[Federal Register Volume 79, Number 199 (Wednesday, October 15, 2014)]
[Notices]
[Pages 61922-61924]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-24422]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73321; File No. SR-NYSEArca-2014-113]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Reflecting Changes
in the Concentration Policies of ARK Innovation ETF and ARK Genomic
Revolution ETF as Well as a Change in the Name of the ARK Genomic
Revolution ETF to the ARK Genomic Revolution Multi-Sector ETF
October 8, 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 September 25, 2014, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule 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 changes in the concentration
policies of ARK Innovation ETF and ARK Genomic Revolution ETF, as well
as a change in the name of the ARK Genomic Revolution ETF to the ARK
Genomic Revolution Multi-Sector ETF. 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.
[[Page 61923]]
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 ARK Innovation ETF and ARK Genomic
Revolution ETF, (each, a ``Fund'' and collectively, the ``Funds'')
under NYSE Arca Equities Rule 8.600, which governs the listing and
trading of Managed Fund Shares.\4\ Shares of the Funds have not
commenced trading on the Exchange.
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\4\ See Securities Exchange Act Release No. 72641 (July 18,
2014), 79 FR 43108 (July 24, 2014) (SR-NYSEArca-2014-64) (order
approving listing and trading on the Exchange of the ARK Innovation
ETF, ARK Genomic Revolution ETF, ARK Industrial Innovation ETF, and
ARK Web x.0 ETF under NYSE Arca Equities Rule 8.600) (``Prior
Order''). See also Securities Exchange Act Release No. 72314 (June
4, 2014), 79 FR 33229 (June 10, 2014) (SR-NYSEArca-2014-64) (``Prior
Notice,'' and together with the Prior Order, the ``Prior Release'').
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The Funds are series of the ARK ETF Trust (``Trust''). The Shares
are offered by the Trust, which is registered with the Commission as an
open-end management investment company.\5\ The investment adviser to
the Funds is ARK Investment Management LLC (``Adviser'').
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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 September 11, 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) (``Securities Act''), and under the 1940 Act relating to the
Funds (File Nos. 333-191019 and 811-22883) (``Registration
Statement''). The description of the operation of the Trust and the
Funds 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 the1940 Act. See Investment
Company Act Release No. 31009 (April 7, 2014) (File No. 812-14172)
(``Exemptive Order'').
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In this proposed rule change, the Exchange proposes to reflect a
change to the Funds' concentration policies as well as the descriptions
of the health care sector, which the Adviser will utilize to implement
each Fund's investment objective, as described below.\6\
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\6\ The changes described herein will be filed with the
Commission in an amendment to the Funds' Registration Statement. See
note 5, supra. The Adviser represents that it will manage the Funds
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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ARK Genomic Revolution Multi-Sector ETF
As described in the Prior Release, the investment objective of the
ARK Genomic Revolution Multi-Sector ETF \7\ is long-term growth of
capital. The Fund will invest under normal circumstances \8\ primarily
(at least 80% of its assets) in domestic and foreign equity securities
of companies that are relevant to the Fund's investment theme of
genomics.\9\ As stated in the Prior Release, the Fund may invest its
remaining assets in other securities and financial instruments, as
described in the Prior Release.
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\7\ The name of the ARK Genomic Revolution Multi-Sector ETF has
been changed from the ARK Genomic Revolution ETF.
\8\ The term ``under normal circumstances'' includes, but is not
limited to, the absence of extreme volatility or trading halts in
the equity 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.
\9\ As described in the Prior Release, companies relevant to
this theme are those that are focused on and are expected to benefit
from extending and enhancing the quality of human and other life by
incorporating technological and scientific developments,
improvements and advancements in genetics into their business, such
as by offering new products or services that rely on genetic
sequencing, analysis, synthesis or instrumentation. These companies
may include ones that develop, produce, manufacture or significantly
rely on bionic devices, bio-inspired computing, bioinformatics,
molecular medicine, and agricultural biology.
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The Prior Release stated that the Fund will be concentrated in
issuers in any industry or group of industries in the health care
sector. The Adviser wishes to supplement the description of the Fund's
concentration policy to state that the Fund will be concentrated in
issuers in any industry or group of industries in the health care
sector, including, in particular, issuers having their principal
business activities in the biotechnology industry.
