[Federal Register: June 16, 2006 (Volume 71, Number 116)]
[Notices]
[Page 34911-34913]
[DOCID:fr16jn06-87]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings  1

June 8, 2006.
    Take notice that the Commission received the following electric
rate filings:

    Docket Numbers: ER01-3001-015.
    Applicants: New York Independent System Operator, Inc.
    Description: New York ISO submits its Tenth Biannual Compliance
Report on Demand Response Programs and the Addition of New Generation,
pursuant to Commission's 10/25/01 order.
    Filed Date: 6/1/2006.
    Accession Number: 20060601-5041.
    Comment Date: 5 p.m. Eastern Time on Thursday, June 22, 2006.

    Docket Numbers: ER06-191-003: ER06-193-003.
    Applicants: ISO New England Inc.; New England Participating
Transmission Owners; Maine Electric Power Company; New England Power
Pool Participants Committee.
    Description: ISO New England, Inc et al submit an errata to correct
the inadvertent omissions of its 5/15/06 filing.
    Filed Date: 6/1/2006.
    Accession Number: 20060607-0075.
    Comment Date: 5 p.m. Eastern Time on Thursday, June 22, 2006.

    Docket Numbers: ER06-730-001.
    Applicants: Midwest Independent Transmission System Operator, Inc.
    Description: Midwest Independent Transmission System Operator Inc.
submits proposed revisions to Section 39.2.12 of its OAT&EM Tariff,
Third Revised Volume No. 1.
    Filed Date: 5/31/2006.
    Accession Number: 20060607-0074.
    Comment Date: 5 p.m. Eastern Time on Wednesday, June 21, 2006.

    Docket Numbers: ER06-864-001.

    Applicants: Bear Energy LP.
    Description: Bear Energy LP submits a notification to FERC that it
has entered into an energy management agreement with LSP Gen Finance
Co, LLC in accordance with Order 652.
    Filed Date: 6/1/2006.
    Accession Number: 20060607-0073.
    Comment Date: 5 p.m. Eastern Time on Thursday, June 22, 2006.

    Docket Numbers: ER06-882-001.
    Applicants: Bayside Power L.P.
    Description: Bayside Power LP submits revised tariff sheets
containing the appropriate headers and footers as required by Order
614.
    Filed Date: 6/1/2006.
    Accession Number: 20060607-0072.
    Comment Date: 5 p.m. Eastern Time on Wednesday, June 14, 2006.

    Docket Numbers: ER06-894-001.
    Applicants: Entergy Services, Inc.
    Description: Entergy Services, Inc submits an errata to its 4/27/06
filing to include cover sheets with appropriate rate schedule
designations for Prescott's Network Operating Agreement and Network
Integration Transmission Service Agreement.
    Filed Date: 5/31/2006.
    Accession Number: 20060607-0071.
    Comment Date: 5 p.m. Eastern Time on Wednesday, June 21, 2006.

    Docket Numbers: ER06-976-001.
    Applicants: West Penn Power Company; Monongahela Power Company; The
Potomac Edison Company.
    Description: West Penn Power Company submits an amended notice of
cancellation of Allegheny Power's Power Interchange and Resale
Agreement with American Municipal Power-Ohio, Rate Schedule No. 50, et
al.
    Filed Date: 6/1/2006.
    Accession Number: 20060601-5006.
    Comment Date: 5 p.m. Eastern Time on Thursday, June 22, 2006.

    Docket Numbers: ER06-981-000.
    Applicants: West Penn Power Company; Monongahela Power Company; The
Potomac Edison Company.
    Description: West Penn Power Company, et al submit a request to
withdraw it Notice of Cancellation filed 5/8/06 in reference to a Power
Interchange and Resale Agreement with American Municipal Power-Ohio.
    Filed Date: 5/18/2006.
    Accession Number: 20060518-5014.
    Comment Date: 5 p.m. Eastern Time on Thursday, June 8, 2006.

    Docket Numbers: ER06-1050-000; ER06-1036-000; ER06-1037-000; ER06-
1095-000.
    Applicants: RockGen OL-1, LLC; RockGen OL-2, LLC, RockGen OL-3,
LLC, RockGen OL-4.
    Description: RockGen OL-1, LLC et al submits an application for
order authorizing market-based rates, waivers and blanket
authorizations and request for expedited action.
    Filed Date: 5/26/2006.
    Accession Number: 20060607-0070.
    Comment Date: 5 p.m. Eastern Time on Friday, June 16, 2006.

    Docket Numbers: ER06-1062-000.
    Applicants: Pacific Gas and Electric Company.
    Description: Pacific Gas and Electric Co submits modifications to
and subsequent cancellation of Minnesota Methane's Service Agreement
for Firm Point-to-Point Transmission Service.
    Filed Date: 5/31/2006.
    Accession Number: 20060607-0069.
    Comment Date: 5 p.m. Eastern Time on Wednesday, June 21, 2006.

    Docket Numbers: ER06-1063-000.
    Applicants: Xcel Energy Services Inc.; Southwestern Public Service
Company.
    Description: Xcel Energy Services, Inc on behalf of Southwestern
Public Service Corp submits a Connection Agreement with Golden Spread
Electric Cooperative, Inc pursuant to Order 614.
    Filed Date: 6/1/2006.
    Accession Number: 20060607-0068.
    Comment Date: 5 p.m. Eastern Time on Thursday, June 22, 2006.

    Docket Numbers: ER06-1064-000.
    Applicants: California Independent System Operator Corporation
    Description: California Independent System Operator Corp submits an
informational filing regarding the revised Transmission Access Charges
effective 3/1/06.
    Filed Date: 6/1/2006.
    Accession Number: 20060607-0067.
    Comment Date: 5 p.m. Eastern Time on Thursday, June 22, 2006.

    Docket Numbers: ER06-1065-000.
    Applicants: Northeast Utilities Service Company.
    Description: Northeast Utilities Service Co on behalf of operating
companies, The Connection Light & Power Co et al submits amendments to
and service agreement under Schedule 21-NU to Section II of ISO New
England, Inc Transmission, Markets and Services Tariff.
    Filed Date: 5/31/2006.
    Accession Number: 20060607-0078.
    Comment Date: 5 p.m. Eastern Time on Wednesday, June 21, 2006.

