[Federal Register Volume 79, Number 120 (Monday, June 23, 2014)]
[Notices]
[Pages 35598-35602]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-14541]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72411; File No. SR-NASDAQ-2014-040]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Granting Approval of a Proposed Rule Change Relating to the Listing and
Trading of the Shares of the Calamos Focus Growth ETF of the Calamos
ETF Trust
June 17, 2014.
I. Introduction
On April 21, 2014, The NASDAQ Stock Market LLC (``Nasdaq'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to list and trade the shares
(``Shares'') of the Calamos Focus Growth ETF (``Fund'') under Nasdaq
Rule 5735. The proposed rule change was published for comment in the
Federal Register on May 9, 2014.\3\ The Commission received no comments
on the proposal. This order grants approval of the proposed rule
change.
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\1\ 15 U.S.C.78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 72096 (May 5, 2014),
79 FR 26789 (``Notice'').
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II. Description of the Proposed Rule Change
A. The Exchange's Proposal
The Exchange proposes to list and trade Shares of the Fund under
Nasdaq Rule 5735, which governs the listing and trading of Managed Fund
Shares on the Exchange. The Shares will be offered by Calamos ETF Trust
(``Trust''), which is registered with the Commission as an investment
company.\4\ The Fund is a series of the Trust.
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\4\ The Trust has filed a registration statement on Form N-1A
(``Registration Statement'') with the Commission. See Initial
Registration Statement on Form N-1A for the Trust, dated September
13, 2013 (File Nos. 333-191151 and 811-22887). In addition, the
Exchange states that the Trust has obtained certain exemptive relief
under the 1940. Act See Investment Company Act Release No. 30653
(August 20, 2013) (File No. 812-14169) (``Exemptive Order'').
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Calamos Advisors LLC will be the investment adviser (``Adviser'')
to the Fund. Foreside Fund Services, LLC will be the principal
underwriter and distributor of the Fund's Shares, and State Street Bank
and Trust will act as the administrator, accounting agent, custodian,
and transfer agent to the Fund.
[[Page 35599]]
The Exchange represents that the Adviser is not a broker-dealer,
but is affiliated with Calamos Financial Services LLC, which is a
broker-dealer. The Exchange states that the Adviser has implemented a
fire wall with respect to its broker dealer affiliate regarding access
to information concerning the composition of or changes to the
portfolio.\5\ The Exchange also represents that the Shares will be
subject to Nasdaq Rule 5735, which sets forth the initial and continued
listing criteria applicable to Managed Fund Shares, and that for
initial and continued listing, the Fund must be in compliance with Rule
10A-3 under the Act.\6\
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\5\ See Nasdaq Rule 5735(g). The Exchange states that, in the
event (a) the Adviser becomes newly affiliated with a broker-dealer
or registers as a broker-dealer, or (b) any new adviser or sub-
adviser is a registered broker-dealer or becomes affiliated with a
broker-dealer, [the Adviser, or the relevant adviser or sub-
adviser,] will implement a fire wall with respect to its relevant
personnel and its broker-dealer affiliate, if applicable, regarding
access to information concerning the composition of or changes to
the portfolio and will be subject to procedures designed to prevent
the use and dissemination of material non-public information
regarding the portfolio.
\6\ See 17 CFR 240.10A-3.
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B. The Exchange's Description of the Fund
The Exchange has made the following additional representations and
statements in describing the Fund and its investment strategy,
including portfolio holdings and investment restrictions.
Principal Investments
According to the Exchange, the Fund's primary investment objective
is to achieve long-term capital growth. The Fund will pursue its
objective by investing primarily, i.e., at least 80% of its assets
under normal market conditions,\7\ in U.S. exchange-listed equity
securities. Under normal market conditions, the Fund will invest
primarily in companies with market capitalization of greater than $1
billion that the Adviser believes offer the best opportunities for
growth.
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\7\ The term ``under normal market conditions'' as used herein
includes, but is not limited to, the absence of adverse market,
economic, political, or other conditions, including extreme
volatility or trading halts in the securities markets or the
financial markets generally; operational issues causing
dissemination of inaccurate market information; or force majeure
type events such as systems failure, natural or man-made disaster,
act of God, armed conflict, act of terrorism, riot or labor
disruption, or any similar intervening circumstance. In periods of
extreme market disturbance, the Fund may take temporary defensive
positions, by overweighting its portfolio in cash or cash-like
instruments; however, to the extent possible, the Adviser would
continue to seek to achieve the Fund's investment objectives.
