
[Federal Register Volume 80, Number 86 (Tuesday, May 5, 2015)]
[Notices]
[Pages 25723-25727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-10412]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74842; File No. SR-NYSEArca-2014-89]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Amendments Nos. 1 and 2 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendments Nos. 1 and 2, To List 
and Trade Shares of Eight PIMCO Exchange-Traded Funds

April 29, 2015.

I. Introduction

    On August 15, 2014, NYSE Arca, Inc. (``NYSEArca'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to list and trade shares (``Shares'') of the 
following eight PIMCO exchange-traded funds, pursuant to NYSE Arca 
Equities Rule 8.600: PIMCO StocksPLUS[supreg] Absolute Return Exchange-
Traded Fund (``StocksPLUS AR Fund''), PIMCO Small Cap 
StocksPLUS[supreg] AR Strategy Exchange-Traded Fund (``Small Cap 
StocksPLUS AR Fund''), PIMCO Fundamental IndexPLUS[supreg] AR Exchange-
Traded Fund (``Fundamental IndexPLUS Fund''), PIMCO Small Company 
Fundamental IndexPLUS[supreg] AR Strategy Exchange-Traded Fund (``Small 
Company Fundamental IndexPLUS Fund''), PIMCO EM Fundamental 
IndexPLUS[supreg] AR Strategy Exchange-Traded Fund (``EM Fundamental 
IndexPLUS Fund''), PIMCO International Fundamental IndexPLUS[supreg] AR 
Strategy Exchange-Traded Fund (``International Fundamental IndexPLUS 
Fund''), PIMCO EM StocksPLUS[supreg] AR Strategy Exchange-Traded Fund 
(``EM StocksPLUS Fund''), and PIMCO International StocksPLUS[supreg] AR 
Strategy Exchange-Traded Fund (Unhedged) (``International StocksPLUS 
Fund'') (each a ``Fund'' and collectively the ``Funds''). The proposed 
rule change was published for comment in the Federal Register on 
September 3, 2014.\3\ The Commission received no comments on the 
proposal. On October 15, 2014, pursuant to Section 19(b)(2) of the 
Act,\4\ the Commission designated a longer period within which to 
either approve the proposed rule change, disapprove the proposed rule 
change, or institute

[[Page 25724]]

