
[Federal Register Volume 79, Number 62 (Tuesday, April 1, 2014)]
[Notices]
[Pages 18378-18382]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-07232]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71813; File No. SR-NASDAQ-2014-009]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Amendment No. 1 and Designation of a Longer Period 
for Commission Action on Proposed Rule Change, as Modified by Amendment 
No. 1 Thereto, Relating to the Listing and Trading of the Shares of the 
First Trust Tactical High Yield ETF of First Trust Exchange-Traded Fund 
IV

March 26, 2014.
    On January 22, 2014, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to modify the description of certain investments 
for the First Trust Tactical High Yield ETF (formerly known as the 
First Trust High Yield Long/Short ETF) (``Fund''). The proposed rule 
change was published for comment in the Federal Register on February 
10, 2014.\3\ The Commission has received no comments on the proposal. 
On March 11, 2014, the Exchange filed Amendment No. 1 to the proposed 
rule change.\4\ The Commission is publishing this notice to solicit 
comments from interested persons on the proposed rule change, as 
modified by Amendment No. 1 thereto and to designate a longer period 
for Commission action on the proposed rule change, as modified by 
Amendment No. 1 thereto.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 71473 (Feb. 4, 
2014), 79 FR 7728 (``Notice'').
    \4\ In Amendment No. 1, which amended and replaced the proposed 
rule change in its entirety, the Exchange: (a) Clarified the types 
of Derivative Instruments (as defined herein) as proposed to be used 
by the Fund; (b) provided specific representations relating the use 
of these Derivative Instruments; (c) provided additional information 
as to the valuation of these Derivative Instruments for purposes of 
determining NAV (as defined herein); (d) provided additional 
information as to the availability of pricing for the Derivative 
Instruments to market participants, as well as information relating 
to the Derivative Instruments as part of the Disclosed Portfolio (as 
defined herein); and (e) provided additional details as to the 
Exchange's surveillance procedures with respect to the Derivative 
Instruments.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to list and trade the shares of the First Trust 
Tactical High Yield ETF (formerly known as the First Trust High Yield 
Long/Short ETF) of First Trust Exchange-Traded Fund IV (the ``Trust'') 
under Nasdaq Rule 5735 (``Managed Fund Shares''). The shares of the 
Fund are collectively referred to herein as the ``Shares.''
    The text of the proposed rule change is available at http://nasdaq.cchwallstreet.com/, at Nasdaq's principal office, 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, Nasdaq included statements 
concerning the purpose of, and basis for, the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item III below, and is set forth in Sections A, B, and C below.

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

1. Purpose
    The Exchange proposes to reflect changes to the means of achieving 
the investment objectives of the Fund.\5\ The Commission has approved 
the listing and trading of Shares under NASDAQ

[[Page 18379]]

