filed Amendment No. 1 to 
the proposed rule change. The Commission is publishing this notice to 
solicit comments on the proposed rule change, as modified by Amendment 
No. 1, from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.

---------------------------------------------------------------------------

[[Page 64599]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Arca Rule 8.900-E to adopt 
generic listing standards for Managed Portfolio Shares. This Amendment 
No. 1 to SR-NYSEArca-2020-84 replaces SR-NYSEArca-2020-84 as originally 
filed and supersedes such filing in its entirety. The proposed 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 proposes to amend NYSE Arca Rule 8.900-E to adopt 
generic listing standards for Managed Portfolio Shares. Under the 
Exchange's current rules, a proposed rule change must be filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') for the 
listing and trading of each new series of Managed Portfolio Shares. The 
Exchange believes that it is appropriate to codify certain rules within 
Rule 8.900-E that would generally reduce the need for such proposed 
rule changes, which would create greater efficiency and promote uniform 
standards in the listing process.
Background
    Rule 8.900-E sets forth certain rules related to the listing and 
trading of Managed Portfolio Shares.\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 88648 (April 15, 
2020), 85 FR 22200 (April 21, 2020) (SR-NYSEArca-2020-32) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Adopt 
a New NYSE Arca Rule 8.900-E).
---------------------------------------------------------------------------

    The Commission has previously approved listing and trading of 
series of Managed Portfolio Shares on the Exchange under NYSE Arca Rule 
8.900-E and on other national securities exchanges under substantially 
equivalent listing rules.\5\ Currently, three series of Managed 
Portfolio Shares are listed and traded on the Cboe BZX Exchange, 
Inc.\6\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release Nos. 89633 (August 25, 
2020), 85 FR 53868 (August 31, 2020) (SR-NYSEArca-2020-48) (Order 
Approving a Proposed Rule Change, as Modified by Amendment No. 1, to 
List and Trade Shares of Gabelli ETFs under Rule 8.900-E) (the 
``Gabelli Approval Order''); 88247 (February 20, 2020), 85 FR 11137 
(February 26, 2020) (SR-CboeBZX-2019-102) (Notice of Filing of 
Amendment No. 3 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment No. 3 thereto, to 
List and Trade Shares of the ClearBridge Focus Value ETF under BZX 
Rule 14.11(k)) (``ClearBridge Approval Order''); 88175 (February 12, 
2020), 85 FR 9494 (February 19, 2020) (SR-CboeBZX-2019-057) (Notice 
of Filing of Amendment No. 2 and Order Granting Accelerated Approval 
of a Proposed Rule Change, as Modified by Amendment No. 2 thereto, 
to List and Trade Shares of the American Century Focused Dynamic 
Growth ETF and American Century Focused Large Cap Value ETF under 
BZX Rule 14.11(k)) (``American Century Approval Order'', together 
with the Gabelli Approval Order, ClearBridge Approval Order and 
American Century Approval Order, the ``Approval Orders'').
    \6\ See ClearBridge Approval Order and American Century Approval 
Order, referenced in note 5, supra.
---------------------------------------------------------------------------

    Rule 8.900-E(b)(1) provides that the Exchange will file separate 
proposals under Section 19(b) of the Act before the listing and trading 
of a series of Managed Portfolio Shares. The rule further provides that 
all statements or representations contained in such rule filing 
regarding (a) the description of the portfolio or reference asset, (b) 
limitations on portfolio holdings or reference assets, or (c) the 
applicability of Exchange listing rules specified in such rule filing 
will constitute continued listing requirements. An issuer of such 
securities must notify the Exchange of any failure to comply with such 
continued listing requirements.
Key Features of Managed Portfolio Shares
    While each series of Managed Portfolio Shares will be actively 
managed and, to that extent, will be similar, for example, to Managed 
Fund Shares (as defined in Rule 8.600-E),\7\ Managed Portfolio Shares 
differ from Managed Fund Shares in the following important respects.\8\ 
First, in contrast to Managed Fund Shares, which require a ``Disclosed 
Portfolio'' to be disseminated at least once daily,\9\ the portfolio 
for a series of Managed Portfolio Shares will be disclosed quarterly in 
accordance with normal disclosure requirements otherwise applicable to 
open-end investment companies registered under the Investment Company 
Act of 1940 (``1940 Act'').\10\ The composition of the portfolio of a 
series of Managed Portfolio Shares would not be available at 
commencement of Exchange listing and/or trading. Second, in connection 
with the creation and redemption of shares in ``Creation Unit'' or 
``Redemption Unit'' size, the delivery of any portfolio securities in 
kind will be effected through a ``Confidential Account'' for the 
benefit of the creating or redeeming Authorized Participant