    Docket Numbers: ER06-1066-000.
    Applicants: American Electric Power Service Corporation; Indiana
Michigan Power Company.
    Description: The American Electric Power Service Corp as agent for
its affiliate Indiana & Michigan Power Co submits an original
interconnection and local delivery service agreement with the City
Bluffton, Indiana.
    Filed Date: 6/1/2006.
    Accession Number: 20060607-0076.
    Comment Date: 5 p.m. Eastern Time on Thursday, June 22, 2006.

    Docket Numbers: ER06-1067-000.
    Applicants: American Electric Power Service Corporation; Indiana
Michigan Power Company.
    Description: The American Electric Power Service Corp as agent for
its affiliate Indiana & Michigan Power Co submits an original
interconnection and local delivery service agreement with the City of
Mishawaka, Indiana.
    Filed Date: 6/1/2006.
    Accession Number: 20060607-0077.
    Comment Date: 5 p.m. Eastern Time on Thursday, June 22, 2006.

    Docket Numbers: ER06-1068-000.
    Applicants: Indiana Michigan Power Company; American Electric Power
Service Corporation.
    Description: Indiana Michigan Power Co submits a Cost-Based Formula
Rate Agreement for Full Requirements Electric Service with the City of
Avilla, Indiana.
    Filed Date: 6/1/2006.
    Accession Number: 20060607-0079.
    Comment Date: 5 p.m. Eastern Time on Thursday, June 22, 2006.

    Docket Numbers: ER06-1069-000.
    Applicants: Midwest Independent Transmission System Operator, Inc.
    Description: Midwest Independent Transmission System Operator, Inc
submits proposed revisions to the Schedule 24-A of its OAT&EM Tariff,
Third Revised Volume No. 1.
    Filed Date: 6/1/2006.
    Accession Number: 20060607-0066.
    Comment Date: 5 p.m. Eastern Time on Thursday, June 22, 2006.

    Any person desiring to intervene or to protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Rules of Practice and Procedure (18 CFR 385.211 and
385.214) on or before 5 p.m. Eastern time on the specified comment
date. It is not necessary to separately intervene again in a subdocket
related to a compliance filing if you have previously intervened in the
same docket. Protests will be considered by the Commission in
determining the appropriate action to be taken, but will not serve to
make protestants parties to the proceeding. Anyone filing a motion to
intervene or protest must serve a copy of that document on the
Applicant. In reference to filings initiating a new proceeding,
interventions or protests submitted on or before the comment deadline
need not be served on persons other than the Applicant.

    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov.
 To facilitate electronic service, persons with Internet

access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
14 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First St., NE., Washington, DC 20426.
    The filings in the above proceedings are accessible in the
Commission's eLibrary system by clicking on the appropriate link in the
above list. They are also available for review in the Commission's
Public Reference Room in Washington, DC. There is an eSubscription link
on the Web site that enables subscribers to receive e-mail notification
when a document is added to a subscribed dockets(s). For assistance
with any FERC Online service, please e-mail<EMAIL_ADDRESS>
or call<PHONE_NUMBER> (toll free). For TTY, call<PHONE_NUMBER>.

Magalie R. Salas,
Secretary.
 [FR Doc. E6-9370 Filed 6-15-06; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register Volume 79, Number 84 (Thursday, May 1, 2014)]
[Notices]
[Pages 24765-24773]
[FR Doc No: 2014-09926]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72030; File No. SR-NASDAQ-2014-041]

Self-Regulatory Organizations; the NASDAQ Stock Market LLC;
Notice of Filing of Proposed Rule Change, as Modified by Amendment No.
1, Relating to the Listing and Trading of Shares of the First Trust
Enhanced Short Maturity ETF of First Trust Exchange-Traded Fund IV

