[Federal Register Volume 85, Number 67 (Tuesday, April 7, 2020)]
[Notices]
[Pages 19526-19537]
[FR Doc No: 2020-07226]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88533; File No. SR-NYSEArca-2019-95]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Amendment No. 2 and Order Instituting Proceedings To Determine
Whether To Approve or Disapprove a Proposed Rule Change, as Modified by
Amendment No. 2, To Adopt NYSE Arca Rule 8.601-E To Permit the Listing
and Trading of Active Proxy Portfolio Shares and To List and Trade
Shares of the Natixis ETF Under Proposed NYSE Arca Rule 8.601-E

April 1, 2020.

I. Introduction

    On December 23, 2019, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to (1) adopt proposed NYSE Arca Rule 8.601-E to
permit the Exchange to list and trade Active Proxy Portfolio Shares,\3\
which are shares of actively managed exchange-traded funds for which
the portfolio is disclosed in accordance with standard mutual fund
disclosure rules; and (2) list and trade the following Active Proxy
Portfolio Shares under proposed NYSE Arca Rule 8.601-E: Natixis ETF.
The proposed rule change was published for comment in the Federal
Register on January 3, 2020.\4\ On February 13, 2020, pursuant to
Section 19(b)(2) of the Exchange Act,\5\ the Commission designated a
longer period within which to approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether to disapprove the proposed rule change.\6\ On March
31, 2020, the Exchange filed Amendment No. 2 to the proposed rule
change, which replaced and superseded the proposed rule

change as originally filed.\7\ The Commission has received no comments
on the proposed rule change. The Commission is publishing this notice
and order to solicit comments on the proposed rule change, as modified
by Amendment No. 2, from interested persons and to institute
proceedings pursuant to Section 19(b)(2)(B) of the Act \8\ to determine
whether to approve or disapprove the proposed rule change, as modified
by Amendment No. 2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Exchange originally proposed to adopt NYSE Arca Rule
8.602-E to permit the Exchange to list and trade Actively Managed
Solution Shares. In Amendment No. 2, the Exchange renumbered and
renamed the Exchange rule proposed to be adopted to NYSE Arca Rule
8.601-E (Active Proxy Portfolio Shares). See Amendment No. 2, infra
note 7.
    \4\ See Securities Exchange Act Release No. 87866 (Dec. 30,
2019), 85 FR 357 (``Notice'').
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 88199, 85 FR 9888
(Feb. 20, 2020). The Commission designated April 2, 2020, as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
    \7\ Amendment No. 1 to the proposed rule change was filed on
March 26, 2020 and subsequently withdrawn on March 31, 2020.
Amendment No. 2 is available on the Commission's website at https://www.sec.gov/comments/sr-nysearca-2019-95/srnysearca201995.htm.
    \8\ 15 U.S.C. 78s(b)(2)(B).
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II. The Exchange's Description of the Proposed Rule Change, as Modified
by Amendment No. 2

    The Exchange proposes to adopt new NYSE Arca Rule 8.601-E to permit
it to list and trade Active Proxy Portfolio Shares, which are shares of
actively managed exchange-traded funds for which the portfolio is
disclosed in accordance with standard mutual fund disclosure rules. In
addition, the Exchange proposes to list and trade shares of the
following under proposed NYSE Arca Rule 8.601-E: Natixis ETF. This
Amendment No. 2 to SR-NYSEArca-2019-95 replaces SR-NYSEArca-2019-95 as
originally filed and supersedes such filing in its entirety. The
Exchange has withdrawn Amendment No. 1 to SR-NYSEArca-2019-95.
    The proposed change is available on the Exchange's website at
www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.