[[Page 64600]]

(``AP'') without disclosing the identity of such securities to the 
AP.\11\
---------------------------------------------------------------------------

    \7\ The Commission approved a proposed rule change to adopt 
rules permitting the listing and trading of Managed Fund Shares. See 
Securities Exchange Act Release No. 57619 (April 4, 2008), 73 FR 
19544 (April 10, 2008) (SR-NYSEArca-2008-25) (Order Granting 
Accelerated Approval of Rules Permitting the Listing and Trading of 
Managed Fund Shares, Trading Hours and Halts, Listing Fees 
Applicable To Managed Fund Shares). The Commission has also 
previously approved listing and trading on the Exchange of a number 
of issues of Managed Fund Shares under Rule 8.600-E. See, e.g., 
Securities Exchange Act Release Nos. 57801 (May 8, 2008), 73 FR 
27878 (May 14, 2008) (SR-NYSEArca-2008-31) (order approving Exchange 
listing and trading of twelve actively-managed funds of the 
WisdomTree Trust; 63802 (January 31, 2011), 76 FR 6503 (February 4, 
2011) (SR-NYSEArca-2010-118) (order approving Exchange listing and 
trading of the SiM Dynamic Allocation Diversified Income ETF and SiM 
Dynamic Allocation Growth Income ETF).
    \8\ Rule 8.900-E(c)(1) defines the term ``Managed Portfolio 
Share'' as a security that (a) represents an interest in 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 Creation Unit, or multiples thereof, in return 
for a designated portfolio of instruments (and/or an amount of cash) 
with a value equal to the next determined net asset value and 
delivered to the Authorized Participant (as defined in the 
Investment Company's Form N-1A filed with the Commission) through a 
Confidential Account; (c) when aggregated into a Redemption Unit, or 
multiples thereof, may be redeemed for a designated portfolio of 
instruments (and/or an amount of cash) with a value equal to the 
next determined net asset value delivered to the Confidential 
Account for the benefit of the Authorized Participant; and (d) the 
portfolio holdings for which are disclosed within at least 60 days 
following the end of every fiscal quarter.
    \9\ NYSE Arca Rule 8.600-E(c)(2) defines the term ``Disclosed 
Portfolio'' as the identities and quantities of the securities and 
other assets held by the Investment Company that will form the basis 
for the Investment Company's calculation of net asset value at the 
end of the business day. NYSE Arca Rule 8.600-E(d)(2)(B)(i) requires 
that the Disclosed Portfolio be disseminated at least once daily and 
be made available to all market participants at the same time.
    \10\ Form N-PORT requires reporting of a fund's complete 
portfolio holdings on a position-by-position basis on a quarterly 
basis within 60 days after fiscal quarter end. Investors can obtain 
a fund's Statement of Additional Information, its Shareholder 
Reports, its Form N-CSR, filed twice a year, and its Form N-CEN, 
filed annually. A fund's SAI and Shareholder Reports are available 
free upon request from the Investment Company, and those documents 
and the Form N-PORT, Form N-CSR, and Form N-CEN may be viewed on-
screen or downloaded from the Commission's website at www.sec.gov.
    \11\ NYSE Arca Rule 8.900-E(c)(4) defines the term 
``Confidential Account'' as ``an account owned by an Authorized 
Participant and held with an AP Representative on behalf of the 
Authorized Participant. The account will be established and governed 
by contractual agreement between the AP Representative and the 
Authorized Participant solely for the purposes of creation and 
redemption, while keeping confidential the Creation Basket 
constituents of each series of Managed Portfolio Shares, including 
from the Authorized Participant. The books and records of the 
Confidential Account will be maintained by the AP Representative on 
behalf of the Authorized Participant.'' NYSE Arca Rule 8.900-E(c)(3) 
defines the term ``AP Representative'' as ``an unaffiliated broker-
dealer, with which an Authorized Participant has signed an agreement 
to establish a Confidential Account for the benefit of such 
Authorized Participant, that will deliver or receive, on behalf of 
the Authorized Participant, all consideration to or from the 
Investment Company in a creation or redemption. An AP Representative 
will not be permitted to disclose the Creation Basket to any person, 
including the Authorized Participants.''
---------------------------------------------------------------------------