April 25, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 11, 2014, The NASDAQ Stock Market LLC (``Nasdaq'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in in Items I,
II, and III below, which Items have been prepared by Nasdaq. On April
24, 2014, the Exchange filed Amendment No. 1 to the proposed rule
change.\3\ The Commission is publishing this notice to solicit comments
on the proposed rule change, as modified by Amendment No. 1, from
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ By Amendment No. 1, the Exchange: (1) Clarifies that the
Fund (defined below) will limit its investments in asset-backed
securities and non-agency mortgage-backed securities (in the
aggregate) to 20% of its net assets; (2) modifies its description of
how asset-backed or mortgage-backed securities will be priced in
certain circumstances; and (3) makes certain grammatical
corrections.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    Nasdaq proposes to list and trade the shares of the First Trust
Enhanced Short Maturity ETF (the ``Fund'') of First Trust Exchange-
Traded Fund IV (the ``Trust'') under Nasdaq Rule 5735 (``Managed Fund
Shares'').\4\ The shares of the Fund are collectively referred to
herein as the ``Shares.''
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    \4\ The Commission approved Nasdaq Rule 5735 in Securities
Exchange Act Release No. 57962 (June 13, 2008), 73 FR 35175 (June
20, 2008) (SR-NASDAQ-2008-039). There are already multiple actively-
managed funds listed on the Exchange; see, e.g., Securities Exchange
Act Release Nos. 69464 (April 26, 2013), 78 FR 25774 (May 2, 2013)
(SR-NASDAQ-2013-036) (order approving listing and trading of First
Trust Senior Loan Fund); 68972 (February 22, 2013), 78 FR 13721
(February 28, 2013) (SR-NASDAQ-2012-147) (order approving listing
and trading of First Trust High Yield Long/Short ETF); 66489
(February 29, 2012), 77 FR 13379 (March 6, 2012) (SR-NASDAQ-2012-
004) (order approving listing and trading of WisdomTree Emerging
Markets Corporate Bond Fund). Additionally, the Commission has
previously approved the listing and trading of a number of actively-
managed funds on NYSE Arca, Inc. pursuant to Rule 8.600 of that
exchange. See, e.g., Securities Exchange Act Release Nos. 68870
(February 8, 2013), 78 FR 11245 (February 15, 2013) (SR-NYSEArca-
2012-139) (order approving listing and trading of First Trust
Preferred Securities and Income ETF); 64643 (June 10, 2011), 76 FR
35062 (June 15, 2011) (SR-NYSEArca-2011-21) (order approving listing
and trading of WisdomTree Global Real Return Fund). The Exchange
believes the proposed rule change raises no significant issues not
previously addressed in those prior Commission orders.
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    The text of the proposed rule change is available at http://nasdaq.cchwallstreet.com/, at Nasdaq's principal office, 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, Nasdaq included statements
concerning the purpose of, and basis for, the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. Nasdaq has prepared summaries, set forth in Sections A,
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade the Shares of the Fund
under Nasdaq Rule 5735, which governs the listing and trading of
Managed Fund Shares \5\ on the Exchange. The Fund will be an actively-
managed exchange-traded fund (``ETF''). The Shares will be offered by
the Trust, which was established as a Massachusetts business trust on
September 15, 2010.\6\ The Trust is registered with the Commission as
an investment company and has filed a registration statement on Form N-
1A (``Registration Statement'') with the Commission.\7\ The Fund will
be a series of the Trust. The Fund intends to qualify each year as a
regulated investment company (``RIC'') under Subchapter M of the
Internal Revenue Code of 1986, as amended.
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    \5\ A Managed Fund Share is a security that represents an
interest in an investment company registered under the Investment
Company Act of 1940 (15 U.S.C. 80a-1) (the ``1940 Act'') organized
as an open-end investment company or similar entity that invests in
a portfolio of securities selected by its investment adviser
consistent with its investment objectives and policies. In contrast,
an open-end investment company that issues Index Fund Shares, listed
and traded on the Exchange under Nasdaq Rule 5705, seeks to provide
investment results that correspond generally to the price and yield
performance of a specific foreign or domestic stock index, fixed
income securities index or combination thereof.
    \6\ The Commission has issued an order, upon which the Trust may
rely, granting certain exemptive relief under the 1940 Act. See
Investment Company Act Release No. 30029 (April 10, 2012) (File No.
812-13795) (the ``Exemptive Relief''). In addition, on December 6,
2012, the staff of the Commission's Division of Investment
Management (``Division'') issued a no-action letter (``No-Action
Letter'') relating to the use of derivatives by actively-managed
ETFs. See No-Action Letter dated December 6, 2012 from Elizabeth G.
Osterman, Associate Director, Office of Exemptive Applications,
Division of Investment Management. The No-Action Letter stated that
the Division would not recommend enforcement action to the
Commission under applicable provisions of and rules under the 1940
Act if actively-managed ETFs operating in reliance on specified
orders (which include the Exemptive Relief) invest in options
contracts, futures contracts or swap agreements provided that they
comply with certain representations stated in the No-Action Letter.
However, the Fund does not intend to invest in derivatives.
    \7\ See Post-Effective Amendment No. 66 to Registration
Statement on Form N-1A for the Trust, dated April 10, 2014 (File
Nos. 333-174332 and 811-22559). The descriptions of the Fund and the
Shares contained herein are based, in part, on information in the
Registration Statement.
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    First Trust Advisors L.P. will be the investment adviser
(``Adviser'') to the Fund. First Trust Portfolios L.P. (the
``Distributor'') will be the principal underwriter and distributor of
the Fund's Shares. The Bank of New York Mellon Corporation (``BNY'')
will act as the administrator, accounting agent, custodian and transfer
agent to the Fund.
    Paragraph (g) of Rule 5735 provides that if the investment adviser
to the investment company issuing Managed Fund Shares is affiliated
with a broker-dealer, such investment adviser shall erect a ``fire
wall'' between the investment adviser and the broker-dealer with
respect to access to information concerning the composition and/or
changes to such investment company portfolio.\8\ In addition, paragraph
(g) further requires that personnel who make decisions on the open-end
fund's portfolio composition must be subject to procedures designed to
prevent the use and dissemination of material, non-public information
regarding the open-end fund's portfolio. Rule 5735(g) is similar to
Nasdaq Rule 5705(b)(5)(A)(i); however, paragraph (g) in connection with
the establishment of a ``fire wall'' between the investment adviser and
the broker-dealer reflects

the applicable open-end fund's portfolio, not an underlying benchmark
index, as is the case with index-based funds. The Adviser is not a
broker-dealer, although it is affiliated with the Distributor, a
broker-dealer. The Adviser has implemented a fire wall with respect to
its broker-dealer affiliate regarding access to information concerning
the composition and/or changes to the portfolio. In addition, personnel
who make decisions on the Fund's portfolio composition will be subject
to procedures designed to prevent the use and dissemination of material
non-public information regarding the Fund's portfolio. In the event (a)
the Adviser or any sub-adviser becomes, or becomes newly affiliated
with, a broker-dealer, or (b) any new adviser or sub-adviser is a
registered broker-dealer or becomes affiliated with a broker-dealer, it
will implement a fire wall with respect to its relevant personnel and/
or such broker-dealer affiliate, as applicable, regarding access to
information concerning the composition and/or changes to the portfolio
and will be subject to procedures designed to prevent the use and
dissemination of material non-public information regarding such
portfolio. The Fund does not currently intend to use a sub-adviser.
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    \8\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``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 other applicable
securities laws. Accordingly, procedures designed to prevent the
communication and misuse of non-public 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.
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First Trust Enhanced Short Maturity ETF
    The investment objective of the Fund will be to seek current
income, consistent with preservation of capital and daily liquidity.
Under normal market conditions,\9\ the Fund will seek to achieve its
investment objective by investing in a portfolio of U.S. dollar-
denominated fixed- and variable-rate \10\ instruments (collectively,
``Fixed Income Securities'') issued by U.S. and non-U.S. public- and
private-sector entities. The Fund will hold Fixed Income Securities of
at least 13 non-affiliated issuers.
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    \9\ 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 fixed income 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. For temporary
defensive purposes, during the initial invest-up period and during
periods of high cash inflows or outflows, the Fund may depart from
its principal investment strategies; for example, it may hold a
higher than normal proportion of its assets in cash. During such
periods, the Fund may not be able to achieve its investment
objective. The Fund may adopt a defensive strategy when the Adviser
believes securities in which the Fund normally invests have elevated
risks due to political or economic factors and in other
extraordinary circumstances.
    \10\ For these purposes, the term ``variable-rate'' also
includes similar terms such as ``floating-rate'' and ``adjustable-
rate.''
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    At least 80% of the Fund's net assets will be invested in Fixed
Income Securities that are, at the time of purchase, investment grade.
To be considered ``investment grade,'' under normal market conditions,
short-term securities (generally securities with original maturities of
one year or less) held by the Fund and rated by at least one nationally
recognized statistical ratings organization (``NRSRO'') will carry, at
the time of purchase, a short-term rating in the highest three rating
categories of at least one NRSRO (e.g., A-3, P-3 or F-3 or better by
Standard & Poor's Ratings Services, a division of the McGraw-Hill
Companies, Inc. (``S&P''), Moody's Investors Service, Inc.
(``Moody's'') or Fitch Ratings (``Fitch''), respectively), and other
rated securities will carry, at the time of purchase, a rating in the
highest four rating categories of at least one NRSRO (e.g., BBB- or
higher by S&P and/or Fitch or Baa3 or higher by Moody's).\11\ For
unrated securities to be considered ``investment grade,'' under normal
market conditions, such securities will be determined, at the time of
purchase, to be of comparable quality \12\ by the Adviser.
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    \11\ For the avoidance of doubt, if a security is rated by
multiple NRSROs and receives different ratings, the Fund will treat
the security as being rated in the highest rating category received
from an NRSRO.
    \12\ Comparable quality of unrated securities will be determined
by the Adviser based on fundamental credit analysis of the unrated
security and comparable NRSRO-rated securities. On a best efforts
basis, the Adviser will attempt to make a rating determination based
on publicly available data. In making a ``comparable quality''
determination, the Adviser may consider, for example, whether the
issuer of the security has issued other rated securities, the nature
and provisions of the relevant security, whether the obligations
under the relevant security are guaranteed by another entity and the
rating of such guarantor (if any), relevant cash flows,
macroeconomic analysis, and/or sector or industry analysis.
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Principal Investments
    The Fund intends to achieve its investment objective by investing,
under normal market conditions, at least 80% of its net assets in a
portfolio of U.S. dollar-denominated Fixed Income Securities issued by
U.S. and non-U.S. public- and private-sector entities. Fixed Income
Securities will include the following types of fixed- and variable-rate
debt securities: corporate \13\ and government bonds and notes; agency
securities; \14\ instruments of non-U.S. issuers in developed markets;
privately-issued securities; \15\ asset-backed securities; \16\
mortgage-backed securities; \17\ municipal bonds; money market
securities; \18\ and investment companies \19\ (including investment
companies advised by the Adviser) that invest primarily in the
foregoing types

