[Federal Register Volume 88, Number 56 (Thursday, March 23, 2023)]
[Notices]
[Pages 17632-17636]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05915]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97158; File No. SR-NYSEARCA-2022-61]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To 
List and Trade the Shares of the Breakwave Tanker Shipping ETF

March 17, 2023.

I. Introduction

    On September 13, 2022, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant

[[Page 17633]]

to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (``Act'' 
or ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ a proposed rule 
change to list and trade shares (``Shares'') of the Breakwave Tanker 
Shipping ETF (``Fund'') under NYSE Arca Rule 8.200-E, Commentary .02. 
The proposed rule change was published for comment in the Federal 
Register on September 27, 2022.\4\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 95853 (Sept. 21, 
2022), 87 FR 58552 (``Notice'').
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    On November 2, 2022, pursuant to Section 19(b)(2) of the Act,\5\ 
the Commission designated a longer period within which to approve the 
proposed rule change, disapprove the proposed rule change, or institute 
proceedings to determine whether to disapprove the proposed rule 
change.\6\ On December 8, 2022, the Commission instituted proceedings 
under Section 19(b)(2)(B) of the Exchange Act \7\ to determine whether 
to approve or disapprove the proposed rule change.\8\ On March 6, 2023, 
the Exchange filed Amendment No. 1, which amended and replaced the 
proposed rule change in its entirety.\9\ The Commission has received no 
comments on the proposed rule change. The Commission is approving the 
proposed rule change, as modified by Amendment No. 1.
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    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 96213, 87 FR 67513 
(Nov. 8, 2022).
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Securities Exchange Act Release No. 96469, 87 FR 76524 
(Dec. 14, 2022).
    \9\ In Amendment No. 1, the Exchange: (1) clarified information 
regarding the markets for Freight Futures (as defined herein) and 
exchange-traded options on Freight Futures; (2) clarified the 
correlation between the Benchmark Portfolio (as defined herein) and 
the Fund's portfolio and the adjustments and rebalancing of the 
Fund's portfolio; (3) provided additional background information on 
the freight futures markets, generally, and additional supporting 
information on the liquidity of the Freight Futures markets, 
specifically; (4) clarified the types of instruments and other 
holdings in which the Fund will not invest; (5) expanded its 
description of the surveillance applicable to the Shares, Freight 
Futures, and exchange-listed options on Freight Futures; (6) added a 
representation that, prior to the commencement of trading of the 
Shares, it will inform its ETP Holders (as defined herein) in an 
Information Bulletin of the special characteristics and risks 
associated with trading the Shares, among other information; and (7) 
made other technical amendments. Because the amendment does not 
materially alter the substance of the proposed rule change or raise 
unique or novel regulatory issues, it is not subject to notice and 
comment. Amendment No. 1 is available on the Commission's website 
at: https://www.sec.gov/comments/sr-nysearca-2022-61/srnysearca202261-20158810-326900.pdf.
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II. Exchange's Description of the Proposed Rule Change, as Modified by 
Amendment No. 1

    As described in more detail in Amendment No 1 to the proposed rule 
change,\10\ the Exchange proposes to list and trade the Shares of the 
Fund under NYSE Arca Rule 8.200-E, Commentary .02, which governs the 
listing and trading of Trust Issued Receipts on the Exchange. The Fund 
will be a series of ETF Managers Group Commodity Trust I (``Trust),\11\ 
and the Fund and the Trust will be managed and controlled by their 
sponsor and investment manager, ETF Managers Capital LLC 
(``Sponsor'').\12\
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    \10\ See id. Additional information about the tanker freight 
industry, including tanker vessel supply, demand for seaborne oil 
transportation, calculation of NAV (as defined herein), 
dissemination of IFV (as defined herein), creation and redemption of 
Shares, general availability of information, trading halts, trading 
rules, surveillance, and information bulletin, among other things, 
can be found in the proposed rule change, as modified by Amendment 
No. 1.
