
[Federal Register Volume 81, Number 143 (Tuesday, July 26, 2016)]
[Notices]
[Pages 48869-48875]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17572]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78373; File No. SR-NYSEArca-2016-97]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to the Listing and Trading of Shares 
of PowerShares Government Collateral Pledge Portfolio Under NYSE Arca 
Equities Rule 8.600

July 20, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on July 6, 2016, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade shares of the following 
under NYSE Arca Equities Rule 8.600 (``Managed Fund Shares''): 
PowerShares Government Collateral Pledge Portfolio. The proposed rule 
change is available on the Exchange's Web site at www.nyse.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

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

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the 
following under NYSE Arca Equities Rule 8.600,\4\ which governs the 
listing and trading of Managed Fund Shares: \5\ PowerShares Government 
Collateral Pledge Portfolio (``Fund''). The Fund is a series of the 
PowerShares Actively Managed Exchange Traded Trust (the ``Trust'').\6\ 
Invesco PowerShares Capital Management LLC is the investment advisor 
for the Fund (``Adviser''). Invesco Advisers, Inc. is the sub-adviser 
for the Fund (``Invesco'' or ``Sub-Adviser''). The Bank of New York 
Mellon (``BNYM'' or ``Custodian'') will be the administrator, custodian 
and transfer agent for the Fund. Invesco Distributors, Inc. will be the 
Fund's distributor (``Distributor'').
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    \4\ The Commission has previously approved listing and trading 
on the Exchange of actively managed funds under Rule 8.600. See, 
e.g., Securities Exchange Act Release Nos. 57801 (May 8, 2008), 73 
FR 27878 (May 14, 2008) (SR-NYSEArca-2008-31) (order approving 
Exchange listing and trading of twelve actively-managed funds of the 
WisdomTree Trust); 66321 (February 3, 2012), 77 FR 6850 (February 9, 
2012) (SR-NYSEArca-2011-95) (order approving listing and trading of 
PIMCO Total Return Exchange Traded Fund); 66670 (March 28, 2012), 77 
FR 20087 (April 3, 2012) (SR-NYSEArca-2012-09) (order approving 
listing and trading of PIMCO Global Advantage Inflation-Linked Bond 
Strategy Fund).
    \5\ A Managed Fund Share is a security that represents an 
interest in an investment company registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a-1) (``1940 Act'') organized as an 
open-end investment company or similar entity that invests in a 
portfolio of securities selected by its investment adviser 
consistent with its investment objectives and policies. In contrast, 
an open-end investment company that issues Investment Company Units, 
listed and traded on the Exchange under NYSE Arca Equities Rule 
5.2(j)(3), seeks to provide investment results that correspond 
generally to the price and yield performance of a specific foreign 
or domestic stock index, fixed income securities index or 
combination thereof.
    \6\ The Trust is registered under the 1940 Act. On May 20, 2016, 
the Trust filed with the Commission an amendment to its registration 
statement on Form N-1A under the Securities Act of 1933 (15 U.S.C. 
77a) (``Securities Act'') and the 1940 Act relating to the Fund 
(File Nos. 333-147622 and 811-22148) (the ``Registration 
Statement''). The description of the operation of the Trust and the 
Fund herein is based, in part, on the Registration Statement. In 
addition, the Commission has issued an order granting certain 
exemptive relief to the Trust and the Adviser (as defined below) 
under the 1940 Act. See Investment Company Act Release No. 28171 
(February 27, 2008) (File No. 812-13386) (``Exemptive Order''). The 
Fund will be offered in reliance upon the Exemptive Order issued to 
the Trust and the Adviser.
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    Commentary .06 to Rule 8.600 provides that, if the investment 
adviser to the investment company issuing Managed Fund Shares is 
affiliated with a broker-dealer, such investment adviser shall erect a 
``fire wall'' between the investment adviser and the broker-dealer with 
respect to access to information concerning the composition and/or 
changes to such investment company portfolio.\7\ In addition, 
Commentary .06 further requires that personnel who make decisions on 
the open-end fund's portfolio composition must be subject to procedures 
designed to prevent the use and dissemination of material nonpublic 
information regarding the open-end fund's portfolio. The Adviser and 
Sub-Adviser each is not registered as a broker-dealer but is affiliated 
with a broker-dealer. The Adviser and Sub-Adviser each has implemented 
and will maintain a fire wall with respect to its affiliated broker-
dealer regarding access to information concerning the composition and/
or changes to the Fund's portfolio. In the event (a) the Adviser or 
Sub-Adviser becomes registered as a broker-dealer or newly affiliated 
with a broker-dealer, or (b) any new adviser or sub-adviser becomes 
registered as a broker-dealer or newly affiliated with a broker-dealer, 
it will implement a fire wall with respect to its relevant personnel or 
such broker-dealer affiliate regarding access to information concerning 
the composition and/or changes to the portfolio, and will be subject to 
procedures designed to