of Fixed Income Securities.\20\ The Fund will limit its investments in
asset-backed securities and non-agency mortgage-backed securities (in
the aggregate) to 20% of its net assets.\21\
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    \13\ While the Fund is permitted to invest without restriction
in corporate bonds, the Adviser expects that, under normal market
conditions, generally, with respect to at least 75% of the Fund's
portfolio, a corporate bond will have, at the time of original
issuance, $100 million or more par amount outstanding to be
considered as an eligible investment.
    \14\ ``Agency securities'' for these purposes generally includes
securities issued by the following entities: Government National
Mortgage Association (Ginnie Mae), Federal National Mortgage
Association (Fannie Mae), Federal Home Loan Banks (FHLBanks),
Federal Home Loan Mortgage Corporation (Freddie Mac), Farm Credit
System (FCS) Farm Credit Banks (FCBanks), Student Loan Marketing
Association (Sallie Mae), Resolution Funding Corporation (REFCORP),
Financing Corporation (FICO), and the Farm Credit System (FCS)
Financial Assistance Corporation (FAC). Agency securities can
include, but are not limited to, mortgage-backed securities.
    \15\ ``Privately-issued securities'' for these purposes
generally includes Rule 144A securities and, in this context, may
include both mortgage-backed and non-mortgage Rule 144A securities.
    \16\ Asset-backed securities are Fixed Income Securities that
are backed by a pool of assets. The Fund currently intends to invest
in asset-backed securities that are consumer asset-backed
securities.
    \17\ Mortgage-backed securities are Fixed Income Securities that
are backed by a pool of mortgage loans. There are a wide variety of
mortgage-backed securities involving commercial or residential,
fixed-rate or adjustable-rate mortgages and mortgages issued by
banks or government agencies.
    \18\ ``Money market securities'' for these purposes generally
includes: Short-term high-quality obligations issued or guaranteed
by the U.S. Treasury or the agencies or instrumentalities of the
U.S. government; short-term high-quality securities issued or
guaranteed by non-U.S. governments, agencies and instrumentalities;
repurchase agreements; commercial paper (both asset-backed and non-
asset-backed); and deposits and other obligations of U.S. and non-
U.S. banks and financial institutions.
    \19\ The Fund currently anticipates investing only in registered
open-end investment companies that are listed and traded in the U.S.
on registered exchanges (i.e., other ETFs). An ETF is an investment
company registered under the 1940 Act that holds a portfolio of
securities. Many ETFs are designed to track the performance of a
securities index, including industry, sector, country and region
indexes. The Fund may invest in the securities of ETFs in excess of
the limits imposed under the 1940 Act pursuant to exemptive orders
obtained by other ETFs and their sponsors from the Commission. In
addition, the Fund may invest in the securities of certain
investment companies in excess of the limits imposed under the 1940
Act pursuant to an exemptive order obtained by the Trust and the
Adviser from the Commission. See Investment Company Act Release No.
30377 (February 5, 2013) (File No. 812-13895). The ETFs in which the
Fund may invest include Index Fund Shares (as described in Nasdaq
Rule 5705), Portfolio Depository Receipts (as described in Nasdaq
Rule 5705), and Managed Fund Shares (as described in Nasdaq Rule
5735). While the Fund may invest in inverse ETFs, the Fund will not
invest in leveraged or inverse leveraged (e.g., 2X or -3X) ETFs.
    \20\ The liquidity of a security, especially in the case of
asset-backed and mortgage-backed securities, is a substantial factor
in the Fund's security selection process. Consistent with the
discussion below under ``Investment Restrictions,'' the Fund will
not purchase any Fixed Income Securities (including asset-backed
securities and mortgage-backed securities) that, in the Adviser's
opinion, are illiquid if, as a result, more than 15% of the value of
the Fund's net assets will be invested in illiquid assets.
    \21\ See Amendment No. 1, supra note 3. For the avoidance of
doubt, there is no limitation on the Fund's investments in agency
mortgage-backed securities.
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    Under normal market conditions, the Fund's duration \22\ is
expected to be below one year and the maturity \23\ of the Fund's
portfolio is expected to be below three years.
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    \22\ Duration is a measure of the expected price volatility of a
debt instrument as a result of changes in market rates of interest,
based on, among other factors, the weighted average timing of the
instrument's expected principal and interest payments. Duration
differs from maturity in that it considers a security's yield,
coupon payments, principal payments, call features and coupon
adjustments in addition to the amount of time until the security
finally matures.
    \23\ Maturity is measured relative to the type of security. For
Fixed Income Securities (exclusive of asset-backed securities and
mortgage-backed securities), maturity shall be calculated using
dollar-weighted average maturity, which is calculated by taking the
average length of time to maturity. For asset-backed securities and
mortgage-backed securities, maturity shall be calculated using
weighted average life, which is the estimated time to principal
paydown for each underlying instrument held by the Fund, weighted
according to the relative holdings per instrument.
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Other Investments
    Under normal market conditions, the Fund will invest primarily in
the Fixed Income Securities described above to meet its investment
objective. In addition, the Fund may invest up to 20% of its net assets
in floating rate loans. The floating rate loans in which the Fund will
invest will represent amounts borrowed by companies or other entities
from banks and other lenders and a significant portion of such floating
rate loans may be rated below investment grade or unrated. Floating
rate loans held by the Fund may be senior or subordinate obligations of
the borrower and may or may not be secured by collateral. The Fund will
generally invest in floating rate loans that the Adviser deems to be
liquid with readily available prices; notwithstanding the foregoing,
the Fund may invest in floating rate loans that are deemed illiquid so
long as the Fund complies with the 15% limitation on investments of its
net assets in illiquid assets described below under ``Investment
Restrictions''.
Investment Restrictions
    The Fund will not invest 25% or more of the value of its total
assets in securities of issuers in any one industry. This restriction
does not apply to (a) obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities or (b) securities of
other investment companies.\24\
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    \24\ 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 Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid assets (calculated at the time of investment),
including Rule 144A securities deemed illiquid by the Adviser.\25\ 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.\26\
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    \25\ In reaching liquidity decisions, the Adviser may consider
the following factors: The frequency of trades and quotes for the
security; the number of dealers wishing to purchase or sell the
security and the number of other potential purchasers; dealer
undertakings to make a market in the security; and the nature of the
security and the nature of the marketplace in which it trades (e.g.,
the time needed to dispose of the security, the method of soliciting
offers and the mechanics of transfer).
    \26\ The Commission has stated that long-standing Commission
guidelines have required open-end funds to hold no more than 15% of
their net assets in illiquid securities and other illiquid assets.
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR
14618 (March 18, 2008), footnote 34. See also Investment Company Act
Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 1970)
(Statement Regarding ``Restricted Securities''); Investment Company
Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 20, 1992)
(Revisions of Guidelines to Form N-1A). A fund's portfolio security
is illiquid if it cannot be disposed of in the ordinary course of
business within seven days at approximately the value ascribed to it
by the fund. See Investment Company Act Release No. 14983 (March 12,
1986), 51 FR 9773 (March 21, 1986) (adopting amendments to Rule 2a-7
under the 1940 Act); Investment Company Act Release No. 17452 (April
23, 1990), 55 FR 17933 (April 30, 1990) (adopting Rule 144A under
the Securities Act of 1933).
---------------------------------------------------------------------------

