[Federal Register Volume 79, Number 126 (Tuesday, July 1, 2014)]
[Notices]
[Pages 37373-37376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-15323]
[[Page 37373]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72464; File No. SR-NYSEArca-2014-45]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a
Proposed Rule Change Governing the Continued Listing and Trading of
Shares of the PowerShares Insured California Municipal Bond Portfolio,
PowerShares Insured National Municipal Bond Portfolio, and PowerShares
Insured New York Municipal Bond Portfolio
June 25, 2014.
I. Introduction
On April 25, 2014, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934
(``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ a proposed rule
change relating to the listing and trading of shares (``Shares'') of
the following series of Investment Company Units (``Units''):
PowerShares Insured California Municipal Bond Portfolio (``CA
Portfolio''); PowerShares Insured National Municipal Bond Portfolio
(``National Portfolio''); and PowerShares Insured New York Municipal
Bond Portfolio (``NY Portfolio,'' and collectively ``Municipal Bond
Portfolios'' or ``Funds''). The proposed rule change was published for
comment in the Federal Register on May 15, 2014.\4\ The Commission
received no comments on the proposal. This order approves the proposed
rule change.
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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. 72139 (May 9, 2014),
79 FR 27950 (``Notice'').
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II. Description of the Proposed Rule Change
The Funds are series of the PowerShares Exchange-Traded Fund Trust
II (``Trust'').\5\ Invesco PowerShares Capital Management LLC is the
investment adviser (``Adviser'') for the Funds. Invesco Distributors,
Inc. is the Funds' distributor. The Bank of New York Mellon is the
administrator, custodian and fund accounting and transfer agent for
each Fund.
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\5\ On February 27, 2014, the Trust filed a post-effective
amendment on Form 485 under the Securities Act of 1933 (15 U.S.C.
77a) (``1933 Act'') to its registration statement on Form N-1A under
the 1933 Act and the Investment Company Act of 1940 (``1940 Act'')
(15 U.S.C. 80a-1) (File Nos. 333-138490 and 811-21977) (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. 27841 (May 25,
2007) (File No. 812-13335) (``Exemptive Order'').
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Currently, the Exchange lists and trades the Shares under NYSE Arca
Equities Rule 5.2(j)(3), Commentary .02, which governs the listing and
trading of Units based on fixed income securities indexes. As described
further below, the Exchange states that it recently became aware that
the indexes underlying the Funds do not meet all of the generic listing
criteria applicable to these Units. Accordingly, by this proposed rule
change, NYSE Arca seeks to permit the continued listing and trading of
the Shares. Additionally, and as discussed further below, in the
future, the Exchange expects that the indexes underlying the Funds will
be changed again, and the Exchange states that those new indexes also
fail to meet the generic listing criteria of NYSE Arca Equities Rule
5.2(j)(3), Commentary .02. Accordingly, by this proposed rule change,
NYSE Arca also seeks to permit the listing and trading of the Shares
once the Funds transition to the new underlying indexes.
The Funds' Current Underling Indexes
The Exchange states that, on May 28, 2009, the municipal bond
indexes underlying the CA Portfolio; the National Portfolio; and the NY
Portfolio were changed to the Merrill Lynch California Insured Long-
Term Core Plus Municipal Securities Index, the Merrill Lynch National
Insured Long-Term Core Plus Municipal Securities Index, and the Merrill
Lynch New York Insured Long-Term Core Plus Municipal Securities Index,
respectively.\6\ According to the Exchange, on September 25, 2009, the
names of the indexes underlying the Municipal Bond Portfolios again
were changed to the BofA Merrill Lynch California Insured Long-Term
Core Plus Municipal Securities Index (``CA Index''), the BofA Merrill
Lynch National Insured Long-Term Core Plus Municipal Securities Index
(``National Index''), and the BofA Merrill Lynch New York Insured Long-
Term Core Plus Municipal Securities Index, respectively \7\ (``NY
Index'', and collectively, ``Municipal Bond Indexes'').\8\
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\6\ See Notice, supra note 4, 79 FR at 27951. The changes to the
indexes underlying the Municipal Bond Portfolios were reflected in a
supplement on Form 497 under the 1933 Act, dated May 28, 2009 (``May
28, 2009 Supplement'') to the Municipal Bond Portfolios' prospectus
dated February 27, 2009. See Notice, supra note 4, 79 FR at 27951,
n.7. The previous names of the indexes underlying the Municipal Bond
Portfolios were the Merrill Lynch California Insured Long-Term Core
Municipal Securities Index, Merrill Lynch National Insured Long-Term
Core Municipal Securities Index, and Merrill Lynch New York Insured
Long-Term Core Municipal Securities Index, respectively. See Notice,
supra note 4, 79 FR at 27951, n.7.