Rule 5735, which governs the listing and trading of Managed Fund Shares 
on the Exchange.\6\ The Exchange believes the proposed rule change 
reflects no significant issues not previously addressed in the Prior 
Release. The Fund is an actively managed exchange-traded fund 
(``ETF''). The Shares are offered by the Trust, which was organized as 
a Massachusetts business trust on September 15, 2010. The Trust, which 
is registered with the Commission as an investment company, has filed a 
registration statement on Form N-1A (``Registration Statement'') 
relating to the Fund with the Commission.\7\ First Trust Advisors L.P. 
(``First Trust Advisors'') is the investment adviser (``Adviser'') to 
the Fund.
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    \5\ See Securities Exchange Act Release No. 68972 (February 22, 
2013), 78 FR 13721 (February 28, 2013) (SR-NASDAQ-2012-147) (order 
approving listing and trading of First Trust High Yield Long/Short 
ETF).
    \6\ The Commission approved NASDAQ Rule 5735 (formerly Nasdaq 
Rule 4420(o)) in Securities Exchange Act Release No. 57962 (June 13, 
2008), 73 FR 35175 (June 20, 2008) (SR-NASDAQ-2008-039). The 
Commission previously approved the listing and trading of the Shares 
of the Fund. See Securities Exchange Act Release No. 68972 (February 
22, 2013), 78 FR 13721 (February 28, 2013) (SR-NASDAQ-2012-147) 
(``Prior Order''). See also Securities Exchange Act Release No. 
68581 (January 4, 2013), 78 FR 2295 (January 10, 2013) (SR-NASDAQ-
2012-147) (``Prior Notice,'' and together with the Prior Order, the 
``Prior Release'').
    \7\ See Post-Effective Amendment No. 60 to Registration 
Statement on Form N-1A for the Trust, dated February 28, 2014 (File 
Nos. 333-174332 and 811-22559). The descriptions of the Shares and 
the Fund contained herein are based, in part, on information in the 
Registration Statement. In addition, the Commission has issued an 
order granting certain exemptive relief to the Trust under the 
Investment Company Act of 1940 (the ``1940 Act''). See Investment 
Company Act Release No. 30029 (April 10, 2012) (File No. 812-13795) 
(the ``Exemptive Order'').
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    The Exchange now proposes two modifications to the description of 
the measures the Adviser would utilize to implement the Fund's 
investment objectives.\8\ The Adviser seeks to make the modifications 
described below to certain representations in the Prior Release.
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    \8\ The Adviser represents that it has managed and will continue 
to manage the Fund in the manner described in the Prior Release, and 
will not implement the changes, as described herein, until the 
instant proposed rule change is operative.
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    The Adviser represents that there is no change to the Fund's 
investment objectives. Except for the changes proposed herein, all 
other facts presented and representations made in the Rule 19b-4 \9\ 
filings underlying the Prior Release remain unchanged. The Fund would 
continue to comply with all initial and continued listing requirements 
under NASDAQ Rule 5735.
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    \9\ 17 CFR 240.19b-4.
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The Fund's Investments in Bank Loans
    First, the Exchange proposes to modify a representation reflected 
in the Prior Release by increasing the percentage of the Fund's net 
assets that may be invested in bank loans. In accordance with the Prior 
Release, the Fund may invest up to 15% of its net assets in ``bank 
loans,'' which, as described in the Prior Release, may include loan 
interests that are not secured by any specific collateral of the 
borrower, loan interests that have a lower than first lien priority on 
collateral of the borrower, loans to foreign borrowers, loans in 
foreign currencies and other loans with characteristics that the 
Adviser believes qualify as bank loans. Going forward, the Exchange 
proposes that the Fund would be permitted to invest up to 40% of its 
net assets in bank loans.
    The proposed change is intended to provide greater flexibility to 
the Adviser as it tactically allocates proceeds across the high yield 
debt market and across the debt capital structure of select companies. 
Additionally, this proposed change would provide the Adviser with 
