[Federal Register Volume 85, Number 20 (Thursday, January 30, 2020)]
[Notices]
[Pages 5493-5500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01645]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88031; File No. SR-NYSEArca-2020-07]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to Listing and Trading of Shares of 
the SPDR SSGA Responsible Reserves ESG ETF under NYSE Arca Rule 8.600-E

January 24, 2020.
    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 January 14, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III 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 SPDR SSGA 
Responsible Reserves ESG ETF (the ``Fund''), under NYSE Arca Rule 
8.600-E (``Managed Fund Shares''). The proposed change is available on 
the Exchange's website 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 
SPDR SSGA Responsible Reserves ESG ETF under NYSE Arca Rule 8.600-E 
(the ``Fund''), a series of the SSGA Active Trust (``Trust''),\4\ under 
NYSE Arca Rule 8.600-E, which governs the listing and trading of 
Managed Fund Shares \5\ on the Exchange.
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    \4\ The Trust is registered under the 1940 Act. On December 20, 
2019, 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. 333-173276 and 811-22542) (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 under the 1940 Act to the Trust. See Investment 
Company Act Release No. 29524, December 13, 2010) (File No. 812-
13487) (``Exemptive Order''). Investments made by the Fund will 
comply with the conditions set forth in the Exemptive Order.
    \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 Rule 5.2-E(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.

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[[Page 5494]]