[[Page 48870]]

prevent the use and dissemination of material non-public information 
regarding such portfolio.
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    \7\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). As a result, the Adviser and Sub-Adviser and their 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. The Exchange represents that the 
Adviser and its related personnel are subject to Investment Advisers 
Act Rule 204A-1. 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.
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Principal Investments
    According to the Registration Statement, the Fund's investment 
objective will be to seek to provide as high a level of current income 
as is consistent with liquidity and minimum volatility of principal. 
The Fund will seek to achieve its investment objective by investing, 
under normal market conditions,\8\ at least 80% of its net assets in a 
portfolio of registered U.S. government money market mutual funds (the 
``Underlying Funds'') and in U.S. dollar-denominated government 
securities and other money market securities eligible for investment by 
U.S. government money market funds (including indirect investments in 
those securities through the Underlying Funds).
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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 securities markets or the financial markets 
generally; circumstances under which the Fund's investments are made 
for temporary defensive purposes; operational issues (e.g., systems 
failure) causing dissemination of inaccurate market information; or 
force majeure type events such as 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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    Under normal market conditions, the Fund intends to invest a 
substantial portion of its assets in the following Underlying Funds: 
The Treasury Portfolio, Government TaxAdvantage Portfolio, Government & 
Agency Portfolio and Premier US Government Money Portfolio, each of 
which is advised by an affiliate of the Adviser. In constructing the 
Fund's portfolio, the Sub-Adviser generally will allocate and 
reallocate the Fund's assets among the Underlying Funds on a monthly 
basis on an approximate pro rata basis that is based on the amount of 
net assets of each Underlying Fund. However, the Sub-Adviser is not 
required to invest the Fund's assets in any particular Underlying Fund 
or allocate any particular percentage of the Fund's assets to any 
particular Underlying Fund. Invesco may add, eliminate or replace any 
or all Underlying Funds at any time. Any additions to or replacements 
of the Underlying Funds in the Fund's portfolio also will be registered 
U.S. government money market funds with investment characteristics that 
are substantially similar to those of the Underlying Funds. The 
Adviser, the Sub-Adviser or their affiliates may advise some or all the 
Underlying Funds.
    According to the Registration Statement, each Underlying Fund is a 
``government money market fund'' (as that term is defined under Rule 
2a-7 of the 1940 Act) and seeks to maintain a stable $1.00 net asset 
value (``NAV''). Each Underlying Fund has an investment objective of 
seeking to provide current income consistent with preservation of 
capital and liquidity. The securities held by the Underlying Funds will 
comply with all requirements of Rule 2a-7 and other Commission rules 
applicable to money market funds seeking a stable NAV. Each Underlying 
Fund invests at least 99.5% of its total assets in cash, government 
securities, and/or repurchase agreements collateralized by cash or 
government securities. In addition, each Underlying Fund invests only 
in U.S. dollar-denominated securities maturing within 397 days of the 
date of purchase, with certain exceptions permitted by applicable 
regulations, and maintains a dollar-weighted average portfolio maturity 
of no more than 60 days, and a dollar-weighted average portfolio 