    \11\ The Exchange states that on July 1, 2022, the Trust 
submitted to the Commission on a confidential basis its draft 
registration statement on Form S-1 (``Registration Statement'') 
under the Securities Act of 1933.
    \12\ The Sponsor is registered with the Commodity Futures 
Trading Commission (``CFTC'') as a commodity pool operator and is a 
member of the National Futures Association. Breakwave Advisors LLC 
(``Breakwave'') is registered as a commodity trading advisor with 
the CFTC and will serve as the Fund's commodity trading advisor. 
ETFMG Financial LLC will be the Fund's distributor, and US Bancorp 
Fund Services LLC will be the Fund's administrator and transfer 
agent (``Administrator'' and ``Transfer Agent'').
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    According to the Exchange, the Fund's investment objective will be 
to provide investors with exposure to the daily change in the price of 
tanker freight futures,\13\ before expenses and liabilities of the 
Fund, by tracking the performance of a portfolio (``Benchmark 
Portfolio'') consisting of positions in the three-month strip of the 
nearest calendar quarter of futures contracts on specified indexes 
(individually, ``Reference Index'') that measure prices for shipping 
crude oil (``Freight Futures'').\14\ Each Reference Index is published 
each U.K. business day by the London-based Baltic Exchange \15\ and 
measures the charter rate for shipping crude oil in a specific size 
category of cargo ship and for a specific route. The two Reference 
Indexes are: (1) the TD3C Index: Persian Gulf to China 270,000 metric 
tons cargo (Very Large Crude Carrier or VLCC tankers); and (2) the TD20 
Index: West Africa to Europe, 130,000 metric tons cargo (Suezmax 
tankers).\16\ The value of each of the TD3C Index and TD20 Index is 
disseminated daily at 4:00 p.m., London Time by the Baltic 
Exchange.\17\ Such Reference Index information also is publicly 
available and widely disseminated by Reuters, Bloomberg, and/or other 
major market data vendors. Freight Futures reflect market expectations 
for the future cost of transporting crude oil.\18\
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    \13\ According to the Exchange, freight futures contracts mainly 
exist for dry bulk and tanker freight rates. The Fund's exposure 
will be to tanker (not dry bulk) freight futures.
    \14\ According to the Exchange, Freight Futures are primarily 
traded through broker members of the Forward Freight Agreement 
Brokers Association (``FFABA''). Members of the FFABA must be 
members of the Baltic Exchange and must be regulated by the 
Financial Conduct Authority if resident in the U.K., or if not 
resident in the U.K., by an equivalent body if required by the 
authorities in the jurisdiction. Freight Futures are quoted in U.S. 
dollars per metric ton, with a minimum lot size of 1,000 metric 
tons. One lot represents freight costs to transport in U.S. dollars. 
The nominal value of a contract is simply the product of lots and 
Freight Futures prices.
    \15\ The Baltic Exchange, which is a wholly-owned subsidiary of 
the Singapore Exchange, is a membership organization and an 
independent source of maritime market information for the trading 
and settlement of physical and derivative shipping contracts.
    \16\ The Reference Indexes are published by the Baltic 
Exchange's subsidiary company, Baltic Exchange Information Services 
Ltd (``Baltic''), which publishes a wide range of market reports, 
fixture lists, and market rate indicators on a daily and (in some 
cases) weekly basis. The Baltic indices, which include the Reference 
Indexes, are an assessment of the price of moving the major raw 
materials by sea. The indices are based on assessments of the cost 
of transporting various bulk cargoes, both wet (e.g., crude oil and 
oil products) and dry (e.g., coal and iron ore), made by leading 
shipbroking houses located around the world on a per ton and daily 
hire basis. The information is collated and published by the Baltic 
Exchange. Procedures relating to administration of the Baltic 
indices are set forth in ``The Baltic Exchange, Guide to Market 
Benchmarks'' November 2016, including production methods, 
calculation, confidentiality and transparency, duties of panelists, 
code of conduct, audits, and quality control.