\7\ BofA Merrill Lynch is the index provider (``Index
Provider'') with respect to the Municipal Bond Indexes and the ``New
Municipal Bond Indexes,'' which are described below. The Index
Provider is a broker-dealer and has implemented a firewall with
respect to and will maintain procedures designed to prevent the use
and dissemination of material non-public information regarding the
Municipal Bond Indexes and New Municipal Bond Indexes. See Notice,
supra note 4, 79 FR at 27951, n.8.
\8\ The September 25, 2009, name changes were reflected in a
supplement dated September 25, 2009 to the Municipal Bond
Portfolios' prospectus dated February 27, 2009. See Notice, supra
note 4, 79 FR at 27951, n.9.
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According to the Exchange, the Municipal Bond Indexes meet all of
the applicable requirements for the generic listing under NYSE Arca
Equities Rule 5.2(j)(3) except for the requirement of Commentary
.02(a)(2), which requires that components that in the aggregate account
for 75% or more of the weight of the index or portfolio each have a
minimum original principal amount outstanding of $100 million or more.
Specifically, as of March 6, 2014, approximately 34.84%, and 37.16%,
and 59.22% of the weight of the components of the CA Index, National
Index and NY Index, respectively, had a minimum original principal
amount outstanding of $100 million or more.\9\
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\9\ See id.
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The CA Portfolio
The CA Portfolio seeks investment results that generally correspond
(before fees and expenses) to the price and yield performance of the CA
Index.\10\ The CA Index is designed to track the performance of U.S.
dollar-denominated, investment grade, tax-exempt debt publicly issued
by California or U.S. territories (including Puerto Rico), or their
political subdivisions, in the U.S. domestic market and includes
approximately 267 bonds (as of January 31, 2014). The CA Index is
adjusted monthly.
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\10\ Normally, the CA Portfolio invests at least 80% of its
total assets in the securities that compose the CA Index and
generally expects to so invest at least 90% of its total assets. The
CA Portfolio reserves the right to invest up to 20% of its assets in
certain futures, options and swap contracts, cash and cash
equivalents, including money market funds, as well as in municipal
securities not included in the CA Index to the extent that the
Adviser believes investment in such instruments will facilitate the
CA Portfolio's ability to achieve its investment objective.
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As of January 31, 2014, the total dollar amount outstanding of
issues in the CA Index was approximately $17.201 billion and the
average dollar amount outstanding of issues in the CA Index was
approximately $64.42 million. The most heavily weighted component
[[Page 37374]]
represented 3.53% of the weight of the CA Index and the five most
heavily weighted components represented 9.94% of the weight of the CA
Index. The CA Index is composed of approximately 267 issues and 127
unique issuers. In addition, the average daily notional trading volume
for CA Index components for the calendar year 2013 was approximately
$27.45 million and the sum of the notional trading volumes for the same
period was approximately $6.9 billion.
The National Portfolio
The National Portfolio seeks investment results that generally
correspond (before fees and expenses) to the price and yield
performance of the National Index. The National Index is designed to
track the performance of U.S. dollar-denominated investment grade
insured tax-exempt debt publicly issued by U.S. states and territories
(including Puerto Rico), or their political subdivision, in the U.S.
domestic market and includes approximately 1,238 bonds (as of January
31, 2014). The National Index is adjusted monthly.\11\
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\11\ Generally, the National Portfolio will invest at least 80%
of its total assets in the securities that compose the National
Index and generally expects to so invest at least 90% of its total
assets. The National Portfolio reserves the right to invest up to
20% of its assets in certain futures, options and swap contracts,
cash and cash equivalents, including money market funds, as well as
in municipal securities not included in the National Index to the
extent that the Adviser believes such investments will facilitate
the National Portfolio's ability to achieve its investment
objective.