maturity (as determined without exceptions regarding certain interest 
rate adjustments under Rule 2a-7) of no more than 120 days.
    Unlike the Underlying Funds, the Fund will not be a money market 
fund, meaning that it will not seek to maintain a stable NAV of $1.00, 
nor will it be subject to other requirements of Rule 2a-7. However, the 
Fund will only purchase securities issued by registered government 
money market funds, or securities that comply with the quality and 
eligibility requirements of Rule 2a-7, as described above.
    Additionally, the Fund and the Underlying Funds may invest in 
variable and floating rate instruments that are permitted under the 
requirements of Rule 2a-7.
    The Fund and the Underlying Funds may transact in securities on a 
when-issued, delayed delivery or forward commitment basis. The purchase 
or sale of securities on a when-issued or delayed delivery basis or 
through a forward commitment involves the purchase or sale of 
securities at an established price with payment and delivery taking 
place in the future.
Creation and Redemption of Shares
    The Trust will issue Shares of the Fund only in ``Creation Unit 
Aggregations'' on a continuous basis through the Distributor at its NAV 
next determined after receipt, on any business day of an order in 
proper form. A Creation Unit Aggregation is 50,000 Shares and the size 
of a Creation Unit Aggregation is subject to change.
    Creation Unit Aggregations of the Fund generally will be sold 
principally for cash, calculated based on the NAV per Share multiplied 
by the number of Shares representing a Creation Unit (``Deposit 
Cash''), plus any applicable administrative or other transaction fees, 
as discussed below. The Fund also reserves the right to permit or 
require Creation Units to be issued in-kind. If in-kind creations are 
permitted or required, an investor must deposit a designated portfolio 
of securities (``Deposit Securities'') and the ``Cash Component'', 
computed as discussed below. Together, the Deposit Securities and the 
Cash Component constitute the ``Fund Deposit'', which represents the 
minimum initial and subsequent investment amount for a Creation Unit 
Aggregation of the Fund.
    The Cash Component serves the function of compensating for any 
differences between the NAV per Creation Unit Aggregation and the 
Deposit Amount (as defined below). The Cash Component is an amount 
equal to the difference between the NAV of the Shares (per Creation 
Unit Aggregation) and the ``Deposit Amount''--an amount equal to the 
market value of the Deposit Securities. If the Cash Component is a 
positive number (i.e., the NAV per Creation Unit Aggregation exceeds 
the Deposit Amount), the ``Authorized Participant'' (as defined below) 
will deliver the Cash Component. If the Cash Component is a negative 
number (i.e., the NAV per Creation Unit Aggregation is less than the 
Deposit Amount), the Authorized Participant will receive the Cash 
Component.
    To the extent that the Fund permits or requires Creation Units to 
be issued in-kind, the Custodian will make available through the 
National Securities Clearing Commission (``NSCC'') on each Business 
Day, prior to the opening of business on the Exchange (currently 9:30 
a.m., Eastern time), the list of the names and the required number or 
par value of each Deposit Security and the amount of Cash Component to 
be included in the current Fund Deposit (based on information at the 
end of the previous Business Day) for the Fund. Such Fund Deposit will 
be applicable, subject to any adjustments, to effect creations of 
Creation Unit Aggregations of the Fund until the Fund's deadline for 
the submission of purchase orders (the Fund's ``Cutoff Time'').
    In addition, the Trust reserves the right to permit or require the 
substitution of an amount of cash--i.e., a ``cash in lieu'' amount--to 
be added to the Cash Component to replace any

[[Page 48871]]

