
[Federal Register Volume 80, Number 189 (Wednesday, September 30, 2015)]
[Notices]
[Pages 58799-58803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-24714]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75975; File No. SR-NASDAQ-2015-089]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Granting Approval of Proposed Rule Change Relating to the Listing and 
Trading of the 1-3 Month Enhanced Short Duration ETF, a Series of Plus 
Trust

September 24, 2015.

I. Introduction

    On July 29, 2015, The NASDAQ Stock Market LLC (``Exchange'' or 
``NASDAQ''), 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 list and trade shares (``Shares'') of the 1-3 
Month Enhanced Short Duration ETF (``Fund''), a series of Plus Trust 
(``Trust''). The proposed rule change was published for comment in the 
Federal Register on August 19, 2015.\3\ The Commission received no 
comments on the proposed rule change. This order grants approval of the 
proposed rule change.
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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. 75694 (August 13, 
2015), 80 FR 50358 (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade Shares of the Fund, an 
actively managed exchange-traded fund (``ETF''), under NASDAQ Rule 
5735, which governs the listing and trading of ``Managed Fund Shares'' 
on the Exchange. The Shares will be offered by the Trust, which was 
established as a Delaware statutory trust on December 10, 2014.\4\ The 
Exchange states that the Trust is registered with the Commission as an 
investment company and has filed a registration statement on Form N-1A 
(``Registration Statement'') with the Commission.\5\ New York Alaska 
ETF Management, LLC will be the investment adviser (``Adviser'') to the 
Fund.\6\ Foreside Fund Services, LLC will be the principal underwriter 
and distributor of the Fund's Shares. The Bank of New York Mellon 
(``BNY Mellon'') will act as the administrator, accounting agent, 
custodian, and transfer agent to the Fund. The Exchange has made the 
following representations and statements in describing the Fund and its 
investment strategy, including the Fund's portfolio holdings and 
investment restrictions.\7\
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    \4\ The Exchange represents that the Trust has obtained certain 
exemptive relief under the Investment Company Act of 1940 (``1940 
Act''). See Investment Company Act Release No. 31709 (July 8, 2015). 
The Exchange further represents that the Trust's application for 
exemptive relief under the 1940 Act states that the Fund will comply 
with the federal securities laws in accepting securities for 
deposits and satisfying redemptions with redemption securities, 
including that the securities accepted for deposits and the 
securities used to satisfy redemption requests are sold in 
transactions that would be exempt from registration under the 
Securities Act of 1933.
    \5\ See Registration Statement on Form N-1A for the Trust filed 
on January 23, 2015 (File Nos. 333-201658 and 811-23019).
    \6\ The Exchange represents that the Adviser is not registered 
as a broker-dealer and is not affiliated with a broker-dealer. In 
the event (a) the Adviser becomes newly affiliated with a broker-
dealer or registers as a broker-dealer, or (b) any new adviser or 
sub-adviser is a registered broker-dealer or becomes affiliated with 
a broker-dealer, it will implement a fire wall with respect to its 
relevant personnel and/or such broker-dealer affiliate, if 
applicable, regarding access to information concerning the 
composition and/or changes to the portfolio and will be subject to 
procedures designed to prevent the use and dissemination of material 
non-public information regarding such portfolio.
    \7\ The Commission notes that additional information regarding 
the Fund, the Trust, and the Shares, including investment 
strategies, risks, creation and redemption procedures, fees, 
portfolio holdings disclosure policies, calculation of net asset 
value (``NAV''), distributions, and taxes, among other things, can 
be found in the Notice and the Registration Statement, as 
applicable. See Notice and Registration Statement, supra notes 3 and 
5, respectively.
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A. Exchange's Description of the Fund's Principal Investments