    SSGA Funds Management, Inc. (``Adviser'') will be the investment 
adviser to the Fund. The Adviser is a wholly-owned subsidiary of State 
Street Global Advisors, Inc. (``SSGA''), which itself is a wholly-owned 
subsidiary of State Street Corporation. State Street Global Advisors 
Funds Distributors, LLC (``Distributor'') will be the distributor of 
the Fund's Shares. State Street Bank and Trust Company will be the 
custodian (``Custodian'') and transfer agent for the Fund.
    Commentary .06 to Rule 8.600-E 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 
and maintain 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.\6\ 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 is not registered as a broker-dealer but is affiliated with a 
broker-dealer and has implemented and will maintain a fire wall with 
respect to such broker-dealer affiliate regarding access to information 
concerning the composition and/or changes to the portfolio. In the 
event (a) the Adviser becomes registered as a broker-dealer or newly 
affiliated with one or more broker-dealers, or (b) any new adviser or 
sub-adviser is a registered broker-dealer or becomes affiliated with a 
broker-dealer, it will implement and maintain a fire wall with respect 
to its relevant personnel or its broker-dealer affiliate 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.
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    \6\ 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 its related personnel are 
subject to the provisions of Rule 204A-1 under the Advisers Act 
relating to codes of ethics. This Rule requires investment advisers 
to adopt a code of ethics that reflects the fiduciary nature of the 
relationship to clients as well as compliance with other applicable 
securities laws. Accordingly, procedures designed to prevent the 
communication and misuse of non-public information by an investment 
adviser must be consistent with Rule 204A-1 under the Advisers Act. 
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful 
for an investment adviser to provide investment advice to clients 
unless such investment adviser has (i) adopted and implemented 
written policies and procedures reasonably designed to prevent 
violation, by the investment adviser and its supervised persons, of 
the Advisers Act and the Commission rules adopted thereunder; (ii) 
implemented, at a minimum, an annual review regarding the adequacy 
of the policies and procedures established pursuant to subparagraph 
(i) above and the effectiveness of their implementation; and (iii) 
designated an individual (who is a supervised person) responsible 
for administering the policies and procedures adopted under 
subparagraph (i) above.
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SPDR SSGA Responsible Reserves ESG ETF
    According to the Registration Statement, the investment objective 
of the Fund will be to seek to maximize current income while giving 
consideration to environmental, social and governance (``ESG'') 
criteria, consistent with the preservation of capital and liquidity by 
investing in a portfolio of high-quality, short-term debt obligations.
    The Fund will follow a disciplined investment process in which the 
Adviser bases its decisions on the relative attractiveness of different 
short-term debt instruments (``Short-Term Fixed Income Securities'') 
while considering ESG criteria at the time of purchase.
    Under normal market conditions,\7\ with respect to the Fund's 
investments in Short-Term Fixed Income Securities, the Fund will target 
to invest only in short-term debt obligations to maintain a maximum 
dollar-weighted average maturity of sixty days or less and dollar-
weighted average life of 120 days or less. The Fund will invest in 
Short-Term Fixed Income Securities that have remaining maturities of 
397 calendar days or less.
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    \7\ The term ``normal market conditions'' is defined in NYSE 
Arca Rule 8.600-E(c)(5).
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    The Adviser intends to consider ESG criteria at the time of 
purchase by using ESG-related metrics for each Fund investment. The 
potential investment universe will first be screened to remove issuers 
involved in, and/or which derive significant revenue (as determined by 
data sourced from ``Third Party Providers'' (defined below)) from, 
certain practices, industries or product lines, including: extreme 
event controversies, controversial weapons, civilian firearms, thermal 
coal extraction, tobacco, and UN global compact violations. Issuers in 
the financial services sector are excluded from this initial screening 
process; however, the Adviser will consider other scoring criteria to 
assign an ESG rating to issuers in the financial services sector.
Principal Investments
    According to the Registration Statement, the Fund will attempt to 
meet its investment objective by investing in a broad range of Short-
Term Fixed Income Securities, as described below.
    The Fund may invest in the following Short-Term Fixed Income 
Securities:
     short-term obligations of the U.S. Government, its 
agencies, instrumentalities, authorities or political subdivisions 
(other than cash equivalents); \8\
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    \8\ The term ``cash equivalents'' is defined in Commentary 
.01(c) to NYSE Arca Rule 8.600-E.
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     mortgage pass-through securities; \9\
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    \9\ The Fund will seek to obtain exposure to U.S. agency 
mortgage pass-through securities primarily through the use of ``to-
be-announced'' or ``TBA transactions.''
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     corporate bonds, floating rate bonds or variable rate 
bonds (including ``inverse floaters'');
     bank obligations, including negotiable certificates of 
deposit, time deposits and bankers' acceptances \10\ (other than cash 
equivalents);
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    \10\ Under normal market conditions, the Fund intends to invest 
more than 25% of its total assets in bank obligations.
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     zero coupon securities;
     Eurodollar Certificates of Deposit (``ECDs''), Eurodollar 
Time Deposits (``ETDs'') and Yankee Certificates of Deposit (``YCDs''); 
\11\
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    \11\ ECDs and ETDs are U.S. dollar denominated certificates of 
deposit and time deposits, respectively, issued by non-U.S. branches 
of domestic banks and non-U.S. banks. YCDs are U.S. dollar 
denominated certificates of deposit issued by U.S. branches of non-
U.S. banks.
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     inflation-protected public obligations (``TIPS)'' of the 
U.S. Treasury, as well as TIPS of major governments and emerging market 
countries, excluding the United States;
     repurchase and reverse repurchase agreements (other than 
repurchase and reverse repurchase agreements that are cash 
equivalents);
     sovereign debt obligations issued or guaranteed by foreign 
governments or their agencies;
     commercial paper (other than cash equivalents);
     private placements, restricted securities and Rule 144A 
securities.
    The Fund may hold cash and cash equivalents.
Other Investments
    While the Fund, under normal market conditions, will invest 
principally in the securities described above in ``Principal 
Investments,'' the Fund may invest its

[[Page 5495]]