Deposit Security that: (i) May not be available in sufficient quantity 
for delivery, (ii) may not be eligible for transfer through the systems 
of the Depository Trust Company (``DTC'') or the ``Clearing Process'' 
(defined below) or that the Authorized Participant (defined below) is 
not able to trade due to a trading restriction. The Fund also reserves 
the right to permit or require a ``cash in lieu'' amount in certain 
circumstances, including circumstances in which the delivery of the 
Deposit Security by the ``Authorized Participant'' (as defined below) 
would be restricted under applicable securities or other local laws or 
in certain other situations.
    As noted above, Creation Units currently will be available only for 
cash purchases. The Custodian will make available on each Business Day 
information on the amount of Deposit Cash required for a Creation Unit.
    To be eligible to place orders with the Distributor and to create a 
Creation Unit Aggregation of the Fund, an entity must be (i) a 
``Participating Party,'' i.e., a broker-dealer or other participant in 
the clearing process through the Continuous Net Settlement System of 
the NSCC (the ``Clearing Process''), a clearing agency that is 
registered with the Commission; or (ii) a DTC Participant. In each 
case, the entity must have executed an agreement with the Distributor, 
with respect to creations and redemptions of Creation Unit Aggregations 
(``Participant Agreement''). A Participating Party and DTC Participant 
are collectively referred to as an ``Authorized Participant''. Creation 
Units may be purchased only by or through an Authorized Participant.
    To initiate an order for a Creation Unit, the Distributor or its 
agent must receive an irrevocable order from an Authorized Participant, 
in proper form, no later than 12:00 p.m., Eastern time, in each case on 
the date such order is placed (the ``Transmittal Date'') in order for 
creation of Creation Unit Aggregations to receive that day's NAV. An 
order to create Creation Unit Aggregations is deemed received by the 
Distributor on the Transmittal Date if (i) such order is received by 
the Distributor not later than 12:00 p.m., Eastern time, on such 
Transmittal Date and (ii) all other procedures set forth in the 
Participant Agreement are properly followed.
    Shares may be redeemed only by Authorized Participants, and only in 
Creation Unit Aggregations at their NAV next determined after receipt 
of a redemption request in proper form by the Distributor or its agent 
and only on a Business Day.
    Redemption requests for Creation Units of the Fund must be 
submitted to the Distributor by or through an Authorized Participant. 
An Authorized Participant must submit an irrevocable request to redeem 
shares of the Fund generally before 12:00 p.m., Eastern time on any 
Business Day in order to receive that day's NAV. Such order to redeem 
Creation Unit Aggregations is deemed received by the Trust on the 
Transmittal Date if (i) such order is received not later than 12:00 
p.m., Eastern time; (ii) such order is accompanied or followed by the 
requisite number of Shares of the Fund; and (iii) all other procedures 
set forth in the Participant Agreement are properly followed.
    Creation Units of the Fund generally will be redeemed for cash in 
an amount equal to the NAV of its Shares next determined after a 
redemption request is received (minus any redemption transaction fees) 
(the ``Cash Redemption Amount'').
    However, the Fund reserves the right to distribute securities in-