proceedings to determine whether to disapprove the proposed rule 
change.\5\ On December 1, 2014, the Commission instituted proceedings 
to determine whether to approve or disapprove the proposed rule 
change.\6\ On December 23, 2014, the Exchange filed Amendment No. 1 to 
the proposed rule change, which entirely replaced and superseded its 
proposal as originally filed.\7\ On March 2, 2015, the Commission 
designated a longer period for Commission action.\8\ On April 20, 2015, 
the Exchange filed Amendment No. 2 to the proposed rule change.\9\ The 
Commission is publishing this notice to solicit comments on Amendments 
Nos. 1 and 2 from interested persons, and is approving the proposed 
rule change, as modified by Amendments Nos. 1 and 2, on an accelerated 
basis.
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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. 72937 (Aug. 27, 
2014), 79 FR 52385).
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 73364, 79 FR 62988 
(Oct. 21, 2014). The Commission determined that it was appropriate 
to designate a longer period within which to take action on the 
proposed rule change so that it would have sufficient time to 
consider the proposed rule change. Accordingly, the Commission 
designated December 2, 2014 as the date by which it should approve, 
disapprove, or institute proceedings to determine whether to 
disapprove the proposed rule change.
    \6\ See Securities Exchange Act Release No. 73706, 79 FR 72223 
(Dec. 5, 2014) (``Order Instituting Proceedings''). In the Order 
Instituting Proceedings, the Commission noted, among other things 
that questions remained as to whether the Exchange's proposal is 
consistent with the requirement of Section (6)(b)(5) of the Act, 
which requires, among other things, that the rules of a national 
securities exchange be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and to protect investors and the public 
interest.
    \7\ In Amendment No. 1, the Exchange: (1) Clarified the 
definition of Fixed Income Instruments; (2) clarified that the types 
of securities and instruments specified as permitted investments may 
be economically tied to foreign countries; (3) clarified that the 
types of securities specified as permitted investments may be 
denominated in foreign currencies; (4) clarified that the Funds may 
invest in OTC foreign currency options contracts; (5) eliminated the 
ability of the Funds to enter into any series of purchase and sale 
contracts; (6) modified the proposal to exclude from the Funds' 
permitted investments variable and floating rate securities and 
floaters and inverse floaters that are not Fixed Income Instruments, 
as defined in the proposal; (7) modified the proposal to provide 
that a Fund may invest up to 20% of its total assets in (a) trade 
claims, (b) junior bank loans, (c) exchange-traded and OTC-traded 
structured products, and (d) privately placed and unregistered 
securities (except that no limit will apply to privately placed and 
unregistered securities that satisfy the listing requirements in the 
Exchange's Rule 5.2(j)(3), Commentary .02(a)(6)); and (8) clarified 
that each Fund may invest up to 20% of its total assets in senior 
bank loans.
    \8\ See Securities Exchange Act Release No. 74407, 80 FR 12228 
(Mar. 6, 2015). The Commission designated May 1, 2015 as the date by 
which it would either approve or disapprove the proposed rule 
change.
    \9\ In Amendment No. 2, the Exchange provided more information 
about the Funds' use of derivatives, specifying that each Fund may 
employ derivatives as part of a strategy intended to provide total 
notional exposure that exceeds the value of the Fund's net assets. 
Additionally, the Exchange noted that each Fund will segregate 
assets determined to be liquid by the Adviser in accordance with 
procedures established by the Trust's board and in accordance with 
the 1940 Act.
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II. Description of Proposed Rule Change

A. In General

    The Exchange proposes to list and trade the Shares under NYSE Arca 
Equities Rule 8.600, which governs the listing and trading of Managed 
Fund Shares. The Shares will be offered by PIMCO ETF Trust 
(``Trust''),\10\ a registered open-end management investment company. 
Pacific Investment Management Company LLC will be the investment 
adviser for the Funds (the ``Adviser'').\11\ Research Affiliates, LLC 
will be the sub-adviser with respect to the Fundamental IndexPLUS Fund, 
Small Company Fundamental IndexPLUS Fund, EM Fundamental IndexPLUS 
Fund, and the International Fundamental IndexPLUS Fund (the ``Sub-
Adviser''). PIMCO Investments LLC will serve as the distributor for the 
Funds. State Street Bank & Trust Co. will serve as the custodian and 
transfer agent for the Funds.
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    \10\ The Trust is registered under the 1940 Act. According to 
the Exchange, on January 27, 2014, the Trust filed with the 
Commission an amendment to its registration statement on Form N-1A 
(File Nos. 333-155395 and 811-22250) (``Registration Statements''). 
In addition, the Commission has issued an order granting certain 
exemptive relief to the Trust under the 1940 Act. See Investment 
Company Act Release No. 28993 (File No. 812-13571) (Nov. 10, 2009).
    \11\ The Exchange represents that the Adviser is not registered 
as a broker-dealer, but is affiliated with a broker-dealer. The 
Exchange further represents that the Adviser will implement a ``fire 
wall'' with respect to that broker-dealer affiliate regarding access 
to information concerning the composition of and changes to the 
Funds' portfolios. The Exchange further represents that the Sub-
Adviser is not registered as a broker-dealer or affiliated with a 
broker-dealer. In addition, according to the Exchange, in the event 
(a) the Adviser or Sub-Adviser becomes, or becomes newly affiliated 
with, a broker-dealer, or (b) any new adviser or sub-adviser is, or 
becomes affiliated with, a broker-dealer, the Adviser or any new 
adviser or Sub-Adviser or new sub-adviser, as applicable, will 
implement a fire wall with respect to its relevant personnel or its 
broker-dealer affiliate regarding access to information concerning 
the composition of and changes to the Funds' portfolios, and will be 
subject to procedures designed to prevent the use and dissemination 
of material, non-public information regarding the portfolios.
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B. The Exchange's Description of the Funds