    The Fund's investment objective is to seek current income 
consistent with preservation of capital and daily liquidity. Under 
normal market conditions,\8\ the Fund will invest substantially all of 
its net assets (exclusive of collateral with respect to securities 
lending, repurchase, and reverse repurchase agreement transactions) in 
U.S. Treasury securities, which include bills, notes, and bonds issued 
by the U.S. Treasury, that have remaining maturities of greater than or 
equal to one month and less than three months.\9\ U.S. Treasury bills, 
notes, and bonds are direct obligations of the U.S. Treasury. U.S. 
Treasury bills have initial maturities of one year or less, U.S. 
Treasury notes have initial maturities from two to 10 years, and U.S. 
Treasury bonds have initial maturities of more than 10 years. While 
U.S. Treasury securities are supported by the full faith and credit of 
the U.S. government, such securities are nonetheless subject to credit 
risk, albeit minimal (i.e., the risk that the U.S. government may be, 
or may be perceived to be, unable to make interest and principal 
payments).
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    \8\ The term ``under normal market conditions'' includes, but is 
not limited to, the absence of extreme volatility or trading halts 
in the fixed income 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. In response to adverse market, economic, political, or 
other conditions, the Fund reserves the right to invest in cash, 
without limitation, as determined by the Adviser. In the event the 
Fund engages in these temporary defensive strategies that are 
inconsistent with its investment strategies, the Fund's ability to 
achieve its investment objectives may be limited.
    \9\ The U.S. Treasury securities in which the Fund may invest 
will include variable rate U.S. Treasury securities, whose rates are 
adjusted daily (or at such other increment as may later be 
determined by the Department of the U.S. Treasury) to correspond 
with the rate paid on one-month or three-month U.S. Treasury 
securities, as applicable.
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    In order to enhance income, the Fund intends to enter into 
securities lending, repurchase agreement, and/or reverse

[[Page 58800]]

repurchase agreement \10\ transactions in an amount equal to not more 
than 33% of the Fund's total assets, consistent with the requirements 
of the 1940 Act.\11\ The Fund may lend its portfolio of securities to 
broker/dealers, institutional investors, banks, and insurance and/or 
reinsurance companies located in the member countries of The 
Organization for Economic Co-operation and Development (``OECD'').\12\
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    \10\ A ``repurchase agreement'' (also known as a repo) is the 
purchase of securities with the agreement to sell the securities 
back at a higher price at a specific future date. A ``reverse 
repurchase agreement'' (also known as a reverse repo) is the sale of 
securities with the agreement to buy them back at a higher price at 
a specific future date. For the party that is selling the security 
and agreeing to repurchase it in the future, it is a reverse repo; 
for the party on the other end of the transaction that is buying the 
security and agreeing to sell in the future, it is a repurchase 
agreement.
    \11\ The Exchange represents that securities lending by funds 
may implicate certain sections of the 1940 Act. For example, the 
transfer of a fund's portfolio securities to a borrower implicates 
section 17(f) of the 1940 Act, which generally requires that a 
fund's portfolio securities be held by an eligible custodian. In 
addition, a fund's obligation to return collateral at the 
termination of a loan implicates Section 18 of the 1940 Act, which 
governs the extent to which a fund may incur indebtedness.
    \12\ A list of OECD members is available at: http://www.oecd.org/about/membersandpartners/list-oecd-member-countries.htm.
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    Securities lending allows the Fund to retain ownership of the 
securities loaned and, at the same time, to earn additional income. 
Loans will be made only to parties who have been reviewed and deemed 
satisfactory by the Adviser, pursuant to guidelines adopted by the 
Trust's Board of Trustees, and which provide collateral under master 
agreements issued by SIFMA (The Securities Industry and Financial 
Markets Association) or ISLA (International Securities Lending 
Association), which is either (i) 102% cash, or (ii) 102%-115% U.S. 
Treasury securities of the market value of the loaned securities. The 
collateral is marked-to-market daily. When the Fund lends portfolio 
securities, its investment performance will continue to reflect changes 
in the value of the securities loaned, and the Fund will also receive a 
fee or interest on the collateral.
    The Fund also may enter into repurchase and reverse repurchase 
agreements with broker/dealers, institutional investors, banks, and 
insurance and/or reinsurance companies located in the member countries 
of the OECD. Repurchase transactions involve the purchase of securities 
with an agreement to resell the securities at an agreed-upon price, 
date, and interest payment. Reverse repurchase transactions involve the 
sale of securities with an agreement to repurchase the securities at an 
agreed-upon price, date, and interest payment, and have the 
characteristics of borrowing. With respect to repurchase agreements and 
reverse repurchase agreements, proceeds (collateral) received under 
master agreements issued by SIFMA or ICMA (International Capital 
Markets Association) must be equal to or greater than the market value 
of the sold securities and (i) cash, (ii) U.S Treasury securities, or 
(iii) debt securities secured by U.S. Treasury securities (such debt 
securities typically will be issued pursuant to Rule 144A and will be 
secured by a pledge to the note holder of U.S. Treasury securities with 
a market value equal to or greater than the face value of the debt 
security). All collateral will have a maturity of three months or less. 
The collateral is marked-to-market daily and valued in accordance with 
the Fund's valuation procedures. The price paid to repurchase the 
security reflects interest accrued during the term of the agreement.