kind as payment for Creation Units being redeemed. During times when 
the Fund permits such in-kind redemptions, the Custodian, through the 
NSCC, will make available prior to the opening of business on the NYSE 
(currently 9:30 a.m., Eastern time) on each Business Day, the 
designated portfolio of securities (including any portion of such 
securities for which cash may be substituted) that will be applicable 
(subject to possible amendment or correction) to redemption requests 
received in proper form on that day (``Fund Securities'') and an amount 
of cash, as described below. Such Fund Securities and the corresponding 
Cash Amount (each subject to possible amendment or correction) are 
applicable in order to effect redemptions of Creation Units of the Fund 
until the Fund's Cutoff Time. Fund Securities received on redemption 
may not be identical to Deposit Securities that are applicable to 
creations of Creation Units.
    The in-kind redemption proceeds for a Creation Unit Aggregation 
generally will consist of Fund Securities plus or minus cash in an 
amount equal to the difference between the NAV of the Fund Shares being 
redeemed, as next determined after a receipt of a request in proper 
form, and the value of the Fund Securities (the ``Redemption Cash 
Component''), less a redemption transaction fee. In the event that the 
Fund Securities have a value greater than the NAV of the Fund Shares, a 
compensating cash payment equal to the difference is required to be 
made by or through an Authorized Participant by the redeeming 
shareholder.
    The right of redemption may be suspended or the date of payment 
postponed (i) for any period during which the NYSE is closed (other 
than customary weekend and holiday closings); (ii) for any period 
during which trading on the NYSE is suspended or restricted; (iii) for 
any period during which an emergency exists as a result of which 
disposal of the Shares of the Fund or determination of the Fund's NAV 
is not reasonably practicable; or (iv) in such other circumstances as 
is permitted by the Commission.
Other Investments
    While the Fund, under normal circumstances, will invest at least 
80% of its net assets in the securities and financial instruments 
described above, the Fund may invest its remaining assets in the 
following other assets and financial instruments, as described below.
    The Fund and the Underlying Funds also may invest in certain U.S. 
government obligations other than those referenced above, namely 
Treasury receipts where the principal and interest components are 
traded separately under the Separate Trading of Registered Interest and 
Principal of Securities (STRIPS) program (``stripped securities'').
    The Fund may invest directly in repurchase agreements and reverse 
repurchase agreements.
Investment Restrictions
    The Fund will be classified as ``non-diversified''.\9\
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    \9\ The diversification standard is set forth in Section 5(b)(1) 
of the 1940 Act.
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    The Fund intends to maintain the required level of diversification 
and otherwise conduct its operations so as to qualify as a regulated 
investment company for purposes of the U.S. Internal Revenue Code of 
1986, as amended.\10\
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    \10\ 26 U.S.C. 851.
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    The Fund may invest up to an aggregate amount of 15% of its net 
assets in 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