increased flexibility to manage the Fund's duration in periods of 
rising rates. The Adviser represents that the Fund would continue to 
invest 85% or more of the portfolio in securities that the Adviser 
deems to be sufficiently liquid at the time of investment. In addition, 
consistent with the Prior Release, the Adviser would continue to 
monitor its portfolio liquidity on an ongoing basis to determine 
whether, in light of current circumstances, an adequate level of 
liquidity is being maintained.
The Fund's Use of Derivative Instruments
    Second, the Exchange proposes to delete a representation reflected 
in the Prior Release, which states that consistent with the Exemptive 
Order, the Fund would not invest in options contracts, futures 
contracts or swap agreements (the ``Derivatives Representation'').
    On December 6, 2012, the staff of the Commission's Division of 
Investment Management (``Division'') issued a no-action letter (``No-
Action Letter'') relating to the use of derivatives by actively-managed 
ETFs.\10\ The No-Action Letter noted that, in March of 2010, the 
Commission announced in a press release that the staff was conducting a 
review to evaluate the use of derivatives by mutual funds, ETFs, and 
other investment companies and that, pending completion of this review, 
the staff would defer consideration of exemptive requests under the 
1940 Act relating to, among others, actively-managed ETFs that would 
make significant investments in derivatives.
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    \10\ See No-Action Letter dated December 6, 2012 from Elizabeth 
G. Osterman, Associate Director, Office of Exemptive Applications, 
Division of Investment Management.
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    The No-Action Letter stated that the Division staff will no longer 
defer consideration of exemptive requests under the 1940 Act relating 
to actively-managed ETFs that make use of derivatives provided that 
they include representations to address some of the concerns expressed 
in the Commission's March 2010 press release. These representations 
are: (i) That the ETF's board periodically will review and approve the 
ETF's use of derivatives and how the ETF's investment adviser assesses 
and manages risk with respect to the ETF's use of derivatives; and (ii) 
that the ETF's disclosure of its use of derivatives in its offering 
documents and periodic reports is consistent with relevant Commission 
and staff guidance (together, the ``No-Action Letter 
Representations''). The No-Action Letter stated that the Division would 
not recommend enforcement action to the Commission under sections 
2(a)(32), 5(a)(1), 17(a), 22(d), and 22(e) of the 1940 Act, or rule 
22c-1 under the 1940 Act if actively-managed ETFs operating in reliance 
on specified orders (which include the Trust's Exemptive Order \11\) 
invest in options contracts, futures contracts or swap agreements 
provided that they comply with the No-Action Letter 
Representations.\12\
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    \11\ See footnote 7.
    \12\ The Adviser acknowledges that for the Fund to rely on the 
No-Action Letter, the Fund must comply with the No-Action Letter 
Representations. In this regard, the Adviser represents that (i) it 
would request that the Board of Trustees of the Trust (the ``Trust 
Board'') periodically review and approve the Fund's use of 
derivatives and how the Adviser assesses and manages risk with 
respect to the Fund's use of derivatives and (ii) the Fund's 
disclosure of its use of derivatives in its offering documents and 
periodic reports would be consistent with relevant Commission and 
staff guidance.
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    In view of the No-Action Letter, the Exchange is proposing to 
delete the Derivatives Representation. The Exchange now proposes that, 
to pursue its investment objectives, the Fund be permitted to invest in 
U.S. exchange-traded options on futures contracts and U.S. exchange-
traded futures contracts (collectively, ``Derivative Instruments''). 
The use of Derivative Instruments may allow the Fund to seek to enhance 
return, to hedge some of the risks of its investments in securities, as 
a substitute for a position in an underlying asset, to reduce 
transaction costs, to maintain full market exposure (which means to 
adjust the characteristics of its investments to more closely

