[Federal Register Volume 85, Number 144 (Monday, July 27, 2020)]
[Notices]
[Pages 45268-45270]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16154]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89357; File No. SR-NYSE-2020-57]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Rule 1.1 To Include Active Proxy Portfolio Shares, Tracking Fund
Shares, Proxy Portfolio Shares, and Index Fund Shares
July 21, 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 July 10, 2020, New York Stock Exchange LLC (``NYSE'' 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. The
[[Page 45269]]
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 amend Rule 1.1 to include Active Proxy
Portfolio Shares, Tracking Fund Shares, Proxy Portfolio Shares, and
Index Fund Shares in the definition of ``UTP Exchange Traded Product.''
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 proposes to amend Rule 1.1(l), which sets forth the
meanings of ``Exchange Traded Product'' and ``UTP Exchange Traded
Product'' as those terms are used in Exchange rules.
Specifically, the Exchange proposes to amend the definition of
``UTP Exchange Traded Product'' to include Active Proxy Portfolio
Shares listed pursuant to NYSE Arca, Inc. (``NYSE Arca'') Rule 8.601-E,
Tracking Fund Shares listed pursuant to Cboe BZX Exchange, Inc.
(``BZX'') Rule 14.11(m), and Proxy Portfolio Shares which may in the
future be listed pursuant to Nasdaq Stock Market LLC (``Nasdaq'') Rule
5750 \4\ as additional types of Exchange Traded Product (``ETPs'') that
may trade on the Exchange pursuant to unlisted trading privileges
(``UTP'').
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\4\ Active Proxy Portfolio Shares, Tracking Fund Shares, and
Proxy Portfolio Shares are substantially similar products with
different names and generally refer to shares of actively managed
exchange-traded funds for which the portfolio is disclosed in
accordance with standard mutual fund disclosure rules. See
Securities Exchange Act Release No. 89185 (June 29, 2020) (order
approving NYSE Arca Rule 8.601-E); Securities Exchange Act Release
No. 88887 (May 15, 2020), 85 FR 30990 (May 21, 2020) (order
approving BZX Rule 14.11(m)); Securities Exchange Act Release No.
89110 (June 22, 2020), 85 FR 38461 (June 26, 2020) (Notice of Filing
and Immediate Effectiveness of Proposed Rule Change to Adopt Nasdaq
Rule 5750 to List and Trade Proxy Portfolio Shares). On June 4,
2020, BZX commenced trading its first securities listed under BZX
Rule 14.11(m) (Fidelity Blue Chip Growth ETF (FBCG), Fidelity Blue
Chip Value ETF (FBCV), and Fidelity New Millennium ETF (FMIL)).
Although Nasdaq has rules pertaining to Proxy Portfolio Shares, it
does not yet list any such product.
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To effect this change, the Exchange proposes to add a bullet point
listing ``Active Proxy Portfolio Shares listed pursuant to NYSE Arca,
Inc. Rule 8.601-E, Tracking Fund Shares listed pursuant to Cboe BZX
Exchange, Inc. Rule 14.11(m), and Proxy Portfolio Shares listed
pursuant to Nasdaq Stock Market LLC Rule 5750'' in Rule 1.1(l) to
include them in the enumerated list of ETPs that may trade on the
Exchange on a UTP basis. The Exchange also proposes non-substantive
changes to accommodate the addition of this bullet point as the final
item in the bulleted list in Rule 1.1(l).
The Exchange also proposes to amend Rule 1.1(l) to include Index
Fund Shares listed pursuant to BZX Rule 14.11(c) or Nasdaq Rule 5705(b)
as a type of ETP that may trade pursuant to UTP. To effect this change,
the Exchange proposes to amend the existing bullet point listing
``Investment Company Units'' to include Index Fund Shares as the
alternative name for the same product. Accordingly, the Exchange
proposes to revise the bullet point to list ``Investment Company Units
listed pursuant to NYSE Arca, Inc. Rule 5.2-E(j)(3) and Index Fund
Shares listed pursuant to Cboe BZX Exchange, Inc. Rule 14.11(c) or
Nasdaq Stock Exchange LLC Rule 5705(b).''
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\5\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\6\ in particular, because it
is designed to remove impediments to and perfect the mechanism of a
free and open market, to promote just and equitable principles of
trade, and, in general, to protect investors and the public interest.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4) & (5).
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The proposed rule change is designed to remove impediments to and
perfect the mechanism of a free and open market, promote just and
equitable principles of trade, and, in general, to protect investors
and the public interest because it modifies Rule 1.1(l) to state the
complete list of ETPs that may trade on a UTP basis on the Exchange,
providing specificity, clarity, and transparency in the Exchange's
rules. Moreover, the proposed rule change will facilitate the trading
of additional types of ETPs on the Exchange pursuant to UTP, thereby
enhancing competition among market participants for the benefit of
investors and the marketplace.
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 change would
provide the public and investors with up-to-date information about the
types of ETPs that can trade on the Exchange on a UTP basis and would
promote competition by adding additional types of ETPs that may trade
on the Exchange pursuant to UTP.
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 proposed rule change does not: (i) Significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; or (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate if consistent with the protection of
investors and the public interest, it has become effective pursuant to
Section 19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 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 has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \9\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \10\
[[Page 45270]]
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 asked the Commission to waive the 30-day operative
delay so that the proposal may become operative upon filing. The
Exchange believes that a waiver of the operative delay is consistent
with the protection of investors and the public interest because it
would allow for the immediate trading, pursuant to UTP, of Active Proxy
Portfolio Shares, Tracking Fund Shares, and Proxy Portfolio Shares on
the Exchange and therefore would provide investors with an additional
trading venue option. In addition, the proposal would specifically name
products substantially similar to Investment Company Units known as
Index Fund Shares on other exchanges in the list of product that may
trade on the Exchange pursuant to unlisted trading privileges. The
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Therefore, the Commission hereby waives the operative delay and
designates the proposed rule change operative upon filing.\11\
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\9\ 17 CFR 240.19b-4(f)(6).
\10\ 17 CFR 240.19b-4(f)(6)(iii).
\11\ For purposes only of waiving the 30-day operative delay,
the Commission also 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.
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-NYSE-2020-57 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-NYSE-2020-57. 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-NYSE-2020-57 and should be submitted on
or before August 17, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-16154 Filed 7-24-20; 8:45 am]
BILLING CODE 8011-01-P