[[Page 48872]]

assets. 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.\11\
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    \11\ The Commission has stated that long-standing Commission 
guidelines have required open-end funds to hold no more than 15% of 
their net assets in illiquid securities and other illiquid assets. 
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 
14618 (March 18, 2008), footnote 34. See also, Investment Company 
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 
1970) (Statement Regarding ``Restricted Securities''); Investment 
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio 
security is illiquid if it cannot be disposed of in the ordinary 
course of business within seven days at approximately the value 
ascribed to it by the fund. See Investment Company Act Release No. 
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting 
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act 
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) 
(adopting Rule 144A under the Securities Act).
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    The Fund will not invest in futures, options, swaps or forward 
contracts.
    The Fund's investments will be consistent with the Fund's 
investment objective and will not be used to enhance leverage. That is, 
while the Fund will be permitted to borrow as permitted under the 1940 
Act, the Fund's investments will not be used to seek performance that 
is the multiple or inverse multiple (e.g., 2Xs and 3Xs) of the Fund's 
primary broad-based securities benchmark index (as defined in Form N-
1A).\12\
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    \12\ The Fund's broad-based securities benchmark index will be 
identified in a future amendment to the Registration Statement 
following the Fund's first full calendar year of performance.
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Net Asset Value
    According to the Registration Statement, BNYM will calculate the 
Fund's NAV at 12:00 p.m., Eastern time, every day the NYSE is open, 
provided that U.S. fixed-income assets may be valued as of the 
announced closing time for trading in fixed-income instruments on any 
day that the Securities Industry and Financial Markets Association 
announces an early closing time. NAV is calculated by deducting all of 
the Fund's liabilities from the total value of its assets and dividing 
the result by the number of Shares outstanding, rounding to the nearest 
cent. Generally, the portfolio securities are recorded in the NAV no 
later than trade date plus one day. All valuations are subject to 
review by the Trust's Board of Trustees (``Board'') or its delegate.
    The NAV for the Fund will be calculated and disseminated on each 
day that the NYSE is open. In determining NAV, expenses are accrued and 
applied daily and securities and other assets for which market 
quotations are readily available are valued at market value. Securities 
listed or traded on an exchange generally will be valued at the last 
sales price or official closing price that day as of the close of the 
exchange where the security primarily is traded.
    The Underlying Funds (including other open-end registered 
investment companies), Treasury securities, cash equivalents or other 
securities not listed on an exchange, normally will be valued using 
prices provided by independent pricing services. Variable and floating 
rate instruments, repurchase agreements and reverse repurchase 
agreements likewise will be valued at prices supplied by approved 
pricing services, which are generally based on bid-side quotations.) 
[sic]
    The Adviser may use various pricing services or discontinue the use 
of any pricing service at any time. Prices obtained from independent 
third-party pricing services, broker-dealers or market makers to value 
the Fund's securities and other assets and liabilities will be based on 
information available at the time the Fund values its assets and 
liabilities. If a security's market price is not readily available, or 
if price quotes from a pricing service are not readily available 
(including where the Sub-Adviser determines that the closing price of 
the security is unreliable), securities will be valued by another 
method in [sic] that the Sub-Adviser, in its judgment, believes will 
better reflect the security's fair value accordance [sic] with the 
Trust's valuation policies and procedures approved by the Trust's 
Board.
    The Trust's Board will be responsible for the oversight of the 
pricing procedures of the Fund and the valuation of the Fund's 
portfolio. The Trust's Board has delegated day-to-day pricing 
responsibilities to the Adviser's Pricing Committee, which will be 
composed of officers of the Adviser. The Pricing Committee will be 
responsible for the valuation and revaluation of any portfolio 
investments for which market quotations or prices are not readily 
available. The Trust and the Adviser have implemented procedures 
designed to prevent the use and dissemination of material, nonpublic 
information.
Availability of Information
    The Fund's Web site (www.invescopowershares.com), which will be 
publicly available prior to the public offering of Shares, will include 
a form of the prospectus for the Fund that may be downloaded. The 
Fund's Web site will include additional quantitative information 
updated on a daily basis, including, for the Fund, (1) daily trading 
volume, the prior business day's reported closing price, NAV and mid-
point of the bid/ask spread at the time of calculation of such NAV (the 
``Bid/Ask Price''),\13\ and a calculation of the premium and discount 
of the Bid/Ask Price against the NAV, and (2) data in chart format 
displaying the frequency distribution of discounts and premiums of the 
daily Bid/Ask Price against the NAV, within appropriate ranges, for 
each of the four previous calendar quarters. On each business day, 
before commencement of trading in Shares in the Core Trading Session on 
the Exchange, 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.\14\
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    \13\ The Bid/Ask Price of the Fund's Shares will be determined 
using the mid-point of the highest bid and the lowest offer on the 
Exchange as of the time of calculation of the Fund's NAV. The 
records relating to Bid/Ask Prices will be retained by the Fund and 
its service providers.
    \14\ 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''). 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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    On a daily basis, the Adviser will disclose on the Fund's Web site 
the following information regarding each portfolio holding of the Fund 
and the Underlying Funds, 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); the identity of the security 
or other asset or instrument underlying the holding, if any; 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 or Underlying Fund's 
portfolio. The Web site information will be publicly available at no 
charge.
    Investors can also obtain the Trust's Statement of Additional 
Information (``SAI''), the Fund's Shareholder Reports, and Form N-CSR 
and Form N-SAR, filed twice a year. The Trust's SAI and Shareholder 
Reports will be available free upon request from the Trust, and those 
documents and the Form N-CSR and Form N-SAR may be viewed on-screen or 
downloaded from the Commission's Web site at www.sec.gov. Information 
regarding market price and trading volume for the

[[Page 48873]]

