
[Federal Register Volume 81, Number 10 (Friday, January 15, 2016)]
[Notices]
[Pages 2261-2264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00661]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76871; File No. SR-NYSEArca-2015-114]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Amendment No. 1 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade 
Shares of the Market Vectors Dynamic Put Write ETF Under NYSE Arca 
Equities Rule 8.600

January 11, 2016.

I. Introduction

    On November 16, 2015, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') 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 
Market Vectors Dynamic Put Write ETF (the ``Fund'') under NYSE Arca 
Equities Rule 8.600. The proposed rule change was published for comment 
in the Federal Register on December 4, 2015.\3\ On December 11, 2015, 
the Exchange filed Amendment No. 1 to the proposed rule change.\4\ The 
Commission received no

[[Page 2262]]

comments on the proposed rule change. The Commission is publishing this 
notice to solicit comments on Amendment No. 1 from interested persons, 
and is approving the proposed rule change, as modified by Amendment No. 
1, 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. 76530 (Nov. 30, 
2015), 80 FR 75883.
    \4\ In Amendment No. 1, the Exchange clarified: (1) That the 
Fund may sell or invest in other U.S. exchange-traded put options on 
stock indexes, put options on stock index futures contracts, put 
options on the Fund (if available), or put options on exchange-
traded pooled investment vehicles (rather than shares of such 
vehicles); (2) how the Fund's put options, U.S. Treasuries, and cash 
equivalents generally would be valued to calculate the Fund's net 
asset value (``NAV''); Amendment No.1 superseded the original filing 
in its entirety. Amendment No. 1 is available at: http://www.sec.gov/comments/sr-nysearca-2015-114/nysearca2015114-1.pdf.
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II. The Exchange's Description of the Proposed Rule Change \5\
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    \5\ The Commission notes that additional information regarding 
the Trust, the Fund, its investments, and the Shares, including 
investment strategies, risks, creation and redemption procedures, 
fees, portfolios holding disclosure policies, calculation of NAV, 
distribution, and taxes, among other things, can be found in 
Amendment No. 1, supra note 4, and the Registration Statement, infra 
note 6, as applicable.
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    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 Market Vectors ETF Trust 
(``Trust''), which is registered with the Commission as an investment 
company.\6\ Van Eck Absolute Return Advisers Corporation (``Adviser) 
will serve as the investment adviser of the Fund. Van Eck Absolute 
Return Advisers will also serve as the administrator for the Fund, and 
The Bank of New York Mellon will serve as the custodian for the Fund. 
Van Eck Securities Corporation will serve as the distributor of the 
Shares.
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    \6\ The Exchange states that the Trust is registered under the 
Investment Company Act of 1940 (15 U.S.C. 80a-1) (``1940 Act''). On 
August 19, 2015, the Trust filed with the Commission a registration 
statement on Form N-1A under the Securities Act of 1933 (15 U.S.C. 
77a), and under the 1940 Act relating to the Fund (File Nos. 333-
123257 and 811-10325) (``Registration Statement''). The Exchange 
states that the Commission has issued an order granting certain 
exemptive relief to the Trust under the 1940 Act. See Investment 
Company Act Release No. 29496 (November 3, 2010) (File No. 812-
13605).
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Principal Investments