    The Fund will not invest in non-U.S. equity securities.
Creation and Redemption of Shares
    The Fund will issue and redeem Shares on a continuous basis at net
asset value (``NAV'') \27\ only in large blocks of Shares (``Creation
Units'') in transactions with authorized participants, generally
including broker-dealers and large institutional investors
(``Authorized Participants''). Creation Units generally will consist of
50,000 Shares, although this may change from time to time. Creation
Units, however, are not expected to consist of less than 50,000 Shares.
As described in the Registration Statement and consistent with the
Exemptive Relief, the Fund will issue and redeem Creation Units in
exchange for an in-kind portfolio of instruments and/or cash in lieu of
such instruments (the ``Creation Basket''). In addition, if there is a
difference between the NAV attributable to a Creation Unit and the
market value of the Creation Basket exchanged for the Creation Unit,
the party conveying instruments with the lower value will pay to the
other an amount in cash equal to the difference (referred to as the
``Cash Component'').
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    \27\ The NAV of the Fund's Shares generally will be calculated
once daily Monday through Friday as of the close of regular trading
on the New York Stock Exchange, generally 4:00 p.m., Eastern time
(the ``NAV Calculation Time''). NAV per Share will be calculated by
dividing the Fund's net assets by the number of Fund Shares
outstanding. For more information regarding the valuation of Fund
investments in calculating the Fund's NAV, see the Registration
Statement.
---------------------------------------------------------------------------

    Creations and redemptions must be made by an Authorized Participant
or through a firm that is either a member of the National Securities
Clearing Corporation (``NSCC'') or a Depository Trust Company
participant that, in each case, must have executed an agreement that
has been agreed to by the Distributor and BNY with respect to creations
and redemptions of Creation Units. All standard orders to create
Creation Units must be received by the transfer agent no later than the
closing time of the regular trading session on the New York Stock
Exchange (ordinarily 4:00 p.m., Eastern time) (the ``Closing Time'') in
each case on the date such order is placed in order for the creation of
Creation Units to be effected based on the NAV of Shares as next
determined on such date after receipt of the order in proper form.
Shares may be redeemed only in Creation Units at their NAV next
determined after receipt not later than the Closing Time of a
redemption request in proper form by the Fund through the transfer
agent and only on a business day.
    The Fund's custodian, through the NSCC, will make available on each