    \17\ Freight futures, including tanker Freight Futures, settle 
monthly over the arithmetic average of spot index assessments in the 
contract month for the relevant underlying product, rounded to three 
decimal places. The daily Reference Index publication, against which 
Freight Futures settle, is published by the Baltic Exchange.
    \18\ Generally, Freight Futures trade from approximately 3:00 
a.m. Eastern Time (``E.T.'') to approximately 1:00 p.m. E.T. The 
great majority of trading volume occurs during London business 
hours, from approximately 4:00 a.m. E.T. time to approximately 12:00 
p.m. E.T. Some limited trading takes place during Asian business 
hours as well (12:00 a.m. to 3:00 a.m. E.T.). The final closing 
prices for settlement are published daily around 12:30 p.m. E.T. 
Final cash settlement occurs the first business day following the 
expiry day.
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    The Fund will seek to achieve its objective by purchasing Freight 
Futures. The Fund also may hold exchange-traded options on Freight 
Futures. Currently, the exclusive markets for Freight Futures and 
options on Freight Futures are ICE Futures Europe (``ICE'') and the 
Chicago Mercantile Exchange (``CME''). The applicable exchange acts as 
a counterparty for each member for

[[Page 17634]]

clearing purposes. The Fund's investments in Freight Futures will be 
cleared by ICE and/or CME.\19\
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    \19\ The Exchange represents that CME and ICE are members of the 
Intermarket Surveillance Group (``ISG'').
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    According to the Exchange, although freight derivatives have been 
used in the shipping industry for more than 30 years, freight futures 
(including tanker Freight Futures) have been clearing on exchanges 
since 2005. In addition, the Exchange represents that the liquidity of 
tanker Freight Futures (clean and dirty) has been increasing, in lot 
terms, over the last five years.\20\ For example, in 2021, 
approximately 560,000 lots in Freight Futures traded. As of 2022, open 
interest in Freight Futures stood at approximately 145,000 lots across 
all asset classes representing an estimated value of more than $2 
billion. Of such open interest in 2022, TD3C contracts accounted for 
approximately 50% in lots of all tanker Freight Futures.
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    \20\ Tanker Freight Futures are quoted in U.S. Dollars per 
metric ton, with a minimum lot size of 1,000 metric tons. One lot 
represents freight costs to transport in U.S. Dollars. The nominal 
value of a contract is simply the product of lots and Freight 
Futures prices. There are futures contracts of up to 72 consecutive 
months, starting with the current month, available for trading for 
each vessel class.
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    The Fund will invest substantially all of its assets in Freight 
Futures constituting the Benchmark Portfolio, and at any given time, 
the average maturity of the futures held by the Fund will be 
approximately 50 to 70 days. The Fund's portfolio will be traded with a 
view to reflecting the performance of the Benchmark Portfolio, whether 
the Benchmark Portfolio is rising, falling, or flat over any particular 
period. The Benchmark Portfolio, which is maintained by Breakwave and 
will be rebalanced annually, will hold long positions in Freight 
Futures corresponding to the TD3C Index and TD20 Index. The Benchmark 
Portfolio's initial allocation will be approximately 90% TD3C contracts 
and 10% TD20 contracts, based on contract value, not number of lots. 
The Benchmark Portfolio will consist of positions in the three-month 
strip of the nearest calendar quarter of Freight Futures and roll them 
constantly to the next calendar quarter. The three-month strip of each 
of the four-calendar quarters are January, February, and March (Q1); 
April, May, and June (Q2); July, August, and September (Q3); and 
October, November, and December (Q4). The Benchmark Portfolio will hold 
all positions to maturity and settle them in cash. During any given 
calendar quarter, the Benchmark Portfolio will progressively increase 
its position to the next calendar quarter three-month strip, thus 
maintaining constant long exposure to the Freight Futures market as 
positions mature.