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As of January 31, 2014, the total dollar amount outstanding of
issues in the National Index was approximately $78.69 billion and the
average dollar amount outstanding of issues in the National Index was
approximately $63.56 million. Further, the most heavily weighted
component represented 0.88% of the weight of the National Index and the
five most heavily weighted components represented 3.51% of the weight
of the National Index. The National Index is composed of approximately
1,238 issues and 521 unique issuers. In addition, the average daily
notional trading volume for National Index components for the calendar
year 2013 was approximately $101.99 million and the sum of the notional
trading volumes for the same period was approximately $25.7 billion.
The NY Portfolio
According to the Registration Statement, the NY Portfolio seeks
investment results that generally correspond (before fees and expenses)
to the price and yield performance of the NY Index. The NY Index is
designed to track the performance of U.S. dollar-denominated,
investment grade, tax-exempt debt publicly issued by New York or U.S.
territories (including Puerto Rico), or their political subdivisions,
included in the U.S. domestic market and includes approximately 130
bonds (as of January 31, 2014). The NY Index is adjusted monthly.\12\
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\12\ Normally, the NY Portfolio will invest at least 80% of its
total assets in the securities that compose the NY Index. The NY
Portfolio reserves the right to invest up to 20% of its assets in
certain futures, options and swap contracts, cash and cash
equivalents, including money market funds, as well as in municipal
securities not included in the NY Index to the extent that the
Adviser believes such investments will facilitate the NY Portfolio's
ability to achieve its investment objective.
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As of January 31, 2014, the total dollar amount outstanding of
issues in the NY Index was approximately $17.76 billion and the average
dollar amount outstanding of issues in the NY Index was approximately
$90.58 million. Further, the most heavily weighted component
represented 6.14% of the weight of the NY Index and the five most
heavily weighted components represented 20.15% of the weight of the NY
Index. The NY Index is composed of approximately 130 issues and 25
unique issuers. In addition, the average daily notional trading volume
for NY Index components for the calendar year 2013 was approximately
$19.41 million and the sum of the notional trading volumes for the same
period was approximately $4.89 billion.
Future Changes to the Funds and the Indexes Underlying the Funds
As stated above, currently the Municipal Bond Indexes underlie the
Municipal Bond Portfolios. The Trust has proposed to its shareholders
to, among other things, change the indexes underlying the Funds (and
the name of the Funds). On May 10, 2013, the Trust filed with the
Commission on Schedule 14A a definitive proxy statement and notice of
shareholders meeting calling a meeting on June 20, 2013 (``Proxy
Statement'').\13\ According to the shareholder proposal, each Fund
would change its underlying index to one that is composed of both
insured and uninsured municipal securities. Following such change, the
proposed underlying indexes for the Funds would be: the BofA Merrill
Lynch California Long-Term Core Plus Municipal Securities Index (``New
CA Index''); BofA Merrill Lynch National Long-Term Core Plus Municipal
Index (``New National Index''); and BofA Merrill Lynch New York Long-
Term Core Plus Municipal Securities Index (``New NY Index,'' and
collectively, ``New Municipal Bond Indexes,'' and together with the
Municipal Bond Indexes, the ``Underlying Indexes'').
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\13\ See Definitive Proxy Statement dated May 10, 2013 on
Schedule 14A (Proxy Statement Pursuant to Section 14(a) of the Act)
(File No. 811-21977).
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In addition, each Fund would change its name by removing the word
``Insured'' and adding the term ``AMT-Free'' to reflect that the
proposed underlying indexes would include primarily municipal
securities that are exempt from the alternative minimum tax. \14\ After
such change, the names of the Funds would be PowerShares California
AMT-Free Municipal Bond Portfolio (``New CA Portfolio''), PowerShares
National AMT-Free Municipal Bond Portfolio (``New National Portfolio'')
and PowerShares New York AMT-Free Municipal Bond Portfolio (``New NY
Portfolio''), respectively. All components of each of the Municipal
Bond Indexes and New Municipal Bond Indexes currently are rated as
investment grade (A3 or higher by Moody's Investors Service).\15\
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\14\ In connection with the addition of the term ``AMT-Free'' to
each Fund's name, the Trust's Board of Trustees has adopted a non-
fundamental investment policy for each Fund normally to invest at
least 80% of its net assets, including the amount of any borrowings
for investment purposes, in municipal securities that are exempt
from the federal alternative minimum tax.