[[Page 18380]]

approximate those of the markets in which it invests), to manage cash 
flows, to preserve capital or to manage its foreign currency 
exposures.\13\
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    \13\ The Adviser currently expects that, initially, all of the 
futures contracts and options on futures contracts that the Fund 
buys and/or sells would be futures and options on futures, 
respectively, on U.S. Treasury obligations. In particular, the 
Adviser contemplates that the Fund would sell futures on U.S. 
Treasury obligations as an alternative to engaging in short sales to 
gain short exposure to the U.S. Treasury market.
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    Under normal market conditions, the Fund expects that, not 
including Derivative Instruments used solely for hedging purposes, no 
more than 30% of the value of the Fund's net assets would be invested 
in Derivative Instruments; however, there would be no limitation on the 
Fund's investments in Derivative Instruments to be used by the Fund 
solely for hedging purposes.\14\
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    \14\ The Fund would limit its direct investments in futures and 
options on futures to the extent necessary for the Adviser to claim 
the exclusion from regulation as a ``commodity pool operator'' with 
respect to the Fund under Rule 4.5 promulgated by the Commodity 
Futures Trading Commission (``CFTC''), as such rule may be amended 
from time to time. Under Rule 4.5 as currently in effect, the Fund 
would limit its trading activity in futures and options on futures 
(excluding activity for ``bona fide hedging purposes,'' as defined 
by the CFTC) such that it will meet one of the following tests: (i) 
Aggregate initial margin and premiums required to establish its 
futures and options on futures positions will not exceed 5% of the 
liquidation value of the Fund's portfolio, after taking into account 
unrealized profits and losses on such positions; or (ii) aggregate 
net notional value of its futures and options on futures positions 
will not exceed 100% of the liquidation value of the Fund's 
portfolio, after taking into account unrealized profits and losses 
on such positions.
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    To the extent applicable, the Fund would seek, where possible, to 
use counterparties whose financial status is such that the risk of 
default is reduced; however, the risk of losses resulting from default 
is still possible. As applicable, the Adviser would evaluate the 
creditworthiness of counterparties on an ongoing basis. In addition to 
utilizing information provided by credit agencies, the Adviser's 
analysis would be based on various methods of analysis and may consider 
the Adviser's past experience with the counterparty, its known 
disciplinary history and its share of market participation.
    The Prior Release stated that the Fund's investments would not be 
used to enhance leverage. In view of the Exchange's proposal to permit 
the Fund to use Derivative Instruments, the Fund's investments in 
Derivative Instruments could potentially be used to enhance leverage. 
However, the Fund's investments in Derivative Instruments would be 
consistent with the Fund's investment objectives and would not be used 
to seek to achieve a multiple or inverse multiple of an index.
    Investments in Derivative Instruments would be made in accordance 
with the 1940 Act and consistent with the Fund's investment objectives 
and policies. The Fund would comply with the regulatory requirements of 
the Commission to maintain assets as ``cover,'' maintain segregated 
accounts, and/or make margin payments when it takes positions in 
Derivative Instruments involving obligations to third parties (i.e., 
instruments other than purchase options). If the applicable guidelines 
prescribed under the 1940 Act so require, the Fund would earmark or set 
aside cash, U.S. government securities, high grade liquid debt 
securities and/or other liquid assets permitted by the Commission in a 
segregated custodial account in the amount prescribed.\15\
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    \15\ With respect to guidance under the 1940 Act, see 15 U.S.C. 
80a-18; Investment Company Act Release No. 10666 (April 18, 1979), 
44 FR 25128 (April 27, 1979); Dreyfus Strategic Investing, 
Commission No-Action Letter (June 22, 1987); Merrill Lynch Asset 
Management, L.P., Commission No-Action Letter (July 2, 1996).
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    The Fund would include appropriate risk disclosure in its offering 
documents, including leveraging risk. Leveraging risk is the risk that 
certain transactions of the Fund, including the Fund's use of 
Derivative Instruments, may give rise to leverage, causing the Fund to 
be more volatile than if it had not been leveraged.\16\
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    \16\ To mitigate leveraging risk, the Fund would segregate or 
``earmark'' liquid assets or otherwise cover the transactions that 
may give rise to such risk.
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    Based on the above, the Exchange seeks this modification regarding 
the Fund's use of Derivative Instruments. The Adviser believes that the 
ability to invest in U.S. exchange-traded options on futures contracts 
and U.S. exchange-traded futures contracts would provide it with 
additional flexibility to meet the Fund's investment objectives.
Valuation of Derivative Instruments for Purposes of Calculating Net 
Asset Value
    As indicated in the Prior Release, the net asset value (``NAV'') of 
the Fund's Shares generally is calculated once daily Monday through 
Friday as of the close of regular trading on the New York Stock 
Exchange, generally 4:00 p.m. Eastern time. The NAV per Share is 
calculated by dividing the Fund's net assets by the number of Shares 
outstanding.
    For purposes of calculating NAV, the Fund's investments are valued 
daily at market value or, in the absence of market value with respect 
to any such investment, at fair value, in each case in accordance with 
valuation procedures (which may be revised from time to time) adopted 
by the Trust Board (the ``Valuation Procedures'') and in accordance 
with the 1940 Act. All valuations are subject to review by the Trust 
Board or its delegate. A market valuation generally means a valuation 
(i) obtained from an exchange, an independent pricing service 
(``Pricing Service''), or a major market maker (or dealer) or (ii) 
based on a price quotation or other equivalent indication of value 
supplied by an exchange, a Pricing Service, or a major market maker (or 
dealer). The information summarized below is based on the Valuation 
Procedures as currently in effect; however, as noted above, the 
Valuation Procedures are amended from time to time and, therefore, such 
information is subject to change.
    The Derivative Instruments held by the Fund would consist of U.S. 
exchange-traded futures contracts and U.S. exchange-traded options on 
futures contracts and, as such, would typically be valued at the 
closing price in the market where such instruments are principally 
traded. Certain Derivative Instruments, however, may not be able to be 
priced by pre-established pricing methods. Such Derivative Instruments 
may be valued by the Trust Board or its delegate at fair value. The use 
of fair value pricing by the Fund would be governed by the Valuation 
Procedures and conducted in accordance with the provisions of the 1940 
Act. Valuing the Fund's Derivative Instruments using fair value pricing 
would result in using prices for those Derivative Instruments that may 
differ from official closing prices on the applicable exchange.
Availability of Information for Derivative Instruments
    As described in the Prior Release, on each business day, before 
commencement of trading in the Regular Market Session on the Exchange, 
the Trust discloses on its Web site the identities and quantities of 
the portfolio of securities and other assets (the ``Disclosed 
Portfolio'') held by the Fund that will form the basis for the Fund's 
calculation of NAV at the end of the business day.
    In addition, as described in the Prior Release, the ``Intraday 
Indicative Value'' (defined in NASDAQ Rule 5735(c)(3)), based on the 
current value for the components of the Disclosed Portfolio is updated 
and widely disseminated and broadly displayed at least every 15 seconds 
during the Regular Market session. For the purposes of determining the 
Intraday Indicative Value, the Fund's holdings in Derivative 
Instruments, which would be exchange-traded derivatives, would be 
valued