business day, prior to the opening of business of the Exchange, the
list of the names and quantities of the instruments comprising the
Creation Basket, as well as the estimated Cash Component (if any), for
that day. The published Creation Basket will apply until a new Creation
Basket is announced on the following business day.
Net Asset Value
    The Fund's NAV will be determined as of the close of trading
(normally 4:00 p.m., Eastern time) on each day the New York Stock
Exchange is open for business. NAV will be calculated for the Fund by
taking the market price of the Fund's total assets, including interest
or dividends accrued but not yet collected, less all liabilities, and
dividing such amount by the total number of Shares outstanding. The
result, rounded to the nearest cent, will be the NAV per Share. All
valuations will be subject to review by the Board of Trustees of the
Trust (``Trust Board'') or its delegate.
    The Fund's investments will be valued daily at market value or, in
the absence of market value with respect to any investment, at fair
value, in each case in accordance with valuation procedures (which may
be revised from time to time) adopted by the Trust Board (the
``Valuation Procedures'') and in accordance with the 1940 Act. A market
valuation generally means a valuation (i) obtained from an exchange, an
independent pricing service (``Pricing Service''), or a major market
maker (or dealer) or (ii) based on a price quotation or other
equivalent indication of value supplied by an exchange, a Pricing
Service, or a major market maker (or dealer). The information
summarized below is based on the Valuation Procedures as currently in
effect; however, as noted above, the Valuation Procedures are amended
from time to time and, therefore, such information is subject to
change.
    Certain securities in which the Fund may invest will not be listed
on any securities exchange or board of trade. Such securities will
typically be bought and sold by institutional investors in individually
negotiated private transactions that function in many respects like an
over-the-counter secondary market, although typically no formal market
makers will exist. Certain securities, particularly debt securities,
will have few or no trades, or trade infrequently, and information
regarding a specific security may not be widely available or may be
incomplete. Accordingly, determinations of the fair value of debt
securities may be based on infrequent and dated information. Because
there is less reliable, objective data available, elements of judgment
may play a greater role in valuation of debt securities than for other
types of securities. Typically, debt securities (other than those
described below) will be valued using information provided by a Pricing
Service. Debt securities having a remaining maturity of 60 days or less
when purchased will be valued at cost adjusted for amortization of
premiums and accretion of discounts. Overnight repurchase agreements
will be valued at cost and term repurchase agreements (i.e., those
whose maturity exceeds seven days) will be valued at the average of the
bid quotations obtained daily from at least two recognized dealers.
    Asset-backed and mortgage-backed securities will generally be
valued by using a Pricing Service. If a Pricing Service does not cover
a particular asset-backed or mortgage-backed security, or discontinues
covering a particular asset-backed or mortgage-backed security, the
security will be priced using broker quotes generally provided by
brokers that make or participate in markets in the security.\28\ To
derive values, Pricing Services and broker-dealers may use matrix
pricing and valuation models, as well as recent market transactions for
the same or similar assets. Occasionally, the Adviser's pricing
committee (the ``Pricing Committee'') may determine that a Pricing
Service price does not represent an accurate value of an asset-backed
or mortgage-backed security, based on the broker quotes it receives, a
recent trade in the security by the Fund, information from a portfolio
manager, or other market information. In the event that the Pricing
Committee determines that the Pricing Service price is unreliable or
inaccurate based on such other information, the broker quotes may be
used. Additionally, if the Pricing Committee determines that the price
of an asset-backed or mortgage-backed security obtained from a Pricing
Service and the available broker quotes are unreliable or inaccurate
due to market conditions or other reasons, or if a Pricing Service
price or broker quote is unavailable, the security will be valued using
fair value pricing, as described below.
---------------------------------------------------------------------------

    \28\ See Amendment No. 1, supra note 3.
---------------------------------------------------------------------------

    Equity securities listed on any exchange other than the Exchange
will be valued at the last sale price on the exchange on which they are
principally traded on the business day as of which such value is being
determined. Equity securities listed on the Exchange will be valued at
the official closing price on the business day as of which such value
is being determined. If there has been no sale on such day, or no
official closing price in the case of securities traded on the
Exchange, the securities will be valued using fair value pricing, as
described below. Equity securities traded on more than one securities
exchange will be valued at the last sale price or official closing
price, as applicable, on the business day as of which such value is
being determined at the close of the exchange representing the
principal market for such securities.
    Certain securities may not be able to be priced by pre-established
pricing methods. Such securities may be valued by the Trust Board or
its delegate at fair value. The use of fair value pricing by the Fund
will be governed by the Valuation Procedures and conducted in
accordance with the provisions of the 1940 Act. Valuing the Fund's
securities using fair value pricing will result in using prices for
those securities that may differ from current market valuations or
official closing prices on the applicable exchange.
Availability of Information
    The Fund's Web site (www.ftportfolios.com), which will be publicly
available prior to the public offering of Shares, will include a form
of the prospectus for the Fund that may be downloaded. The Web site
will include the Shares' ticker, Cusip and exchange information along
with additional quantitative information updated on a daily basis,
including, for the Fund: (1) Daily trading volume, the prior business
day's reported NAV and closing price, mid-point of the bid/ask spread
at the time of calculation of such NAV (the ``Bid/Ask Price''),\29\ and
a calculation of the premium and discount of the Bid/Ask Price against
the NAV; and (2) data in chart format displaying the frequency
distribution of discounts and premiums of the daily Bid/Ask Price
against the NAV, within appropriate ranges, for each of the four
previous calendar quarters. On each business day, before commencement
of trading in Shares in the Regular Market Session \30\ on the
Exchange, the Fund will disclose on its Web site the identities and
quantities of the portfolio

of securities, and other assets (the ``Disclosed Portfolio'' as defined
in Nasdaq Rule 5735(c)(2)) held by the Fund that will form the basis
for the Fund's calculation of NAV at the end of the business day.\31\
The Disclosed Portfolio will include, as applicable, the names,
quantities, percentage weightings and market values of the portfolio
securities, and other assets held by the Fund. The Web site information
will be publicly available at no charge.
---------------------------------------------------------------------------

    \29\ The Bid/Ask Price of the Fund will be determined using the
mid-point of the highest bid and the lowest offer on the Exchange as
of the time of calculation of the Fund's NAV. The records relating
to Bid/Ask Prices will be retained by the Fund and its service
providers.
    \30\ See Nasdaq Rule 4120(b)(4) (describing the three trading
sessions on the Exchange: (1) Pre-Market Session from 4 a.m. to 9:30
a.m., Eastern time; (2) Regular Market Session from 9:30 a.m. to 4
p.m. or 4:15 p.m., Eastern time; and (3) Post-Market Session from 4
p.m. or 4:15 p.m. to 8 p.m., Eastern time).
    \31\ Under accounting procedures to be followed by the Fund,
trades made on the prior business day (``T'') will be booked and
reflected in NAV on the current business day (``T+1''). Accordingly,
the Fund will be able to disclose at the beginning of the business
day the portfolio that will form the basis for the NAV calculation
at the end of the business day.
---------------------------------------------------------------------------

    In addition, for the Fund, an estimated value, defined in Rule
5735(c)(3) as the ``Intraday Indicative Value,'' that reflects an
estimated intraday value of the Fund's Disclosed Portfolio, will be
disseminated. Moreover, the Intraday Indicative Value, available on the
NASDAQ OMX Information LLC proprietary index data service,\32\ will be
based upon the current value for the components of the Disclosed
Portfolio and will be updated and widely disseminated by one or more
major market data vendors and broadly displayed at least every 15
seconds during the Regular Market Session. The Intraday Indicative
Value will be based on quotes and closing prices from the securities'
local market and may not reflect events that occur subsequent to the
local market's close. Premiums and discounts between the Intraday
Indicative Value and the market price may occur. This should not be
viewed as a ``real time'' update of the NAV per Share of the Fund,
which is calculated only once a day.
---------------------------------------------------------------------------