    The Exchange has made the following representations and statements 
in describing the Funds and its investment strategies, including other 
portfolio holdings and investment restrictions.\12\
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    \12\ Additional information regarding the Trust, the Funds, and 
the Shares, including investment strategies, risks, net asset value 
(``NAV'') calculation, creation and redemption procedures, fees, 
portfolio holdings disclosure policies, distributions, and taxes, 
among other information, is included in Amendment No. 1 and the 
Registration Statements, as applicable. See Amendment No. 1, supra 
note 7 and Registration Statements, supra note 10.
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1. Principal Investments of Funds
    Each Fund will seek total return that exceeds the total return of 
its equity securities index benchmark, and under normal circumstances 
would seek to achieve its investment objective by investing in 
derivatives overlying its benchmark and a portfolio of Fixed Income 
Instruments (defined below), which would be managed using an absolute 
return approach. Typically, the Funds would use derivative instruments 
as a substitute for taking a position in the underlying asset \13\ or 
as part of a strategy designed to reduce exposure to other risks. The 
Funds may also use derivative instruments to enhance returns.
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    \13\ Derivatives may be purchased with a small fraction of the 
assets that would be needed to purchase the benchmark index 
securities directly, and the remainder of the Funds' assets may be 
invested in Fixed Income Instruments. Although the Funds generally 
will not invest directly in benchmark index component stocks, the 
Funds may invest in stocks and exchange-traded funds.
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    ``Fixed Income Instruments'' are: Securities issued or guaranteed 
by the U.S. Government, its agencies, or government-sponsored 
enterprises (``U.S. Government Securities''); corporate debt securities 
of U.S. and non-U.S. issuers, including convertible securities and 
corporate commercial paper; mortgage-backed and other asset-backed 
securities; inflation-indexed bonds issued both by governments and 
corporations; structured notes, including hybrid or ``indexed'' 
securities, and event-linked bonds; \14\ bank capital and trust 
preferred securities; loan participations and assignments; \15\ delayed 
funding loans and revolving credit facilities; bank certificates of 
deposit, fixed time deposits and bankers' acceptances; repurchase 
agreements on Fixed Income Instruments and reverse repurchase 
agreements on Fixed Income Instruments; debt securities issued by 
states or local governments and their agencies, authorities and other 
government-sponsored enterprises; obligations of non-U.S. governments 
or their subdivisions, agencies, and government-sponsored enterprises; 
and obligations of international agencies or supranational entities. 
Derivative instruments may include the following: Forwards; exchange-
traded and over-

[[Page 25725]]