III. 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 Exchange proposes to add new NYSE Arca Rule 8.601-E for the
purpose of permitting the listing and trading, or trading pursuant to
unlisted trading privileges (``UTP''), of Active Proxy Portfolio
Shares, which are securities issued by an actively managed open-end
investment management company. The Exchange also proposes to list and
trade shares (``Shares'') of the following under proposed NYSE Arca
Rule 8.601-E: Natixis ETF (the ``Fund'').
Proposed Listing Rules
    Proposed Rule 8.601-E (a) provides that the Exchange will consider
for trading, whether by listing or pursuant to UTP, Active Proxy
Portfolio Shares that meet the criteria of Rule 8.601-E.
    Proposed Rule 8.601-E (b) provides that Rule 8.601-E is applicable
only to Active Proxy Portfolio Shares and that, except to the extent
inconsistent with Rule 8.601-E, or unless the context otherwise
requires, the rules and procedures of the Exchange's Board of Directors
shall be applicable to the trading on the Exchange of such securities.
Proposed Rule 8.601-E (b) provides further that Active Proxy Portfolio
Shares are included within the definition of ``security'' or
``securities'' as such terms are used in the Rules of the Exchange.
    Proposed Rule 8.601-E(c)(1) defines the term ``Active Proxy
Portfolio Share'' as a security that (a) is issued by a registered
investment company (``Investment Company'') organized as an open-end
management investment company that invests in a portfolio of securities
selected by the Investment Company's investment adviser consistent with
the Investment Company's investment objectives and policies; (b) is
issued in a Creation Unit, or multiples thereof, in return for a
deposit by the purchaser of the Proxy Portfolio and/or cash with a
value equal to the next determined net asset value (``NAV''); (c) when
aggregated in the same specified minimum number of Active Proxy
Portfolio Shares, or multiples thereof, may be redeemed at a holder's
request in return for a transfer of the Proxy Portfolio and/or cash to
the holder by the issuer with a value equal to the next determined NAV;
and (d) the portfolio holdings for which are disclosed within at least
60 days following the end of every fiscal quarter.
    Proposed Rule 8.601-E(c)(2) defines the term ``Actual Portfolio''
as the identities and quantities of the securities and other assets
held by the Investment Company that shall form the basis for the
Investment Company's calculation of NAV at the end of the business day.
    Proposed Rule 8.601-E(c)(3) defines the term ``Proxy Portfolio'' as
a specified portfolio of securities, other financial instruments and/or
cash designed to track closely the daily performance of the Actual
Portfolio of a series of Active Proxy Portfolio Shares as provided in
the exemptive relief pursuant to the Investment Company Act of 1940
applicable to such series. The website for each series of Active Proxy
Portfolio Shares shall disclose the information regarding the Proxy
Portfolio as provided in the exemptive relief pursuant to the
Investment Company Act of 1940 applicable to such series, including the
following, to the extent applicable:
    (i) Ticker symbol;
    (ii) CUSIP or other identifier;
    (iii) Description of holding;
    (iv) Quantity of each security or other asset held; and
    (v) Percentage weighting of the holding in the portfolio.\9\
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    \9\ The information required in proposed Rule 8.601-E(c)(3) for
the Proxy Portfolio is the same as that required in SEC Rule 6c-
11(c)(1)(i)(A) through (E) under the 1940 Act for exchange-traded
funds operating in compliance with Rule 6c-11. See Release Nos. 33-
10695; IC-33646; File No. S7-15-18 (Exchange-Traded Funds)
(September 25, 2019), 84 FR 57162 (October 24, 2019) (the ``Rule 6c-
11 Release''). The Exchange believes it is appropriate to require
such information, rather than all information required under Rule
8.600-E(c)(2), in order to provide consistency in website
dissemination among various ETF issuers. In adopting this
requirement for funds operating in compliance with Rule 6c-11, the
Commission stated that ``a more streamlined requirement will provide
standardized portfolio holdings disclosure in a more efficient, less
costly, and less burdensome format, while still providing market
participants with relevant information. Accordingly, rule 6c-11 will
require an ETF to post a subset of the information required by the
listing exchanges' current generic listing standards for actively
managed ETFs.'' The Commission stated further that ``this framework
will provide market participants with the information necessary to
support an effective arbitrage mechanism and eliminate potential
investor confusion due to a lack of standardization.'' See Rule 6c-
11 Release, notes 249-260 and accompanying text.
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    Proposed Rule 8.601-E(c)(4) defines the term ``Creation Unit'' as a
specified minimum number of Active Proxy Portfolio Shares issued by an
Investment Company in return for a deposit by the purchaser of the
Proxy Portfolio and/or cash.
    Proposed Rule 8.601-E(c)(5) defines the term ``Reporting
Authority'' in respect of a particular series of Active Proxy Portfolio
Shares means the Exchange, an institution, or a reporting service
designated by the Exchange or

