[Federal Register Volume 81, Number 22 (Wednesday, February 3, 2016)]
[Notices]
[Pages 5798-5800]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01922]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76981; File No. SR-NYSEArca-2016-20]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Reflect Changes
to the Investment Strategy for the PowerShares S&P 500[supreg] Downside
Hedged Portfolio
January 28, 2016.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on January 26, 2016, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. 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 a rule change to reflect changes to the
investment strategy for the PowerShares S&P 500[supreg] Downside Hedged
Portfolio (the ``Fund''). 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Commission previously approved listing and trading on the
Exchange of shares (``Shares'') of the Fund, a series of the
PowerShares Actively Managed Exchange-Traded Fund Trust (the
``Trust''),\4\ under NYSE Arca Equities Rule 8.600, which governs the
listing and trading of Managed Fund Shares. Shares of the Fund have
commenced listing and trading on the Exchange.
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\4\ See Securities Exchange Act Release No. 68158 (Nov. 5,
2012), 77 FR 67412 (Nov. 9, 2012) (SR-NYSEArca-2012-101) (``Prior
Order''). See also Securities Exchange Act Release No. 67881 (Sept.
18, 2012), 77 FR 58889 (Sept. 24, 2012) (SR-NYSEArca-2012-101)
(``Prior Notice,'' and together with the Prior Order, the ``Prior
Release'').
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The Shares are offered by the Trust, a statutory trust organized
under the laws of the State of Delaware and registered with the
Commission as an open-end management investment company.\5\ The
investment advisor to the Fund is Invesco PowerShares Capital
Management LLC (the ``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''). The Trust intends to file a
prospectus supplement with the Commission or a post-effective
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 Fund (File Nos. 333-147622 and
811-22148) (``Registration Statement'') to reflect the changes
requested in the proposed rule change upon effectiveness of the rule
change. The description of the operation of the Trust and the Fund
herein will be reflected in any such filing. In addition, the
Commission has issued an order granting certain exemptive relief to
the Trust under the1940 Act. See Investment Company Act Release No.
28171 (Feb. 27, 2008) (File No. 812-13386) (``Exemptive Order'').
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In this proposed rule change, the Exchange proposes to reflect
changes to the investment strategy that the Adviser utilizes in seeking
to achieve the Fund's investment objective, as described below.\6\
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\6\ The changes described herein will be effective contingent
upon filing of a prospectus supplement or upon effectiveness of the
Trust's most recent post-effective amendment to its Registration
Statement. See note 5, supra. The Adviser represents that the
Adviser will not implement the changes described herein until the
instant proposed rule change is operative.
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The Prior Release stated that, according to the Registration
Statement, the Fund is an actively managed exchange-traded fund that
will seek to achieve positive total returns in rising or falling
markets that are not directly correlated to broad equity or fixed
income market returns. According to the Registration Statement, the
Fund seeks to achieve its investment objective by using a quantitative,
rules-based investment strategy designed to provide returns that
correspond to the performance of the S&P 500 Dynamic VEQTOR Index (the
``Benchmark''). The Registration Statement also stated that the
allocation among the Fund's investments generally will approximate the
allocation among the components of the Benchmark.
The Adviser now represents that, rather than employing a
quantitative, rules-based strategy designed to provide returns that
correspond to the performance of the Benchmark, the Fund will use a
quantitative, rules-based strategy that is designed to outperform the
Benchmark rather than match it.
The Adviser will continue to invest the Fund in the same
instruments as are contained in the Benchmark, as discussed in the
Prior Release. However, the Adviser now represents that the Fund will
use portfolio management strategies in seeking to achieve its
investment objective that allocate the Fund's assets in a manner that
may not correspond to the Benchmark. The Adviser also now represents
that, going forward, the Fund will seek to outperform the Benchmark
rather than match it.