the-counter (``OTC'') options contracts; exchange-traded futures 
contracts; exchange-traded and OTC swap agreements; exchange-traded and 
OTC options on futures contracts; and OTC options on swap 
agreements.\16\
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    \14\ Such investments will constitute only up to 20% of a Fund's 
total assets.
    \15\ Such investments will constitute only up to 20% of a Fund's 
total assets.
    \16\ All investment guidelines and limitations will apply to a 
Fund's aggregate investment exposure to a particular type of 
investment that is the subject of the guideline or limitation, 
whether that exposure is obtained through direct holdings or through 
derivative instruments.
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2. Other Investments of the Funds
    While each of the Funds, under normal circumstances,\17\ will 
invest in investments as described above, the Funds may also invest in 
other certain investments as described below.
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    \17\ The term ``under normal circumstances'' includes, but is 
not limited to, the absence of extreme volatility or trading halts 
in the equity markets or the financial markets generally; 
operational issues causing dissemination of inaccurate market 
information; or force majeure type events such as systems failure, 
natural or man-made disaster, act of God, armed conflict, act of 
terrorism, riot or labor disruption or any similar intervening 
circumstance.
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    The Funds may invest in securities and instruments that are 
economically tied to foreign (non-U.S.) countries. The Funds may invest 
in securities denominated in foreign (non-U.S.) currencies and in U.S. 
dollar-denominated securities of foreign (non-U.S.) issuers, subject to 
applicable limitations set forth in the proposed rule change. With 
respect to the Funds' absolute return investments, each Fund will 
normally limit its foreign currency exposure (from non-U.S. dollar-
denominated securities or currencies) to 20% of its total assets. With 
respect to the Funds' absolute return investments, each Fund may invest 
up to 25% of its total assets in securities and instruments that are 
economically tied to emerging market countries.
    Each of the Funds may also engage in foreign currency transactions 
on a spot (cash) basis or forward basis, and each of the Funds may 
invest in foreign currency futures contracts and options contracts. The 
Funds may enter into these contracts to hedge against foreign exchange 
risk, to increase exposure to a foreign currency, or to shift exposure 
to foreign currency fluctuations from one currency to another. Suitable 
hedging transactions may not be available in all circumstances and 
there can be no assurance that the Funds will engage in such 
transactions at any given time or from time to time.
    The Funds may purchase or sell securities on a when-issued, delayed 
delivery or forward commitment basis and may engage in short sales.
3. Additional Investment Limits of the Funds
    Each of the Funds may invest up to 10% of its total assets in 
preferred stocks, convertible securities, and other equity-related 
securities. Each Fund may invest up to 20% of its total assets in: (i) 
Trade claims; (ii) junior bank loans; (iii) exchange-traded and OTC-
traded structured products, including credit-linked securities and 
commodity-linked notes; and (iv) privately placed and unregistered 
securities. This 20% limitation, however, does not apply to privately 
placed and unregistered securities that comply with the generic fixed 
income initial listing requirements in NYSE Arca Equities Rule 
5.2(j)(3), Commentary .02(a)(6).\18\
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    \18\ NYSE Arca Equities Rule 5.2(j)(3), Commentary .02 provides 
for listing on the Exchange pursuant to Rule 19b-4(e) under the Act 
of a series of Units with an underlying index or portfolio of Fixed 
Income Securities meeting specified criteria. Units meeting these 
criteria can be listed and traded on the Exchange without Commission 
approval of each individual product pursuant to Section 19(b)(2) of 
the Act.
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    Each Fund may, with up to 20% of its total assets, enter into 
repurchase agreements on instruments other than Fixed Income 
Instruments. Each Fund may also, with up to 20% of its total assets, 
enter into reverse repurchase agreements on instruments other than 
Fixed Income Instruments, subject to the Fund's limitations on 
borrowings.
    Each Fund may invest up to 20% of its total assets in ``high yield 
securities'' or unrated securities determined by PIMCO to be of 
comparable quality (except that within this limitation, the Fund may 
invest in mortgage-related securities rated below B).
    Each Fund may invest up to 20% of its assets in mortgage-related 
and other asset-backed securities, although this 20% limitation does 
not apply to securities issued or guaranteed by Federal agencies or 
U.S. government sponsored instrumentalities. Each Fund may invest up to 
20% of its total assets in senior bank loans.

