[Federal Register Volume 86, Number 83 (Monday, May 3, 2021)]
[Notices]
[Pages 23460-23471]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09024]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91675; File No. SR-NASDAQ-2021-023]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Adopt Nasdaq Rule 5760 To Permit the Listing and Trading of Managed 
Portfolio Shares

April 26, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on April 14, 2021, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III, below, which Items have been prepared by the 
Exchange. 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\ 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 adopt Nasdaq Rule 5760 to permit the 
listing and trading of Managed Portfolio Shares, which are shares of 
actively managed exchange-traded funds for which the portfolio is 
disclosed in accordance with standard mutual fund disclosure rules.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 Exchange 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 these 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 aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to add new Nasdaq Rule 5760 for the purpose 
of permitting the listing and trading, or trading pursuant to unlisted 
trading privileges, of Managed Portfolio Shares, which are securities 
issued by an actively managed open-end management investment company. 
This proposed rule change to add new Nasdaq Rule 5760 is substantially 
similar to the recently approved rule change by Cboe BZX Exchange, Inc. 
(``Cboe BZX'') to adopt rule 14.11(k).\3\
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    \3\ See Securities and Exchange Act Release No. 87759 (December 
16, 2019) 84 FR 70223 (December 20, 2019) (SR-CboeBZX-2019-047).
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Proposed Listing Rules
    Proposed Nasdaq Rule 5760(a) provides that the Exchange will 
consider for trading, whether by listing or pursuant to unlisted 
trading privileges, Managed Portfolio Shares that meet the criteria of 
Nasdaq Rule 5760.
    Proposed Nasdaq Rule 5760(b) provides that Nasdaq Rule 5760 is 
applicable only to Managed Portfolio Shares and that, except to the 
extent inconsistent with Nasdaq Rule 5760, or unless the context 
otherwise requires, the rules and procedures of the Exchange's Board of 
Directors shall be applicable to the trading on the Exchange of such 
securities. Proposed Nasdaq Rule 5760(b) provides further that Managed 
Portfolio Shares are included within the definition of ``security'' or 
``securities'' as such terms are used in the Rules of the Exchange.
    Proposed Nasdaq Rule 5760(b)(1) provides that the Exchange will 
file separate proposals under Section 19(b) of the Act before the 
listing and trading of a series of Managed Portfolio Shares. 
Additionally, that all statements or representations regarding (a) the 
description of the portfolio or reference assets; (b) limitations on 
portfolio holdings or reference assets; (c) dissemination and 
availability of the reference asset or intraday indicative values and 
Verified Intraday Indicative Values (``VIIV'') (as applicable); or (d) 
the applicability of Nasdaq listing rules specified in such proposals 
shall constitute continued listing standards.
    Proposed Nasdaq Rule 5760(b)(2) provides that transactions in 
Managed Portfolio Shares will occur throughout the Exchange's System 
Hours.\4\
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    \4\ See Nasdaq Equity Rules Equity 1. Section 1(a)(9). The term 
``System Hours'' is defined as the period of time beginning at 4:00 
a.m. E.T. and ending at 8:00 p.m. E.T. (or such earlier time as may 
be designated by Nasdaq on a day when Nasdaq closes early).
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    Proposed Nasdaq Rule 5760(b)(3) provides that the minimum price 
variation for quoting and entry of orders in Managed Portfolio Shares 
is $0.01.
    Proposed Nasdaq Rule 5760(b)(4) provides that the Exchange will 
implement and maintain written surveillance procedures for Managed 
Portfolio Shares. As part of these surveillance procedures, the 
Investment Company's investment adviser will upon request by the 
Exchange or FINRA, on behalf of the Exchange, make available to the 
Exchange or FINRA the daily portfolio holdings of each series of 
Managed Portfolio Shares.
    Proposed Nasdaq Rule 5760(b)(5) provides that, if the investment 
adviser to the Investment Company issuing Managed Portfolio Shares is 
registered as a broker-dealer or is affiliated with a broker-dealer, 
such investment adviser will erect and maintain a ``fire wall'' between 
the investment adviser and

[[Page 23461]]

personnel of the broker-dealer or broker-dealer affiliate, as 
applicable, with respect to access to information concerning the 
composition of and/or changes to such Investment Company portfolio and/
or the Creation Basket. Any person related to the investment adviser or 
Investment Company who makes decisions pertaining to the Investment 
Company's portfolio composition or has access to information regarding 
the Investment Company's portfolio composition or changes thereto or 
the Creation Basket must be subject to procedures designed to prevent 
the use and dissemination of material nonpublic information regarding 
the applicable Investment Company portfolio or changes thereto or the 
Creation Basket.
    Proposed Nasdaq Rule 5760(b)(6) provides that any person or entity, 
including an AP Representative, custodian, Reporting Authority, 
distributor, or administrator, who has access to information regarding 
the Investment Company's portfolio composition or changes thereto or 
the Creation Basket, must be subject to procedures designed to prevent 
the use and dissemination of material nonpublic information regarding 
the applicable Investment Company portfolio or changes thereto or the 
Creation Basket. Moreover, if any such person or entity is registered 
as a broker-dealer or affiliated with a broker-dealer, such person or 
entity will erect and maintain a ``fire wall'' between the person or 
entity and the broker-dealer with respect to access to information 
concerning the composition and/or changes to such Investment Company 
portfolio or Creation Basket.
    Proposed Nasdaq Rule 5760(c)(1) defines the term ``Managed 
Portfolio Share'' as a security that (a) represents an interest in an 
investment company registered under the Investment Company Act of 1940 
(``Investment Company'') organized as an open-end management investment 
company, that invests in a portfolio of securities selected by the 
Investment Company's investment adviser consistent with the Investment 
Company's investment objectives and policies; (b) is issued in a 
Creation Unit, or multiples thereof, in return for a designated 
portfolio of instruments (and/or an amount of cash) with a value equal 
to the next determined net asset value (``NAV'') and delivered to the 
Authorized Participant (as defined in the Investment Company's Form N-
1A filed with the SEC) through a Confidential Account; (c) when 
aggregated into a Redemption Unit, or multiples thereof, may be 
redeemed for a designated portfolio of instruments (and/or an amount of 
cash) with a value equal to the next determined NAV delivered to the 
Confidential Account for the benefit of the Authorized Participant; and 
(d) the portfolio holdings for which are disclosed within at least 60 
days following the end of every fiscal quarter.\5\
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    \5\ For purposes of this filing, references to a series of 
Managed Portfolio Shares are referred to interchangeably as a series 
of Managed Portfolio Shares or as a ``Fund'' and shares of a series 
of Managed Portfolio Shares are generally referred to as the 
``Shares''.
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    Proposed Nasdaq Rule 5760(c)(2) defines the term ``Verified 
Intraday Indicative Value'' as the indicative value of a Managed 
Portfolio Share based on all of the holdings of a series of Managed 
Portfolio Shares as of the close of business on the prior business day 
and, for corporate actions, based on the applicable holdings as of the 
opening of business on the current business day, priced and 
disseminated in one second intervals during Nasdaq's regular market 
session by the Reporting Authority.
    Proposed Nasdaq Rule 5760(c)(3) defines the term ``AP 
Representative'' as an unaffiliated broker-dealer, with which an 
Authorized Participant has signed an agreement to establish a 
Confidential Account for the benefit of such Authorized Participant, 
that will deliver or receive, on behalf of the Authorized Participant, 
all consideration to or from the Investment Company in a creation or 
redemption. An AP Representative will not be permitted to disclose the 
Creation Basket to any person, including the Authorized Participants.
    Proposed Nasdaq Rule 5760(c)(4) defines the term ``Confidential 
Account'' as an account owned by an Authorized Participant and held 
with an AP Representative on behalf of the Authorized Participant. The 
account will be established and governed by contractual agreement 
between the AP Representative and the Authorized Participant solely for 
the purposes of creation and redemption, while keeping confidential the 
Creation Basket constituents of each series of Managed Portfolio 
Shares, including from the Authorized Participant. The books and 
records of the Confidential Account will be maintained by the AP 
Representative on behalf of the Authorized Participant.
    Proposed Nasdaq Rule 5760(c)(5) defines the term ``Creation 
Basket'' as on any given business day the names and quantities of the 
specified instruments and/or an amount of cash that are required for an 
AP Representative to deposit in-kind on behalf of an Authorized 
Participant in exchange for a Creation Unit and the names and 
quantities of the specified instruments and/or an amount of cash that 
will be transferred in-kind to an AP Representative on behalf of an 
Authorized Participant in exchange for a Redemption Unit, which will be 
identical and will be transmitted to each AP Representative before the 
commencement of trading.
    Proposed Nasdaq Rule 5760(c)(6) defines the term ``Creation Unit'' 
as a specified minimum number of Managed Portfolio Shares issued by an 
Investment Company at the request of an Authorized Participant in 
return for a designated portfolio of instruments and/or cash.
    Proposed Nasdaq Rule 5760(c)(7) defines the term ``Redemption 
Unit'' as a specified minimum number of Managed Portfolio Shares that 
may be redeemed to an Investment Company at the request of an 
Authorized Participant in return for a portfolio of instruments and/or 
cash.
    Proposed Nasdaq Rule 5760(c)(8) defines the term ``Reporting 
Authority'' in respect of a particular series of Managed Portfolio 
Shares means the Exchange, the exchange that lists a particular series 
of Managed Portfolio Shares (if the Exchange is trading such series 
pursuant to unlisted trading privileges), an institution, or a 
reporting service designated by the Investment Company as the official 
source for calculating and reporting information relating to such 
series, including, the NAV, the VIIV, or other information relating to 
the issuance, redemption or trading of Managed Portfolio Shares. A 
series of Managed Portfolio Shares may have more than one Reporting 
Authority, each having different functions.
    Proposed Nasdaq Rule 5760(c)(9) provides that the term ``Normal 
Market Conditions'' includes, but is not limited to, the absence of 
trading halts in the applicable financial markets generally; 
operational issues (e.g., systems failure) causing dissemination of 
inaccurate market information; or force majeure type events such as 
natural or manmade disaster, act of God, armed conflict, act of 
terrorism, riot or labor disruption or any similar intervening 
circumstance.
    Proposed Nasdaq Rule 5760(d)(1) sets forth initial listing criteria 
applicable to Managed Portfolio Shares. Proposed Nasdaq Rule 
5760(d)(1)(A) provides that, for each series of Managed Portfolio 
Shares, the Exchange will establish a minimum number of Managed 
Portfolio Shares required to be outstanding at the time of commencement 
of trading on the