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When buying and selling growth-oriented securities, the Adviser
will focus on the company's growth potential coupled with financial
strength and stability. When selecting specific growth-oriented
securities, the Adviser will combine its top-down macroeconomic views
with individual security selection based on qualitative and
quantitative research. The equity securities held by the Fund may
include small- and mid-cap sized companies. The Fund may invest in
equity securities issued by other registered investment companies
(including money market funds).
The Fund may invest up to 25% of its assets in foreign securities.
The Fund's investment in such stocks may be in the form of direct
investments in non-U.S. securities that are listed on non-U.S.
exchanges or in the form of American Depositary Receipts (``ADRs''),
Global Depositary Receipts (``GDRs''), and European Depositary Receipts
(``EDRs'') (collectively, ``Depositary Receipts'').\8\ With respect to
its investments in exchange-listed common stocks and Depositary
Receipts of non-U.S. issuers, the Fund will generally invest in
securities that trade in markets that are members of the Intermarket
Surveillance Group (``ISG'') or are parties to a comprehensive
surveillance sharing agreement with the Exchange.
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\8\ Depositary Receipts are receipts, typically issued by a bank
or trust issuer, that evidence ownership of underlying securities
issued by a non-U.S. issuer. For ADRs, the depository is typically a
U.S. financial institution and the underlying securities are issued
by a non-U.S. issuer. For other forms of Depositary Receipts, the
depository may be a non-U.S. or a U.S. entity, and the underlying
securities may be issued by a non-U.S. or a U.S. issuer. Depositary
Receipts are not necessarily denominated in the same currency as
their underlying securities. Generally, ADRs, issued in registered
form, are designed for use in the U.S. securities markets, and EDRs,
issued in bearer form, are designed for use in European securities
markets. GDRs are tradable both in the United States and in Europe
and are designed for use throughout the world.
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The Fund will generally invest in sponsored Depositary Receipts
that are listed on ISG member exchanges and that the Adviser deems as
liquid at time of purchase. In certain limited circumstances, the Fund
may invest in unlisted or unsponsored Depositary Receipts, Depositary
Receipts listed on non-ISG member exchanges, or Depositary Receipts
that the Adviser deems illiquid at the time of purchase or for which
pricing information is not readily available.\9\ The issuers of
unlisted or unsponsored Depositary Receipts are not obligated to
disclose material information in the United States. Therefore, there
may be less information available regarding such issuers, and there may
be no correlation between available information and the market value of
the Depositary Receipts.
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\9\ Not more than 10% of the net assets of the Fund, in the
aggregate, will be invested in (1) unlisted or unsponsored
Depositary Receipts; (2) Depositary Receipts not listed on an
exchange that is a member of the ISG or a party to a comprehensive
surveillance sharing agreement with the Exchange; or (3) unlisted
common stocks or common stocks not listed on an exchange that is a
member of the ISG or a party to a comprehensive surveillance sharing
agreement with the Exchange.
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Other Investments
While the Fund under normal circumstances will invest at least 80%
of its assets in exchange-listed equity securities issued by U.S.
companies, the Fund may invest the remaining assets in a variety of
other securities and investments in support of its primary investment
strategy, including, but not limited to: Equity securities traded over-
the-counter; \10\ convertible securities; synthetic convertible
instruments; debt securities (including high-yield fixed-income
securities, loan participations and assignments, inflation-indexed
bonds, municipal bonds, U.S. Government obligations (including stripped
securities),\11\ and agency mortgage-backed securities); repurchase
agreements; reverse repurchase agreements; exchange-traded options on
exchange-traded securities, indexes, and currencies; money market
instruments; \12\ foreign currency forward contracts; futures contracts
on securities indices and options on futures contracts on securities
indices; warrants; and total-return swaps related to individual
exchange-traded securities or securities indices. The Fund does not
intend to
[[Page 35600]]
use these other investments to create a leveraged return on the Fund's
portfolio.