III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of Section 6 of the Act \19\ 
and the rules and regulations thereunder applicable to a national 
securities exchange.\20\ In particular, the Commission finds that the 
proposal is consistent with Section 6(b)(5) of the Act,\21\ which 
requires, among other things, that the Exchange's rules be designed 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. The Commission also finds that the proposal to list and trade 
the Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) 
of the Act,\22\ which sets forth Congress' finding that it is in the 
public interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers, and investors of information with respect to 
quotations for, and transactions in, securities.
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    \19\ 15 U.S.C. 78f.
    \20\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \21\ 15 U.S.C. 78f(b)(5).
    \22\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    Quotation and last-sale information for the Shares will be 
available via the Consolidated Tape Association (``CTA'') high-speed 
line. In addition, the Portfolio Indicative Value (``PIV'') as defined 
in NYSE Arca Equities Rule 8.600(c)(3), will be widely disseminated at 
least every fifteen seconds during the NYSE Arca Core Trading Session 
by one or more major market data vendors.\23\ On a daily basis, the 
Funds will disclose for each portfolio holding, as applicable to the 
type of holding, the following information on the Funds' Web site: 
Ticker symbol, CUSIP number or other identifier, if any; a description 
of the holding (including the type of holding, such as the type of 
swap); the identity of the security or other asset or instrument 
underlying the holding,\24\ if any; for options, the option strike 
price; quantity held (as measured by, for example, par value, notional 
value or number of shares, contracts or units); maturity date, if any; 
coupon rate, if any; effective date, if any; market value of the 
holding; and the percentage weighting of the holding in the portfolio. 
The Web site information will be publicly available at no charge.
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    \23\ The Exchange understands that several major market data 
vendors display or make widely available PIV taken from CTA or other 
data feeds.
    \24\ Derivatives that reference or allow delivery of more than 
one asset, such as U.S. Treasury futures, will name the underlying 
asset generically.
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    In addition, a basket composition file, which includes the security 
names and share quantities required to be delivered in exchange for 
each of the Funds' Shares, together with estimates and actual cash 
components, will be publicly disseminated daily prior to the opening of 
the Exchange via National Securities Clearing Corporation. The NAV of 
each of the Funds will be

[[Page 25726]]