    \32\ Currently, the NASDAQ OMX Global Index Data Service
(``GIDS'') is the NASDAQ OMX global index data feed service,
offering real-time updates, daily summary messages, and access to
widely followed indexes and Intraday Indicative Values for ETFs.
GIDS provides investment professionals with the daily information
needed to track or trade NASDAQ OMX indexes, listed ETFs, or third-
party partner indexes and ETFs.
---------------------------------------------------------------------------

    The dissemination of the Intraday Indicative Value, together with
the Disclosed Portfolio, will allow investors to determine the value of
the underlying portfolio of the Fund on a daily basis and will provide
a close estimate of that value throughout the trading day.
    Investors will also be able to obtain the Fund's Statement of
Additional Information (``SAI''), the Fund's annual and semi-annual
reports (together, ``Shareholder Reports''), and its Form N-CSR and
Form N-SAR, filed twice a year. The Fund's SAI and Shareholder Reports
will be available free upon request from the Fund, and those documents
and the Form N-CSR and Form N-SAR may be viewed on-screen or downloaded
from the Commission's Web site at www.sec.gov. Information regarding
market price and trading volume of the Shares will be continually
available on a real-time basis throughout the day on brokers' computer
screens and other electronic services. 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.
Quotation and last sale information for the Shares will be available
via Nasdaq proprietary quote and trade services, as well as in
accordance with the Unlisted Trading Privileges and the Consolidated
Tape Association (``CTA'') plans for the Shares. Intraday executable
price quotations on Fixed Income Securities and other assets not traded
on an exchange will be available from major broker-dealer firms or
market data vendors, as well as from automated quotation systems,
published or other public sources, or online information services.
Additionally, the Trade Reporting and Compliance Engine (``TRACE'') of
the Financial Industry Regulatory Authority (``FINRA'') will be a
source of price information for certain Fixed Income Securities held by
the Fund, including mortgage-backed securities and asset-backed
securities. For exchange-traded assets, intraday pricing information
will be available directly from the applicable listing exchange.
    [sic] and, for exchange-traded assets, such intraday information
will be available directly from the applicable listing exchange.
Intraday price information will also be available through subscription
services, such as Bloomberg, Markit, and Thomson Reuters, which can be
accessed by Authorized Participants and other investors.
    Additional information regarding the Fund and the Shares, including
investment strategies, risks, creation and redemption procedures, fees,
Fund holdings disclosure policies, distributions and taxes will be
included in the Registration Statement. All terms relating to the Fund
that are referred to, but not defined in, this proposed rule change
will be defined in the Registration Statement.
Initial and Continued Listing
    The Shares will be subject to Rule 5735, which sets forth the
initial and continued listing criteria applicable to Managed Fund
Shares. The Exchange represents that, for initial and/or continued
listing, the Fund must be in compliance with Rule 10A-3 \33\ under the
Act. A minimum of 100,000 Shares will be outstanding at the
commencement of trading on the Exchange. The Exchange will obtain a
representation from the issuer of the Shares that the NAV per Share
will be calculated daily and that the NAV and the Disclosed Portfolio
will be made available to all market participants at the same time.
---------------------------------------------------------------------------

    \33\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Trading Halts
    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 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 may be halted because of market conditions or for reasons that,
in the view of the Exchange, make trading in the Shares inadvisable.
These may include: (1) The extent to which trading is not occurring in
the securities and/or the other assets constituting the Disclosed
Portfolio of the Fund; or (2) whether other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present. Trading in the Shares also will be subject to Rule
5735(d)(2)(D), which sets forth circumstances under which Shares of the
Fund may be halted.
Trading Rules
    Nasdaq deems the Shares to be equity securities, thus rendering
trading in the Shares subject to Nasdaq's existing rules governing the
trading of equity securities. Nasdaq will allow trading in the Shares
from 4:00 a.m. until 8:00 p.m., Eastern time. The Exchange has
appropriate rules to facilitate transactions in the Shares during all
trading sessions. As provided in Nasdaq Rule 5735(b)(3), the minimum
price variation for quoting and entry of orders in Managed Fund Shares
traded on the Exchange is $0.01.
Surveillance
    The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances, administered by both Nasdaq and
also FINRA on behalf of the Exchange, which are designed to detect
violations of Exchange rules and applicable federal

securities laws.\34\ The Exchange represents that 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.
---------------------------------------------------------------------------

    \34\ 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.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
    FINRA, on behalf of the Exchange, will communicate as needed
regarding trading in the Shares and the exchange-traded securities held
by the Fund with other markets and other entities that are members of
the Intermarket Surveillance Group (``ISG'') \35\ and FINRA may obtain
trading information regarding trading in the Shares and the exchange-
traded securities held by the Fund from such markets and other
entities. In addition, the Exchange may obtain information regarding
trading in the Shares and the exchange-traded securities held by the
Fund from markets and other entities that are members of ISG, which
includes securities and futures exchanges, or with which the Exchange
has in place a comprehensive surveillance sharing agreement. Moreover,
FINRA, on behalf of the Exchange, will be able to access, as needed,
trade information for certain Fixed Income Securities held by the Fund
reported to FINRA's TRACE.
---------------------------------------------------------------------------

    \35\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Disclosed Portfolio may trade on markets that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.
---------------------------------------------------------------------------