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\10\ See Notice, supra note 3, 79 FR at 26791 (noting that not
more than 10% of the net assets of the Fund, in the aggregate, will
be invested in certain Depositary Receipts or in unlisted common
stocks or common stocks not listed on an exchange that is a member
of the ISG or a party to a comprehensive surveillance sharing
agreement with the Exchange).
\11\ The term ``stripped security,'' as used herein, means a
security that evidences ownership in either the future interest
payments or the future principal payments on underlying U.S.
Government, mortgage, or other debt obligations. These securities
generally are structured to make a lump-sum payment at maturity and
do not make periodic payments of principal or interest.
\12\ The term ``money market instruments,'' as used herein,
means: (i) Short-term obligations issued by the U.S. Government;
(ii) short-term negotiable obligations of commercial banks, fixed
time deposits and bankers' acceptances of U.S. and foreign banks,
and similar institutions; (iii) commercial paper rated at the date
of purchase ``Prime-1'' by Moody's Investors Service, Inc., or ``A-
1+'' or ``A-1'' by Standard & Poor's, or, if unrated, of comparable
quality, as the Adviser of the Fund determines; and (iv) money
market mutual funds.
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Investment Restrictions
The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid securities or other illiquid assets (calculated at
the time of investment). The Fund will monitor its portfolio liquidity
on an ongoing basis to determine whether, in light of current
circumstances, an adequate level of liquidity is being maintained and
will consider taking appropriate steps in order to maintain adequate
liquidity if, through a change in values, net assets, or other
circumstances, more than 15% of the Fund's net assets are held in
illiquid assets. Illiquid assets include securities subject to
contractual or other restrictions on resale and other instruments that
lack readily available markets as determined in accordance with
Commission staff guidance.
The Fund may not invest more than 25% of the value of its total
assets in securities of issuers in any one industry or group of
industries. This restriction does not apply to obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities,
or securities of other registered investment companies.
Additional information regarding the Trust, Fund, and Shares,
including investment strategies and restrictions, risks, creation and
redemption procedures, fees, portfolio holdings, disclosure policies,
distributions and taxes, calculation of net asset value per share
(``NAV''), availability of information, trading rules and halts, and
surveillance procedures, among other things, can be found in the
Notice, Registration Statement, and Exemptive Order, as applicable.\13\
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\13\ See Notice, supra note 3; see also Registration Statement
and Exemptive Order, supra note 4.
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III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of Section 6 of the Act;
\14\ and the rules and regulations thereunder applicable to a national
securities exchange.\15\ In particular, the Commission finds that the
proposed rule change is consistent with the requirements of Section
6(b)(5) of the Act,\16\ 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 foster cooperation and coordination with persons engaged in
facilitating transactions in securities, 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.
The Commission notes that the Fund and the Shares must comply with the
requirements of Nasdaq Rule 5735 to be listed and traded on the
Exchange.
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\14\ 15 U.S.C. 78(f).
\15\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\16\ 15 U.S.C. 78f(b)(5).