determined as of the close of trading (normally 4:00 p.m., Eastern 
Time) on each day the Exchange is open for business.
    Information regarding market price and trading volume of the Shares 
will be continually available on a real-time basis throughout the day 
on brokers' computer screens and other electronic services. Information 
regarding the previous day's closing price and trading volume 
information for the Shares will be published daily in the financial 
section of newspapers. Intra-day and closing prices of equity 
securities traded on a national securities exchange, including common 
stocks, preferred stocks, securities convertible into stocks, closed-
end funds, exchange traded-funds, and other equity-related securities, 
as well as any options (including options on futures) and futures, will 
be available from the exchange on which those securities and 
instruments are traded. U.S. exchange-traded options quotation and last 
sale information is available via the Options Price Reporting 
Authority. Intra-day and closing price information for Fixed Income 
Instruments will be available from major market data vendors. In 
addition, price information for debt securities and other financial 
instruments, forwards, OTC options, swaps, money market instruments, 
trade claims, privately placed and unregistered securities, bank loans, 
and structured products held by each Fund will be available through 
major market data vendors. Price information regarding other investment 
company securities will be available from on-line information services 
and from the Web site for the applicable investment company security. 
The Trust's Web site will include a form of the prospectus for each of 
the Funds and additional data relating to NAV and other applicable 
quantitative information for the Funds.
    The Exchange will obtain a representation from the issuer of the 
Shares that the NAV per Share will be calculated daily and the NAV and 
the Disclosed Portfolio will be made available to all market 
participants at the same time. Trading in Shares will be halted if the 
circuit breaker parameters in NYSE Arca Equities Rule 7.12 have been 
reached or because of market conditions or for reasons that, in the 
view of the Exchange, make trading in the Shares inadvisable,\25\ and 
trading in the Shares will be subject to NYSE Arca Equities Rule 
8.600(d)(2)(D), which sets forth additional circumstances under which 
trading in the Shares may be halted. The Exchange states that it has a 
general policy prohibiting the distribution of material, non-public 
information by its employees. Consistent with NYSE Arca Equities Rule 
8.600(d)(2)(B)(ii), the Commission notes that the Reporting Authority 
must implement and maintain, or be subject to, procedures designed to 
prevent the use and dissemination of material, non-public information 
regarding the actual components of each Fund's portfolio. In addition, 
the Exchange states that the Adviser is affiliated with a broker-dealer 
and that the Adviser will implement a fire wall with respect to that 
broker-dealer affiliate regarding access to information concerning the 
composition of and changes to the Funds' portfolios.\26\ The Exchange 
represents that trading in the Shares will be subject to the existing 
trading surveillances, administered by 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.\27\ The Exchange further 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 of federal securities laws applicable to trading on 
the Exchange. Moreover, prior to the commencement of trading, the 
Exchange states that it will inform its Equity Trading Permit Holders 
in an Information Bulletin of the special characteristics and risks 
associated with trading the Shares.
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    \25\ These reasons may include: (1) The extent to which trading 
is not occurring in the securities or the financial instruments 
composing the Disclosed Portfolio of the Funds; or (2) the presence 
of other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market. With respect to trading 
halts, the Exchange may consider all relevant factors in exercising 
its discretion to halt or suspend trading in the Shares.
    \26\ See supra note 7. The Exchange states that an investment 
adviser to an open-end fund is required to be registered under the 
Investment Advisers Act of 1940 (``Advisers Act''). As a result, the 
Adviser and its related personnel are subject to the provisions of 
Rule 204A-1 under the Advisers Act relating to codes of ethics. This 
Rule requires investment advisers to adopt a code of ethics that 
reflects the fiduciary nature of the relationship to clients, as 
well as compliance with other applicable securities laws. 
Accordingly, procedures designed to prevent the communication and 
misuse of non-public information by an investment adviser must be 
consistent with Rule 204A-1 under the Advisers Act. In addition, 
Rule 206(4)-7 under the Advisers Act makes it unlawful for an 
investment adviser to provide investment advice to clients unless 
such investment adviser has (i) adopted and implemented written 
policies and procedures reasonably designed to prevent violation, by 
the investment adviser and its supervised persons, of the Advisers 
Act and the Commission rules adopted thereunder; (ii) implemented, 
at a minimum, an annual review regarding the adequacy of the 
policies and procedures established pursuant to subparagraph (i) 
above and the effectiveness of their implementation; and (iii) 
designated an individual (who is a supervised person) responsible 
for administering the policies and procedures adopted under 
subparagraph (i) above.
    \27\ The Exchange states that FINRA surveils trading on the 
Exchange pursuant to a regulatory services agreement and that the 
Exchange is responsible for FINRA's performance under this 
regulatory services agreement.
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    The Commission notes that the Shares and the Funds must comply with 
the initial and continued listing criteria in NYSE Arca Equities Rule 
8.600 for the Shares to be listed and traded on the Exchange. The 
Exchange represents that it deems the Shares to be equity securities, 
thus rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. In support of this 
proposal, the Exchange has also made the following representations:
    (1) The Shares will be subject to NYSE Arca Equities Rule 8.600, 
which sets forth the initial and continued listing criteria applicable 
to Managed Fund Shares.
    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.
    (3) FINRA, on behalf of the Exchange, will communicate as needed 
regarding trading in the Shares, exchange-traded options, equity 
securities, futures and options on futures with other markets and other 
entities that are members of ISG, and FINRA, on behalf of the Exchange, 
may obtain trading information regarding trading in the Shares, 
exchange-traded options, equity securities, futures and options on 
futures from these markets and other entities. In addition, the 
Exchange may obtain information regarding trading in the Shares, 
exchange-traded options, equity securities, futures and options on 
futures from ISG member markets or markets with which the Exchange has 
in place a comprehensive surveillance sharing agreement.
    (4) With respect to its exchange-traded equity securities 
investments, the Funds will invest not more than 10% of its net assets 
in equity securities that trade in markets that are neither members of 
the ISG nor parties to a comprehensive surveillance sharing agreement 
with the Exchange. To the extent that any of the Funds invest in 
futures contracts or exchange-traded options, not more than 10% of such 
investments will be in futures contracts or exchange-traded options 
whose principal trading market is neither a member of ISG nor a market 
with which the Exchange does not have a comprehensive surveillance 
sharing agreement.
    (5) Prior to the commencement of trading, the Exchange will inform 
its Equity Trading Permit Holders in an