    To track the Benchmark Portfolio, the Fund will attempt to roll 
positions in the nearby calendar quarter, on a pro rata basis. For 
example, if the Fund was currently holding the Q1 calendar quarter 
comprising the January, February and March monthly contracts, each week 
in the month of February, the Fund will attempt to purchase Q2 
contracts in an amount equal to approximately one quarter of the 
expiring February positions. As a result, by the end of February, the 
Fund would have rolled the February position to Q2 freight contracts, 
leaving the Fund with March and Q2 contracts. At the end of March, the 
Fund will have completed the roll and will then hold only Q2 exposure 
comprising April, May, and June monthly contracts.
    During the month of December of each year, the Fund will rebalance 
its portfolio in order to bring the allocation of assets back to the 
initial allocation levels (i.e., 90% and 10% in accordance with the 
Benchmark Portfolio construction). Given each asset's individual price 
movements during the year, such percentages might deviate from the 
targeted allocation. To maintain the correlation between the Fund and 
the change in the Benchmark Portfolio with regard to the performance of 
near-dated versus longer-dated futures (i.e., based on contract 
duration), the Sponsor may adjust the Fund's portfolio of investments 
on a daily basis in response to creation and redemption orders or 
otherwise as required. For example, if needed, the Fund will sell 
current month Freight Futures and buy next calendar quarter futures to 
maintain a balance in terms of average duration, but also sell TD3C 
futures and buy TD20 futures to maintain the initial allocation levels 
(i.e., 90%; 10%). The Sponsor anticipates that the Fund's Freight 
Futures positions will be held to expiration and settle in cash against 
the respective Reference Index as published by the Baltic Exchange and 
ICE or CME. Because Freight Futures contracts are cash settled, the 
Fund need not close out of existing contracts. Rather, it will hold 
such contracts to expiration and apply the above methodology in order 
acquire the nearby calendar contract.
    When establishing positions in Freight Futures, the Fund will be 
required to deposit initial margin with a value of approximately 10% to 
40% of the notional value of each Freight Futures position at the time 
it is established. These margin requirements are established and 
subject to change from time to time by the relevant exchanges, clearing 
houses, or the Fund's futures commission merchant (``FCM''). On a daily 
basis, the Fund will be obligated to pay, or entitled to receive, 
variation margin in an amount equal to the change in the daily 
settlement level of its overall Freight Futures positions. Any assets 
not required to be posted as margin with the FCM will be held at the 
Fund's custodian in cash or cash equivalents.\21\ Like other investors 
in Freight Futures, the Fund will place purchase orders for Freight 
Futures with an execution broker. The broker will identify a selling 
counterparty and, simultaneously with the completion of the 
transaction, will submit the block traded Freight Futures to the 
relevant exchange or clearing house for clearing, thereby completing 
and creating a cleared futures transaction. If the exchange or clearing 
house does not accept the transaction for any reason, the transaction 
will be considered null and void and of no legal effect.
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    \21\ The Fund will hold cash or cash equivalents, such as U.S. 
Treasuries or other high credit quality, short-term fixed-income or 
similar securities for direct investment or as collateral for the 
U.S. Treasuries and for other liquidity purposes, and to meet 
redemptions that may be necessary on an ongoing basis.
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    The Exchange represents that not more than 10% of the net assets of 
the Fund in the aggregate invested in Freight Futures and exchange-
traded options on Freight Futures will consist of Freight Futures and 
exchange-traded options on Freight Futures whose principal market is 
not a member of the ISG or is a market with which the Exchange does not 
have in place a comprehensive surveillance sharing agreement 
(``CSSA''). In addition, while the Fund maintains the right to invest 
in other maturities of Freight Futures, if such strategy is deemed 
necessary, according to the Exchange, the Benchmark Portfolio will not 
include, and the Fund will not invest in, swaps or other over-the-
counter derivative instruments.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the Exchange's 
proposal to list and trade the Shares is consistent with the Exchange 
Act and the rules and regulations thereunder applicable to a national 
securities exchange.\22\ In particular, the Commission finds that the 
proposed rule change, as modified by Amendment No. 1, is consistent 
with: (1) Section 6(b)(5) of the Exchange

[[Page 17635]]

Act,\23\ which requires, among other things, that the Exchange's rules 
be designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest; and (2) Section 11A(a)(1)(C)(iii) of the Exchange 
Act,\24\ which sets forth Congress' finding that it is in the public 
interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers, and investors of information with respect to 
quotations for and transactions in securities.