\15\ See Notice, supra, note 4 at 27955.
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The shareholders of each Fund have approved these changes
contingent upon approval of this proposed rule change.\16\
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\16\ The changes described herein with respect to use of the New
Municipal Bond Indexes would be effective upon filing with the
Commission of another amendment to the Trust's Registration
Statement, or a prospectus supplement reflecting these changes. The
Adviser represents that the Adviser and Sub-Adviser have managed and
will continue to manage the Funds in the manner described in the
Registration Statement and will not implement the changes described
herein until this proposed rule change is operative.
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Currently, the New Municipal Bond Indexes do not meet the generic
listing criteria of NYSE Arca Equities Rule 5.2(j)(3). Accordingly, the
Exchange submitted this proposed rule change to permit the continued
listing and trading the Shares in the event they overlie the New
Municipal Bond Indexes. Specifically, the Exchange states that the New
Municipal Bond Indexes meet all of the requirements of the generic
listing criteria of NYSE Arca Equities Rule 5.2(j)(3), except for those
set forth in Commentary .02(a)(2); \17\ as of January 31, 2014,
approximately 59.51%, 46.90%, and 60.63% of the weight of the
components of the New CA Index, New National Index and New NY Index,
[[Page 37375]]
respectively, had a minimum original principal amount outstanding of
$100 million or more.
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\17\ See text following n.8, supra (describing the requirement
of Commentary .02(a)(2)).
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The New CA Portfolio
The New CA Portfolio would generally seek investment results that
correspond (before fees and expenses) to the price and yield
performance of the New CA Index.\18\ The New CA Index is designed to
track the performance of U.S. dollar-denominated, investment grade,
tax-exempt debt publicly issued by California or U.S. territories
(including Puerto Rico), or their political subdivisions, in the U.S.
domestic market and includes approximately 1,086 bonds (as of January
31, 2014). The New CA Index is adjusted monthly.
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\18\ Normally, the New CA Portfolio would invest at least 80% of
its total assets in the securities that compose the New CA Index,
and generally expects to so invest at least 90% of its total assets.
The New CA Portfolio reserves the right to invest up to 20% of its
assets in certain futures, options and swap contracts, cash and cash
equivalents, including money market funds, as well as in municipal
securities not included in the New CA Index to the extent that the
Adviser believes investment in such instruments would facilitate the
New CA Portfolio's ability to achieve its investment objective.
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As of January 31, 2014, the total dollar amount outstanding of
issues in the New CA Index was approximately $100.76 billion and the
average dollar amount outstanding of issues in the Index was
approximately $92.81 million. Further, the most heavily weighted
component represented 1.39% of the weight of the New CA Index and the
five most heavily weighted components represented 5.17% of the weight
of the CA Index. The New CA Index is composed of approximately 1,086
issues and 229 unique issuers. In addition, the average daily notional
trading volume for New CA Index components for the calendar year 2013
was approximately $364.22 million and the sum of the notional trading
volumes for the same period was approximately $91.78 billion.
The New National Portfolio
The New National Portfolio generally would seek investment results
that correspond (before fees and expenses) to the price and yield
performance of the New National Index.\19\ The New National Index is
designed to track the performance of U.S. dollar-denominated investment
grade tax-exempt debt publicly issued by U.S. states or U.S.
territories (including Puerto Rico), or its political subdivision, in
the U.S. domestic market and includes approximately 5,476 bonds (as of
January 31, 2014). The New National Index is adjusted monthly.
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\19\ Normally, the New National Portfolio would invest at least
80% of its total assets in the securities that compose the New
National Index and generally expects to so invest at least 90% of
its total assets. The New National Portfolio reserves the right to
invest up to 20% of its assets in certain futures, options and swap
contracts, cash and cash equivalents, including money market funds,
as well as in municipal securities not included in the New National
Index to the extent that the Adviser believes such investments would
facilitate the New National Portfolio's ability to achieve its
investment objective.