remaining assets in the securities described below.
    The Fund may invest in exchange traded funds (``ETFs'').\12\
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    \12\ For purposes of this filing, ``ETFs'' are Investment 
Company Units (as described in NYSE Arca Rule 5.2-E(j)(3)); 
Portfolio Depositary Receipts (as described in NYSE Arca Rule 8.100-
E); and Managed Fund Shares (as described in NYSE Arca Rule 8.600-
E). All ETFs will be listed and traded in the U.S. on a national 
securities exchange. The Fund will not invest in inverse or 
leveraged (e.g., 2X, -2X, 3X or -3X) ETFs.
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    The Fund may invest in the securities of non-exchange-traded 
investment company securities, subject to applicable limitations under 
Section 12(d)(1) of the 1940 Act.
    The Fund will not invest in securities or other financial 
instruments that have not been described in this proposed rule change.
Creation and Redemption of Creation Units
    The Fund will issue and redeem its Shares on a continuous basis, at 
net asset value (``NAV''), only in a large specified number of Shares 
(a ``Creation Unit''). Creation Unit sizes are 50,000 Shares per 
Creation Unit. The Creation Unit size for the Fund may change.
    The Trust will issue and sell Shares of the Fund only in Creation 
Units on a continuous basis through the Distributor at their NAV per 
Share next determined after receipt of an order, on any Business Day 
(as defined below), in proper form pursuant to the terms of the 
Authorized Participant Agreement (``Participant Agreement''). A 
``Business Day'' with respect to the Fund is, generally, any day on 
which the NYSE is open for business.
    The consideration for purchase of a Creation Unit of the Fund 
generally will consist of either (i) the in-kind deposit of a 
designated portfolio of securities (the ``Deposit Securities'') per 
each Creation Unit and the ``Cash Component'' (defined below), computed 
as described below or (ii) the cash value of the Deposit Securities 
(``Deposit Cash'') and Cash Component, computed as described below.
    Together, the Deposit Securities or Deposit Cash, as applicable, 
and the Cash Component constitute the ``Fund Deposit,'' which 
represents the minimum initial and subsequent investment amount for a 
Creation Unit of the Fund. The ``Cash Component'', is an amount equal 
to the difference between the NAV of the Shares (per Creation Unit) and 
the market value of the Deposit Securities or Deposit Cash, as 
applicable.
    The Custodian, through the National Securities Clearing Corporation 
(``NSCC''), will make available 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 of shares of each 
Deposit Security or the required amount of Deposit Cash, as applicable, 
to be included in the current Fund Deposit (based on information at the 
end of the previous Business Day) for the Fund.
    To be eligible to place orders to purchase a Creation Unit 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 SEC; or (ii) 
a Depository Trust Company participant.
Redemption of Shares
    Shares may be redeemed only in Creation Units at their NAV next 
determined after receipt of a redemption request in proper form by the 
Fund and only on a Business Day. With respect to the Fund, the 
Custodian, through the NSCC, will make available prior to the opening 
of business on the Exchange on each Business Day, the list of the names 
and share quantities of the Fund's portfolio securities that will be 
applicable on that day (``Fund Securities''). Fund Securities received 
on redemption may not be identical to Deposit Securities.
    Redemption proceeds for a Creation Unit will be paid either in-kind 
or in cash or a combination thereof, as determined by the Trust. With 
respect to in-kind redemptions of the Fund, redemption proceeds for a 
Creation Unit will consist of Fund Securities, as announced by the 
Custodian prior to the opening of business on the Business Day of the 
request for redemption received in proper form plus cash in an amount 
equal to the difference between the NAV of the Shares being redeemed, 
as next determined after a receipt of a request in proper form, and the 
value of the Fund Securities (the ``Cash Redemption Amount''), less a 
fixed redemption transaction fee and any applicable additional variable 
charge. Notwithstanding the foregoing, at the Trust's discretion, an 
Authorized Participant may receive the corresponding cash value of the 
securities in lieu of the in-kind securities value representing one or 
more Fund Securities.\13\
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    \13\ The Adviser represents that, to the extent the Trust 
effects the creation or redemption of Shares wholly or partially in 
cash, such transactions will be effected in the same manner for all 
Authorized Participants.
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Investment Restrictions
    The Fund's investments will be consistent with the Fund's 
investment objective and will not be used to enhance leverage (although 
certain derivatives and other investments may result in 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).\14\
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    \14\ 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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Disclosed Portfolio
    The Fund's disclosure of derivative positions in the applicable 
Disclosed Portfolio includes information that market participants can 
use to value these positions intraday. On a daily basis, the Fund will 
disclose the information regarding the Disclosed Portfolio required 
under NYSE Arca Rule 8.600-E (c)(2) to the extent applicable. The 
Fund's website information will be publicly available at no charge.
Application of Generic Listing Requirements
    The Exchange is submitting this proposed rule change because the 
portfolio for the Fund will not meet all of the ``generic'' listing 
requirements of Commentary .01 to NYSE Arca Rule 8.600-E applicable to 
the listing of Managed Fund Shares. The Fund's portfolio would meet all 
such requirements except for those set forth in Commentary .01(a)(1)(A) 
through (E) (with respect to the Fund's investments in non-exchange-
traded investment company securities) and Commentary .01(b)(3) to NYSE 
Arca Rule 8.600-E with respect to the Fund's investments in Short-Term 
Fixed Income Securities.\15\
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    \15\ Commentary .01(b)(3) to NYSE Arca Rule 8.600-E provides as 
follows:
    ``An underlying portfolio (excluding exempted securities) that 
includes fixed income securities shall include a minimum of 13 non-
affiliated issuers, provided, however, that there shall be no 
minimum number of non-affiliated issuers required for fixed income 
securities if at least 70% of the weight of the portfolio consists 
of equity securities as described in Commentary .01(a) above''.
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    The Fund's Short-Term Fixed Income Securities may not comply with 
the requirements set forth in Commentary .01(b)(3) to NYSE Arca Rule 
8.600-E. While the requirements set forth in Commentary .01(b)(3) is 
intended to ensure that the Short-Term Fixed