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The Commission finds that the proposal to list and trade the Shares
on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the
Act,\17\ 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. Quotation and last-
sale information for the Shares will be available via Nasdaq
proprietary quote and trade services and via the Consolidated Tape
Association plans for the Shares. Similarly, quotation and last-sale
information for any underlying exchange-traded products will also be
available via the quote and trade services of their respective primary
exchanges, as well as in accordance with the Unlisted Trading
Privileges and the Consolidated Tape Association plans or through the
Options Price Reporting Authority, or equivalent services related to
futures, as applicable.\18\ In addition, the Intraday Indicative Value
(as defined in Nasdaq Rule 5735(c)(3))--which will be based upon the
current value of the components of the Disclosed Portfolio (as defined
in Nasdaq Rule 5735(c)(2))--will be available on the NASDAQ OMX
Information LLC proprietary index data service \19\ and will be updated
and widely disseminated and broadly displayed at least every 15 seconds
during the Regular Market Session.\20\ On each business day, before
commencement of trading in Shares in the Regular Market Session on the
Exchange, the Fund will disclose on its Web site the Disclosed
Portfolio, which will form the basis for the Fund's calculation of NAV
at the end of the business day.\21\ The NAV of the Fund will be
determined once each business day, normally as of the close of trading
on the New York Stock Exchange (normally 4:00 p.m. Eastern time).\22\
Information regarding market price and volume of the Shares will be
continually available on a real-time basis throughout the day on
brokers' computer screens and other electronic services.\23\
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.\24\ Intra-day, executable price
quotations for the securities and other assets held by the Fund will be
available from major broker-dealer firms
[[Page 35601]]
or on the exchange on which they are traded, as applicable.\25\
Specifically, intra-day price information on the securities and other
assets held by the Fund will be available through subscription or free
services that can be accessed by Authorized Participants and other
investors: (a) Pricing information for exchange-traded equity
securities; investment company securities; futures contracts on
securities indices and options on futures contracts on securities
indices; warrants; exchange-traded options on exchange-traded
securities, indexes, or currencies; sponsored or unsponsored Depositary
Receipts; or other exchange-traded securities will be publicly
available from the Web sites of the exchanges on which they trade, on
public financial Web sites, and through subscription services such as
Bloomberg and Thompson Reuters; (b) pricing information regarding over-
the-counter equities (including Depositary Receipts and certain
investment company securities); convertible securities; synthetic
convertible instruments; debt securities (including high-yield fixed-
income securities, loan participations and assignments, inflation-
indexed bonds, municipal bonds, U.S. Government obligations (including
stripped securities), and agency mortgage-backed securities);
repurchase agreements; reverse repurchase agreements; money market
instruments; and foreign currency forward contracts will be available
through subscription services such as Markit, Bloomberg, and Thompson
Reuters; and (c) pricing information on the reference index or security
underlying total-return swaps will be available on Bloomberg.\26\ In
addition, a basket composition file, which includes the security names,
amounts, and share quantities, as applicable, required to be delivered
in exchange for the Fund's Shares, together with estimates and actual
cash components, will be publicly disseminated daily prior to the
opening of Nasdaq via the National Securities Clearing Corporation. The
basket will represent one ``Creation Unit'' of the Fund. The Fund's Web
site will include a form of the prospectus for the Fund and additional
data relating to NAV and other applicable quantitative information.\27\
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\17\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
\18\ See Notice, supra note 3, 79 FR at 26794.
\19\ According to the Exchange, the NASDAQ OMX Global Index Data
Service offers real-time updates, daily summary messages, and access
to widely followed indexes and Intraday Indicative Values for
exchange-traded funds. See id. at 26793.
\20\ See id.
\21\ On a daily basis, the Disclosed Portfolio will include each
portfolio security and other financial instruments of the Fund with
the following information on the Fund's Web site: (1) Ticker symbol
(if applicable); (2) name of security and financial instrument; (3)
number of shares (if applicable); (4) dollar value of securities and
financial instruments held in the Fund; and (5) percentage weighting
of the security and financial instrument in the Fund. The Web site
information will be publicly available at no charge. See id.
\22\ See id. at 26791. The Exchange notes that, for purposes of
calculating NAV, exchange-traded equities; futures contracts on
securities indices and options on futures contracts on securities
indices; warrants; exchange-traded options on exchange-traded
securities, indexes, or currencies; sponsored or unsponsored
Depositary Receipts; or other exchange-traded securities will be
valued at the official closing price on their principal exchange or
board of trade, or, lacking any current reported sale at the time of
valuation, at the mean between the most recent bid and asked
quotations on its principal exchange or board of trade. Portfolio
securities traded on more than one securities exchange will be
valued at the last sale price or official closing price, as
applicable, on the exchange representing the principal market for
the securities. Equity securities traded over-the-counter,
convertible securities, synthetic convertible instruments, debt
securities (including high-yield fixed-income securities, loan
participations and assignments, inflation-indexed bonds, municipal
bonds, U.S. Government obligations (including stripped securities),
and agency mortgage-backed securities) will be valued at the mean
between the most recent bid and asked quotations received from
pricing services, but, if the most recent bid and asked quotations
are not available, these securities will be valued in accordance
with the Fund's fair valuation procedures. Repurchase agreements and
reverse repurchase agreements are valued at cost. Money market
instruments with maturities of less than 60 days will be valued at
amortized cost; money market instruments with longer maturities will
be valued at the mid-point of the bid-ask prices. Foreign currency
forward contracts will be valued in U.S. dollars using an exchange
price provided by a third party. Total-return swaps related to
individual exchange-traded securities or securities indices will be
valued at the mean between bid and asked prices provided by a dealer
(which may be the counterparty). Investment company shares will be
valued at NAV, unless the shares are exchange-traded, in which case
they will be valued at the last sale or official closing price on
the market on which they primarily trade. In addition, expenses and
fees, including the management fees, will be accrued daily and taken
into account for purposes of determining NAV.