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    \22\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \23\ 15 U.S.C. 78f(b)(5).
    \24\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    As stated in the proposal, the Fund will seek to achieve its 
objective by purchasing Freight Futures (and exchange-traded options on 
Freight Futures) that are cleared through major exchanges and, 
currently, the exclusive markets for Freight Futures (and options on 
Freight Futures) are ICE and CME, both of which are members of ISG and 
are regulated in the U.S. by the CFTC.\25\ The Exchange further states 
that, although freight derivatives have been used in the shipping 
industry for more than 30 years, freight futures (including tanker 
Freight Futures) have been clearing on exchanges since 2005. In 
summary, Freight Futures are cleared on well-established, regulated 
markets that are members of the ISG.\26\ The Commission finds that the 
Exchange will be able to obtain and share surveillance information with 
a significant regulated market in Freight Futures.
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    \25\ See supra note 19.
    \26\ See supra notes 19-20 and accompanying text.
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    To be listed and traded on the Exchange, the Shares must comply 
with the requirements of NYSE Arca Rule 8.200-E, Commentary .02 thereto 
on an initial and continuing basis. The Exchange deems the Shares to be 
equity securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules governing the trading of equity securities.
    Quotation and last-sale information regarding the Shares will be 
disseminated through the facilities of the Consolidated Tape 
Association. The intraday, closing prices, and settlement prices of the 
Freight Futures will be readily available from the applicable futures 
exchange websites, automated quotation systems, published or other 
public sources, or major market data vendors. Complete real-time data 
for Freight Futures is available by subscription through on-line 
information services. Trading prices for the Freight Futures and 
exchange-traded options on Freight Futures will be disseminated by one 
or more major market data vendors during the NYSE Arca Core Trading 
Session of 9:30 a.m. to 4:00 p.m. E.T. CME and ICE provide on a daily 
basis transaction volumes, transaction prices, and open interest on 
their respective websites. Daily settlement prices and historical 
settlement prices are available through a subscription service to the 
Baltic Exchange, ICE, and CME; however, these exchanges provide the 
daily settlement price change of Freight Futures on their respective 
websites. Certain Freight Futures brokers provide real time pricing 
information to the general public either through their websites or 
through data vendors, such as Bloomberg or Reuters. Most Freight 
Futures brokers provide, upon request, individual electronic screens 
that market participants can use to transact, place orders, or only 
monitor Freight Futures market price levels.
    In addition, the Fund's website will display the applicable end of 
day closing net asset value (``NAV''). The daily holdings of the Fund 
will be disclosed on the Fund's website before 9:30 a.m. E.T. each day. 
The Fund's website disclosure of portfolio holdings will include, as 
applicable: (1) the composite value of the total portfolio; (2) the 
quantity and type of each holding (including the ticker symbol, 
maturity date, or other identifier, if any) and other descriptive 
information including, in the case of an option, its strike price; (3) 
the percentage weighting of each holding in the Fund's portfolio; (4) 
the number of Freight Futures contracts and the value of each Freight 
Futures (in U.S. dollars); (5) the type (including maturity, ticker 
symbol, or other identifier) and value of each Treasury security and 
cash equivalent; and (6) the amount of cash held in the Fund's 
portfolio.