[[Page 18381]]

intraday using the relevant exchange data.
Disclosed Portfolio
    The Fund's disclosure of derivative positions in the Disclosed 
Portfolio would include information that market participants can use to 
value these positions intraday. This information would vary by line 
item, and, as applicable, may include tickers or other identifiers 
which would identify the listing exchange, strike price(s), underlying 
asset, and quantities or exposure. For example, a Treasury future would 
require only a ticker/identifier and quantity.
Surveillance
    The Exchange represents that trading in the Shares would continue 
to be subject to the existing trading surveillances, administered by 
both NASDAQ and also the Financial Industry Regulatory Authority 
(``FINRA'') on behalf of the Exchange, which are designed to detect 
violations of Exchange rules and applicable federal securities 
laws.\17\ The Exchange represents that these procedures are adequate to 
properly monitor Exchange trading of the Shares in all trading sessions 
and to deter and detect violations of Exchange rules and applicable 
federal securities laws.
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    \17\ FINRA surveils trading on the Exchange pursuant to a 
regulatory services agreement. The Exchange is responsible for 
FINRA's performance under this regulatory services agreement.
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    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations.
    FINRA, on behalf of the Exchange, will communicate as needed 
regarding trading in the Shares and the Derivative Instruments with 
other markets or other entities that are members of the Intermarket 
Surveillance Group (``ISG''), and FINRA may obtain trading information 
regarding trading in the Shares and the Derivative Instruments from 
such markets and other entities. In addition, the Exchange may obtain 
information regarding trading in the Shares and the Derivative 
Instruments from markets and other entities that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement.\18\ Moreover, FINRA, on behalf of the Exchange, is 
able to access, as needed, trade information for certain fixed income 
securities held by the Fund reported to FINRA's Trade Reporting and 
Compliance Engine (``TRACE'').
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    \18\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio may trade on markets that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement.
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    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \19\ in general and Section 6(b)(5) of the Act \20\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
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    \19\ 15 U.S.C. 78f.
    \20\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule changes are designed 
to prevent fraudulent and manipulative acts and practices in that the 
Shares would continue to be listed and traded on the Exchange pursuant 
to the initial and continued listing criteria in NASDAQ Rule 5735. The 
first proposed rule change would permit the Fund to invest up to 40% 
(rather than up to 15%) of its net assets in bank loans; however, the 
Adviser represents that the Fund would continue to invest 85% or more 
of its portfolio in securities that the Adviser deems to be 
sufficiently liquid at the time of investment and would continue to 
monitor portfolio liquidity on an ongoing basis.
    The second proposed rule change is consistent with the No-Action 
Letter and, provided that the Fund satisfy the No-Action Letter 
Representations, would permit the Fund to invest in U.S. exchange-
traded options on futures contracts and U.S. exchange-traded futures 
contracts. Under normal market conditions, the Fund expects that, not 
including Derivative Instruments used solely for hedging purposes, no 
more than 30% of the value of the Fund's net assets would be invested 
in Derivative Instruments; however, there would be no limitation on the 
Fund's investments in Derivative Instruments to be used by the Fund 
solely for hedging purposes. The Fund's investments in Derivative 
Instruments would be consistent with the Fund's investment objectives 
and would not be used to seek to achieve a multiple or inverse multiple 
of an index. Investments in Derivative Instruments would be made in 
accordance with the 1940 Act and consistent with the Fund's investment 
objectives and policies.
    The Derivative Instruments held by the Fund would consist of U.S. 
exchange-traded futures contracts and U.S. exchange-traded options on 
futures contracts and, as such, would typically be valued at the 
closing price in the market where such instruments are principally 
traded. Certain Derivative Instruments, however, may not be able to be 
priced by pre-established pricing methods. Such Derivative Instruments 
may be valued by the Trust Board or its delegate at fair value. The use 
of fair value pricing by the Fund would be governed by the Valuation 
Procedures and conducted in accordance with the provisions of the 1940 
Act.
    The proposed rule changes are designed to promote just and 
equitable principles of trade and to protect investors and the public 
interest in that the Adviser represents that there is no change to the 
Fund's investment objectives. The Adviser represents that the purpose 
of the proposed changes is to provide it with greater flexibility in 
meeting the Fund's investment objectives by permitting (1) the Fund to 
invest a greater portion of its net assets in bank loans and (2) the 
Fund to invest a portion of its net assets in Derivative Instruments. 
In addition, consistent with the Prior Release, NAV per Share would 
continue to be calculated daily and the NAV and Disclosed Portfolio 
would be made available to all market participants at the same time.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
an actively managed exchange-traded product that will enhance 
competition among market participants, to the benefit of investors and 
the marketplace. As noted above, the additional flexibility to be 
afforded to the Adviser under the proposed rule change is intended to 
enhance the Adviser's ability to meet the Fund's investment objectives. 
Further, as noted in the Prior Release and in the proposed rule change 
the Exchange has in place surveillance procedures relating to trading 
in the Shares and may obtain information via ISG from other exchanges 
that are members of ISG or with which the Exchange has entered into a 
comprehensive surveillance sharing agreement. In addition, as indicated 
in