    For each series of Managed Portfolio Shares, an estimated value--
the Verified Intraday Indicative Value or ``VIIV''-- that reflects an 
estimated intraday value of a fund's portfolio will be 
disseminated.\12\ Specifically, the VIIV will be based upon all of a 
series' holdings as of the close of the prior business day and, for 
corporate actions, based on the applicable holdings as of the opening 
of business on the current business day. The VIIV will be widely 
disseminated by the ``Reporting Authority'' and/or one or more major 
market data vendors in one second intervals during the Exchange's Core 
Trading Session and will be disseminated to all market participants at 
the same time. The dissemination of the VIIV will allow investors to 
determine the estimated intra-day value of the underlying portfolio of 
a series of Managed Portfolio Shares and will provide a close estimate 
of that value throughout the trading day.
---------------------------------------------------------------------------

    \12\ Rule 8.900-E(c)(2) defines the term ``Verified Intraday 
Indicative Value (``VIIV'') as the indicative value of a Managed 
Portfolio Share based on all of the holdings of a series of Managed 
Portfolio Shares as of the close of business on the prior business 
day and, for corporate actions, based on the applicable holdings as 
of the opening of business on the current business day, priced and 
disseminated in one second intervals during the Core Trading Session 
by the Reporting Authority.
---------------------------------------------------------------------------

    In addition, Rule 8.900-E currently provides criteria that Managed 
Portfolio Shares must satisfy for initial and continued listing on the 
Exchange, including, for example, that a minimum number of Managed 
Portfolio Shares are required to be outstanding at the time of 
commencement of trading on the Exchange. However, the current process 
for listing and trading new series of Managed Portfolio Shares on the 
Exchange requires that the Exchange submit a proposed rule change with 
the Commission. In this regard, as noted above, Rule 8.900-E(b)(1) 
specifies that the Exchange will file separate proposals under Section 
19(b) of the Act before listing and trading of shares of a series of 
Managed Portfolio Shares.
Proposed Changes To Rule 8.900-E
    The Exchange proposes to amend Rule 8.900-E(b) to specify that the 
Exchange may approve Managed Portfolio Shares for listing and/or 
trading (including pursuant to unlisted trading privileges) pursuant to 
SEC Rule 19b-4(e) under the Act, which pertains to derivative 
securities products (``SEC Rule 19b-4(e)'').\13\ SEC Rule 19b-4(e)(1) 
provides that the listing and trading of a new derivative securities 
product by a self-regulatory organization (``SRO'') is not deemed a 
proposed rule change, pursuant to paragraph (c)(1) of Rule 19b-4,\14\ 
if the Commission has approved, pursuant to section 19(b) of the Act, 
the SRO's trading rules, procedures and listing standards for the 
product class that would include the new derivative securities product 
and the SRO has a surveillance program for the product class. This is 
the current method pursuant to which ``passive'' ETFs are listed under 
NYSE Arca Rule 5.2-E(j)(3), actively-managed ETFs are listed under NYSE 
Arca Rule 8.600-E, and Exchange-Traded Fund Shares are listed under 
NYSE Arca Rule 5.2-E(j)(8).
---------------------------------------------------------------------------

