[Federal Register Volume 79, Number 114 (Friday, June 13, 2014)]
[Notices]
[Pages 33973-33976]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-13821]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72349; File No. SR-NYSEArca-2014-66]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change to Reflect a Change
to the Reference Index Relating to the Columbia Select Large Cap Value
ETF
June 9, 2014.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on June 2, 2014, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule
[[Page 33974]]
change, as described in Items I and II 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to reflect a change to the reference index
relating to the Columbia Select Large Cap Value ETF (formerly, Grail
American Beacon Large Cap Value ETF). Shares of the Fund are currently
listed and traded on the Exchange. The text of the proposed rule change
is available on the Exchange's Web site at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Commission has approved listing and trading on the Exchange of
shares (``Shares'') of the Columbia Select Large Cap Value ETF
(formerly, Grail American Beacon Large Cap Value ETF) (``Fund''), a
series of Columbia ETF Trust (``Trust'') (formerly, the Grail Advisors
ETF Trust) \4\ under NYSE Arca Equities Rule 8.600, which governs the
listing and trading of Managed Fund Shares. Shares of the Fund are
currently listed and traded on the Exchange.
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\4\ See Securities Exchange Act Release No. 59826 (April 28,
2009), 74 FR 20512 (May 4, 2009) (SR-NYSEArca-2009-22) (``Prior
Order''). See also Securities Exchange Act Release No. 59651 (March
30, 2009), 74 FR 15548 (April 6, 2009) (SR-NYSEArca-2009-22)
(``Prior Notice,'' and together with the Prior Order, the ``Prior
Release'').
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The Shares are offered by the Trust, which is registered with the
Commission as an open-end management investment company.\5\ The
investment advisor to the Fund is Columbia Management Investment
Advisers, LLC (the ``Investment Manager'').\6\
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\5\ The Trust is registered under the Investment Company Act of
1940 (15 U.S.C. 80a-1) (``1940 Act''). On April 14, 2014, the Trust
filed with the Commission an amendment to its registration statement
on Form N-1A under the Securities Act of 1933 (15 U.S.C. 77a), and
under the 1940 Act relating to the Fund (File Nos. 333-148082 and
811-22154) (``Registration Statement''). The description of the
operation of the Trust and the Fund herein is based, in part, on the
Registration Statement. In addition, the Commission has issued an
order granting certain exemptive relief to the Trust under the 1940
Act. See Investment Company Act Release No. 28604 (January 16, 2009)
(File No. 812-13440) (``Exemptive Order'').
\6\ The previous investment manager for the Fund was Grail
Advisors LLC, a majority-owned subsidiary of Grail Partners LLC. The
Fund previously was sub-advised by American Beacon Advisors, Inc.
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In this proposed rule change, the Exchange proposes to reflect a
change to the index that the Investment Manager will utilize to
implement the Fund's investment objective, as described below.\7\
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\7\ The changes described herein will be effective upon filing
with the Commission of another amendment to the Fund's Registration
Statement. See note 5, supra. The Investment Manager represents that
it will manage the Fund in the manner described in the Prior
Release, and will not implement the changes described herein until
the instant proposed rule change is operative.
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The Prior Release stated that the Fund's investment objective is
long-term capital appreciation and current income; that, ordinarily, at
least 80% of the Fund's net assets (plus the amount of any borrowings
for investment purposes) would be invested in equity securities of
large market capitalization U.S. companies; and that these companies
generally have market capitalizations similar to the market
capitalizations of the companies in the Russell 1000[supreg] Index at
the time of investment.\8\ The Prior Release further stated that the
Fund's investment sub-advisers will select stocks that, in their
opinion, have most or all of the following characteristics (relative to
the Russell 1000[supreg] Index): Above-average earnings growth
potential; below-average price to earnings ratio; below-average price
to book value ratio; and above-average dividend yields.\9\
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\8\ The Russell 1000 Index measures the performance of the 1,000
largest U.S. companies based on total market capitalization. The
Prior Release stated that the Fund's investments may include common
stocks, preferred stocks, securities convertible into U.S. common
stocks, U.S. dollar-denominated American Depositary Receipts, and
U.S. dollar-denominated foreign stocks traded on U.S. exchanges, and
that the Fund will not purchase or sell securities in markets
outside the U.S.
\9\ The Fund currently does not have a sub-adviser. The
activities of the sub-advisers described in the Prior Release have
been assumed by the Investment Manager, but the Investment Manager
may, in the future, employ for the Fund the services of an
investment sub-adviser or sub-advisers. The Investment Manager is
not registered as a broker-dealer, but is affiliated with a broker-
dealer, and has implemented a ``fire wall'' with respect to such
broker-dealer regarding access to information concerning the
composition and/or changes to the Fund's portfolio. If the
Investment Manager elects to hire a sub-adviser for the Fund that is
registered as a broker-dealer or is affiliated with a broker-dealer,
such sub-adviser will implement a fire wall with respect to its
relevant personnel or broker-dealer affiliate regarding access to
information concerning the composition and/or changes to the
portfolio, and will be subject to procedures designed to prevent the
use and dissemination of material non-public information regarding
such portfolio.