[[Page 5496]]

Income Securities included in the Fund's portfolio are sufficiently 
diversified among non-affiliated issuers, the Exchange believes that 
any concerns related to non-compliance are mitigated by the types of 
instruments that the Fund would hold. The Fund's Short-Term Fixed 
Income Securities to a significant extent will include those 
instruments that are included in the definition of cash and cash 
equivalents, but are not considered cash and cash equivalents because 
they have maturities of three months or longer. The Exchange believes, 
however, that Short-Term Fixed Income Securities are less susceptible 
than other types of fixed income instruments both to price manipulation 
and volatility and that the holdings as proposed are generally 
consistent with the policy concerns which Commentary .01(b)(3) is 
intended to address. Because the Short-Term Fixed Income Securities 
will consist generally of high-quality Short-Term Fixed Income 
Securities described above, the Exchange believes that the policy 
concerns that Commentary .01(b)(3) is intended to address are otherwise 
mitigated and that the Fund should be permitted to hold these 
securities in a manner that may not comply with such provision.
    The Adviser represents that the Fund is not a money market fund but 
its investment strategy follows certain guidelines applicable to such 
funds. Specifically, the Fund will only in Short-Term Fixed Income 
Securities to maintain a maximum dollar-weighted average maturity of 
sixty days or less and dollar-weighted average life of 120 days or 
less. The Fund will invest in securities that have remaining maturities 
of 397 calendar days or less. While the Fund will have portfolio 
holdings that meet the definition of cash and cash equivalents under 
NYSE Arca Rule 8.600-E, Commentary .01(c), the remaining assets may at 
times be invested in longer dated securities, including U.S. and 
foreign government securities, and corporate bonds. The exemption from 
the 13 non-affiliated issuer requirement for the fixed income portion 
of the Fund's portfolio will allow the Fund to invest in a limited 
number of Short-Term Fixed Income Securities without having to allocate 
a small percentage of assets under management to the required minimum 
13 issuers.
    The Fund may invest in shares of investment company securities 
(other than ETFs), which are equity securities. Therefore, to the 
extent the Fund invests in shares of other non-exchange-traded open-end 
management investment company securities, the Fund will not comply with 
the requirements of Commentary .01(a)(1)(A) through (E) to NYSE Arca 
Rule 8.600-E (U.S. Component Stocks) with respect to its equity 
securities holdings.
    However, it is appropriate and in the public interest to approve 
listing and trading of Shares of the Fund notwithstanding that the 
Fund's holdings in such securities would not meet the requirements of 
Commentary .01(a)(1)(A) through (E) to Rule 8.600-E. Investments in 
other non-exchange-traded open-end management investment company 
securities will not exceed 20% of the total assets of the Fund. Such 
investments, which may include mutual funds that invest, for example, 
principally in fixed income securities, would be utilized to help the 
Fund meet its investment objective and to equitize cash in the short 
term. The Fund will invest in such securities only to the extent that 