    \13\ 17 CFR 240.19b-4(e). As provided under SEC Rule 19b-4(e), 
the term ``new derivative securities product'' means any type of 
option, warrant, hybrid securities product or any other security, 
other than a single equity option or a security futures product, 
whose value is based, in whole or in part, upon the performance of, 
or interest in, an underlying instrument.
    \14\ 17 CFR 240.19b-4(c)(1). As provided under SEC Rule 19b-
4(c)(1), a stated policy, practice, or interpretation of the SRO 
shall be deemed to be a proposed rule change unless it is reasonably 
and fairly implied by an existing rule of the SRO.
---------------------------------------------------------------------------

    The Exchange would also specify in Rule 8.900-E(b) that components 
of a series of Managed Portfolio Shares listed pursuant to Rule 19b-
4(e) shall satisfy the criteria set forth in Rule 8.900-E and proposed 
Commentary .01 thereto upon initial listing and on a continual basis. 
The Exchange will file separate proposals under Section 19(b) of the 
Act before the listing and trading of a series of Managed Portfolio 
Shares with components that do not satisfy the criteria set forth in 
proposed Commentary .01 or components other than those specified in 
Commentary .01(a). For example, if the components of a series of 
Managed Portfolio Shares included a security or asset that is not 
specified in proposed Commentary .01(a), the Exchange would file a 
separate proposed rule change.
    Proposed Commentary .01(a) provides that the portfolio holdings for 
a series of Managed Portfolio Shares listed pursuant to Rule 19b-4(e) 
shall include only the following:
    (1) U.S. exchange-traded securities that are common stocks; 
preferred stocks; American Depositary Receipts; and real estate 
investment trusts;
    (2) U.S. exchange-traded funds that are listed under the following 
rules: Investment Company Units (Rule 5.2-E(j)(3)); Exchange-Traded 
Fund Shares (Rule 5.2-E(j)(8)); Portfolio Depositary Receipts (Rule 
8.100-E); Managed Fund Shares (Rule 8.600-E); Active Proxy Portfolio 
Shares (Rule 8.601-E); and Managed Portfolio Shares (Rule 8.900-E);
    (3) Equity Gold Shares (Rule 5.2-E(j)(5))
    (4) Index-Linked Securities (Rule 5.2-E(j)(6));
    (5) Commodity-Based Trust Shares (Rule 8.201-E);
    (6) Currency Trust Shares (Rule 8.202-E);
    (7) the following securities, which are required to be organized as 
commodity pools: Commodity Index Trust Shares (Rule 8.203-E); Commodity 
Futures Trust Shares (Rule 8.204-E); Trust Units (Rule 8.500-E); and 
Managed Trust Securities (Rule 8.700-E);
    (8) the following securities if organized as commodity pools: Trust 
Issued Receipts (Rule 8.200-E) and Partnership Units (Rule 8.300-E);
    (9) U.S. exchange-traded futures that trade contemporaneously with 
shares of a series of Managed Portfolio Shares in the Exchange's Core 
Trading Session; and
    (10) Cash and cash equivalents. Cash equivalents are the following: 
Short-term U.S. Treasury securities, government money market funds, and 
repurchase agreements.
    Proposed Commentary .01(b) provides that a series of Managed 
Portfolio Shares listed pursuant to Rule 19b-4(e) will not hold short 
positions in securities and other financial instruments referenced in 
proposed Commentary .01(a)(1)-(10).
    Proposed Commentary .01(c) provides that the securities referenced 
above in proposed Commentary .01(a)(2)-(8) shall include securities 
listed on another national securities exchange pursuant to 
substantially equivalent listing rules.
    The securities and financial instruments enumerated in proposed 
Commentary .01(a) to Rule 8.900-E are consistent with, and limited to, 
the ``permissible investments'' for series of Managed Portfolio Shares 
previously