B. Exchange's Description of the Fund's Other Investments

    In order to seek its investment objective, the Fund will not employ 
other strategies outside of the above-described ``Principal 
Investments.'' The Exchange represents that the Fund will not use 
derivative instruments, including options, swaps, forwards, and futures 
contracts, both listed and over-the-counter. The Fund will not invest 
in leveraged, inverse, or leveraged inverse exchange-traded products 
and will not be operated as a ``leveraged ETF'' designed to seek a 
multiple of the performance of an underlying reference asset.
    In addition, according to the Exchange, the Fund's securities 
lending and reverse repurchase agreement transactions will be made in 
accordance with the 1940 Act and consistent with the Fund's investment 
objectives and policies, and will not be used to multiply the risks and 
returns of income producing assets. The Fund will comply with the 
regulatory requirements of the Commission to maintain assets as 
``cover,'' and maintain segregated accounts as needed. With respect to 
the reverse repurchase agreements entered into by the Fund that involve 
obligations to make future payments to third parties, the Fund, in 
accordance with applicable federal securities laws, rules, and 
interpretations thereof, will ``set aside'' liquid assets, or engage in 
other measures to ``cover'' open positions with respect to such 
transactions. These procedures will be adopted consistent with section 
18 of the 1940 Act and related Commission guidance. In addition, the 
Fund will 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 reverse 
repurchase agreements, may give rise to leverage, causing the Fund's 
Shares to be more volatile than if they had not been leveraged.

C. Exchange's Description of the Fund's Investment Restrictions

    Under normal market conditions, the Fund will invest substantially 
all, but not less than, 80% of its net assets (exclusive of collateral 
with respect to securities lending, repurchase, and reverse repurchase 
agreement transactions), plus any borrowings for investment purposes, 
in U.S. Treasury securities, which include bills, notes, and bonds 
issued by the U.S. Treasury, that have remaining maturities of greater 
than or equal to one month and less than three months.
    The Fund may hold up to an aggregate amount of 15% of its net 
assets in illiquid securities, including repurchase and reverse 
repurchase agreements maturing in more than seven days, and other 
illiquid assets (calculated at the time of investment). The Fund will 
monitor its portfolio liquidity on an ongoing basis to determine 
whether, in light of current circumstances, an adequate level of 
liquidity is being maintained, and will consider taking appropriate 
steps in order to maintain adequate liquidity if, through a change in 
values, net assets, or other circumstances, more than 15% of the Fund's 
net assets are held in illiquid securities or other illiquid assets. 
Illiquid securities and other illiquid assets include securities 
subject to contractual or other restrictions on resale and other 
instruments that lack readily available markets, as determined in 
accordance with Commission staff guidance.
    The Fund intends to qualify for, and to elect to be treated as, a 
regulated investment company under subchapter M of the Internal Revenue 
Code of 1986.

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 \13\ 
and the rules and regulations thereunder applicable to a national 
securities exchange.\14\ In

[[Page 58801]]