    The daily closing Benchmark Portfolio level and the percentage 
change in the daily closing level for the Benchmark Portfolio will be 
publicly available from one or more major market data vendors. The 
intraday value of the Benchmark Portfolio, updated every 15 seconds, 
will be available through major market data vendors during those times 
that the hours trading in Freight Futures overlap with trading hours on 
NYSE Arca (i.e., between 9:00 a.m. and 1:00 p.m. E.T.). The indicative 
fund value (``IFV''), which will be calculated by using the prior day's 
closing NAV per Share of the Fund as a base and updating that value 
throughout the trading day to reflect changes in the most recently 
reported trade price for the futures and/or options held by the Fund, 
will be disseminated on a per Share basis every 15 seconds during 
regular NYSE Arca Core Trading Session hours of 9:30 a.m. E.T. to 4:00 
p.m. E.T.\27\ The Administrator will calculate the NAV of the Fund on 
each NYSE Arca trading day. The NAV for a particular trading day will 
be released after 4:00 p.m. E.T., and the NAV for the Shares will be 
disseminated daily to all market participants at the same time.
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    \27\ The Exchange represents that the customary trading hours of 
Freight Futures trading are 3:00 a.m. E.T. to 1:00 p.m. E.T. This 
means that there is a gap in time at the end of each day during 
which the Fund's Shares will be traded on the NYSE Arca, but real-
time trading prices for contracts are not available. During such 
gaps in time the IFV will be calculated based on the end of day 
price of such contracts from the Baltic Exchange's, CME's, and ICE's 
immediately preceding settlement prices.
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    The Commission also believes that the proposal to list and trade 
the Shares is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Shares appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. If the Exchange becomes aware that the NAV with respect to the 
Shares is not disseminated to all market participants at the same time, 
it will halt trading in the Shares until such time as the NAV is 
available to all market participants. Further, the Exchange may halt 
trading during the day in which an interruption to the dissemination of 
the IFV or the intraday value of the Benchmark Portfolio occurs; if the 
interruption to the dissemination of the IFV or the value of the 
Benchmark Portfolio persists past the trading day in which it occurred, 
the Exchange will halt trading no later than the beginning of the 
trading day following the interruption. Trading in Shares of the Fund 
will be halted if the circuit breaker parameters in NYSE Arca Rule 
7.12-E have been reached. Trading also may be halted because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Shares inadvisable. The Exchange states that it has a 
general policy prohibiting the distribution of material, non-public 
information by its employees. Moreover, trading of the Shares will be 
subject to NYSE Arca Rule 8.200-E, Commentary .02(e), which sets forth 
certain restrictions on Equity Trading Permit holders (``ETP Holders'') 
acting as registered Market Makers in Trust

[[Page 17636]]

Issued Receipts to facilitate surveillance.
    Under the proposal, the Exchange or the Financial Industry 
Regulatory Authority (``FINRA''), on behalf of the Exchange, or both, 
will communicate as needed regarding trading in the Shares, Freight 
Futures, and exchange-traded options on Freight Futures with other 
markets and other entities that are members of the ISG, and the 
Exchange or FINRA, on behalf of the Exchange, or both, may obtain 
trading information regarding trading in the Shares, Freight Futures, 
and exchange-traded options on Freight Futures from such markets and 
other entities. In addition, the Exchange may obtain information 
regarding trading in the Shares, Freight Futures, and options on 
Freight Futures from markets and other entities that are members of ISG 
or with which the Exchange has in place a CSSA.
    In support of this proposal, the Exchange also represents that:
    (1) The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Rule 8.200-E.
    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.
    (3) Trading in the Shares will be subject to the existing trading 
surveillances administered by the Exchange, as well as cross-market 
surveillances administered by FINRA on behalf of the Exchange, which 
are designed to detect violations of Exchange rules and applicable 
federal securities laws, and these procedures are adequate to properly 
monitor Exchange trading of the Shares in all trading sessions and to 
deter and detect violations of Exchange rules and federal securities 
laws applicable to trading on the Exchange.