    The Fund's investment objective will be to seek a positive total 
return and income. Under normal circumstances,\7\ the Fund will seek to 
achieve its investment objective by selling only exchange-listed, 
uncovered out-of-the-money put options, which typically expire between 
30 and 60 days, on: (i) The S&P 500 Index; (ii) futures on the S&P 500 
Index; and (iii) e-mini futures on the S&P 500 Index.\8\ The aggregate 
notional value (i.e., the underlying value) of the Fund's put option 
contracts (including those described below) will be approximately 200% 
of the Fund's net assets.\9\
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    \7\ The term ``under normal circumstances'' includes, but is not 
limited to, the absence of extreme volatility or trading halts in 
the domestic 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. For temporary defensive purposes, the Fund may hold 
cash and cash equivalents, including U.S. Treasury bills and/or 
invest without limit in money market instruments, repurchase 
agreements, or other funds which invest exclusively in money market 
instruments, as described further below. The Fund may take temporary 
defensive positions in anticipation of or in an attempt to respond 
to adverse market, economic, political or other conditions.
    \8\ Options on the S&P 500 Index are traded on the Chicago Board 
Options Exchange. Options on futures on the S&P 500 Index and 
options on e-mini futures on the S&P 500 Index are traded on the 
Chicago Mercantile Exchange.
    \9\ See Amendment No. 1, supra note 4, at 7.
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Other Investments

    Cash and cash equivalents, in which the Fund may hold, include U.S. 
Treasury Bills, repurchase agreements, money market instruments, or 
investment companies and exchange-traded funds (``ETFs'') \10\ that 
invest principally in money market instruments. The Fund also may 
invest in other U.S. exchange-traded put options on stock indexes, put 
options on stock index futures contracts, put options on the Fund (if 
available) or put options exchange-traded pooled investment 
vehicles,\11\ to the extent such investments are considered suitable 
for the Fund by the Adviser.
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    \10\ The ETFs in which the Fund may invest will be registered 
under the 1940 Act and include Investment Company Units (as 
described in NYSE Arca Equities Rule 5.2(j)(3)); Portfolio 
Depositary Receipts (as described in NYSE Arca Equities Rule 8.100); 
and Managed Fund Shares (as described in NYSE Arca Equities Rule 
8.600). All ETFs in which the Fund invests will be listed and traded 
in the U.S. on registered exchanges.
    \11\ Exchange-traded pooled investment vehicles include Trust 
Issued Receipts (as described in NYSE Arca Equities Rule 8.200); 
Commodity-Based Trust Shares (as described in NYSE Arca Equities 
Rule 8.201); Currency Trust Shares (as described in NYSE Arca 
Equities Rule 8.202); Commodity Index Trust Shares (as described in 
NYSE Arca Equities Rule 8.203); and Trust Units (as described in 
NYSE Arca Equities Rule 8.500).
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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 \12\ 
and the rules and regulations thereunder applicable to a national 
securities exchange.\13\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\14\ 
which requires, among other things, that the Exchange's rules be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest. The Commission notes that the Fund and the Shares must comply 
with the requirements of NYSE Arca Equities Rule 8.600 for the Shares 
to be listed and traded on the Exchange.
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    \12\ 15 U.S.C. 78f.
    \13\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \14\ 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,\15\ which sets forth Congress's 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. According to the 
Exchange, quotation and last sale information for the Shares, ETFs and 
pooled investment vehicles will be available via the Consolidated Tape 
Association high-speed line. Quotation and last sale information for 
exchange-listed options cleared via the Options Clearing Corporation 
will be available via the Options Price Reporting Authority. Intra-day 
and closing price information regarding exchange-traded options 
(including options on futures) will be available from the exchange on 
which these instruments are traded. Intra-day and closing price 
information regarding money market instruments, repurchase agreements, 
and cash equivalents, including U.S. Treasuries, will be available from 
major market data vendors. Price information for non-exchange-traded 
investment company securities will be available from major market data 
vendors and from the Web site of the applicable investment company. In 
addition, the Indicative Per Share Portfolio Value will be disseminated 
every 15 seconds during the Exchange's Core Trading Session by major 
market data vendors. On each business day, before commencement of 
trading in Shares in the Core Trading Session (as defined in NYSE Arca

[[Page 2263]]