particular, the Commission finds that the proposal is consistent with 
section 6(b)(5) of the Act,\15\ 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.
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    \13\ 15 U.S.C. 78f.
    \14\ 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).
    \15\ 15 U.S.C. 78f(b)(5).
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    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,\16\ which sets forth the finding of Congress 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. Quotation and last-
sale information for the Shares will be available via NASDAQ 
proprietary quote and trade services, as well in accordance with the 
Unlisted Trading Privileges and the Consolidated Tape Association 
plans, as applicable. In addition, the Intraday Indicative Value,\17\ 
as defined in Nasdaq Rule 5735(c)(3), will be available on the NASDAQ 
OMX Information LLC proprietary index data service and will be widely 
disseminated by one or more major market data vendors at least every 15 
seconds during the Regular Market Session.\18\ On each business day, 
before commencement of trading in Shares in the Regular Market Session 
\19\ on the Exchange, the Fund will disclose on its Web site the 
identities and quantities of the portfolio of securities and other 
assets (``Disclosed Portfolio,'' as defined in Nasdaq Rule 5735(c)(2)) 
held by the Fund that will form the basis for the Fund's calculation of 
NAV at the end of the business day.\20\ On a daily basis, the Disclosed 
Portfolio will include, as applicable, each portfolio security and 
other financial instruments of the Fund with the following information 
on the Fund's Web site: Ticker symbol, CUSIP number or other 
identifier, if any; a description of the holding (including the type of 
holding); the identity of the security or other asset or instrument 
underlying the holding, if any; quantity held (as measured by, for 
example, par value; maturity date, if any; coupon rate, if any; 
effective date, if any; market value of the holding; and the percentage 
weighting of the holdings in the Fund's portfolio). The Web site 
information will be publicly available at no charge. In addition, the 
Fund's disclosure of securities lending transactions and repurchase and 
reverse repurchase agreements will include information regarding the 
income being accrued on such instruments/transactions expressed in a 
percentage relative to the NAV published by the Fund.
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    \16\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \17\ The Intraday Indicative Value will be based upon the 
current value for the components of the Disclosed Portfolio, as 
defined below.
    \18\ Currently, the NASDAQ OMX Global Index Data Service 
(``GIDS'') is the NASDAQ OMX global index data feed service, 
offering real-time updates, daily summary messages, and access to 
widely followed indexes and ETFs. GIDS provides investment 
professionals with the daily and historical information needed to 
track or trade NASDAQ OMX indexes, listed ETFs or third-party 
partner indexes and ETFs.
    \19\ See Nasdaq Rule 4120(b)(4) (describing the three trading 
sessions on the Exchange: (1) Pre-Market Session from 4 a.m. to 9:30 
a.m. Eastern Time (``E.T.''); (2) Regular Market Session from 9:30 
a.m. to 4 p.m. or 4:15 p.m. E.T.; and (3) Post-Market Session from 4 
p.m. or 4:15 p.m. to 8 p.m. E.T.).
    \20\ Under accounting procedures to be followed by the Fund, 
trades made on the prior business day (``T'') will be booked and 
reflected in NAV on the current business day (``T+1''). 
Notwithstanding the foregoing, portfolio trades that are executed 
prior to the opening of the Exchange on any business day may be 
booked and reflected in NAV on such business day. Accordingly, the 
Fund will be able to disclose at the beginning of the business day 
the portfolio that will form the basis for the NAV calculation at 
the end of the business day.
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    A basket composition file, which will include the security names 
and quantities of securities and other assets required to be delivered 
in exchange for Shares, if applicable, together with estimates and 
actual cash components, will be publicly disseminated prior to the 
opening of the Exchange via the National Securities Clearing 
Corporation. The basket will represent one ``Creation Unit'' of the 
Fund. The NAV will be determined on each business day as of the close 
of trading (ordinarily 4:00 p.m. E.T.) on the New York Stock Exchange, 
now under the umbrella of the Intercontinental Exchange.\21\ 
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. 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, executable price quotations on U.S. Treasury securities are 
available through subscription services such as Bloomberg, TradeWeb, E-
Speed, Tullett Prebon, the U.S. Treasury Department, and/or Interactive 
Brokers, which can be accessed by Authorized Participants \22\ and 
other investors. In addition, the Fund's Web site will include a form 
of the prospectus for the Fund and additional data relating to NAV and 
other applicable quantitative information.
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    \21\ NAV will be calculated for the Fund by taking the market 
price of the Fund's total assets, including interest or dividends 
accrued but not yet collected, less all liabilities, and dividing 
this amount by the total number of Shares outstanding. According to 
the Exchange, with respect to U.S. Treasury securities, which 
include bills, notes, and bonds issued by the U.S. Treasury, the 
Fund will value such securities at the price listed at the following 
sources: Bloomberg, TradeWeb, E-Speed, Tullett Prebon, the U.S. 
Treasury Department, and/or Interactive Brokers, with the hierarchy 
of such sources generally in the order listed. Securities lending 
transactions, repurchase agreements, and reverse repurchase 
agreements transactions will be valued at the combined value of (i) 
the value of the underlying Fund asset utilized in the transaction, 
and (ii) the relative realized profit value, added daily.
    \22\ To be eligible to place orders to create a Creation Unit of 
the Fund, an entity must be a Depository Trust Company (``DTC'') 
participant, such as a broker-dealer, bank, trust company, clearing 
corporation, or certain other organization (``DTC Participant''). 
DTC acts as a securities depositary for the Shares. The DTC 
Participant must have executed an agreement with respect to 
creations and redemptions of Creation Units (``Participant 
Agreement''). A DTC Participant that has executed a Participant 
Agreement is referred to as an ``Authorized Participant.''
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    The Commission further believes that the proposal to list and trade 
the Shares is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Shares appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. The Exchange states that the Adviser is not registered as a 
broker-dealer and is not affiliated with a broker-dealer.\23\ The 
Exchange will obtain a representation from the issuer of the Shares 
that the NAV per Share will be calculated daily and that the NAV and 
the Disclosed