[[Page 23462]]

Exchange. In addition, proposed Nasdaq Rule 5760(d)(1)(B) provides that 
the Exchange will obtain a representation from the Investment Company 
that issues each series of Managed Portfolio Shares that the NAV per 
share for the series will be calculated daily and that the NAV will be 
made available to all market participants at the same time. Proposed 
Nasdaq Rule 5760(d)(1)(C) provides that all Managed Portfolio Shares 
shall have a stated investment objective, which shall be adhered to 
under Normal Market Conditions.
    Proposed Nasdaq Rule 5760(d)(2) provides that each series of 
Managed Portfolio Shares will be listed and traded subject to 
application of the following continued listing criteria. Proposed 
Nasdaq Rule 5760(d)(2)(A) provides that the VIIV for Managed Portfolio 
Shares will be widely disseminated by the Reporting Authority and/or by 
one or more major market data vendors in one second intervals during 
Nasdaq's regular market session, and will be disseminated to all market 
participants at the same time. Proposed Nasdaq Rule 5760(d)(2)(B) 
provides that the Exchange will consider the suspension of trading in, 
and will commence delisting proceedings under the Nasdaq Rule 5800 
Series, for a series of Managed Portfolio Shares, under any of the 
following circumstances: (i) If, following the initial twelve-month 
period after commencement of trading on the Exchange of a series of 
Managed Portfolio Shares, there are fewer than 50 beneficial holders of 
the series of Managed Portfolio Shares for 30 or more consecutive 
trading days; (ii) if the Exchange has halted trading in a series of 
Managed Portfolio Shares because the VIIV is interrupted pursuant to 
Nasdaq Rule 5760(d)(2)(C)(ii) and such interruption persists past the 
trading day in which it occurred or is no longer available; (iii) if 
the Exchange has halted trading in a series of Managed Portfolio Shares 
because the NAV with respect to such series of Managed Portfolio Shares 
is not disseminated to all market participants at the same time, the 
holdings of such series of Managed Portfolio Shares are not made 
available on at least a quarterly basis as required under the 
Investment Company Act of 1940 (``1940 Act''), or such holdings are not 
made available to all market participants at the same time pursuant to 
Nasdaq Rule 5760(d)(2)(C)(ii) and such issue persists past the trading 
day in which it occurred; (iv) if the Exchange has halted trading in a 
series of Managed Portfolio Shares pursuant to Nasdaq Rule 
5760(d)(2)(C)(i), such issue persists past the trading day in which it 
occurred; (v) if the Investment Company issuing the Managed Portfolio 
Shares has failed to file any filings required by the Commission or if 
the Exchange is aware that the Investment Company is not in compliance 
with the conditions of any currently applicable exemptive order or no-
action relief granted by the Commission or Commission staff to the 
Investment Company with respect to the series of Managed Portfolio 
Shares; (vi) if any of the continued listing requirements set forth in 
Nasdaq Rule 5760 are not continuously maintained; (vii) if the series 
of Managed Portfolio Shares is not in compliance with any statements or 
representations included in the applicable rule proposal under Section 
19(b) regarding: (a) The description of the portfolio or reference 
assets; (b) limitations on portfolio holdings or reference assets; (c) 
dissemination and availability of the reference asset or intraday 
indicative values and VIIVs; or (d) the applicability of Nasdaq listing 
rules specified in such proposals; or (viii) if such other event shall 
occur or condition exists which, in the opinion of the Exchange, makes 
further dealings on the Exchange inadvisable.
    Proposed Nasdaq Rule 5760(d)(2)(C)(i) provides that the Exchange 
may consider all relevant factors in exercising its discretion to halt 
trading in a series of Managed Portfolio Shares. Trading may be halted 
because of market conditions or for reasons that, in the view of the 
Exchange, make trading in the series of Managed Portfolio Shares 
inadvisable. These may include: (a) The extent to which trading is not 
occurring in the securities and/or the financial instruments composing 
the portfolio; or (b) whether other unusual conditions or circumstances 
detrimental to the maintenance of a fair and orderly market are 
present.
    Proposed Nasdaq Rule 5760(d)(2)(C)(ii) provides that, if the 
Exchange becomes aware that: (a) The VIIV of a series of Managed 
Portfolio Shares is not being calculated or disseminated in one second 
intervals, as required; (b) the NAV with respect to a series of Managed 
Portfolio Shares is not disseminated to all market participants at the 
same time; (c) the holdings of a series of Managed Portfolio Shares are 
not made available on at least a quarterly basis as required under the 
1940 Act; or (d) such holdings are not made available to all market 
participants at the same time (except as otherwise permitted under the 
currently applicable exemptive order or no-action relief granted by the 
Commission or Commission staff to the Investment Company with respect 
to the series of Managed Portfolio Shares), it will halt trading in 
such series until such time as the VIIV, the NAV, or the holdings are 
available, as required.
    Proposed Nasdaq Rule 5760(d)(2)(D) provides that, upon termination 
of an Investment Company, the Exchange requires that Managed Portfolio 
Shares issued in connection with such entity be removed from Exchange 
listing.
    Proposed Nasdaq Rule 5760(d)(2)(E) provides that voting rights 
shall be as set forth in the applicable Investment Company prospectus 
and/or statement of additional information.
    Proposed Nasdaq Rule 5760(e), which relates to limitation of 
Exchange liability, provides that neither the Exchange, the Reporting 
Authority, when the Exchange is acting in the capacity of a Reporting 
Authority, nor any agent of the Exchange shall have any liability for 
damages, claims, losses or expenses caused by any errors, omissions, or 
delays in calculating or disseminating any current portfolio value; the 
current value of the portfolio of securities required to be deposited 
to the open-end management investment company in connection with 
issuance of Managed Portfolio Shares; the VIIV; the amount of any 
dividend equivalent payment or cash distribution to holders of Managed 
Portfolio Shares; NAV; or other information relating to the purchase, 
redemption, or trading of Managed Portfolio Shares, resulting from any 
negligent act or omission by the Exchange, the Reporting Authority when 
the Exchange is acting in the capacity of a Reporting Authority, or any 
agent of the Exchange, or any act, condition, or cause beyond the 
reasonable control of the Exchange, its agent, or the Reporting 
Authority, when the Exchange is acting in the capacity of a Reporting 
Authority, including, but not limited to, an act of God; fire; flood; 
extraordinary weather conditions; war; insurrection; riot; strike; 
accident; action of government; communications or power failure; 
equipment or software malfunction; or any error, omission, or delay in 
the reports of transactions in one or more underlying securities.
    Proposed Nasdaq Rule 5760(f), which relates to disclosures, 
provides that the provisions of this subparagraph apply only to series 
of Managed Portfolio Shares that are the subject of an order by the 
Commission exempting such series from certain prospectus delivery 
requirements under Section 24(d) of the 1940 Act and are not otherwise 
subject to prospectus delivery requirements under the Securities Act of 
1933. The Exchange will inform its Members regarding application of 
this