those investments would be consistent with the requirements of Section 
12(d)(1) of the 1940 Act and the rules thereunder.\16\ Because such 
securities must satisfy applicable 1940 Act diversification 
requirements, and have a net asset value based on the value of 
securities and financial assets the investment company holds, it is 
both unnecessary and inappropriate to apply to such investment company 
securities the criteria in Commentary .01(a)(1).
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    \16\ The Commission has previously approved proposed rule 
changes under Section 19(b) of the Act for series of Managed Fund 
Shares that may invest in non-exchange traded investment company 
securities to the extent permitted by Section 12(d)(1) of the 1940 
Act and the rules thereunder. See, e.g., Securities Exchange Act 
Release No. 86362 (July 12, 2019), 84 FR 34457 (July 18, 2019) (SR-
NYSEArca-2019-36 (Notice of Filing of Amendment No. 3 and Order 
Granting Accelerated Approval of a Proposed Rule Change, as Modified 
by Amendment No. 3, to List and Trade Shares of JPMorgan Income 
Builder Blend ETF under NYSE Arca Rule 8.600-E).
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    The Exchange notes that Commentary .01(a)(1)(A) through (D) to Rule 
8.600-E exclude certain ``Derivative Securities Products'' that are 
exchange-traded investment company securities, including Investment 
Company Units (as described in NYSE Arca Rule 5.2-E(j)(3)), Portfolio 
Depositary Receipts (as described in NYSE Arca Rule 8.100-E)) and 
Managed Fund Shares (as described in NYSE Arca Rule 8.600-E)).\17\ In 
its 2008 Approval Order approving amendments to Commentary .01(a) to 
Rule 5.2(j)(3) to exclude Derivative Securities Products from certain 
provisions of Commentary .01(a) (which exclusions are similar to those 
in Commentary .01(a)(1) to Rule 8.600-E), the Commission stated that 
``based on the trading characteristics of Derivative Securities 
Products, it may be difficult for component Derivative Securities 
Products to satisfy certain quantitative index criteria, such as the 
minimum market value and trading volume limitations.'' The Exchange 
notes that it would be difficult or impossible to apply to mutual fund 
shares certain of the generic quantitative criteria (e.g., market 
capitalization, trading volume, or portfolio criteria) in Commentary 
.01(a)(1) (A) through (D) applicable to U.S. Component Stocks. For 
example, the requirements for U.S. Component Stocks in Commentary 
.01(a)(1)(B) that there be minimum monthly trading volume of 250,000 
shares, or minimum notional volume traded per month of $25,000,000, 
averaged over the last six months are tailored to exchange-traded 
securities (i.e., U.S. Component Stocks) and not to mutual fund shares, 
which do not trade in the secondary market and for which no such volume 
information is reported. In addition, Commentary .01(a)(1)(A) relating 
to minimum market value of portfolio component stocks, Commentary 
.01(a)(1)(C) relating to weighting of portfolio component stocks, and 
Commentary .01(a)(1)(D) relating to minimum number of portfolio 
components are not appropriately applied to open-end management 
investment company securities; open-end investment companies hold 
multiple individual securities as disclosed publicly in accordance with 
the 1940 Act, and application of Commentary .01(a)(1)(A) through (D)