The Prior Release stated that the issuers in the health care sector
include manufacturers and distributors of health care equipment and
supplies, owners and operators of health care facilities, health
maintenance organizations and managed health care plans, health care
providers and issuers that provide services to health care providers.
The Adviser wishes to revise the description of the health care sector
to state that, while the health care sector includes the biotechnology
industry, other industries in the health care sector include medical
laboratories and research and drug manufacturers.
ARK Innovation ETF
As described in the Prior Release, the ARK Innovation ETF's
investment objective is long-term growth of capital. The Fund will
invest under normal circumstances \10\ primarily (at least 65% of its
assets) in domestic and foreign equity securities of companies that are
relevant to the Fund's investment theme of disruptive innovation.\11\
As stated in the Prior Release, the Fund may invest its remaining
assets in other securities and financial instruments, as described in
the Prior Release.
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\10\ See note 8, supra.
\11\ As described in the Prior Release, companies relevant to
this theme are those that rely on or benefit from the development of
new products or services, technological improvements and
advancements in scientific research relating to the areas of
genomics, industrial innovation or the increased use of shared
technology, infrastructure, and services.
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The Prior Release stated that the Fund will be concentrated in
issuers in any industry or group of industries in the industrials and
information technology sectors. The Adviser wishes to revise the
description of the Fund's concentration policy to state that it will
not be concentrated in any industry.
Other Investments
The Prior Release stated that each Fund will be classified as a
``non-diversified'' investment company under the 1940 Act \12\ and
therefore may concentrate its investments in any particular industry or
group of industries, such that: (i) ARK Genomic Revolution Multi-Sector
ETF will concentrate in securities of issuers having their principal
business activities in any industry or group of industries in the
health care sector; and (ii) ARK Innovation ETF will concentrate in
securities of issuers having their principal business activities in any
industry or group of industries in the health care sector, the
industrials sector, the information technology sector, or the
telecommunications services sector.\13\
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\12\ The diversification standard is set forth in Section
5(b)(1) of the 1940 Act.
\13\ See Form N-1A, Item 9. The Commission has taken the
position that a fund is concentrated if it invests more than 25% of
the value of its total assets in any one industry. See, e.g.,
Investment Company Act Release No. 9011 (October 30, 1975), 40 FR
54241 (November 21, 1975).
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The Adviser wishes to revise the description of the Funds'
concentration to state that each Fund will be classified as a ``non-
diversified'' investment company under the 1940 Act \14\ and that
neither of the Funds will be concentrated in any industry, except that
ARK Genomic Revolution Multi-Sector ETF will concentrate in securities
of issuers having their principal business activities in any industry
or group of industries in the health care sector, including issuers
having their principal business activities in the biotechnology
industry.\15\
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\14\ See note 12, supra.
\15\ See note 13, supra.
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The Adviser represents that there is no change to the Funds'
investment
[[Page 61924]]
objectives. The Shares will conform to the initial and continued
listing criteria 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) \16\ 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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\16\ 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 Adviser represents that
there are no changes to the Funds' investment objectives and the
proposed changes will clarify the Funds' concentration policies and the
descriptions of the health care sector. There are no changes to the
Funds' statements regarding how their assets primarily will be invested
in normal circumstances and how they may invest remaining assets.
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 change in the name of
the ARK Genomic Revolution Multi-Sector ETF is designed to clarify that
such Fund invests, on a multi-sector basis, in genomic revolution
companies.
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 Shares will be listed and traded on the
Exchange pursuant to the initial and continued listing requirements in
NYSE Arca Equities Rule 8.600. The Adviser represents that there is no
change to the Funds' investment objectives. 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 Exchange notes that the
proposed rule change will facilitate the listing and trading of
additional types of actively-managed exchange-traded products that hold
equity securities and will enhance competition among market
participants, to the benefit of investors and the marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were 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 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 \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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-2014-113 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-2014-113. 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 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 the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; 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-2014-113 and should
be submitted on or before November 5, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24422 Filed 10-14-14; 8:45 am]
BILLING CODE 8011-01-P