[[Page 23463]]

subparagraph to a particular series of Managed Portfolio Shares by 
means of an information circular prior to commencement of trading in 
such series.
    The Exchange requires that Members provide to all purchasers of a 
series of Managed Portfolio Shares a written description of the terms 
and characteristics of those securities, in a form prepared by the 
open-end management investment company issuing such securities, not 
later than the time a confirmation of the first transaction in such 
series is delivered to such purchaser. In addition, Members shall 
include such a written description with any sales material relating to 
a series of Managed Portfolio Shares that is provided to customers or 
the public. Any other written materials provided by a Member to 
customers or the public making specific reference to a series of 
Managed Portfolio Shares as an investment vehicle must include a 
statement in substantially the following form: ``A circular describing 
the terms and characteristics of (the series of Managed Portfolio 
Shares) has been prepared by the (open-end management investment 
company name) and is available from your broker. It is recommended that 
you obtain and review such circular before purchasing (the series of 
Managed Portfolio Shares).''
    A Member carrying an omnibus account for a non-Member broker-dealer 
is required to inform such non-Member that execution of an order to 
purchase a series of Managed Portfolio Shares for such omnibus account 
will be deemed to constitute agreement by the non-Member to make such 
written description available to its customers on the same terms as are 
directly applicable to Members under this rule.
    Upon request of a customer, a Member shall also provide a 
prospectus for the particular series of Managed Portfolio Shares.
Key Features of Managed Portfolio Shares
    While each series of Managed Portfolio Shares will be actively 
managed and, to that extent, similar to Managed Fund Shares (as defined 
in Nasdaq Rule 5735),\6\ Managed Portfolio Shares differ from Managed 
Fund Shares in the following important respects. First, in contrast to 
Managed Fund Shares, which require a ``Disclosed Portfolio'' to be 
disseminated at least once daily,\7\ the portfolio for a series of 
Managed Portfolio Shares will be disclosed at least quarterly in 
accordance with normal disclosure requirements otherwise applicable to 
open-end investment companies registered under the 1940 Act.\8\ The 
composition of the portfolio of a series of Managed Portfolio Shares 
would not be available at commencement of Exchange listing and/or 
trading. Second, in connection with the creation and redemption of 
shares in Creation Unit or Redemption Unit size (as described below), 
the delivery of any portfolio securities in kind will be effected 
through a Confidential Account (as described below) for the benefit of 
the creating or redeeming AP (as described further below in ``Creation 
and Redemption of Shares'') without disclosing the identity of such 
securities to the AP.
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    \6\ The Commission approved a proposed rule change to adopt 
generic listing standards for Managed Fund Shares. See Securities 
Exchange Act Release No. 78918 (Sept. 23, 2016), 81 FR 67033 (Sept. 
29, 2016 (SR-NASDAQ-2016-104) (order approving proposed rule change 
to amend Nasdaq Rule 5735 to adopt generic listing standards for 
Managed Fund Shares).
    \7\ Nasdaq Rule 5735(c)(2) defines the term ``Disclosed 
Portfolio'' as the identities and quantities of the securities and 
other assets held by the Investment Company that will form the basis 
for the Investment Company's calculation of NAV at the end of the 
business day. Nasdaq Rule 5735(d)(1)(B) and Nasdaq Rule 
5735(d)(2)(B)(i) requires that the Disclosed Portfolio will be 
disseminated at least once daily and will be made available to all 
market participants at the same time.
    \8\ Form N-PORT requires reporting of a fund's complete 
portfolio holdings on a position-by-position basis on a quarterly 
basis within 60 days after fiscal quarter end. Investors can obtain 
a fund's Statement of Additional Information, its Shareholder 
Reports, its Form N-CSR, filed twice a year, and its Form N-CEN, 
filed annually. A fund's SAI and Shareholder Reports are available 
free upon request from the Investment Company, and those documents 
and the Form N-PORT, Form N-CSR, and Form N-CEN may be viewed on-
screen or downloaded from the Commission's website at www.sec.gov.
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    For each series of Managed Portfolio Shares, the VIIV will be 
disseminated reflecting an estimated intraday value of a fund's 
portfolio. Specifically, the VIIV will be based upon all of a series' 
holdings as of the close of the prior business day and, for corporate 
actions, based on the applicable holdings as of the opening of business 
on the current business day, and will be widely disseminated by the 
Reporting Authority and/or one or more major market data vendors in one 
second intervals during the regular market session. The dissemination 
of the VIIV will allow investors to determine the estimated intra-day 
value of the underlying portfolio of a series of Managed Portfolio 
Shares and will provide a close estimate of that value throughout the 
trading day.
    The Exchange, after consulting with various Designated Liquidity 
Providers (``DLPs'') \9\ that trade exchange-traded funds (``ETFs'') on 
the Exchange, believes that market makers will be able to make 
efficient and liquid markets priced near the ETF's intraday value as 
long as a VIIV is disseminated in one second intervals, and market 
makers employ market making techniques such as ``statistical 
arbitrage,'' including correlation hedging, beta hedging, and 
dispersion trading, which is currently used throughout the financial 
services industry, to make efficient markets in exchange-traded 
products.\10\ For Managed Portfolio Shares, market makers may use the 
knowledge of a Fund's means of achieving its investment objective, as 
described in the applicable Fund registration statement (the 
``Registration Statement''), to construct a hedging proxy for a Fund to 
manage a market maker's quoting risk in connection with trading Fund 
Shares.
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    \9\ As defined in Nasdaq Equity 7 Sec. 114(f)(2), the term DLP 
means a registered Nasdaq market maker for a ``Qualified Security'' 
that has committed to maintain minimum performance standards. As 
defined in Nasdaq Equity 7 Sec. 114(f)(1), the term ``Qualified 
Security'' means an ETP that has at least one DLP. The performance 
measurement is the percent of time at the NBBO.
    \10\ Statistical arbitrage enables a trader to construct an 
accurate proxy for another instrument, allowing it to hedge the 
other instrument or buy or sell the instrument when it is cheap or 
expensive in relation to the proxy. Statistical analysis permits 
traders to discover correlations based purely on trading data 
without regard to other fundamental drivers. These correlations are 
a function of differentials, over time, between one instrument or 
group of instruments and one or more other instruments. Once the 
nature of these price deviations have been quantified, a universe of 
securities is searched in an effort to, in the case of a hedging 
strategy, minimize the differential. Once a suitable hedging proxy 
has been identified, a trader can minimize portfolio risk by 
executing the hedging basket. The trader then can monitor the 
performance of this hedge throughout the trade period making 
corrections where warranted. In the case of correlation hedging, the 
analysis seeks to find a proxy that matches the pricing behavior of 
a fund. In the case of beta hedging, the analysis seeks to determine 
the relationship between the price movement over time of a fund and 
that of another stock. Dispersion trading is a hedged strategy 
designed to take advantage of relative value differences in implied 
volatilities between an index and the component stocks of that 
index. Such trading strategies will allow market participants to 
engage in arbitrage between series of Managed Portfolio Shares and 
other instruments, both through the creation and redemption process 
and strictly through arbitrage without such processes.
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    Market makers can then conduct statistical arbitrage between their 
hedging proxy (for example, the Russell 1000 Index) and Shares of a 
Fund, buying and selling one against the other over the course of the 
trading day. This ability should permit market makers to make efficient 
markets in an issue of Managed Portfolio Shares without

[[Page 23464]]

precise knowledge \11\ of a fund's underlying portfolio.\12\ This is 
similar to certain other existing exchange traded products (for 
example, ETFs that invest in foreign securities that do not trade 
during U.S. trading hours), in which spreads may be generally wider in 
the early days of trading and then narrow as market makers gain more 
confidence in their real-time hedges.
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    \11\ Using the various trading methodologies described above, 
both APs and other market participants will be able to hedge 
exposures by trading correlative portfolios, securities or other 
proxy instruments, thereby enabling an arbitrage functionality 
throughout the trading day. For example, if an AP believes that 
Shares of a Fund are trading at a price that is higher than the 
value of its underlying portfolio based on the VIIV, the AP may sell 
Shares short and purchase securities that the AP believes will track 
the movements of a Fund's portfolio until the spread narrows and the 
AP executes offsetting orders or the AP enters an order through its 
AP Representative to create Fund Shares. Upon the completion of the 
Creation Unit, the AP will unwind its correlative hedge. Similarly, 
a non-AP market participant would be able to perform an identical 
function but, because it would not be able to create or redeem 
directly, would have to employ an AP to create or redeem Shares on 
its behalf.
    \12\ APs that enter into their own separate Confidential 
Accounts shall have enough information to ensure that they are able 
to comply with applicable regulatory requirements. For example, for 
purposes of net capital requirements, the maximum securities haircut 
applicable to the securities in a Creation Basket, as determined 
under Rule 15c3-1, will be disclosed daily on each Fund's website.
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    To protect the identity and weightings of the portfolio holdings, a 
series of Managed Portfolio Shares would sell and redeem their shares 
in Creation Units and Redemption Units to APs only through an AP 
Representative. As such, on each business day, before commencement of 
trading in Shares on the Exchange, each series of Managed Portfolio 
Shares will provide to an AP Representative of each AP the names and 
quantities of the instruments comprising a Creation Basket, i.e. the 
Deposit Instruments or ``Redemption Instruments'' and the estimated 
``Balancing Amount'' (if any),\13\ for that day (as further described 
below). This information will permit APs to purchase Creation Units or 
redeem Redemption Units through an in-kind transaction with a Fund, as 
described below.
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    \13\ The Balancing Amount is the cash amount necessary for the 
applicable Fund to receive or pay to compensate for the difference 
between the value of the securities delivered as part of a 
redemption and the NAV, to the extent that such values are 
different.
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Creations and Redemptions of Shares
    In connection with the creation and redemption of Creation Units 
and Redemption Units, the delivery or receipt of any portfolio 
securities in-kind will be required to be effected through a 
Confidential Account \14\ with an AP Representative,\15\ which will be 
a broker-dealer for the benefit of an AP.\16\ An AP must be a 
Depository Trust Company (``DTC'') Participant that has executed a 
``Participant Agreement'' with the applicable distributor (the 
``Distributor'') with respect to the creation and redemption of 
Creation Units and Redemption Units and formed a Confidential Account 
for its benefit in accordance with the terms of the Participant 
Agreement. For purposes of creations or redemptions, all transactions 
will be effected through the respective AP's Confidential Account, for 
the benefit of the AP without disclosing the identity of such 
securities to the AP. The Funds will offer and redeem Creation Units 
and Redemption Units on a continuous basis at the NAV per Share next 
determined after receipt of an order in proper form. The NAV per Share 
of each Fund will be determined as of the close of regular trading each 
business day. Funds will sell and redeem Creation Units and Redemption 
Units only on business days.
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    \14\ Transacting through a Confidential Account is designed to 
be very similar to transacting through any broker-dealer account, 
except that the AP Representative will be bound to keep the names 
and weights of the portfolio securities confidential. Each service 
provider that has access to the identity and weightings of 
securities in a Fund's Creation Basket or portfolio securities, such 
as a Fund's custodian or pricing verification agent, shall be 
restricted contractually from disclosing that information to any 
other person, or using that information for any purpose other than 
providing services to the Fund. To comply with certain recordkeeping 
requirements applicable to APs, the AP Representative will maintain 
and preserve, and make available to the Commission, certain required 
records related to the securities held in the Confidential Account.
    \15\ Each AP shall enter into its own separate Confidential 
Account with an AP Representative.
    \16\ Each Fund will identify one or more entities to enter into 
a contractual arrangement with the Fund to serve as an AP 
Representative. In selecting entities to serve as AP 
Representatives, a Fund will obtain representations from the entity 
related to the confidentiality of the Fund's Creation Basket and 
portfolio securities, the effectiveness of information barriers, and 
the adequacy of insider trading policies and procedures. In 
addition, as a broker-dealer, Section 15(g) of the Act requires the 
AP Representative to establish, maintain, and enforce written 
policies and procedures reasonably designed to prevent the misuse of 
material, nonpublic information by the AP Representative or any 
person associated with the AP Representative.
---------------------------------------------------------------------------