[[Page 5497]]

would not serve the purposes served with respect to U.S. Component 
Stocks, namely, to establish minimum liquidity and diversification 
criteria for U.S. Component Stocks held by series of Managed Fund 
Shares.
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    \17\ The Commission initially approved the Exchange's proposed 
rule change to exclude ``Derivative Securities Products'' (i.e., 
Investment Company Units and securities described in Section 2 of 
Rule 8) and ``Index-Linked Securities (as described in Rule 5.2-
E(j)(6)) from Commentary .01(a)(A) (1) through (4) to Rule 5.2-
E(j)(3) in Securities Exchange Act Release No. 57751 (May 1, 2008), 
73 FR 25818 (May 7, 2008) (SR-NYSEArca-2008-29) (Order Granting 
Approval of a Proposed Rule Change, as Modified by Amendment No. 1 
Thereto, to Amend the Eligibility Criteria for Components of an 
Index Underlying Investment Company Units)(``2008 Approval Order''). 
See also Securities Exchange Act Release No. 57561 (March 26, 2008), 
73 FR 17390 (April 1, 2008) (Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto to Amend the Eligibility Criteria 
for Components of an Index Underlying Investment Company Units). The 
Commission subsequently approved generic criteria applicable to 
listing and trading of Managed Fund Shares, including exclusions for 
Derivative Securities Products and Index-Linked Securities in 
Commentary .01(a)(1)(A) through (D), in Securities Exchange Act 
Release No. 78397 (July 22, 2016), 81 FR 49320 (July 27, 2016) 
(Order Granting Approval of Proposed Rule Change, as Modified by 
Amendment No. 7 Thereto, Amending NYSE Arca Rule 8.600-E To Adopt 
Generic Listing Standards for Managed Fund Shares). See also 
Amendment No. 7 to SR-NYSEArca-2015-110, available at https://www.sec.gov/comments/sr-nysearca-2015-110/nysearca2015110-9.pdf.
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    The Exchange notes that the Commission has previously approved 
listing and trading of an issue of Managed Fund Shares that may invest 
in equity securities that are non-exchange-traded securities of other 
open-end investment company securities notwithstanding that the fund 
would not meet the requirements of Commentary .01(a)(1)(A) through (E) 
to Rule 8.600-E with respect to such fund's investments in such 
securities.\18\ Thus, the Exchange believes that it is appropriate to 
permit the Fund to invest in non-exchange-traded open-end management 
investment company securities, as described above.
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    \18\ See Securities Exchange Act Release No. 83319 (May 24, 
2018) (SR-NYSEArca-2018-15) (Order Approving a Proposed Rule Change, 
as Modified by Amendment No. 1 Thereto, to Continue Listing and 
Trading Shares of the PGIM Ultra Short Bond ETF Under NYSE Arca Rule 
8.600-E).
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    The Exchange notes that, other than Commentary .01(a)(1)(A) through 
(E) Commentary .01(b)(3) to Rule 8.600-E, the Fund will meet all other 
requirements of Rule 8.600-E.
Availability of Information
    The Fund's website (www.spdrs.com) will include a form of the 
prospectus for the Fund that may be downloaded. The Fund's website 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''),\19\ 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 
Adviser will disclose on the Fund's website the Disclosed Portfolio for 
the Fund as defined in NYSE Arca Rule 8.600-E(c)(2) that will form the 
basis for the Fund's calculation of NAV at the end of the business 
day.\20\
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    \19\ 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.
    \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''). 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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    Investors can also obtain the Fund's Statement of Additional 
Information (``SAI''), its Shareholder Reports, its Form N-CSR, filed 
twice a year, and its Form N-CEN, filed annually. The Fund's SAI and 
Shareholder Reports are available free upon request from the Trust, and 
those documents and the Form N-CSR and Form N-CEN may be viewed on-
screen or downloaded from the Commission's website at www.sec.gov.
    Quotation and last sale information for the Shares and ETFs will be 
available via the CTA high speed line. Quotation and last sale 
information for such U.S. exchange-listed securities will be available 
from the exchange on which they are listed and from major market data 
vendors. 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 information for Short-Term Fixed Income Securities and 
cash equivalents may be obtained from brokers and dealers who make 
markets in such securities or through nationally recognized pricing 
services through subscription agreements. The U.S. dollar value of 
foreign securities, instruments and currencies can be derived by using 
foreign currency exchange rate quotations obtained from nationally 
recognized pricing services.
    In addition, the Portfolio Indicative Value (``PIV''), as defined 
in NYSE Arca Rule 8.600-E(c)(3), will be widely disseminated by one or 
more major market data vendors at least every 15 seconds during the 
Core Trading Session.\21\ The dissemination of the PIV, together with 
the Disclosed Portfolio, will allow investors to determine the 
approximate value of the underlying portfolio of the Fund on a daily 
basis and will provide a close estimate of that value throughout the 
trading day.
---------------------------------------------------------------------------