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As of January 31, 2014, the total dollar amount outstanding of
issues in the New National Index was approximately $ 394.04 billion and
the average dollar amount outstanding of issues in the New National
Index was approximately $71.96 million. Additionally, the most heavily
weighted component represented 0.34% of the weight of the New National
Index and the five most heavily weighted components represented 1.47%
of the weight of the New National Index. The New National Index is
composed of approximately 5,476 issues and 1,259 unique issuers.
Further, the average daily notional trading volume for New National
Index components for the calendar year 2013 was approximately $1.26
billion and the sum of the notional trading volumes for the same period
was approximately $317.73 billion.
The New NY Portfolio
The New NY Portfolio would seek investment results that correspond
(before fees and expenses) generally to the price and yield performance
of the New NY Index.\20\ The New NY Index is designed to track the
performance of U.S. dollar-denominated, investment grade, tax-exempt
debt publicly issued by New York or U.S. territories (including Puerto
Rico), or their political subdivisions, included in the U.S. domestic
market includes approximately 952 bonds (as of January 31, 2014).
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\20\ Normally, the New NY Portfolio would invest at least 80% of
its total assets in the securities that compose the New NY Index.
The New NY Portfolio reserves the right to invest up to 20% of its
assets in certain futures, options and swap contracts, cash and cash
equivalents, including money market funds, as well as in municipal
securities not included in the New NY Index to the extent that the
Adviser believes such investments will facilitate the New NY
Portfolio's ability to achieve its investment objective.
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As of January 31, 2014, the total dollar amount outstanding of
issues in the New NY Index was approximately $86.75 billion and the
average dollar amount outstanding of issues in the New NY Index was
approximately $91.13 million. Further, the most heavily weighted
component represents 1.61% of the weight of the New NY Index and the
five most heavily weighted components represented 5.07% of the weight
of the New NY Index. The New NY Index is composed of approximately 952
issues and 67 unique issuers. In addition, the average daily notional
trading volume for New NY Index components for the calendar year 2013
was approximately $334.68 million and the sum of the notional trading
volumes for the same period was approximately $84.34 billion.
Additional information regarding the Trust, the Funds, the
Underlying Indexes, and the Shares, including investment strategies,
risks, creation and redemption procedures, fees, portfolio holdings
disclosure policies, distributions, and taxes, among other things, is
included in the Notice and Registration Statements, as applicable.\21\
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\21\ See Notice and Registration Statement, supra notes 4 and 5,
respectively.
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III. Discussion and Commission Findings
After careful review, the Commission finds that the Exchange's
proposal to continue listing and trading 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 is consistent with Section 6(b)(5) of the
Exchange 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.
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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).
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The Commission finds that the proposal to continue trading the
Shares on the Exchange is consistent with 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. Quotation and last-sale
information for the Shares is available via the Consolidated Tape
Association (``CTA'') high-speed line.\25\ The values of Underlying
Indexes are calculated and disseminated at least once daily,
[[Page 37376]]
and the components of the Underlying Indexes and their respective
percentage weightings are available from major market data vendors.\26\
The intraday indicative values (``IIVs'') for the Shares are
disseminated by one or more major market data vendors and updated at
least every 15 seconds during the Exchange's Core Trading Session, as
required by NYSE Arca Equities Rule 5.2(j)(3), Commentary .02(c).\27\
Information regarding market price and trading volume of the Shares is
continually available on a real-time basis throughout the day on
brokers' computer screens and other electronic services.\28\ The Funds'
Web site (www.invescopowershares.com) includes a form of the prospectus
for the Funds, information relating to net asset value (``NAV''), and
other applicable quantitative information.\29\ The Funds' portfolio
holdings are disclosed on the Funds' Web site daily after the close of
trading on the Exchange and prior to the opening of trading on the
Exchange the following day.\30\
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\24\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
\25\ See Notice, supra note 4 at 27957.
\26\ See id.
\27\ See id. at 27956.
\28\ See id. at 27958.
\29\ See id. at 27957.
\30\ See id.
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The Commission believes that the proposal 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 Exchange states that the
Index Provider is a broker-dealer and has implemented a firewall and
will maintain procedures designed to prevent the use and dissemination
of material, non-public information regarding the Underlying
Indexes.\31\
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\31\ See id. at 27956.