    Each AP Representative will be given, before the commencement of 
trading each business day, the Creation Basket for that day. The 
published Creation Basket will apply until a new Creation Basket is 
announced on the following business day, and there will be no intra-day 
changes to the Creation Basket except to correct errors in the 
published Creation Basket. In order to keep costs low and permit Funds 
to be as fully invested as possible, Shares will be purchased and 
redeemed in Creation Units and Redemption Units and generally on an in-
kind basis. Accordingly, except where the purchase or redemption will 
include cash under the circumstances required or determined permissible 
by the Fund, APs will be required to purchase Creation Units by making 
an in-kind deposit of specified instruments (``Deposit Instruments''), 
and APs redeeming their Shares will receive an in-kind transfer of 
Redemption Instruments through the AP Representative in their 
Confidential Account.\17\
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    \17\ Funds must comply with the federal securities laws in 
accepting Deposit Instruments and satisfying redemptions with 
Redemption Instruments, including that the Deposit Instruments and 
Redemption Instruments are sold in transactions that would be exempt 
from registration under the Securities Act of 1933.
---------------------------------------------------------------------------

    In the case of a creation, the AP \18\ would enter into an 
irrevocable creation order with a Fund and then direct the AP 
Representative to purchase the necessary basket of portfolio 
securities. The AP Representative would then purchase the necessary 
securities in the Confidential Account. In purchasing the necessary 
securities, the AP Representative would use methods such as breaking 
the purchase into multiple purchases and transacting in multiple 
marketplaces. Once the necessary basket of securities has been 
acquired, the purchased securities held in the Confidential Account 
would be contributed in-kind to the applicable Fund.
---------------------------------------------------------------------------

    \18\ An AP will issue execution instructions to the AP 
Representative and be responsible for all associated profit or 
losses. Like a traditional ETF, the AP has the ability to sell the 
basket securities at any point during the regular market session.
---------------------------------------------------------------------------

    Other market participants that are not APs will not have the 
ability to create or redeem shares directly with a Fund. Rather, if 
other market participants wish to create or redeem Shares in a Fund, 
they will have to do so through an AP.
Placement of Purchase Orders
    Each Fund will issue Shares through the Distributor on a continuous 
basis at NAV. The Exchange represents that the issuance of Shares will 
operate in a manner substantially similar to that of other ETFs. Each 
Fund will issue Shares only at the NAV per Share next determined after 
an order in proper form is received.
    The Distributor will furnish acknowledgements to those placing 
orders that the orders have been accepted, but the Distributor may 
reject any order which is not submitted in proper form, as described in 
a Fund's prospectus or Statement of Additional

[[Page 23465]]

Information (``SAI''). The NAV of each Fund is expected to be 
determined once each business day at a time determined by the board of 
the Investment Company (``Board''), currently anticipated to be as of 
the close of the regular trading session on the NYSE (ordinarily 4:00 
p.m. E.T.) (the ``Valuation Time''). Each Fund will establish a cut-off 
time (``Order Cut-Off Time'') for purchase orders in proper form. To 
initiate a purchase of Shares, an AP must submit to the Distributor an 
irrevocable order to purchase such Shares after the most recent prior 
Valuation Time.
    Purchases of Shares will be settled in-kind and/or cash for an 
amount equal to the applicable NAV per Share purchased plus applicable 
``Transaction Fees,'' as discussed below.
    Generally, all orders to purchase Creation Units must be received 
by the Distributor no later than the end of the regular market session 
on the date such order is placed (``Transmittal Date'') in order for 
the purchaser to receive the NAV per Share determined on the 
Transmittal Date. In the case of custom orders made in connection with 
creations or redemptions in whole or in part in cash, the order must be 
received by the Distributor, no later than the Order Cut-Off Time.\19\
---------------------------------------------------------------------------

    \19\ A ``custom order'' is any purchase or redemption of Shares 
made in whole or in part on a cash basis, as provided in the 
Registration Statement.
---------------------------------------------------------------------------

Authorized Participant Redemption
    The Shares may be redeemed to a Fund in Redemption Unit size or 
multiples thereof as described below. Redemption orders of Redemption 
Units must be placed by or through an AP (``AP Redemption Order''). 
Each Fund will establish an Order Cut-Off Time for redemption orders of 
Redemption Units in proper form. Redemption Units of a Fund will be 
redeemable at their NAV per Share next determined after receipt of a 
request for redemption by the Investment Company in the manner 
specified below before the Order Cut-Off Time. To initiate an AP 
Redemption Order, an AP must submit to the Distributor an irrevocable 
order to redeem such Redemption Unit after the most recent prior 
Valuation Time but not later than the Order Cut-Off Time.
    In the case of a redemption, the AP would enter into an irrevocable 
redemption order, and then instruct the AP Representative to sell the 
underlying basket of securities that it will receive in the redemption. 
As with the purchase of securities, the AP Representative would be 
required to obfuscate the sale of the portfolio securities it will 
receive as redemption proceeds using similar tactics.
    Consistent with the provisions of Section 22(e) of the 1940 Act and 
Rule 22e-2 thereunder, the right to redeem will not be suspended, nor 
payment upon redemption delayed, except for: (1) Any period during 
which the Exchange is closed other than customary weekend and holiday 
closings, (2) any period during which trading on the Exchange is 
restricted, (3) any period during which an emergency exists as a result 
of which disposal by a Fund of securities owned by it is not reasonably 
practicable or it is not reasonably practicable for a Fund to determine 
its NAV, and (4) for such other periods as the Commission may by order 
permit for the protection of shareholders.
    It is expected that redemptions will occur primarily in-kind, 
although redemption payments may also be made partly or wholly in cash. 
The Participant Agreement signed by each AP will require establishment 
of a Confidential Account to receive distributions of securities in-
kind upon redemption.\20\ Each AP will be required to open a 
Confidential Account with an AP Representative in order to facilitate 
orderly processing of redemptions.
---------------------------------------------------------------------------

    \20\ The terms of each Confidential Account will be set forth as 
an exhibit to the applicable Participant Agreement, which will be 
signed by each AP. The Authorized Participant will be free to choose 
an AP Representative for its Confidential Account from a list of 
broker-dealers that have signed confidentiality agreements with the 
Fund. The Authorized Participant will be free to negotiate account 
fees and brokerage charges with its selected AP Representative. The 
Authorized Participant will be responsible to pay all fees and 
expenses charged by the AP Representative of its Confidential 
Account.
---------------------------------------------------------------------------

    After receipt of a Redemption Order, a Fund's custodian 
(``Custodian'') will typically deliver securities to the Confidential 
Account with a value approximately equal to the value of the Shares 
\21\ tendered for redemption at the Cut-Off time. The Custodian will 
make delivery of the securities by appropriate entries on its books and 
records transferring ownership of the securities to the AP's 
Confidential Account, subject to delivery of the Shares redeemed. The 
AP Representative of the Confidential Account will in turn liquidate 
the securities based on instructions from the AP. The AP Representative 
will pay the liquidation proceeds net of expenses plus or minus any 
cash Balancing Amount to the AP through DTC. The redemption securities 
that the Confidential Account receives are expected to mirror the 
portfolio holdings of a Fund pro rata. To the extent a Fund distributes 
portfolio securities through an in-kind distribution to more than one 
Confidential Account for the benefit of the accounts' respective APs, 
each Fund expects to distribute a pro rata portion of the portfolio 
securities selected for distribution to each redeeming AP.
---------------------------------------------------------------------------