In the event (a) the Investment Manager becomes registered as a
broker-dealer or newly affiliated with a broker-dealer, or (b) any
new adviser or sub-adviser is a registered broker-dealer, or becomes
affiliated with a broker-dealer, it will implement a fire wall with
respect to its relevant personnel or its broker-dealer affiliate
regarding access to information concerning the composition and/or
changes to the portfolio, and will be subject to procedures designed
to prevent the use and dissemination of material non-public
information regarding such portfolio.
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Going forward, whether day-to-day portfolio management of the Fund
is provided by the Investment Manager or a sub-adviser selected by the
Investment Manager, the Investment Manager wishes to revise the
description of what constitutes equity securities of ``large market
capitalization U.S. companies'' from the market capitalization range of
the Russell 1000[supreg] Index to companies with market capitalizations
similar to the market capitalizations of the companies in the Russell
1000[supreg] Value Index at the time of investment.\10\ The Investment
Manager represents that it has managed the Fund consistent with the
range of the Russell 1000[supreg] Index; however, the Investment
Manager believes that the Russell 1000 Value[supreg] Index will better
reflect the Fund's ``value'' style of investing.\11\
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\10\ The Russell 1000 Value[supreg] Index, which is a subset of
the Russell[supreg] 1000 Index, measures the performance of the
large-cap value segment of the U.S. equity universe. It includes
those Russell 1000 companies with lower price-to-book ratios and
lower expected growth values. The Russell 1000 Value Index is
reconstituted annually. The Fund's current performance benchmark is
the Russell 1000 Value[supreg] Index, as reflected in the
Registration Statement.
\11\ According to the Registration Statement, the Investment
Manager considers a variety of factors in identifying opportunities
and constructing the Fund's portfolio which may include, among
others, a low price-to-earnings ratio; positive change in senior
management; positive corporate restructuring; temporary setback in
price due to factors that no longer exist or are ending; a positive
shift in the company's business cycle; and/or a catalyst for
increase in the rate of the company's earnings growth. These factors
may change over time.
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The Investment Manager represents that there is no change to the
Fund's investment objective. The Fund will
[[Page 33975]]
continue to comply with all initial and continued listing requirements
under NYSE Arca Equities Rule 8.600.
Except for the changes noted above, all other facts presented and
representations made in the Prior Release remain unchanged.
All terms referenced but not defined herein are defined in the
Prior Release.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \12\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
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\12\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices, and is designed
to promote just and equitable principles of trade and to protect
investors and the public interest, in that the Investment Manager
represents that there is no change to the Fund's investment objective
and the Investment Manager believes that the Russell 1000 Value[supreg]
Index better reflects the Fund portfolio managers' value style of
investing. In addition, the Investment Manager notes that the Fund's
current performance benchmark is the Russell 1000 Value[supreg] Index.
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 the Fund will continue to comply with all
initial and continued listing requirements under NYSE Arca Equities
Rule 8.600. The Investment Manager represents that there is no change
to the Fund's investment objective. Except for the changes noted above,
all other representations made in the Prior Release remain unchanged.
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 purposes of the Act. The proposed changes will
accommodate continued listing and trading of an issue of Managed Fund
Shares that, ordinarily, principally holds large-capitalization, U.S.
exchange-listed equities.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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, if consistent with
the protection of investors and the public interest, the proposed rule
change has become effective pursuant to Section 19(b)(3)(A) of the Act
\13\ and Rule 19b-4(f)(6)(iii) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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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A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally
does not become operative for 30 days after the date of the filing.
However, Rule 19b-4(f)(6)(iii) \16\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange requests that the
Commission waive the 30-day operative delay to accommodate the proposed
change without delay. The Exchange states that the Shares of the Fund
are currently listed and trading.
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public
interest.\17\ As stated in this proposal, the proposed change does not
alter the Fund's investment objective. Under the proposal, the Exchange
seeks to change the description of what constitutes equity securities
of ``large market capitalization U.S. companies'' from the market
capitalization range of the Russell 1000[supreg] Index to companies
with market capitalizations similar to the market capitalizations of
the companies in the Russell 1000[supreg] Value Index at the time of
investment. The Commission notes that the Russell 1000 Value[supreg]
Index, which measures the performance of the large-cap value segment of
the U.S. equity universe, is a subset of the Russell[supreg] 1000
Index. The Commission further notes that the Fund's current performance
benchmark is the Russell 1000 Value[supreg] Index, as reflected in the
Registration Statement. The Exchange represents that, except for this
change, all other facts and representations made in the Prior Release
remain unchanged, and the Fund will continue to comply with all initial
and continued listing requirements under NYSE Arca Equities Rule 8.600.
Because the proposed change does not alter the Fund's investment
objective and does not raise any novel or unique regulatory issues, the
Commission designates the proposed rule change as operative upon
filing.
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\17\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.
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 [email protected]. Please include
File Number SR-NYSEArca-2014-66 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2014-66. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule
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change that are filed with the Commission, and all written
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street NE., Washington, DC 20549, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
such filing will also be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NYSEArca-2014-66 and should be submitted on or before
July 7, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-13821 Filed 6-12-14; 8:45 am]
BILLING CODE 8011-01-P