    \21\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available PIVs 
taken from the 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.\22\ Trading in Shares of the Fund 
will be halted if the circuit breaker parameters in NYSE Arca Rule 
7.12-E 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 of the Fund inadvisable.
---------------------------------------------------------------------------

    \22\ See NYSE Arca Rule 7.12-E.
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    Trading in the Shares will be subject to NYSE Arca Rule 8.600-
E(d)(2)(D), which sets forth circumstances under which Shares of the 
Fund may be halted.
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 4:00 a.m. to 8:00 p.m. E.T. in 
accordance with NYSE Arca Rule 7.34-E (Early, 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 Rule 7.6-E, 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.
    Except as described herein, the Shares of the Fund will conform to 
the initial and continued listing criteria under NYSE Arca Rule 8.600-
E. The Exchange represents that, for initial and/or continued listing, 
the Fund will be in compliance with Rule 10A-3 \23\ under the Act, as 
provided by NYSE Arca Rule 5.3-E. 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 of the Fund that the NAV and the Disclosed Portfolio will be 
made available to all market participants at the same time.
---------------------------------------------------------------------------

    \23\ 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

[[Page 5498]]

designed to detect violations of Exchange rules and applicable federal 
securities laws.\24\ The Exchange represents that these procedures are 
adequate to properly monitor Exchange trading of the Shares in all 
trading sessions and to deter and detect violations of Exchange rules 
and applicable federal securities laws.
---------------------------------------------------------------------------

    \24\ 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 and ETFs with 
other markets and other entities that are members of the Intermarket 
Surveillance Group (``ISG''), and the Exchange or FINRA, on behalf of 
the Exchange, or both, may obtain trading information regarding trading 
in Shares and ETFs from such markets and other entities. In addition, 
the Exchange may obtain information regarding trading in Shares and 
ETFs from markets and other entities that are members of ISG or with 
which the Exchange has in place a comprehensive surveillance sharing 
agreement.\25\ 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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    \25\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio for the Fund may trade on markets that are 
members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    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 holdings or reference assets, (b) 
limitations on portfolio holdings or reference assets, or (c) the 
applicability of Exchange listing rules specified in this rule filing 
shall constitute continued listing requirements for listing the Shares 
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 Rule 5.5-E(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 of the Fund. 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 9.2-E(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; (3) the risks involved in 
trading the Shares during the Early 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 of the Fund 
will be calculated after 4:00 p.m. E.T. each trading day.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \26\ 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.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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 Rule 8.600-E. The 
Adviser is not registered as a broker-dealer but is affiliated with a 
broker-dealer and has implemented and will maintain a fire wall with 
respect to such broker-dealer affiliate regarding access to information 
concerning the composition and/or changes to the portfolio. 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 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 applicable federal securities laws. The Exchange or 
FINRA, on behalf of the Exchange, or both, will communicate as needed 
regarding trading in the Shares and ETFs with other markets and 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 such securities from such markets and other entities. 
In addition, the Exchange may obtain information regarding trading in 
such securities from markets and 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.
    The PIV, as defined in NYSE Arca Rule 8.600-E (c)(3), will be 
widely disseminated by one or more major market data vendors at least 
every 15 seconds during the Core Trading Session.
    Except as described herein, the Shares of the Fund will conform to 
the initial and continued listing criteria under NYSE Arca Rule 8.600-
E. The Exchange represents that, for initial and/or continued listing, 
the Fund will be in compliance with Rule 10A-3 under the Act, as 
provided by NYSE Arca Rule 5.3-E. 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 of the Fund that the NAV per Share will be calculated daily 
and that