[[Page 58802]]

Portfolio will be made available to all market participants at the same 
time. Trading in the Shares will be halted under the conditions 
specified in Nasdaq Rules 4120 and 4121, including the trading pause 
provisions under Nasdaq Rules 4120(a)(11) and (12). Trading in the 
Shares may be halted because of market conditions or for reasons that, 
in the view of the Exchange, make trading in the Shares 
inadvisable,\24\ and trading in the Shares will be subject to Nasdaq 
Rule 5735(d)(2)(D), which sets forth 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. Further, the Commission notes that the Reporting 
Authority \25\ that provides the Disclosed Portfolio 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 the portfolio.\26\ The Exchange represents that trading 
in the Shares will be subject to the existing trading surveillances, 
administered by both Nasdaq and also 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 applicable federal securities laws. 
Moreover, prior to the commencement of trading, the Exchange states 
that it will inform its members in an Information Circular of the 
special characteristics and risks associated with trading the Shares.
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    \23\ See supra note 6. The Exchange further represents 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, which requires 
investment advisers to adopt a code of ethics that reflects the 
fiduciary nature of their relationship with their clients as well as 
compliance with other applicable securities laws. Accordingly, 
investment advisers must have procedures designed to prevent the 
communication and misuse of non-public information, 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.
    \24\ These reasons may include: (1) The extent to which trading 
is not occurring in the securities and/or the other assets 
constituting the Disclosed Portfolio of the Fund; or (2) whether 
other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present. With respect 
to trading halts, the Exchange may consider all relevant factors in 
exercising its discretion to halt or suspend trading in the Shares.
    \25\ Nasdaq Rule 5730(c)(4) defines ``Reporting Authority.''
    \26\ See Nasdaq Rule 5735(d)(2)(B)(ii).
    \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 Exchange represents that the Shares are deemed 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 made representations, 
including the following:
    (1) The Shares will be subject to Rule 5735, 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 with other markets and other entities 
that are members of the Intermarket Surveillance Group (``ISG''),\28\ 
and FINRA may obtain trading information regarding trading in the 
Shares and other exchange-traded securities and instruments held by the 
Fund from such markets and other entities. In addition, the Exchange, 
if applicable, may obtain information regarding trading in the Shares 
from markets and other entities that are members of ISG, or with which 
the Exchange has in place a comprehensive surveillance sharing 
agreement.
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    \28\ 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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    (4) Prior to the commencement of trading, the Exchange will inform 
its members in an Information Circular of the special characteristics 
and risks associated with trading the Shares. Specifically, the 
Information Circular will discuss the following: (a) The procedures for 
purchases and redemptions of Shares in creation units (and that Shares 
are not individually redeemable); (b) Nasdaq Rule 2111A, which imposes 
suitability obligations on Nasdaq members with respect to recommending 
transactions in the Shares to customers; (c) how information regarding 
the Intraday Indicative Value and the Disclosed Portfolio is 
disseminated; (d) the risks involved in trading the Shares during the 
Pre-Market and Post-Market Sessions when an updated Intraday Indicative 
Value will not be calculated or publicly disseminated; (e) the 
requirement that members deliver a prospectus to investors purchasing 
newly issued Shares prior to or concurrently with the confirmation of a 
transaction; and (f) trading information.
    (5) For initial and continued listing, the Fund must be in 
compliance with Rule 10A-3 under the Act.\29\
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    \29\ See 17 CFR 240.10A-3.
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    (6) Under normal market conditions, the Fund will invest 
substantially all, but in any event not less than 80%, of its net 
assets (exclusive of collateral with respect to securities lending, 
repurchase, and reverse repurchase agreement transactions) in U.S. 
Treasury securities, which include bills, notes, and bonds issued by 
the U.S. Treasury, that have remaining maturities of greater than or 
equal to one month and less than three months. In order to seek its 
investment objective, the Fund will not employ other strategies outside 
of the above-described ``Principal Investments.''
    (7) The Fund may hold up to an aggregate amount of 15% of its net 
assets in illiquid securities, including repurchase and reverse 
repurchase agreements maturing in more than seven days, and other 
illiquid assets (calculated at the time of investment). The Fund will 
monitor its portfolio liquidity on an ongoing basis to determine 
whether, in light of current circumstances, an adequate level of 
liquidity is being maintained, and will consider taking appropriate 
steps in order to maintain adequate liquidity if, through a change in 
values, net assets, or other circumstances, more than 15% of the Fund's 
net assets are held in illiquid securities or other illiquid assets.
    (8) Loans will be made only to parties who have been reviewed and 
deemed satisfactory by the Adviser, pursuant to guidelines adopted by 
the Trust's Board of Trustees, and which provide collateral under 
master agreements issued by SIFMA or ISLA, which is either (i) 102% 
cash, or (ii) 102%-115% U.S. Treasury securities of the market value of 
the loaned securities. With respect to repurchase agreements and 
reverse repurchase agreements, proceeds (collateral) received under 
master agreements issued by SIFMA or ICMA must be equal to or greater 
than the market value of the sold securities and (i) cash, (ii) U.S 
Treasury securities, or (iii) debt securities secured by U.S. Treasury 
securities. All collateral will have a maturity of three months or 
less.
    (9) The Fund may enter into securities lending, repurchase 
agreement, and/or reverse repurchase agreement transactions in an 
amount equal to not more than 33% of the Fund's total assets, 
consistent with the requirements of the 1940 Act.
    (10) The Fund's investments will be consistent with its investment 
objective. The Fund will not use derivative instruments, including 
options, swaps, forwards, and futures contracts, both listed and over-
the-counter. The Fund will not invest in leveraged, inverse, or 
leveraged inverse exchange-traded products and will not be operated as 
a ``leveraged ETF'' designed to seek a multiple of the performance of 
an underlying reference asset.