[[Page 64601]]

approved by the Commission for Exchange listing and trading, as 
described in the Approval Orders.\15\ Each such series has 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, and the Commission has issued orders under the 1940 Act 
granting the exemptions requested in such applications.\16\ Such 
applications made substantially identical representations specifying 
the instruments that a series of Managed Portfolio Shares is permitted 
to hold, and a series of Managed Portfolio Shares listed generically 
pursuant to Commentary .01 would be limited to such holdings on an 
initial and continued listing basis.\17\
---------------------------------------------------------------------------

    \15\ See note 5, supra.
    \16\ See, e.g., Application for exemptive relief (File No. 812-
14405) and order granting exemptive relief applicable to the 
Precidian ETFs Trust under the 1940 Act (Investment Company Act 
Release No. 33477) (May 20, 2019).
    \17\ For example, the ClearBridge Approval Order (see note 5, 
supra) relating to listing of shares of the ClearBridge Focus Value 
ETF states: ``Pursuant to the Exemptive Order, the permissible 
investments include only the following instruments that trade on a 
U.S. exchange contemporaneously with the Shares: ETFs and exchange-
traded notes, common stocks, preferred stocks, American depositary 
receipts, real estate investment trusts, commodity pools, metals 
trusts, currency trusts, and futures for which the reference asset 
the Fund may invest in directly or, in the case of an index future, 
based on an index of a type of asset that the Fund could invest in 
directly; as well as cash and cash equivalents (short-term U.S. 
Treasury securities, government money market funds and repurchase 
agreements).''
---------------------------------------------------------------------------

    The regulatory staff of the Exchange, or the Financial Industry 
Regulatory Authority, Inc. (``FINRA''), on behalf of the Exchange, will 
communicate as needed regarding trading in Managed Portfolio Shares, 
other exchange-traded equity securities and futures contracts with 
other markets that are members of the Intermarket Surveillance Group 
(``ISG''), including U.S. exchanges on which the components are traded. 
In addition, the Exchange may obtain information regarding trading in 
Managed Portfolio Shares from other markets that are members of the 
ISG, including all U.S. securities exchanges and futures exchanges on 
which the equity securities and futures contracts are traded. Pursuant 
to Rule 8.900-E(b)(3), an Investment Company's investment adviser will 
upon request by the Exchange or FINRA, on behalf of the Exchange, make 
available to the Exchange or FINRA the daily portfolio holdings of each 
series of Managed Portfolio Shares.
    With respect to the proposed amendment to Commentary .01(a)(10) 
relating to cash and cash equivalents, the enumerated cash 
equivalents--short-term U.S. Treasury securities, government money 
market funds, and repurchase agreements--also are included as cash 
equivalents for purposes of the generic listing criteria applicable to 
Managed Fund Shares in Commentary .01(c) to Rule 8.600-E. Such 
instruments are short-term, highly liquid, and of high credit quality, 
making them less susceptible than other asset classes both to price 
manipulation and volatility.\18\
---------------------------------------------------------------------------

    \18\ See Securities Exchange Act Release No. 78397 (July 22, 
2016), 81 FR 49320 (July 27, 2016) (SR-NYSEArca-2015-110) (amending 
NYSE Arca Equities Rule 8.600 to adopt generic listing standards for 
Managed Fund Shares).
---------------------------------------------------------------------------