The Exchange notes that the Prior Release stated that, according to
the Registration Statement, the Fund may invest a portion of its assets
in high-quality money market instruments, cash, and cash equivalents to
provide liquidity, to collateralize its futures contracts investments,
or to track the Benchmark during times when the Benchmark moves its
entire allocation to cash. The Exchange also proposes to change this
representation to state that the Fund may invest a portion of its
assets in high-quality money market instruments, cash, and cash
equivalents to provide liquidity, to collateralize its futures
contracts investments, or during periods of heightened volatility when
the Adviser believes that it is in the best interest of the Fund to do
so. Because the Fund, going forward, would seek to outperform rather
than match the Benchmark, the Fund would no longer utilize high quality
money market instruments, cash and cash equivalents for the purpose of
tracking the Benchmark.
The Adviser represents that there is no change to the Fund's
investment objective. The Fund will continue to invest in the
securities and financial instruments identified in the Prior
[[Page 5799]]
Release and will remain subject to the allocation limitations
identified in the Prior Release.
Except for the changes noted above, all other facts presented and
representations made in the Prior Release are unchanged.
The Fund will continue to comply with all initial and continued
listing requirements under NYSE Arca Equities Rule 8.600.
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) \7\ 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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\7\ 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. The proposed
changes to the representations contained in the Prior Release are
limited in scope. The Adviser is changing the representation in the
Prior Release that the Fund will employ a quantitative, rules-based
strategy designed to provide returns that correspond to the performance
of the Benchmark, to a representation that the Fund will use a
quantitative, rules-based strategy that is designed to outperform the
Benchmark rather than seek returns comparable to it.
The Adviser represents that there is no change to the Fund's
investment objective or to the securities and financial instruments
identified in the Prior Release that the Fund utilizes in seeking to
achieve its investment objective. The Fund's use of such securities and
financial instruments will remain subject to the applicable allocation
limitations identified in the Prior Release. The Fund will continue to
comply with all initial and continued listing requirements under NYSE
Arca Equities Rule 8.600.
The proposed rule change 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 is no change to the Fund's
investment objective. The Adviser represents that the allocation of the
Fund's portfolio will remain consistent with the allocation limitations
discussed in the Prior Release, and that the Fund may invest in the
same instruments as are contained in the Benchmark, as discussed in the
Prior Release. However, the Adviser now represents that the Fund will
use portfolio management strategies in seeking to achieve its
investment objective that allocate the Fund's assets in a manner that
may not correspond to the Benchmark. The Adviser also now represents
that, going forward, the Fund will seek to outperform the Benchmark
rather than match it.
As noted above, the Prior Release stated that, according to the
Registration Statement, the Fund may invest a portion of its assets in
high-quality money market instruments, cash, and cash equivalents to
provide liquidity, to collateralize its futures contracts investments,
or to track the Benchmark during times when the Benchmark moves its
entire allocation to cash. The Exchange also proposes to change this
representation to state that the Fund may invest a portion of its
assets in high-quality money market instruments, cash, and cash
equivalents to provide liquidity, to collateralize its futures
contracts investments, or during periods of heightened volatility when
the Adviser believes that it is in the best interest of the Fund to do
so.
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 proposed rule change will permit the Fund to operate in
a manner similar to other issues of Managed Fund Shares that seek to
outperform an index and will permit continued listing on the Exchange
of the Fund after it begins to utilize the quantitative, rules-based
strategy designed to outperform the Benchmark, which will enhance
competition among issues of Managed Fund Shares currently trading on
the Exchange. Except for the changes noted above, all other
representations made in the Prior Release are 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 change will
permit the Fund to operate in a manner similar to other issues of
Managed Fund Shares that seek to outperform an index and will permit
continued listing on the Exchange of the Fund after it begins to
utilize the quantitative, rules-based strategy designed to outperform
the Benchmark, which will enhance competition among issues of Managed
Fund Shares.
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
\8\ and Rule 19b-4(f)(6) thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 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 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. If the Commission takes such
action, the Commission shall institute proceedings to determine whether
the proposed rule should be approved or disapproved.
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
[[Page 5800]]
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2016-20 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-2016-20. 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 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-2016-20 and should
be submitted on or before February 24, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-01922 Filed 2-2-16; 8:45 am]
BILLING CODE 8011-01-P