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. Quotation and last sale information 
for the Shares will be available via the Consolidated Tape Association 
(``CTA'') high-speed line. Price information for the Underlying Funds, 
other money market funds, STRIPS, U.S. government obligations, variable 
and floating rate instruments, repurchase agreements and reverse 
repurchase agreements will be available from major market data vendors. 
In addition, the Portfolio Indicative Value (``PIV''), as defined in 
NYSE Arca Equities Rule 8.600 (c)(3), will be widely disseminated by 
one or more major market data vendors at least every 15 seconds during 
the Core Trading Session.\15\ The dissemination of the PIV, together 
with the Disclosed Portfolio, will allow investors to determine the 
value of the underlying portfolio of the Fund on a daily basis and 
provide a close estimate of that value throughout the trading day.
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    \15\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available PIVs 
taken from CTA or other data feeds.
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Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of the Fund. Trading in Shares of the Fund will 
be halted if the circuit breaker parameters in NYSE Arca Equities Rule 
7.12 have been reached.\16\ 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. These may include: (1) The 
extent to which trading is not occurring in the securities and/or the 
financial instruments comprising 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. Trading in 
the Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), 
which sets forth circumstances under which Shares of the Fund may be 
halted [sic]
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    \16\ See NYSE Arca Equities Rule 7.12.
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Trading Rules
    The Exchange 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. Shares will trade on 
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. Eastern Time in 
accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late 
Trading Sessions). The Exchange has appropriate rules to facilitate 
transactions in the Shares during all trading sessions. As provided in 
NYSE Arca Equities Rule 7.6, the minimum price variation (``MPV'') for 
quoting and entry of orders in equity securities traded on the NYSE 
Arca Marketplace is $0.01, with the exception of securities that are 
priced less than $1.00 for which the MPV for order entry is $0.0001.
    The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.600. The Exchange represents 
that, for initial and/or continued listing, the Fund will be in 
compliance with Rule 10A-3 \17\ under the Act, as provided by NYSE Arca 
Equities Rule 5.3. A minimum of 100,000 Shares of the Fund will be 
outstanding at the commencement of trading on the Exchange. 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 of the Fund will be made available to all 
market participants at the same time.
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    \17\ 17 CFR 240.10A-3.
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Surveillance
    The Exchange represents that trading in the Shares will be subject 
to the existing trading surveillances administered by the Exchange, as 
well as cross-market 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. 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.\18\
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    \18\ FINRA conducts cross-market surveillances on behalf of the 
Exchange pursuant to a regulatory services agreement. The Exchange 
is responsible for FINRA's performance under this regulatory 
services agreement.
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    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations.
    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares with other 
markets or other entities that are members of the Intermarket 
Surveillance Group (``ISG''),\19\ and the Exchange or FINRA, on behalf 
of the Exchange, or both, may obtain trading information regarding 
trading in the Shares from such markets or entities. In addition, the 
Exchange may obtain information regarding trading in the Shares from 
markets or other entities that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement. 
FINRA, on behalf of the Exchange, is able to access, as needed, trade 
information for certain fixed income securities held by the Fund 
reported to FINRA's Trade Reporting and Compliance Engine (``TRACE'').
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    \19\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio may trade on markets that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement.
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    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
    All statements and representations made in this filing regarding 
(a) the description of the portfolio, (b) limitations on portfolio 
holdings or reference assets, or (c) the applicability of Exchange 
rules and surveillance procedures shall constitute continued listing 
requirements for listing the Shares of the Fund on the Exchange.
    The issuer has represented to the Exchange that it will advise the 
Exchange of any failure by the Fund to comply with the continued 
listing requirements, and, pursuant to its obligations under Section 
19(g)(1) of the Act, the Exchange will monitor for compliance with the 
continued listing requirements. If the Fund is not in compliance with 
the applicable listing requirements, the Exchange will commence 
delisting procedures under NYSE Arca Equities Rule 5.5(m).
Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its 
Equity Trading Permit (``ETP'') Holders in an Information Bulletin 
(``Bulletin'') of the special characteristics and risks associated with 
trading the Shares. Specifically, the Bulletin will discuss the 
following: (1) The procedures for purchases and redemptions of Shares 
in Creation Units (and that Shares are not individually redeemable); 
(2) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due 
diligence on its