    The Exchange believes that the proposed standards would continue to 
ensure transparency surrounding the listing process for Managed 
Portfolio Shares. In addition, the Exchange believes that the proposed 
portfolio standards for listing and trading Managed Portfolio Shares 
are reasonably designed to promote a fair and orderly market for such 
Managed Portfolio Shares. These proposed standards would also work in 
conjunction with the existing initial and continued listing criteria 
related to surveillance procedures and trading guidelines.
    In support of this proposal, the Exchange represents that:
    (1) Managed Portfolio Shares listed generically pursuant to 
Commentary .01 will conform to the initial and continued listing 
criteria under Rule 8.900-E as it is proposed to be amended and 
proposed Commentary .01 thereto;
    (2) the Exchange's surveillance procedures are adequate to continue 
to properly monitor the trading of Managed Portfolio Shares in all 
trading sessions and to deter and detect violations of Exchange rules. 
Specifically, the Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products, which will include 
Managed Portfolio Shares, to monitor trading in the Managed Portfolio 
Shares;
    (3) the issuer of a series of Managed Portfolio Shares will be 
required to comply with Rule 10A-3 under the Act for the initial and 
continued listing of Managed Portfolio Shares, as provided under NYSE 
Arca Rule 5.3-E.
    Prior to listing, pursuant to Rule 8.900-E(b) an issuer would be 
required to represent to the Exchange that it will notify the Exchange 
of any failure by a series of Managed Portfolio Shares 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 a series of 
Managed Portfolio Shares is not in compliance with the applicable 
listing requirements, the Exchange will commence delisting procedures 
under NYSE Arca Rule 5.5-E(m).
    All Managed Portfolio Shares listed and/or traded pursuant to Rule 
8.900-E (including pursuant to unlisted trading privileges) are subject 
to all Exchange rules and procedures that currently govern the trading 
of equity securities on the Exchange.
    The Exchange notes that the proposed change is not otherwise 
intended to address any other issues and that the Exchange is not aware 
of any problems that Equity Trading Permit Holders or issuers would 
have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\19\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\20\ in particular, because 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, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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 because it would facilitate the listing and trading of 
additional Managed Portfolio Shares, which would enhance competition 
among market participants, to the benefit of investors and the 
marketplace. The Exchange believes that, in view of the Commission's 
approval of Exchange rules for Managed Portfolio Shares and 
commencement of Exchange trading of shares of series of Managed 
Portfolio Shares,\21\ it is appropriate to codify certain rules within 
Rule 8.900-E that would generally reduce the need for separate proposed 
rule changes. The Exchange believes that this would facilitate the 
listing and trading of additional types of Managed Portfolio Shares 
that have investment portfolios that are similar to investment 
portfolios for other exchange-traded funds that have been approved for 
listing and trading, thereby creating greater efficiencies in the 
listing process for the Exchange and the Commission.
---------------------------------------------------------------------------

    \21\ See notes 4-6, supra.
---------------------------------------------------------------------------

    The securities and financial instruments enumerated in proposed

[[Page 64602]]

Commentary .01 (a)(1)-(10) to Rule 8.900-E are consistent with, and 
limited to, the ``permissible investments'' for series of Managed 
Portfolio Shares previously approved by the Commission for Exchange 
listing and trading, as described in the Approval Orders.\22\ The 
Exchange notes that all exchange-traded equity securities held by a 
series of Managed Portfolio Shares would be listed and traded on a 
national securities exchange in the United States. Futures contracts 
held by a series of Managed Portfolio Shares would be traded on a U.S. 
futures exchange.
---------------------------------------------------------------------------

    \22\ See notes 5 and 17, supra.
---------------------------------------------------------------------------

    With respect to the proposed amendment to Commentary .01(a)(10) 
relating to cash and cash equivalents, the enumerated cash 
equivalents--short-term U.S. Treasury securities, government money 
market funds, and repurchase agreements--also are included as cash 
equivalents for purposes of the generic listing criteria applicable to 
Managed Fund Shares in Commentary .01(c) to Rule 8.600-E. Such 
instruments are short-term, highly liquid, and of high credit quality, 
making them less susceptible than other asset classes both to price 
manipulation and volatility.\23\
---------------------------------------------------------------------------