\23\ See id. at 26794.
\24\ See id.
\25\ See id. at 26793.
\26\ See id. at 26794.
\27\ See id. at 26793.
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The Commission further 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. The Commission notes that the Exchange will obtain a
representation from the issuer of the Shares that the NAV will be
calculated daily and that the NAV and the Disclosed Portfolio will be
made available to all market participants at the same time.\28\
Further, trading in the Shares will be subject to Nasdaq 5735(d)(2)(D),
which sets forth circumstances under which trading in the Shares may be
halted.\29\ The Exchange also may halt trading in the Shares if trading
is not occurring in the securities or the financial instruments
constituting the Disclosed Portfolio or if other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present.\30\ Further, the Commission notes that the
Reporting Authority that provides the Disclosed Portfolio must
implement and maintain, or be subject to, procedures designed to
prevent the use and dissemination of material, non-public information
regarding the actual components of the portfolio.\31\ The Exchange
states that it has a general policy prohibiting the distribution of
material, non-public information by its employees.\32\ The Exchange
also states that the Adviser is not a broker-dealer but is affiliated
with a broker-dealer and that the Adviser has implemented a fire wall
with respect to its broker-dealer affiliate regarding access to
information concerning the composition or changes to the portfolio.\33\
The Financial Industry Regulatory Authority (``FINRA''), on behalf of
the Exchange, will communicate as needed regarding trading in the
Shares; exchange-traded equities; futures contracts on securities
indices and options on futures contracts on securities indices;
warrants; exchange-traded options on exchange-traded securities,
indexes, or currencies; exchange-listed investment companies; or other
exchange-traded securities with other markets and other entities that
are ISG members, and FINRA, on behalf of the Exchange, may obtain
trading information regarding trading in the Shares; exchange-traded
equities; futures contracts on securities indices and options on
futures contracts on securities indices; warrants; exchange-traded
options on exchange-traded securities, indexes, or currencies;
exchange-listed investment companies; or other exchange-traded
securities from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares;
exchange-traded equities; futures contracts on securities indices and
options on futures contracts on securities indices; warrants; exchange-
traded options on exchange-traded securities, indexes, or currencies;
exchange-listed investment companies; or other exchange-traded
securities from markets and other entities that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.\34\ FINRA, on behalf of the Exchange, also is able
to access, as needed, trade information for certain fixed income
securities held by the Fund reported to FINRA's Trade Reporting and
Compliance Engine.
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\28\ See id. at 26794.
\29\ See id.
\30\ See id. See also Nasdaq Rule 5735(d)(2)(C) (providing
additional considerations for the suspension of trading in or
removal from listing of Managed Fund Shares on the Exchange). With
respect to trading halts, the Exchange may consider all relevant
factors in exercising its discretion to halt or suspend trading in
the Shares of the Fund. Nasdaq will halt or pause trading in the
Shares under the conditions specified in Nasdaq Rules 4120 and 4121,
including the trading pauses under Nasdaq Rules 4120(a)(11) and
(12). 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. See Notice, supra note 3, 79 FR at 26794.
\31\ See Nasdaq Rule 5735(d)(2)(B)(ii).
\32\ See Notice, supra note 3, 79 FR at 26795.
\33\ See supra note 5 and accompanying text. The Exchange
further represents that an investment adviser to an open-end fund is
required to be registered under the Investment Advisers Act of 1940
(``Advisers Act''). As a result, the Adviser and its related
personnel are subject to the provisions of Rule 204A-1 under the
Advisers Act relating to codes of ethics. This Rule requires
investment advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as well as
compliance with applicable federal securities laws as defined in
Rule 204A-1(e)(4). Accordingly, procedures designed to prevent the
communication and misuse of nonpublic information by an investment
adviser must be consistent with Rule 204A-1 under the Advisers Act.