[[Page 58803]]

    (11) The Fund's securities lending and reverse repurchase agreement 
transactions will be made in accordance with the 1940 Act and 
consistent with the Fund's investment objectives and policies, and will 
not be used to multiply the risks and returns of income producing 
assets. The Fund will comply with the regulatory requirements of the 
Commission to maintain assets as ``cover,'' and maintain segregated 
accounts as needed. With respect to the reverse repurchase agreements 
entered into by the Fund that involve obligations to make future 
payments to third parties, the Fund, in accordance with applicable 
federal securities laws, rules, and interpretations thereof, will ``set 
aside'' liquid assets, or engage in other measures to ``cover'' open 
positions with respect to such transactions. These procedures will be 
adopted consistent with Section 18 of the 1940 Act and related 
Commission guidance. In addition, the Fund will 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 reverse repurchase agreements, may give 
rise to leverage, causing the Fund's Shares to be more volatile than if 
they had not been leveraged.
    (12) A minimum of 50,000 Shares 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 the Notice, and 
the Exchange's description of the Fund. The Commission notes that the 
Fund and the Shares must comply with the initial and continued listing 
criteria in Nasdaq Rule 5735 for the Shares to be listed and traded on 
the Exchange.
    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with section 6(b)(5) of the Act \30\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.
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    \30\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\31\ that the proposed rule change (SR-NASDAQ-2015-089), be, and it 
hereby is, approved.
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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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-24714 Filed 9-29-15; 8:45 am]
 BILLING CODE 8011-01-P