    \21\ If the NAV of the Shares redeemed differs from the value of 
the securities delivered to the applicable Confidential Account, the 
applicable Fund will receive or pay a cash Balancing Amount to 
compensate for the difference between the value of the securities 
delivered and the NAV.
---------------------------------------------------------------------------

    If the AP would receive a security that it is restricted from 
receiving, for example if the AP is engaged in a distribution of the 
security, a Fund will deliver cash equal to the value of that security. 
APs will provide the AP Representative with a list of restricted 
securities applicable to the AP on a daily basis, and a Fund will 
substitute cash for those securities in the applicable Confidential 
Account.
    The Investment Company will accept a Redemption Order in proper 
form. A Redemption Order is subject to acceptance by the Investment 
Company and must be preceded or accompanied by an irrevocable 
commitment to deliver the requisite number of Shares. At the time of 
settlement, an AP will initiate a delivery of the Shares plus or minus 
any cash Balancing Amounts, and less the expenses of liquidation.
Surveillance
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of Managed Portfolio Shares on the 
Exchange during all trading sessions and to deter and detect violations 
of Exchange rules and the applicable federal securities laws. Trading 
of Managed Portfolio Shares through the Exchange will be subject to the 
Exchange's surveillance procedures for derivative products. The 
Exchange will require the issuer of each series of Managed Portfolio 
Shares, upon initial listing and periodically thereafter, to provide a 
representation that it is in compliance with Nasdaq Rule 5760. In 
addition, the Exchange will require issuers to represent that they will 
notify the Exchange of any failure to comply with the terms of 
applicable exemptive and no-action relief. As part of its surveillance 
procedures, the Exchange will rely on the foregoing procedures to 
become aware of any non-compliance with the requirements of Nasdaq Rule 
5760.
    The Exchange will require each issuer of a Fund to represent that 
it will advise the Exchange of any failure by a Fund to comply with the 
continued listing requirements, and, pursuant to its obligations under 
Section 19(g)(1) of the

[[Page 23466]]

Act, the Exchange will monitor for compliance with the continued 
listing requirements. If a Fund is not in compliance with the 
applicable listing requirements, the Exchange will commence delisting 
procedures under the Nasdaq Rule 5800 Series.
    Specifically, the Exchange will implement real-time surveillances 
that monitor for the continued dissemination of the VIIV. The Exchange 
will also have surveillances designed to alert Exchange personnel where 
shares of a series of Managed Portfolio Shares are trading away from 
the VIIV. As noted in proposed Nasdaq Rule 5760(b)(4), the Investment 
Company's investment adviser will upon request by the Exchange or 
FINRA, on behalf of the Exchange, make available to the Exchange or 
FINRA the daily portfolio holdings of each series of Managed Portfolio 
Shares. The Exchange believes that this is appropriate because it will 
provide the Exchange or FINRA, on behalf of the Exchange, with access 
to the daily portfolio holdings of any series of Managed Portfolio 
Shares upon request on an as needed basis. The Exchange believes that 
the ability to access the information on an as needed basis will 
provide it with sufficient information to perform the necessary 
regulatory functions associated with listing and trading series of 
Managed Portfolio Shares on the Exchange, including the ability to 
monitor compliance with the initial and continued listing requirements 
as well as the ability to surveil for manipulation of the shares.
    The Exchange notes that any equity instruments or futures held by a 
Fund operating under an exemptive order would trade on markets that are 
a member of Intermarket Surveillance Group (``ISG'') or affiliated with 
a member of ISG or with which the Exchange has in place a comprehensive 
surveillance sharing agreement.\22\ While future exemptive relief 
applicable to Managed Portfolio Shares may expand the investable 
universe, the Exchange notes that proposed Nasdaq Rule 5760(b)(1) would 
require the Exchange to file separate proposals under Section 19(b) of 
the Act before listing and trading any series of Managed Portfolio 
Shares and such proposal would describe the investable universe for any 
such series of Managed Portfolio Shares along with the Exchange's 
surveillance procedures applicable to such series.
---------------------------------------------------------------------------

    \22\ For a list of the current members of ISG, see 
www.isgportal.com. The Exchange notes that cash equivalents may 
trade on markets that are members of ISG or with which the Exchange 
has in place a comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    FINRA, on behalf of the Exchange, or the regulatory staff of the 
Exchange, or both, will communicate as needed regarding trading in the 
Shares and underlying exchange-traded instruments with other markets 
and other entities that are members of the ISG, and FINRA, on behalf of 
the Exchange, or the regulatory staff 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 the Shares and underlying exchange-
traded instruments from other markets and other entities 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.
Trading Halts
    As proposed above, the Exchange may consider all relevant factors 
in exercising its discretion to halt trading in a series of Managed 
Portfolio Shares. Trading may be halted because of market conditions or 
for reasons that, in the view of the Exchange make trading in the 
series of Managed Portfolio Shares inadvisable. These may include: (a) 
The extent to which trading is not occurring in the securities and/or 
the financial instruments composing the portfolio; or (b) whether other 
unusual conditions or circumstances detrimental to the maintenance of a 
fair and orderly market are present. Additionally, the Exchange would 
halt trading as soon as practicable where the Exchange becomes aware 
that: (a) The VIIV of a series of Managed Portfolio Shares is not being 
calculated or disseminated in one second intervals, as required; (b) 
the NAV with respect to a series of Managed Portfolio Shares is not 
disseminated to all market participants at the same time; (c) the 
holdings of a series of Managed Portfolio Shares are not made available 
on at least a quarterly basis as required under the 1940 Act; or (d) 
such holdings are not made available to all market participants at the 
same time, (except as otherwise permitted under the currently 
applicable exemptive order or no-action relief granted by the 
Commission or Commission staff to the Investment Company with respect 
to the series of Managed Portfolio Shares) (collectively, 
``Availability of Information Halts''). The Exchange would halt trading 
in such series of Managed Portfolio Shares until such time as the VIIV, 
the NAV, or the holdings are available, as required.
Availability of Information
    As noted above, Form N-PORT requires reporting of a fund's complete 
portfolio holdings on a position-by-position basis on a quarterly basis 
within 60 days after fiscal quarter end. Investors can obtain a fund's 
Statement of Additional Information, its Shareholder Reports, its Form 
N-CSR, filed twice a year, and its Form N-CEN, filed annually. A fund's 
SAI and Shareholder Reports are available free upon request from the 
Investment Company, and those documents and the Form N-PORT, Form N-
CSR, and Form N-CEN may be viewed on-screen or downloaded from the 
Commission's website at www.sec.gov.
    Information regarding market price and trading volume of the Shares 
will be continually available on a real-time basis throughout the day 
on brokers' computer screens and other electronic services. Information 
regarding the previous day's closing price and trading volume 
information for the Shares will be published daily in the financial 
section of newspapers. Quotation and last sale information for the 
Shares will be available via the Consolidated Tape Association 
(``CTA'') high-speed line. In addition, the VIIV, as defined in 
proposed Nasdaq Rule 5760(c)(2), will be widely disseminated by the 
Reporting Authority and/or one or more major market data vendors in one 
second intervals during the regular market session.
Trading Rules
    The Exchange deems Managed Portfolio Shares to be equity 
securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules governing the trading of equity securities. 
Transactions in Managed Portfolio Shares will occur throughout the 
Exchange's System Hours as provided in proposed Nasdaq Rule 5760(b)(2). 
As provided in Nasdaq Rule 5760(b)(3), the minimum price variation for 
quoting and entry of orders in Managed Portfolio Shares traded on the 
Exchange is $0.01.
Information Circular
    Prior to the commencement of trading of a series of Managed 
Portfolio Shares, the Exchange will inform its Members in an 
Information Circular (``Circular'') of the special characteristics and 
risks associated with trading the Shares. Specifically, the Circular 
will discuss the following: (1) The procedures for purchases and 
redemptions of Shares; (2) Members and associated persons of a Member 
shall comply with FINRA Rule 2111, which imposes suitability