Equities Rule 7.34(a)(2)), the Fund will disclose on its Web site the 
Disclosed Portfolio (as defined in NYSE Arca Equities Rule 8.600(c)(2)) 
that will form the basis for the Fund's calculation of NAV at the end 
of the business day.\16\ The Fund's NAV per Share will be calculated 
daily every day the NYSE is open. A basket composition file, which will 
include the security names and share quantities, if applicable, 
required to be delivered in exchange for the Shares, together with 
estimates and actual cash components, will be publicly disseminated 
daily prior to the opening of the Exchange via the National Securities 
Clearing Corporation. 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. The Web site for the Fund will 
include a form of the prospectus for the Fund and additional 
quantitative information.
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    \15\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \16\ On a daily basis, the Fund will disclose on the Fund's Web 
site the following information regarding each portfolio holding, as 
applicable to the type of holding: Ticker symbol, CUSIP number or 
other identifier, if any; a description of the holding (including 
the type of holding, such as the type of option); the identity of 
the security, commodity, index or other asset or instrument 
underlying the holding, 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 Fund's portfolio. This information will be publicly available at 
no charge. See Amendment No. 1, supra note 4, at 13.
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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 Commission notes that 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 Portfolio 
will be made available to all market participants at the same time.\17\ 
In addition, trading in the Shares will be subject to NYSE Arca 
Equities Rule 8.600(d)(2)(D), which sets forth circumstances under 
which trading in the Shares may be halted. The Exchange may halt 
trading in the Shares if the Indicative Per Share Portfolio Value is 
not being disseminated as required, if the Exchange becomes aware that 
the NAV for the Fund is not being disseminated to all market 
participants at the same time, if trading is not occurring in the 
securities and/or the financial instruments comprising the Disclosed 
Portfolio of the Fund, or if other unusual conditions or circumstances 
detrimental to the maintenance of a fair and orderly market are 
present.\18\ Further, the Commission notes that the Reporting Authority 
that provides the Disclosed Portfolio of the Fund 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.\19\ The Commission notes that the 
Financial Industry Regulatory Authority (``FINRA''), on behalf of the 
Exchange,\20\ will communicate as needed regarding trading in the 
Shares, options contracts and options on futures contracts with other 
markets and other entities that are members of the Intermarket 
Surveillance Group (``ISG''), and FINRA, on behalf of the Exchange, may 
obtain trading information regarding trading in the Shares, options 
contracts, and options on futures contracts from such markets and other 
entities. In addition, the Exchange may obtain information regarding 
trading in the Shares, options contracts, and options on futures 
contracts from markets and other entities that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement. The Exchange states that is has a general policy 
prohibiting the distribution of material, non-public information by its 
employees. According to the Exchange, the Adviser is not a registered 
broker-dealer but is affiliated with a broker-dealer whose primary 
function is to serve as distributor and placement agent for its 
products. The Exchange states that the Adviser has implemented a fire 
wall with respect to its broker-dealer affiliate regarding access to 
information concerning the composition and/or changes to the portfolio. 
In the event (a) the Adviser or any sub-adviser becomes registered as a 
broker-dealer or newly affiliated with a broker-dealer, or (b) any new 
adviser or sub-adviser is a registered broker-dealer or becomes 
affiliated with a broker-dealer, the Exchange states that such Adviser, 
new adviser or sub-adviser, as applicable will implement a fire wall 
with respect to its relevant personnel or broker-dealer affiliate 
regarding access to information concerning the composition of or 
changes to the portfolio and will be subject to procedures designed to 
prevent the use and dissemination of material non-public information 
regarding the portfolio.
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    \17\ See NYSE Arca Equities Rule 8.600(d)(1)(B).
    \18\ See NYSE Arca Equities Rule 8.600(d)(2)(C) (providing 
additional considerations for the suspension of trading in or 
removal from listing of Managed Fund Shares on the Exchange). With 
respect to trading halts, the Exchange may consider all relevant 
factors in exercising its discretion to halt or suspend trading in 
the Shares. Trading in the Shares will be halted if the circuit 
breaker parameters in NYSE Arca Equities Rule 7.12 have been 
reached. Trading also may be halted because of market conditions or 
for reasons that, in the view of the Exchange, make trading in the 
Shares inadvisable.
    \19\ See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
    \20\ The Exchange states that, while 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 Exchange deems the Shares to be equity securities, which 
subjects trading in the Shares to the Exchange's existing rules 
governing the trading of equity securities.\21\
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    \21\ See Amendment No. 1, supra note 4, at 15.
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    In support of this proposal, the Exchange has made additional 
representations, including:
    (1) The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.600.\22\
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    \22\ See id.
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    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.\23\
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    \23\ See id.
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    (3) The Exchange represents that the trading in the Shares will be 
subject to the existing trading surveillances, administered by the 
Exchange or FINRA on behalf of the Exchange, which are designed to 
detect violations of Exchange rules and applicable federal securities 
laws. 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 federal 
securities laws applicable to trading on the Exchange.\24\
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    \24\ See id.
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    (4) Prior to the commencement of trading, the Exchange will inform 
its Equity Trading Permit (``ETP'') Holders in an Information Bulletin 
of the special characteristics and risks associated with trading the 
Shares. Specifically, the Bulletin will discuss the following: (a) The 
procedures for purchases and redemptions of Shares in Creation Unit 
(and that Shares are not individually redeemable); (b) NYSE Arca 
Equities Rule 9.2(a), which imposes a duty of due diligence on its ETP 
Holders to learn the essential facts relating to every customer prior 
to trading the Shares; (c)