[[Page 48874]]

ETP Holders to learn the essential facts relating to every customer 
prior to trading the Shares; (3) the risks involved in trading the 
Shares during the Opening and Late Trading Sessions when an updated PIV 
will not be calculated or publicly disseminated; (4) how information 
regarding the PIV and the Disclosed Portfolio is disseminated; (5) 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 (6) trading information.
    In addition, the Bulletin will reference that the Fund is subject 
to various fees and expenses described in the Registration Statement. 
The Bulletin will discuss any exemptive, no-action, and interpretive 
relief granted by the Commission from any rules under the Act. The 
Bulletin will also disclose that the NAV for the Shares will generally 
be calculated as of 12:00 p.m., Eastern time, on each day the NYSE is 
open for trading.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \20\ that an exchange have rules that 
are 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, in general, to protect investors and the public interest.
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    \20\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in NYSE Arca Equities Rule 
8.600. The Exchange has in place surveillance procedures that are 
adequate to properly monitor trading in 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.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest. 
The Adviser is not registered as a broker-dealer but is affiliated with 
a broker-dealer. The Adviser has implemented and will maintain a fire 
wall with respect to its affiliated broker-dealers [sic] regarding 
access to information concerning the composition and/or changes to the 
Fund's portfolio. 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.
    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares with other 
markets or other entities that are members of the ISG, and the Exchange 
or FINRA, on behalf of the Exchange, or both, may obtain trading 
information regarding trading in the Shares from such markets or 
entities. In addition, the Exchange may obtain information regarding 
trading in the Shares from markets or other entities that are members 
of ISG or with which the Exchange has in place a comprehensive 
surveillance sharing agreement. FINRA, on behalf of the Exchange, is 
able to access, as needed, trade information for certain fixed income 
securities held by the Fund reported to FINRA's TRACE.
    Information regarding market price and trading volume for 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. Quotation and last sale information 
for the Shares will be available via the CTA high-speed line. Price 
information for the Underlying Funds, investment company securities, 
STRIPS, U.S. government obligations, variable and floating rate 
instruments, repurchase agreements, and reverse repurchase agreements 
will be available from major market data vendors. In addition, the PIV, 
as defined in NYSE Arca Equities Rule 8.600(c)(3), will be widely 
disseminated by one or more major market data vendors at least every 15 
seconds during the Core Trading Session. Moreover, prior to the 
commencement of trading, the Exchange will inform its ETP Holders in an 
Information Bulletin of the special characteristics and risks 
associated with trading the Shares. Trading in Shares of the Fund 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, and trading in the Shares will be subject to NYSE Arca 
Equities Rule 8.600(d)(2)(D), which sets forth circumstances under 
which Shares of the Fund may be halted. In addition, as noted above, 
investors will have ready access to information regarding the Fund's 
holdings, the PIV, the Disclosed Portfolio, and quotation and last sale 
information for the Shares.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
an additional type of actively-managed exchange-traded product that 
principally holds U.S. government securities and other money market 
securities that will enhance competition among market participants, to 
the benefit of investors and the marketplace. As noted above, the 
Exchange has in place surveillance procedures relating to trading in 
the Shares and may obtain information via ISG from other exchanges that 
are members of ISG or with which the Exchange has entered into a 
comprehensive surveillance sharing agreement. In addition, as noted 
above, investors will have ready access to information regarding the 
Fund's holdings, the PIV, the Disclosed Portfolio, and quotation and 
last sale information for the Shares.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change will facilitate the listing and trading of an 
additional type of actively-managed exchange-traded product that 
principally holds U.S. government securities and other money market 
securities as discussed above, which will enhance competition among 
market participants, to the benefit of investors and the marketplace.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or

[[Page 48875]]

    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2016-97 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-2016-97. 
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-2016-97 and should be submitted on or before August 16, 2016.
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    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-17572 Filed 7-25-16; 8:45 am]
 BILLING CODE 8011-01-P