    All of the Fund's net assets that are invested in exchange-traded
equity securities will be invested in securities that trade in markets
that are members of ISG or are parties to a comprehensive surveillance
sharing agreement with the Exchange.
    In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Information Circular
    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: (1) The procedures for purchases
and redemptions of Shares in Creation Units (and that Shares are not
individually redeemable); (2) Nasdaq Rule 2111A, which imposes
suitability obligations on Nasdaq members with respect to recommending
transactions in the Shares to customers; (3) how information regarding
the Intraday Indicative Value is disseminated; (4) 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; (5) the requirement that members deliver a
prospectus to investors purchasing newly issued Shares prior to or
concurrently with the confirmation of a transaction; and (6) trading
information. The Information Circular will also discuss any exemptive,
no-action and interpretive relief granted by the Commission from any
rules under the Act.
    Additionally, the Information Circular will reference that the Fund
is subject to various fees and expenses described in the Registration
Statement. The Information Circular will also disclose the trading
hours of the Shares of the Fund and the applicable NAV Calculation Time
for the Shares. The Information Circular will disclose that information
about the Shares of the Fund will be publicly available on the Fund's
Web site.
2. Statutory Basis
    Nasdaq believes that the proposal is consistent with Section 6(b)
of the Act in general and Section 6(b)(5) of the Act in particular in
that it is 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, and to remove impediments to and perfect
the mechanism of a free and open market and, in general, to protect
investors and the public interest.
    The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in Nasdaq Rule 5735. The
Exchange represents that trading in the Shares will be subject to the
existing trading surveillances, administered by both Nasdaq and also
FINRA on behalf of the Exchange, which are designed to detect
violations of Exchange rules and applicable federal securities laws.
    The Adviser is not a broker-dealer, although it is affiliated with
the Distributor, a broker-dealer, and is required to implement a ``fire
wall'' with respect to such broker-dealer affiliate regarding access to
information concerning the composition and/or changes to the Fund's
portfolio. In addition, paragraph (g) of Nasdaq Rule 5735 further
requires that personnel who make decisions on the open-end fund's
portfolio composition must be subject to procedures designed to prevent
the use and dissemination of material non-public information regarding
the open-end fund's portfolio.
    FINRA, on behalf of the Exchange, will communicate as needed
regarding trading in the Shares and the exchange-traded securities held
by the Fund with other markets and other entities that are members of
ISG, and FINRA may obtain trading information regarding trading in the
Shares and the exchange-traded securities held by the Fund from such
markets and other entities. In addition, the Exchange may obtain
information regarding trading in the Shares and the exchange-traded
securities held by the Fund from markets and other entities that are
members of ISG, which includes securities and futures exchanges, or
with which the Exchange has in place a comprehensive surveillance
sharing agreement. Moreover, FINRA, on behalf of the Exchange, will be
able to access, as needed, trade information for certain Fixed Income
Securities held by the Fund reported to FINRA's TRACE. All of the
Fund's net assets that are invested in exchange-traded equity
securities will be invested in securities that trade in markets that
are members of ISG or are parties to a comprehensive surveillance
sharing agreement with the Exchange.
    The investment objective of the Fund will be to seek current
income, consistent with preservation of capital and daily liquidity.
Under normal market conditions, the Fund will seek to achieve its
investment objective by investing in a portfolio of U.S. dollar-
denominated Fixed Income Securities. At least 80% of the Fund's net
assets will be invested in Fixed Income Securities that are, at the
time of purchase, investment grade. The Fund intends to limit its
investments in asset-backed securities and non-agency mortgage-backed
securities (in the aggregate) to 20% of its net assets and does not
intend to invest in derivatives. The Fund may hold up to an aggregate
amount of 15% of its net assets in illiquid assets (calculated at the
time of investment), including Rule 144A

securities deemed illiquid by the Adviser. 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 proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation from the issuer of the
Shares that the NAV per Share will be calculated daily and that the NAV
and the Disclosed Portfolio will be made available to all market
participants at the same time. In addition, a large amount of
information will be publicly available regarding the Fund and the
Shares, thereby promoting market transparency. Moreover, the Intraday
Indicative Value, available on the NASDAQ OMX Information LLC
proprietary index data service, will be widely disseminated by one or
more major market data vendors and broadly displayed at least every 15
seconds during the Regular Market Session. 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 that will form the basis for the Fund's calculation of NAV at
the end of the business day. Information regarding market price and
trading volume of the Shares will be continually available on a real-
time basis throughout the day on brokers' computer screens and other
electronic services, and quotation and last sale information for the
Shares will be available via Nasdaq proprietary quote and trade
services, as well as in accordance with the Unlisted Trading Privileges
and the CTA plans for the Shares. Intraday executable price quotations
on Fixed Income Securities and other assets not traded on an exchange
will be available from major broker-dealer firms or market data
vendors, as well as from automated quotation systems, published or
other public sources, or online information services. Additionally,
FINRA's TRACE will be a source of price information for certain Fixed
Income Securities held by the Fund, including mortgage-backed
securities and asset-backed securities. For exchange-traded assets,
intraday pricing information will be available directly from the
applicable listing exchange.
    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. Trading in Shares of the Fund will be halted
under the conditions specified in Nasdaq Rules 4120 and 4121 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 Nasdaq Rule 5735(d)(2)(D), which sets forth circumstances
under which Shares of the Fund may be halted. In addition, as noted
above, investors will have ready access to information regarding the
Fund's holdings, the Intraday Indicative Value, the Disclosed
Portfolio, and quotation and last sale information for the Shares.
    The Fund's investments will be valued daily at market value or, in
the absence of market value with respect to any investment, at fair
value, in each case in accordance with the Valuation Procedures and the
1940 Act.
    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 it will facilitate the listing and trading of
an additional type of actively-managed exchange-traded product that
will enhance competition among market participants, to the benefit of
investors and the marketplace. As noted above, FINRA, on behalf of the
Exchange, will communicate as needed regarding trading in the Shares
and the exchange-traded securities held by the Fund with other markets
and other entities that are members of ISG, and FINRA may obtain
trading information regarding trading in the Shares and the exchange-
traded securities held by the Fund from such markets and other
entities. In addition, the Exchange may obtain information regarding
trading in the Shares and in the exchange-traded securities held by the
Fund from markets and other entities that are members of ISG, which
includes securities and futures exchanges, or with which the Exchange
has in place a comprehensive surveillance sharing agreement.
Furthermore, as noted above, investors will have ready access to
information regarding the Fund's holdings, the Intraday Indicative
Value, the Disclosed Portfolio, and quotation and last sale information
for the Shares. For the above reasons, Nasdaq believes the proposed
rule change is consistent with the requirements of Section 6(b)(5) of
the Act.

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 believes that
the proposed rule change will facilitate the listing and trading of an
additional type of actively-managed exchange-traded fund that 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

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) By order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be 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
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2014-041 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-NASDAQ-2014-041. 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 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-NASDAQ-2014-041, and should be submitted on or before
May 22, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
Kevin M. O'Neill,
Deputy Secretary.
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    \36\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2014-09926 Filed 4-30-14; 8:45 am]
BILLING CODE 8011-01-P