[[Page 2264]]

the risks involved in trading the Shares during the Opening and Late 
Trading Sessions when an updated Intraday Indicative Value (``IIV'') or 
Index value will not be calculated or publicly disseminated; (d) how 
information regarding the IIV and the Disclosed Portfolio will be 
disseminated; (e) the requirement that ETP Holders deliver a prospectus 
to investors purchasing newly issued Shares prior to or concurrently 
with the confirmation of a transaction; and (f) trading 
information.\25\
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    \25\ See id. at 16.
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    (5) For initial and continued listing, the Fund will be in 
compliance with Rule 10A-3 \26\ under the Act, as provided by NYSE Arca 
Equities Rule 5.3.
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    \26\ 17 CFR 240.10A-3.
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    (6) A minimum of 100,000 Shares for the Fund will be outstanding at 
the commencement of trading on the Exchange.\27\
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    \27\ See Amendment No. 1, supra note 4, at 15.

This approval order is based on all of the Exchange's representations.
    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendment No. 1, is consistent with Section 
6(b)(5) of the Act \28\ and the rules and regulations thereunder 
applicable to a national securities exchange.
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    \28\ 15 U.S.C. 78f(b)(5).
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IV. Solicitation of Comments on Amendment No. 1

    Interested persons are invited to submit written data, views, and 
arguments concerning whether Amendment No. 1 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-NYSEArca-2015-114 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2015-114. 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-2015-114 and should 
be submitted on or before February 5, 2016.

V. Accelerated Approval of Proposed Rule Change as Modified by 
Amendment No. 1

    The Commission finds good cause to approve the proposed rule 
change, as modified by Amendment No. 1, prior to the thirtieth day 
after the date of publication of notice in the Federal Register. 
Amendment No. 1 supplements the proposed rule change by, among other 
things, clarifying the scope of the Fund's permitted investments and 
adding additional information about the availability of prices for the 
Shares and underlying assets. This clarifying information aided the 
Commission in evaluating the likelihood of effective arbitrage in the 
Shares. Accordingly, the Commission finds good cause, pursuant to 
Section 19(b)(2) of the Act,\29\ to approve the proposed rule change, 
as modified by Amendment No. 1, on an accelerated basis.
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    \29\ 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,\30\ that the proposed rule change (SR-NYSEArca-2015-114), as 
modified by Amendment No. 1, be, and it hereby is, approved on an 
accelerated basis.
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    \30\ 15 U.S.C. 78s(b)(2).
    \31\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-00661 Filed 1-14-16; 8:45 am]
 BILLING CODE 8011-01-P