[[Page 23467]]

obligations on Exchange members with respect to recommending 
transactions in the Managed Portfolio Shares to customers, as if such 
rule were part of Nasdaq's rules; (3) how information regarding the 
VIIV is disseminated; (4) the requirement that Members deliver a 
prospectus to investors purchasing newly issued Shares prior to or 
concurrently with the confirmation of a transaction; (5) trading 
information; and (6) that the portfolio holdings of the Shares are not 
disclosed on a daily basis.
    In addition, the Circular will reference that Funds are subject to 
various fees and expenses described in the Registration Statement. The 
Circular will discuss any exemptive, no-action, and interpretive relief 
granted by the Commission from any rules under the Act. The Circular 
will also disclose that the NAV for the Shares will be calculated after 
4:00 p.m., E.T. each trading day.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \23\ in general and Section 6(b)(5) of the Act \24\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
of a free and open market and a national market system, and, in 
general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78f.
    \24\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that proposed Nasdaq Rule 5760 is designed to 
prevent fraudulent and manipulative acts and practices in that the 
proposed rules relating to listing and trading of Managed Portfolio 
Shares provide specific initial and continued listing criteria required 
to be met by such securities. Proposed Nasdaq Rule 5760(d) sets forth 
initial and continued listing criteria applicable to Managed Portfolio 
Shares. Proposed Nasdaq Rule 5760(d)(1)(A) provides that, for each 
series of Managed Portfolio Shares, the Exchange will establish a 
minimum number of Managed Portfolio Shares required to be outstanding 
at the time of commencement of trading on the Exchange. In addition, 
proposed Nasdaq Rule 5760(d)(1)(B) provides that the Exchange will 
obtain a representation from the Investment Company that issues each 
series of Managed Portfolio Shares that the NAV per share for the 
series will be calculated daily and that the NAV will be made available 
to all market participants at the same time.\25\ Proposed Nasdaq Rule 
5760(d)(1)(C) provides that all Managed Portfolio Shares shall have a 
stated investment objective, which shall be adhered to under Normal 
Market Conditions (as defined in the rule).
---------------------------------------------------------------------------

    \25\ Proposed Nasdaq Rule 5760(d)(2)(C)(ii) provides that if the 
Exchange becomes aware that the NAV with respect to a series of 
Managed Portfolio Shares is not disseminated to all market 
participants at the same time, it will halt trading in such series 
until such time as the NAV is available to all market participants 
at the same time.
---------------------------------------------------------------------------

    Proposed Nasdaq Rule 5760(d)(2) provides that each series of 
Managed Portfolio Shares will be listed and traded subject to 
application of the specified continued listing criteria, as described 
above. Proposed Nasdaq Rule 5760(d)(2)(A) provides that the VIIV for 
Managed Portfolio Shares will be widely disseminated by the Reporting 
Authority and/or by one or more major market data vendors in one second 
intervals during the regular market session and will be disseminated to 
all market participants at the same time. Proposed Nasdaq Rule 
5760(d)(2)(B) provides that the Exchange will consider the suspension 
of trading in, and will commence delisting proceedings under the Nasdaq 
Rule 5800 Series, for a series of Managed Portfolio Shares, under any 
of the following circumstances: (i) If, following the initial twelve-
month period after commencement of trading on the Exchange of a series 
of Managed Portfolio Shares, there are fewer than 50 beneficial holders 
of the series of Managed Portfolio Shares for 30 or more consecutive 
trading days; (ii) if the Exchange has halted trading in a series of 
Managed Portfolio Shares because the VIIV is interrupted pursuant to 
Nasdaq Rule 5760(d)(2)(C)(ii) and such interruption persists past the 
trading day in which it occurred or is no longer available; (iii) if 
the Exchange has halted trading in a series of Managed Portfolio Shares 
because the NAV with respect to such series of Managed Portfolio Shares 
is not disseminated to all market participants at the same time, the 
holdings of such series of Managed Portfolio Shares are not made 
available on at least a quarterly basis as required under the 
Investment Company Act of 1940, or such holdings are not made available 
to all market participants at the same time pursuant to Nasdaq Rule 
5760(d)(2)(C)(ii) and such issue persists past the trading day in which 
it occurred; (iv) if the Exchange has halted trading in a series of 
Managed Portfolio Shares pursuant to Nasdaq Rule 5760(d)(2)(C)(i), such 
issue persists past the trading day in which it occurred; (v) if the 
Investment Company issuing the Managed Portfolio Shares has failed to 
file any filings required by the Commission or if the Exchange is aware 
that the Investment Company is not in compliance with the conditions of 
any currently applicable exemptive order or no-action relief granted by 
the Commission or Commission staff to the Investment Company with 
respect to the series of Managed Portfolio Shares; (vi) if any of the 
continued listing requirements set forth in Nasdaq Rule 5760 are not 
continuously maintained; (vii) if the series of Managed Portfolio 
Shares is not in compliance with any statements or representations 
included in the applicable rule proposal under Section 19(b) regarding: 
(a) The description of the portfolio or reference assets; (b) 
limitations on portfolio holdings or reference assets; (c) 
dissemination and availability of the reference asset or intraday 
indicative values and VIIVs; or (d) the applicability of Nasdaq listing 
rules specified in such proposals; or (viii) if such other event shall 
occur or condition exists which, in the opinion of the Exchange, makes 
further dealings on the Exchange inadvisable.
    Proposed Nasdaq Rule 5760(d)(2)(C)(i) provides that the Exchange 
may consider all relevant factors in exercising its discretion to halt 
trading in a series of Managed Portfolio Shares. Trading may be halted 
because of market conditions or for reasons that, in the view of the 
Exchange, make trading in the series of Managed Portfolio Shares 
inadvisable. These may include: (a) The extent to which trading is not 
occurring in the securities and/or the financial instruments composing 
the portfolio; or (b) whether other unusual conditions or circumstances 
detrimental to the maintenance of a fair and orderly market are 
present.
    Proposed Nasdaq Rule 5760(d)(2)(C)(ii) provides that, if the 
Exchange becomes aware that: (a) The VIIV of a series of Managed 
Portfolio Shares is not being calculated or disseminated in one second 
intervals, as required; (b) the NAV with respect to a series of Managed 
Portfolio Shares is not disseminated to all market participants at the 
same time; (c) the holdings of a series of Managed Portfolio Shares are 
not made available on at least a quarterly basis as required under the 
1940 Act; or (d) such holdings are not made available to all market 
participants at the same time (except as otherwise permitted under the 
currently applicable exemptive order or no-action relief granted by the 
Commission or Commission staff to the Investment Company with respect 
to the series of

[[Page 23468]]

Managed Portfolio Shares), it will halt trading in such series until 
such time as the VIIV, the NAV, or the holdings are available, as 
required.
    Proposed Nasdaq Rule 5760(d)(2)(D) provides that, upon termination 
of an Investment Company, the Exchange requires that Managed Portfolio 
Shares issued in connection with such entity be removed from Exchange 
listing. Proposed Nasdaq Rule 5760(d)(2)(E) provides that voting rights 
shall be as set forth in the applicable Investment Company prospectus 
and/or Statement of Additional Information. The Exchange also notes 
that an issuer must comply with Regulation Fair Disclosure, which 
prohibits selective disclosure of any material non-public information, 
which otherwise does not apply to issuers of Managed Fund Shares.
    Proposed Nasdaq Rule 5760(b)(3) provides that the minimum price 
variation for quoting and entry of orders in Managed Portfolio Shares 
is $0.01. Proposed Nasdaq Rule 5760(b)(4) provides that the Exchange 
will implement and maintain written surveillance procedures for Managed 
Portfolio Shares. As part of these surveillance procedures, the 
Investment Company's investment adviser will upon request by the 
Exchange or FINRA, on behalf of the Exchange, make available to the 
Exchange or FINRA the daily portfolio holdings of each series of 
Managed Portfolio Shares.
    Proposed Nasdaq Rule 5760(b)(5) provides that, if the investment 
adviser to the Investment Company issuing Managed Portfolio Shares is 
registered as a broker-dealer or is affiliated with a broker-dealer, 
such investment adviser will erect and maintain a ``fire wall'' between 
the investment adviser and personnel of the broker-dealer or broker-
dealer affiliate, as applicable, with respect to access to information 
concerning the composition of and/or changes to such Investment Company 
portfolio and/or the Creation Basket. Any person related to the 
investment adviser or Investment Company who makes decisions pertaining 
to the Investment Company's portfolio composition or has access to 
information regarding the Investment Company's portfolio composition or 
changes thereto or the Creation Basket must be subject to procedures 
designed to prevent the use and dissemination of material nonpublic 
information regarding the applicable Investment Company portfolio or 
changes thereto or the Creation Basket.
    Proposed Nasdaq Rule 5760(b)(6) provides that any person or entity, 
including an AP Representative, custodian, Reporting Authority, 
distributor, or administrator, who has access to information regarding 
the Investment Company's portfolio composition or changes thereto or 
the Creation Basket, must be subject to procedures designed to prevent 
the use and dissemination of material nonpublic information regarding 
the applicable Investment Company portfolio or changes thereto or the 
Creation Basket. Moreover, if any such person or entity is registered 
as a broker-dealer or affiliated with a broker-dealer, such person or 
entity will erect and maintain a ``fire wall'' between the person or 
entity and the broker-dealer with respect to access to information 
concerning the composition and/or changes to such Investment Company 
portfolio or Creation Basket.
    The Exchange believes that these proposed rules are designed to 
prevent fraudulent and manipulative acts and practices related to the 
listing and trading of Managed Portfolio Shares because they provide 
meaningful requirements about both the data that will be made publicly 
available about the Shares as well as the information that will only be 
available to certain parties and the controls on such information.
    Specifically, the Exchange believes that the requirements related 
to information protection enumerated under proposed Nasdaq Rule 
5760(b)(6) \26\ will act as a strong safeguard against any misuse and 
improper dissemination of information related to a Fund's portfolio 
composition, the Creation Basket, or changes thereto. The requirement 
that any person or entity implement procedures to prevent the use and 
dissemination of material nonpublic information regarding the portfolio 
or Creation Basket will act to prevent any individual or entity from 
sharing such information externally and the internal ``fire wall'' 
requirements applicable where an entity is a registered broker-dealer 
or affiliated with a broker-dealer will act to make sure that no entity 
will be able to misuse the data for their own purposes. As such, the 
Exchange believes that this proposal is designed to prevent fraudulent 
and manipulative acts and practices.
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    \26\ As described above, proposed Nasdaq Rule 5760(b)(6) 
provides that any person or entity, including an AP Representative, 
custodian, Reporting Authority, distributor, or administrator, who 
has access to information regarding the Investment Company's 
portfolio composition or changes thereto or the Creation Basket, 
must be subject to procedures designed to prevent the use and 
dissemination of material nonpublic information regarding the 
applicable Investment Company portfolio or changes thereto or the 
Creation Basket. Moreover, if any such person or entity is 
registered as a broker-dealer or affiliated with a broker-dealer, 
such person or entity will erect and maintain a ``fire wall'' 
between the person or entity and the broker-dealer with respect to 
access to information concerning the composition and/or changes to 
such Investment Company portfolio or Creation Basket.
---------------------------------------------------------------------------