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With respect to trading halts, if the Exchange becomes aware that
the NAV is not being 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.\32\ In addition, the
Exchange may consider all relevant factors in exercising its discretion
to halt or suspend trading in the Shares of the Funds.\33\ Trading may
be halted because of market conditions or for reasons that, in the view
of the Exchange, make trading in the Shares inadvisable.\34\ The
Exchange represents that, if the IIV or the values of the Underlying
Indexes are not being disseminated as required, the Exchange may halt
trading during the day in which the interruption to the dissemination
of the applicable IIV or values of the Underlying Indexes occurs.\35\
If the interruption to the dissemination of the applicable IIV or
values of the Underlying Indexes persists past the trading day in which
it occurred, the Exchange will halt trading.\36\ Moreover, trading in
the Shares will be halted if the circuit breaker parameters in NYSE
Arca Equities Rule 7.12 have been reached or because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable, and trading in the Shares will be
subject to NYSE Arca Equities Rule 7.34, which sets forth circumstances
under which Shares may be halted.\37\
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\32\ See id.
\33\ See id.
\34\ See id.
\35\ See id.
\36\ See id.
\37\ See id.
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The Exchange states that it has in place surveillance procedures
that are adequate to properly monitor trading in the Shares in all
trading sessions and to deter and detect violations of Exchange rules
and applicable federal securities laws.\38\ The Exchange may obtain
information via the Intermarket Surveillance Group (``ISG'') from other
exchanges that are members of ISG or with which the Exchange has
entered into a comprehensive surveillance sharing agreement.\39\ Based
on the Exchange's representations regarding the number of issues and
issuers in each index, the total and average dollar amount outstanding
of the index components, the average daily notional trading volume for
the index components in 2013, the total notional trading volume for the
index components in 2013, and the concentration of the components in
each index, the Commission believes that the Underlying Indexes are
sufficiently broad-based and liquid to deter potential manipulation.
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\38\ See id.
\39\ See id.
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In support of this proposal, the Exchange has made additional
representations, including:
(1) Except for Commentary .02(a)(2) to NYSE Arca Equities Rule
5.2(j)(3), the Shares of the Funds currently satisfy all of the generic
listing standards under NYSE Arca Equities Rule 5.2(j)(3).
(2) The continued listing standards under NYSE Arca Equities Rules
5.2(j)(3) and 5.5(g)(2) applicable to Units shall apply to the Shares
of the Funds.
(3) The Shares will comply with all other requirements applicable
to Units including, but not limited to, requirements relating to the
dissemination of key information such as the value of the Underlying
Indexes and the applicable value of the IIV, rules governing the
trading of equity securities, trading hours, trading halts,
surveillance, information barriers, and the Information Bulletin to
Equity Trading Permit Holders (each as described in more detail herein
and in the Notice and Registration Statements, as applicable), as set
forth in Exchange rules applicable to Units and prior Commission orders
approving the generic listing rules applicable to the listing and
trading of Units.
(4) For continued listing of the Shares, the Trust is required to
comply with Rule 10A-3 under the Exchange Act.
(5) Each Fund generally will invest at least 80% of its assets in
the securities that compose each Fund's respective underlying index.
(6) Each Fund may at times invest up to 20% of its assets in
certain futures, options and swap contracts, cash and cash equivalents,
including money market funds, as well as in municipal securities not
included in a Fund's respective underlying index to the extent that the
Adviser believes investment in such instruments will facilitate the
Fund's ability to achieve its investment objective.
This order is based on all of the Exchange's representations,
including those set forth above and in the Notice.
Lastly, the Commission notes that the approval of this proposed
rule change permits only the prospective continued listing of the
Shares. No retroactive relief is granted to the Exchange regarding its
listing and trading of the Shares during the time period in which not
all of the generic listing criteria in Commentary .02 to NYSE Arca
Equities Rule 5.2(j)(3) were satisfied.
For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with the Exchange Act.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\40\ that the proposed rule change (SR-NYSEArca-2014-45),
be, and it hereby is, approved.
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\40\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\41\
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\41\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-15323 Filed 6-30-14; 8:45 am]
BILLING CODE 8011-01-P