[[Page 5499]]

the NAV and the Disclosed Portfolio will be made available to all 
market participants at the same time. In addition, a large amount of 
information is publicly available regarding the Fund and the Shares, 
thereby promoting market transparency. The Fund's portfolio holdings 
will be disclosed on its website daily after the close of trading on 
the Exchange and prior to the opening of trading on the Exchange the 
following day. On a daily basis, the Fund will disclose the information 
regarding the Disclosed Portfolio required under NYSE Arca Rule 8.600-E 
(c)(2) to the extent applicable. The Fund's website information will be 
publicly available at no charge.
    Investors can also obtain the Fund's Statement of Additional 
Information (``SAI''), its Shareholder Reports, its Form N-CSR, filed 
twice a year, and its Form N-CEN, filed annually. The Fund's SAI and 
Shareholder Reports are available free upon request from the Trust, and 
those documents and the Form N-CSR and Form N-CEN may be viewed on-
screen or downloaded from the Commission's website at www.sec.gov. 
Quotation and last sale information for the Shares and ETFs will be 
available via the CTA high speed line.
    With respect to the Fund's non-compliance with Commentary .01(b)(3) 
(with respect to Short-Term Fixed Income Securities),\27\ the 
requirement set forth in Commentary .01(b)(3) is intended to ensure 
that the Short-Term Fixed Income Securities included in the Fund's 
portfolio are sufficiently diversified among non-affiliated issuers, 
and the Exchange believes that any concerns related to non-compliance 
are mitigated by the types of instruments that the Fund would hold. The 
Fund's Short-Term Fixed Income Securities to a significant extent will 
include those instruments that are included in the definition of cash 
and cash equivalents, but are not considered cash and cash equivalents 
because they have maturities of three months or longer. The Exchange 
believes, however, that Short-Term Fixed Income Securities are less 
susceptible than other types of fixed income instruments both to price 
manipulation and volatility and that the holdings as proposed are 
generally consistent with the policy concerns which Commentary 
.01(b)(3) is intended to address. Because the Short-Term Fixed Income 
Securities will consist generally of high-quality Short-Term Fixed 
Income Securities described above, the Exchange believes that the 
policy concerns that Commentary .01(b)(3) is intended to address are 
otherwise mitigated and that the Fund should be permitted to hold these 
securities in a manner that may not comply with such provision.
---------------------------------------------------------------------------

    \27\ See note 15, supra.
---------------------------------------------------------------------------

    As noted above, the Fund's portfolio will not meet the requirements 
of Commentary .01(a)(1)(A) through (E) to Rule 8.600-E with respect to 
the Fund's investments in non-exchange-traded securities of open-end 
investment company securities. The Exchange believes that it is 
appropriate and in the public interest to approve listing and trading 
of Shares of the Fund on the Exchange notwithstanding that the Fund 
would not meet the requirements of Commentary .01(a)(1)(A) through (E) 
to Rule 8.600-E with respect to the Fund's investments in non-exchange-
traded securities of open-end investment company securities. 
Investments in non-exchange-traded securities of open-end investment 
company securities will not be principal investments of the Fund. Such 
investments, which may include mutual funds that invest, for example, 
principally in fixed income securities, would be utilized to help the 
Fund meet its investment objective and to equitize cash in the short 
term.
    The website for the Fund will include the prospectus for the Fund 
and additional data relating to NAV and other applicable quantitative 
information. 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 of 
the Fund. Trading in Shares of the Fund will be halted if the circuit 
breaker parameters in NYSE Arca Rule 7.12-E 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 Rule 8.600-E(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 
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).\28\
---------------------------------------------------------------------------

    \28\ See note 14, supra.
---------------------------------------------------------------------------

    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
an actively-managed exchange-traded product and 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 have ready access to 
information regarding the Fund's holdings, the PIV, the Disclosed 
Portfolio for the Fund, 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 holds 
fixed income securities, equity securities and derivatives and that 
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 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
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

[[Page 5500]]

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-2020-07 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-2020-07. 
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 website (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 website 
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. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEArca-2020-07 and should 
be submitted on or before February 20, 2020.
---------------------------------------------------------------------------

    \29\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-01645 Filed 1-29-20; 8:45 am]
 BILLING CODE 8011-01-P