    The Exchange, after consulting with various DLPs s that trade ETFs 
on the Exchange, believes that market makers will be able to make 
efficient and liquid markets priced near the VIIV, as long as market 
makers have knowledge of a Fund's means of achieving its investment 
objective, even without daily disclosure of a fund's underlying 
portfolio. The Exchange believes that market makers will employ risk-
management techniques to make efficient markets in exchange traded 
products. This ability should permit market makers to make efficient 
markets in shares without knowledge of a fund's underlying portfolio.
    The Exchange understands that traders use statistical analysis to 
derive correlations between different sets of instruments to identify 
opportunities to buy or sell one set of instruments when it is 
mispriced relative to the others. For Managed Portfolio Shares, market 
makers utilizing statistical arbitrage use the knowledge of a fund's 
means of achieving its investment objective, as described in the 
applicable fund registration statement, to construct a hedging proxy 
for a fund to manage a market maker's quoting risk in connection with 
trading fund shares. Market makers will then conduct statistical 
arbitrage between their hedging proxy (for example, the Russell 1000 
Index) and shares of a fund, buying and selling one against the other 
over the course of the trading day. Eventually, at the end of each day, 
they will evaluate how their proxy performed in comparison to the price 
of a fund's shares, and use that analysis as well as knowledge of risk 
metrics, such as volatility and turnover, to enhance their proxy 
calculation to make it a more efficient hedge.
    Market makers have indicated to the Exchange that there will be 
sufficient data to run a statistical analysis which will lead to 
spreads being tightened substantially around the VIIV. This is similar 
to certain other existing exchange traded products (for example, ETFs 
that invest in foreign securities that do not trade during U.S. trading 
hours), in which spreads may be generally wider in the early days of 
trading and then narrow as market makers gain more confidence in their 
real-time hedges.
    The DLPs also indicated that, as with some other new exchange-
traded products, spreads would tend to narrow

[[Page 23469]]

as market makers gain more confidence in the accuracy of their hedges 
and their ability to adjust these hedges in real-time relative to the 
published VIIV and gain an understanding of the applicable market risk 
metrics such as volatility and turnover, and as natural buyers and 
sellers enter the market. Other relevant factors cited by DLPs were 
that a fund's investment objectives are clearly disclosed in the 
applicable prospectus, the existence of quarterly portfolio disclosure 
and the ability to create shares in creation unit size or redeem in 
redemption unit size through an AP.
    The real-time dissemination of a Fund's VIIV together with the 
right of APs to create and redeem each day at the NAV will be 
sufficient for market participants to value and trade Shares in a 
manner that will not lead to significant deviations between the shares' 
Bid/Ask Price and NAV.
    The pricing efficiency with respect to trading a series of Managed 
Portfolio Shares will generally rest on the ability of market 
participants to arbitrage between the Shares and a fund's portfolio, in 
addition to the ability of market participants to assess a fund's 
underlying value accurately enough throughout the trading day in order 
to hedge positions in shares effectively. Professional traders can buy 
Shares that they perceive to be trading at a price less than that which 
will be available at a subsequent time, and sell Shares they perceive 
to be trading at a price higher than that which will be available at a 
subsequent time.
    It is expected that, as part of their normal day-to-day trading 
activity, market makers assigned to Shares by the Exchange, off-
exchange market makers, firms that specialize in electronic trading, 
hedge funds and other professionals specializing in short-term, non-
fundamental trading strategies will assume the risk of being ``long'' 
or ``short'' shares through such trading and will hedge such risk 
wholly or partly by simultaneously taking positions in correlated 
assets \27\ or by netting the exposure against other, offsetting 
trading positions--much as such firms do with existing ETFs and other 
equities. Disclosure of a fund's investment objective and principal 
investment strategies in its prospectus and SAI, along with the 
dissemination of the VIIV in one second intervals, should permit 
professional investors to engage easily in this type of hedging 
activity.\28\
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    \27\ Price correlation trading is used throughout the financial 
industry. It is used to discover both trading opportunities to be 
exploited, such as currency pairs and statistical arbitrage, as well 
as for risk mitigation such as dispersion trading and beta hedging. 
These correlations are a function of differentials, over time, 
between one or multiple securities pricing. Once the nature of these 
price deviations have been quantified, a universe of securities is 
searched in an effort to, in the case of a hedging strategy, 
minimize the differential. Once a suitable hedging basket has been 
identified, a trader can minimize portfolio risk by executing the 
hedging basket. The trader then can monitor the performance of this 
hedge throughout the trade period, making corrections where 
warranted.
    \28\ With respect to trading in the Shares, market participants 
would manage risk in a variety of ways. It is expected that market 
participants will be able to determine how to trade Shares at levels 
approximating the VIIV without taking undue risk by gaining 
experience with how various market factors (e.g., general market 
movements, sensitivity of the VIIV to intraday movements in interest 
rates or commodity prices, etc.) affect VIIV, and by finding hedges 
for their long or short positions in Shares using instruments 
correlated with such factors. Market participants will likely 
initially determine the VIIV's correlation to a major large 
capitalization equity benchmark with active derivative contracts, 
such as the Russell 1000 Index, and the degree of sensitivity of the 
VIIV to changes in that benchmark. For example, using hypothetical 
numbers for illustrative purposes, market participants should be 
able to determine quickly that price movements in the Russell 1000 
Index predict movements in a Fund's VIIV 95% of the time (an 
acceptably high correlation) but that the VIIV generally moves 
approximately half as much as the Russell 1000 Index with each price 
movement. This information is sufficient for market participants to 
construct a reasonable hedge--buy or sell an amount of futures, 
swaps or ETFs that track the Russell 1000 equal to half the opposite 
exposure taken with respect to Shares. Market participants will also 
continuously compare the intraday performance of their hedge to a 
Fund's VIIV. If the intraday performance of the hedge is correlated 
with the VIIV to the expected degree, market participants will feel 
comfortable they are appropriately hedged and can rely on the VIIV 
as appropriately indicative of a Fund's performance.
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    With respect to trading of the Shares, the ability of market 
participants to buy and sell Shares at prices near the VIIV is 
dependent upon their assessment that the VIIV is a reliable, indicative 
real-time value for a Fund's underlying holdings. Market participants 
are expected to accept the VIIV as a reliable, indicative real-time 
value because (1) the VIIV will be calculated and disseminated based on 
a Fund's actual portfolio holdings, (2) the securities in which a Fund 
plans to invest are generally highly liquid and actively traded and 
therefore generally have accurate real time pricing available, and (3) 
market participants will have a daily opportunity to evaluate whether 
the VIIV at or near the close of trading is indeed predictive of the 
actual NAV.
    In a typical index-based ETF, it is standard for APs to know what 
securities must be delivered in a creation or will be received in a 
redemption. For Managed Portfolio Shares, however, APs do not need to 
know the securities comprising the portfolio of a Fund since creations 
and redemptions are handled through the Confidential Account mechanism. 
In-kind creations and redemptions through a Confidential Account are 
expected to preserve the integrity of the active investment strategy 
and reduce the potential for ``free riding'' or ``front-running,'' 
while still providing investors with the advantages of the ETF 
structure.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that the Exchange will obtain a representation from the Investment 
Company that issues each series of Managed Portfolio Shares that the 
NAV per share of a fund will be calculated daily and that the NAV will 
be made available to all market participants at the same time. 
Investors can also obtain a fund's Statement of Additional Information, 
its Shareholder Reports, its Form N-CSR, filed twice a year, and its 
Form N-CEN, filed annually. A fund's SAI and Shareholder Reports are 
available free upon request from the Investment Company, and those 
documents and the Form N-PORT, Form N-CSR, and Form N-CEN may be viewed 
on-screen or downloaded from the Commission's website at www.sec.gov. 
In addition, a large amount of information will be publicly available 
regarding the Funds and the Shares, thereby promoting market 
transparency. Quotation and last sale information for the Shares will 
be available via the CTA high-speed line. Information regarding the 
VIIV will be widely disseminated in one second intervals throughout the 
regular market session by the Reporting Authority and/or one or more 
major market data vendors. The website for each Fund will include a 
form of the prospectus for the Fund that may be downloaded, and 
additional data relating to NAV and other applicable quantitative 
information, updated on a daily basis. Moreover, prior to the 
commencement of trading, the Exchange will inform its Members in a 
Circular of the special characteristics and risks associated with 
trading the Shares.
    The Exchange further believes that the proposal is designed to 
prevent fraudulent and manipulative acts and practices related to the 
listing and trading of Managed Portfolio Shares and to promote just and 
equitable principles of trade and to protect investors and the public 
interest in that the Exchange would halt trading under certain 
circumstances under which trading in the shares of a Fund may be 
inadvisable. These may include: (a) The extent to which trading is not 
occurring in the securities and/or the financial instruments composing 
the portfolio; or (b) whether other unusual conditions or