[[Page 18382]]

the Prior Release and in the proposed rule change, investors would have 
ready access to information regarding the Fund's holdings (including 
Derivative Instruments), the Intraday Indicative Value, the Disclosed 
Portfolio, and quotation and last sale information for the Shares.
    For the above reasons, the Exchange believes the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act.

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 Exchange believes the 
proposed rule change will permit the Adviser additional flexibility in 
achieving the Fund's investment objectives, thereby offering investors 
additional investment options.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. 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 thereto, 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-NASDAQ-2014-009 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, Station Place, 100 F Street NE., Washington, 
DC 20549-9303.

All submissions should refer to File Number SR-NASDAQ-2014-009. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site http://www.sec.gov/rules/sro.shtml. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for Web site viewing and printing in 
the Commission's Public Reference 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 Nasdaq. All comments received 
will be posted without change; the Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2014-009 and should be submitted 
on or before April 22, 2014.

IV. Designation of a Longer Period for Commission Action

    Section 19(b)(2) of the Act \21\ provides that, within 45 days of 
the publication of notice of the filing of a proposed rule change, or 
within such longer period up to 90 days as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or as to which the self-regulatory organization 
consents, the Commission shall either approve the proposed rule change, 
disapprove the proposed rule change, or institute proceedings to 
determine whether the proposed rule change should be disapproved. The 
Commission is extending this 45-day time period.
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    \21\ 15 U.S.C. 78s(b)(2).
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    The proposed rule change, as modified by Amendment No. 1 thereto, 
would permit the Fund to invest up to 40% of its net assets in bank 
loans and up to 30% of its net assets in Derivative Instruments 
(excluding Derivative Instruments used solely for hedging purposes). 
The Commission finds that it is appropriate to designate a longer 
period within which to take action on the proposed rule change, as 
modified by Amendment No. 1 thereto, so that it has sufficient time to 
consider the proposed rule change and Amendment No. 1.
    Accordingly, the Commission, pursuant to Section 19(b)(2) of the 
Act,\22\ designates May 9, 2014, as the date by which the Commission 
should either approve or disapprove or institute proceedings to 
determine whether to disapprove the proposed rule change (File Number 
SR-NASDAQ-2014-009), as modified by Amendment No. 1 thereto.
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    \22\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
Kevin M. O'Neill,
Deputy Secretary.
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    \23\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2014-07232 Filed 3-31-14; 8:45 am]
BILLING CODE 8011-01-P