    \23\ See note 18, supra.
---------------------------------------------------------------------------

    Quotation and last sale information for Managed Portfolio Shares 
and exchange-traded equities will be available via the Consolidated 
Tape Association high-speed line or from the exchange on which such 
securities trade. Price information for futures contracts is available 
from the exchange on which such futures trade and from major market 
data vendors. Intraday pricing information for cash equivalents will be 
available through subscription services and/or pricing services.
    The proposed rule change is also designed to protect investors and 
the public interest because Managed Portfolio Shares listed and traded 
pursuant to Rule 8.601-E, including pursuant to the proposed portfolio 
standards, would continue to be subject to the full panoply of Exchange 
rules and procedures that currently govern the trading of equity 
securities on the Exchange.
    The Exchange believes that the proposed standards would continue to 
ensure transparency surrounding the listing process for Managed 
Portfolio Shares. In addition, the Exchange believes that the proposed 
portfolio standards for listing and trading Managed Portfolio Shares 
are reasonably designed to promote a fair and orderly market for such 
Managed Portfolio Shares. These proposed standards would also work in 
conjunction with the existing initial and continued listing criteria 
related to surveillance procedures and trading halts.
    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices because the 
Managed Portfolio Shares will be listed and traded on the Exchange 
pursuant to the initial and continued listing criteria in Rule 8.900-E. 
The Exchange has in place surveillance procedures that are adequate to 
properly monitor trading in Managed Portfolio Shares in all trading 
sessions and to deter and detect violations of Exchange rules and 
applicable federal securities laws. FINRA, on behalf of the Exchange, 
or the regulatory staff of the Exchange, will communicate as needed 
regarding trading in Managed Portfolio Shares, other exchange-traded 
equity securities, and futures contracts with other markets that are 
members of the ISG. In addition, the Exchange may obtain information 
regarding trading in Managed Portfolio Shares from other markets that 
are members of the ISG, including all U.S. securities exchanges and 
futures exchanges on which the equity securities and futures contracts 
are traded.
    The Exchange also believes that the proposed rule change would 
fulfill the intended objective of Rule 19b-4(e) under the Act by 
allowing Managed Portfolio Shares that satisfy the proposed listing 
standards to be listed and traded without separate Commission approval. 
However, as proposed, the Exchange would continue to file separate 
proposed rule changes before the listing and trading of Managed 
Portfolio Shares that do not satisfy the additional criteria described 
above.
    Prior to listing pursuant to proposed amended Rule 8.900-E and 
Commentary .01 thereto, an issuer would be required to represent to the 
Exchange that it will advise the Exchange of any failure by a series of 
Managed Portfolio Shares 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 a series of Managed Portfolio Shares is not in 
compliance with the applicable listing requirements, the Exchange will 
commence delisting procedures under NYSE Arca Rule 5.5-E(m).
    For these reasons, the Exchange believes that the proposal is 
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\24\ 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. Instead, the Exchange believes that the 
proposed rule change would facilitate the listing and trading of 
additional types of Managed Portfolio Shares and result in a 
significantly more efficient process surrounding the listing and 
trading of Managed Portfolio Shares, which will enhance competition 
among market participants, to the benefit of investors and the 
marketplace. The Exchange believes that this would reduce the time 
frame for bringing Managed Portfolio Shares to market, thereby reducing 
the burdens on issuers and other market participants and promoting 
competition. In turn, the Exchange believes that the proposed change 
would make the process for listing Managed Portfolio Shares more 
competitive by applying uniform listing standards with respect to 
Managed Portfolio Shares.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

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 longer period up to 90 days (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, as modified by Amendment No. 1, is consistent with the Act. 
Comments may be submitted by any of the following methods:

[[Page 64603]]

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-2020-84 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-2020-84. 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-2020-84 and should be submitted 
on or before November 3, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22630 Filed 10-9-20; 8:45 am]
BILLING CODE 8011-01-P