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful
for an investment adviser to provide investment advice to clients
unless such investment adviser has (i) adopted and implemented
written policies and procedures reasonably designed to prevent
violation, by the investment adviser and its supervised persons, of
the Advisers Act and the Commission rules adopted thereunder; (ii)
implemented, at a minimum, an annual review regarding the adequacy
of the policies and procedures established pursuant to subparagraph
(i) above and the effectiveness of their implementation; and (iii)
designated an individual (who is a supervised person) responsible
for administering the policies and procedures adopted under
subparagraph (i) above.
\34\ For a list of the current members of ISG, see
www.isgportal.org.
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In support of this proposal, the Exchange has made representations,
including:
(1) The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the
[[Page 35602]]
Exchange's existing rules governing the trading of equity securities.
(2) The Shares will be subject to Rule 5735, which sets forth the
initial and continued listing criteria applicable to Managed Fund
Shares.
(3) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.
(4) Prior to the commencement of trading, the Exchange will inform
its members in an Information Circular of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Circular will discuss the following: (a) The procedures for
purchases and redemptions of Shares in Creation Units (and that Shares
are not individually redeemable); (b) Nasdaq Rule 2111A, which imposes
suitability obligations on Nasdaq members with respect to recommending
transactions in the Shares to customers; (c) how information regarding
the Intraday Indicative Value is disseminated; (d) the risks involved
in trading the Shares during the Pre-Market and Post-Market Sessions
when an updated Intraday Indicative Value will not be calculated or
publicly disseminated; (e) the requirement that members deliver a
prospectus to investors purchasing newly issued Shares prior to or
concurrently with the confirmation of a transaction; and (f) trading
information.
(5) Trading in the Shares will be subject to the existing trading
surveillances, administered by both Nasdaq and FINRA,\35\ 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 applicable federal securities laws.
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\35\ According to the Exchange, FINRA surveils trading on the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement. See Notice, supra note 3 at 26794.
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(6) Not more than 10% of the net assets of the Fund, in the
aggregate, will be invested in: (a) Unlisted or unsponsored Depositary
Receipts; (b) Depositary Receipts not listed on an exchange that is not
a member of ISG or a party to a comprehensive surveillance sharing
agreement with the Exchange; or (c) unlisted common stocks or common
stocks not listed on an exchange that is a member of the ISG or a party
to a comprehensive surveillance sharing agreement with the Exchange. In
addition, all futures and options held by the Fund will be listed on an
exchange that is a member of the ISG or a party to a comprehensive
surveillance sharing agreement with the Exchange.
(7) For initial and continued listing, the Fund must be in
compliance with Rule 10A-3 under the Exchange Act.\36\
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\36\ 17 CFR 240.10A-3.
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(8) A minimum of 100,000 Shares will be outstanding at the
commencement of trading on the Exchange.
(9) The Fund will invest at least 80% of its assets under normal
market conditions in U.S. exchange-listed equity securities. The Fund
will invest primarily in companies with market capitalization of
greater than $1 billion that the Adviser believes offer the best
opportunities for growth. The Fund may invest up to 25% of its assets
in foreign securities.
(10) The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid assets (calculated at the time of investment); will
monitor its portfolio liquidity on an ongoing basis to determine
whether, in light of current circumstances, an adequate level of
liquidity is being maintained; and will consider taking appropriate
steps in order to maintain adequate liquidity if, through a change in
values, net assets, or other circumstances, more than 15% of the Fund's
net assets are held in illiquid assets.
(11) The Fund does not intend to use its other investments to
create a leveraged return on the Fund's portfolio.
(12) The Fund's investments will be consistent with the Fund's
investment objective.
This approval order is based on all of the Exchange's
representations and description of the Fund, including those set forth
above and in the Notice.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\37\ that the proposed rule change (SR-NASDAQ-2014-040), be, and it
hereby is, approved.
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\37\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
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\38\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-14541 Filed 6-20-14; 8:45 am]
BILLING CODE 8011-01-P