    (4) Prior to the commencement of trading, the Exchange will inform 
its ETP Holders in an Information Bulletin of the special 
characteristics and risks associated with trading the Shares. 
Specifically, the Information Bulletin will discuss the following: (a) 
the risks involved in trading the Shares during the Early and Late 
Trading Sessions when an updated IFV will not be calculated or publicly 
disseminated; (b) the procedures for purchases and redemptions of 
Shares in creation baskets and redemption baskets (and that Shares are 
not individually redeemable); (c) NYSE Arca Rule 9.2-E(a), which 
imposes a duty of due diligence on its ETP Holders to learn the 
essential facts relating to every customer prior to trading the Shares; 
(d) how information regarding the IFV is disseminated; (e) how 
information regarding portfolio holdings is disseminated; (f) the 
requirement that ETP Holders deliver a prospectus to investors 
purchasing newly issued Shares prior to, or concurrently with, the 
confirmation of a transaction; and (g) trading information.
    (5) For initial and continued listing, the Funds will be in 
compliance with Rule 10A-3 under the Act,\28\ as provided by NYSE Arca 
Rule 5.3-E.
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    \28\ 17 CFR 240.10A-3.
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    (6) A minimum of 100,000 Shares will be outstanding at the 
commencement of trading on the Exchange.
    (7) The Fund will invest substantially all of its assets in Freight 
Futures currently constituting the Benchmark Portfolio, and not more 
than 10% of the net assets of the Fund in the aggregate invested in 
Freight Futures and exchange-traded options on Freight Futures will 
consist of Freight Futures and exchange-traded options on Freight 
Futures whose principal market is not a member of the ISG or is a 
market with which the Exchange does not have a CSSA.
    (8) The Benchmark Portfolio will not include, and the Fund will not 
invest in, swaps or other over-the-counter derivative instruments.
    (9) Statements and representations made in this filing regarding 
(a) the description of the Reference Indexes and portfolios, (b) 
limitations on portfolio holdings or reference assets, or (c) 
applicability of Exchange listing rules specified in this filing shall 
constitute continued listing requirements for listing the Shares on the 
Exchange.
    (10) The Sponsor has represented to the Exchange that it will 
advise the Exchange of any failure by the Fund to comply with the 
continued listing requirements, and, pursuant to its obligations under 
Section 19(g)(1) of the Act, the Exchange will monitor for compliance 
with the continued listing requirements.\29\ If the Fund is not in 
compliance with the applicable listing requirements, the Exchange will 
commence delisting procedures under NYSE Arca Rule 5.5-E(m).
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    \29\ The Commission notes that certain other proposals for the 
listing and trading of exchange-traded products include a 
representation that the listing exchange will ``surveil'' for 
compliance with the continued listing requirements. See, e.g., 
Securities Exchange Act Release No. 77620 (Apr. 14, 2016), 81 FR 
23339 (Apr. 20, 2016) (SR-BATS-2015-124). In the context of this 
representation, it is the Commission's view that ``monitor'' and 
``surveil'' both mean ongoing oversight of the Fund's compliance 
with the continued listing requirements. Therefore, the Commission 
does not view ``monitor'' as a more or less stringent obligation 
than ``surveil'' with respect to the continued listing requirements.
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    This approval order is based on all of the Exchange's 
representations and description of the Fund, including those set forth 
above and in Amendment No. 1 to the proposed rule change.
    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendment No. 1, is consistent with 
Sections 6(b)(5) and 11A(a)(1)(C)(iii) of the Act \30\ and the rules 
and regulations thereunder applicable to a national securities 
exchange.
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    \30\ 15 U.S.C. 78f(b)(5) and 15 U.S.C. 78k-1(a)(1)(C)(iii).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Exchange Act,\31\ that the proposed rule change (SR-NYSEARCA-2022-61), 
as modified by Amendment No. 1, be, and it hereby is, approved.
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    \31\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-05915 Filed 3-22-23; 8:45 am]
BILLING CODE 8011-01-P