[[Page 25727]]

Information Bulletin of the special characteristics and risks 
associated with trading the Shares. Specifically, the Information 
Bulletin will discuss the following: (a) The procedures for purchases 
and redemptions of Shares in creation units (and that Shares are not 
individually redeemable); (b) NYSE Arca Equities Rule 9.2(a), which 
imposes a duty of due diligence on its Equity Trading Permit Holders to 
learn the essential facts relating to every customer prior to trading 
the Shares; (c) the risks involved in trading the Shares during the 
Opening and Late Trading Sessions when an updated Portfolio Indicative 
Value will not be calculated or publicly disseminated; (d) how 
information regarding the Portfolio Indicative Value and Disclosed 
Portfolio is disseminated; (e) the requirement that Equity Trading 
Permit Holders deliver a prospectus to investors purchasing newly 
issued Shares prior to or concurrently with the confirmation of a 
transaction; and (f) trading information.
    (6) For initial and continued listing, the Funds will be in 
compliance with Rule 10A-3 under the Act,\28\ as provided by NYSE Arca 
Equities Rule 5.3.
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    \28\ 17 CFR 240.10A-3.
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    (7) Each of the Funds may hold up to an aggregate amount of 15% of 
its net assets in illiquid assets (calculated at the time of 
investment).
    (8) A minimum of 100,000 Shares for each of the Funds will be 
outstanding at the commencement of trading on the Exchange.

This approval order is based on all of the Exchange's representations, 
including those set forth above and in Amendments Nos. 1 and 2.
    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendments Nos. 1 and 2, is consistent with 
Section 6(b)(5) of the Act \29\ and the rules and regulations 
thereunder applicable to a national securities exchange.
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    \29\ 15 U.S.C. 78f(b)(5).
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IV. Solicitation of Comments on Amendments Nos. 1 and 2

    Interested persons are invited to submit written data, views, and 
arguments concerning whether Amendments Nos. 1 and 2 are consistent 
with the Act. Comments may be submitted by any of the following 
methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2014-89 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-2014-89. 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 the Exchange. 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-NYSEArca-2014-89 and should 
be submitted on or before May 26, 2015.

V. Accelerated Approval of Proposed Rule Change as Modified by 
Amendments Nos. 1 and 2

    The Commission finds good cause to approve the proposed rule 
change, as modified by Amendments Nos. 1 and 2, prior to the thirtieth 
day after the date of publication of notice of the amendments in the 
Federal Register. Amendment No. 1 modifies the proposed rule change by, 
among other things, limiting each Fund's investments trade claims, 
junior bank loans, exchange-traded and OTC-traded structured products, 
and certain privately placed and unregistered securities. Additionally, 
Amendment No. 2 modifies the propose rule change by expanding the 
description of the Funds' use of derivatives. The Commission believes 
that these changes should facilitate arbitrage opportunities, which may 
result in narrower spreads between the market prices of the Shares and 
the intraday values of the Funds' portfolios. Accordingly, the 
Commission finds good cause, pursuant to Section 19(b)(2) of the 
Act,\30\ to approve the proposed rule change, as modified by Amendments 
Nos. 1 and 2, on an accelerated basis.
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    \30\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\31\ that the proposed rule change as modified by Amendments Nos. 1 
and 2 (SR-NYSEArca-2014-89) be, and it hereby is, approved on an 
accelerated basis.
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    \31\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-10412 Filed 5-4-15; 8:45 am]
 BILLING CODE 8011-01-P