[[Page 23470]]

circumstances detrimental to the maintenance of a fair and orderly 
market are present. Specifically, the Exchange would halt trading as 
soon as practicable under the following circumstances: (a) The VIIV of 
a series of Managed Portfolio Shares is not being calculated or 
disseminated in one second intervals, as required; (b) the NAV with 
respect to a series of Managed Portfolio Shares is not disseminated to 
all market participants at the same time; (c) the holdings of a series 
of Managed Portfolio Shares are not made available on at least a 
quarterly basis as required under the 1940 Act; or (d) such holdings 
are not made available to all market participants at the same time 
(except as otherwise permitted under the currently applicable exemptive 
order or no-action relief granted by the Commission or Commission staff 
to the Investment Company with respect to the series of Managed 
Portfolio Shares), it will halt trading in such series until such time 
as the VIIV, the NAV, or the holdings are available, as required.
    The Exchange is proposing to retain discretion to halt trading in a 
series of Managed Portfolio Shares based on market conditions or where 
the Exchange determines that trading in such series is inadvisable 
(each a ``Discretionary Halt'') and is also proposing the four 
Availability of Information Halts described above. The Exchange 
believes that retaining discretion to implement a Discretionary Halt as 
specified is consistent with the Act. The proposed rule retaining 
discretion related to halts is designed to ensure the maintenance of a 
fair and orderly market and protect investors and the public interest 
in that it provides the Exchange with the ability to halt when it 
determines that trading in the shares is inadvisable. This could be 
based on the Exchange's own analysis of market conditions being 
detrimental to a fair and orderly market and/or information provided by 
the Investment Company or its agent. There are certain circumstances 
related to the trading and dissemination of information related to the 
underlying holdings of a series of Managed Portfolio Shares, such as 
the extent to which trading is not occurring in the securities and/or 
financial instruments composing the portfolio, that the Exchange may 
not be in a position to know or become aware of as expeditiously as the 
Investment Company or its agent.
    Also, as noted above, there are certain circumstances under which 
trading in the Shares of a Fund may be inadvisable or where the 
Investment Company or its agent will request that the Exchange halt 
trading in the applicable series of Managed Portfolio Shares. Upon 
receipt of information and/or a request from the Investment Company, 
the Exchange would consider the information and/or circumstances 
leading to the request as well as other factors both specific to such 
issue of Managed Portfolio Shares and the broader market in determining 
whether trading in the series of Managed Portfolio Shares is 
inadvisable and that halting trading is necessary in order to maintain 
a fair and orderly market. As such, the Exchange believes that the 
proposal to provide the Exchange with discretion to implement a 
Discretionary Halt is consistent with the Act.
    The Exchange believes that the proposed Availability of Information 
Halts to halt trading in shares of a series of Managed Portfolio Shares 
are consistent with the Act because: (i) The Commission has already 
determined that the requirement that the VIIV be disseminated every 
second is appropriate; (ii) the other Availability of Information Halts 
are generally consistent with and designed to address the same concerns 
about asymmetry of information that Nasdaq Rule 5735(d)(2)(D) related 
to trading halts in Managed Fund Shares \29\ is intended to address, 
specifically that the availability of such information is intended to 
reduce the potential for manipulation and help ensure a fair and 
orderly market in Managed Portfolio Shares; \30\ and (iii) the 
quarterly disclosure of portfolio holdings is a fundamental component 
of Managed Portfolio Shares that allows market participants to better 
understand the strategy of the funds and to monitor how closely trading 
in the funds is tracking the value of the underlying portfolio and when 
such information is not being disclosed as required, trading in the 
shares is inadvisable and it is necessary and appropriate to halt 
trading. The Exchange notes, however, that an Investment Company that 
issues Managed Portfolio Shares will still be subject to Nasdaq Rule 
5701, which requires that a ``A Company with securities listed under 
this Rule 5700 Series must provide Nasdaq with prompt notification 
after the Company becomes aware of any noncompliance by the Company 
with the requirements of the Rule 5700 Series.''
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    \29\ Nasdaq Rule 5735(d)(2)(C)(ii) provides that ``Nasdaq will 
consider the suspension of trading in, and will initiate delisting 
proceedings under the Rule 5800 Series of, a series of Managed Fund 
Shares under any of the following circumstances: . . . if the 
Disclosed Portfolio is not made available to all market participants 
at the same time;'' and (d)(2)(D) provides that ``If Nasdaq becomes 
aware that the net asset value or the Disclosed Portfolio with 
respect to a series of Managed Fund Shares is not disseminated to 
all market participants at the same time, it will halt trading in 
such series until such time as the net asset value or the Disclosed 
Portfolio is available to all market participants.'' These are 
generally consistent with the proposed Availability of Information 
Halts, specifically as it relates to whether the NAV or Disclosed 
Portfolio is not being made available to all market participants at 
the same time.
    \30\ See, e.g., Securities Exchange Act Release No. 80169 (March 
7, 2017), 82 FR 13536 (March 13, 2017); Securities Exchange Act 
Release Nos. 54739 (November 9, 2006), 71 FR 66993, 66997 (November 
17, 2006) (SR-AMEX-2006-78) (approving generic listing standards for 
Portfolio Depositary Receipts and Index Fund Shares based on 
international or global indexes, and stating that ``the proposed 
listing standards are designed to preclude ETFs from becoming 
surrogates for trading in unregistered securities'' and that ``the 
requirement that each component security underlying an ETF be listed 
on an exchange and subject to last-sale reporting should contribute 
to the transparency of the market for ETFs'' and that ``by requiring 
pricing information for both the relevant underlying index and the 
ETF to be readily available and disseminated, the proposal is 
designed to ensure a fair and orderly market for ETFs''); 53142 
(January 19, 2006), 71 FR 4180, 4186 (January 25, 2006) (SR-NASD-
2006-001) (approving generic listing standards for Index-Linked 
Securities and stating that ``[t]he Commission believes that by 
requiring pricing information for both the relevant underlying index 
or indexes and the Index Security to be readily available and 
disseminated, the proposed listing standards should help ensure a 
fair and orderly market for Index Securities'').
---------------------------------------------------------------------------

    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 
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. FINRA, on behalf of the Exchange, or 
the regulatory staff of the Exchange, or both, will communicate as 
needed regarding trading in the Shares and the underlying exchange-
traded instruments with other markets and other entities that are 
members of the ISG, and FINRA, on behalf of the Exchange, or the 
regulatory staff of the Exchange, or both, may obtain trading 
information regarding trading such instruments from such markets and 
other entities. In addition, the Exchange may obtain information 
regarding trading in the Shares and the underlying exchange-traded 
instruments from markets and other entities that are members of ISG or 
with which the

[[Page 23471]]

Exchange has in place a comprehensive surveillance sharing agreement.
    Additionally, any equity instruments or futures held by a Fund 
operating under an exemptive order would trade on markets that are a 
member of ISG or affiliated with a member of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement. 
While future exemptive relief applicable to Managed Portfolio Shares 
may expand the investable universe, the Exchange notes that proposed 
Nasdaq Rule 5760(b)(1) would require the Exchange to file separate 
proposals under Section 19(b) of the Act before listing and trading any 
series of Managed Portfolio Shares and that all of the statements or 
representations regarding (a) the description of the portfolio or 
reference assets; (b) limitations on portfolio holdings or reference 
assets; (c) dissemination and availability of the reference asset or 
intraday indicative values and VIIVs; or (d) the applicability of 
Nasdaq listing rules specified in such proposals shall constitute 
continued listing standards. Also, such proposal would describe the 
investable universe for any such series of Managed Portfolio Shares 
along with the Exchange's surveillance procedures applicable to such 
series. In addition, as noted above, investors will have ready access 
to information regarding the VIIV and quotation and last sale 
information for the Shares.
    For the above reasons, the Exchange believes that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act.

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, rather will facilitate the listing and trading of 
a new type of actively-managed exchange-traded product that will 
enhance competition among both market participants and listing venues, 
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 either solicited or received.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \31\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\32\
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    \31\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \32\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or 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-NASDAQ-2021-023 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-NASDAQ-2021-023. 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-NASDAQ-2021-023 and should be submitted 
on or before May 24, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
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    \33\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09024 Filed 4-30-21; 8:45 am]
BILLING CODE 8011-01-P