by the exchange that lists a particular series of Active Proxy
Portfolio Shares (if the Exchange is trading such series pursuant to
unlisted trading privileges) as the official source for calculating and
reporting information relating to such series, including, but not
limited to, NAV; the Actual Portfolio, Proxy Portfolio, or other
information relating to the issuance, redemption or trading of Active
Proxy Portfolio Shares. A series of Active Proxy Portfolio Shares may
have more than one Reporting Authority, each having different
functions.
    Proposed Rule 8.601-E(c)(6) defines the term ``normal market
conditions'' as including, but not limited to, the absence of trading
halts in the applicable financial markets generally; operational issues
(e.g., systems failure) causing dissemination of inaccurate market
information; or force majeure type events such as natural or manmade
disaster, act of God, armed conflict, act of terrorism, riot or labor
disruption or any similar intervening circumstance.
    Proposed Rule 8.601-E (d) sets forth initial and continued listing
criteria applicable to Active Proxy Portfolio Shares. Proposed Rule
8.601-E(d)(1) provides that each series of Active Proxy Portfolio
Shares shall be listed and traded on the Exchange subject to
application of the following criteria:
    (A) For each series, the Exchange shall establish a minimum number
of Active Proxy Portfolio Shares required to be outstanding at the time
of commencement of trading on the Exchange.
    (B) The Exchange shall obtain a representation from the issuer of
each series of Active Proxy Portfolio Shares that the NAV per share for
the series shall be calculated daily and that the NAV, the Proxy
Portfolio, and the Actual Portfolio shall be made publicly available to
all market participants at the same time.
    (C) All Active Proxy Portfolio Shares shall have a stated
investment objective, which shall be adhered to under normal market
conditions.
    Proposed Rule 8.601-E(d)(2) provides that each series of Active
Proxy Portfolio Shares shall be listed and traded subject to
application of the following continued listing criteria: The Actual
Portfolio shall be disseminated at least 60 days following the end of
every fiscal quarter and shall be made publicly available to all market
participants at the same time (proposed Rule 8.601-E(d)(2)(A)(i)), and
the Proxy Portfolio will be made publicly available on the website for
each series of Active Proxy Portfolio Shares at least once daily and
will be made available to all market participants at the same time
(proposed Rule 8.601-E(d)(2)(B)(i)).
    Proposed Rule 8.601-E(d)(2)(C) provides that the Exchange will
consider the suspension of trading in, and will commence delisting
proceedings under Rule 5.5-E(m) for, a series of Active Proxy Portfolio
Shares under any of the following circumstances:
    (i) If any of the continued listing requirements set forth in Rule
8.601-E are not continuously maintained;
    (ii) if, following the initial twelve month period after
commencement of trading on the Exchange of a series of Active Proxy
Portfolio Shares, there are fewer than 50 beneficial holders of such
series of Active Proxy Portfolio Shares;
    (iii) if the Exchange is notified, or otherwise becomes aware, that
the Investment Company is not in compliance with the conditions of any
currently applicable exemptive order or no-action relief granted by the
Commission or Commission staff to the Investment Company with respect
to a series of Active Proxy Portfolio Shares;
    (iv) if any of the statements or representations regarding (a) the
description of the portfolio, (b) limitations on portfolio holdings, or
(c) the applicability of Exchange listing rules, specified in the
Exchange's rule filing pursuant to Section 19(b) of the Act to permit
the listing and trading of a series of Active Proxy Portfolio Shares,
is not continuously maintained; or
    (v) if such other event shall occur or condition exists which, in
the opinion of the Exchange, makes further dealings on the Exchange
inadvisable.
    Proposed Rule 8.601-E(d)(2)(D) (Trading Halt) provides that (i) The
Exchange may consider all relevant factors in exercising its discretion
to halt trading in a series of Active Proxy Portfolio Shares. Trading
may be halted because of market conditions or for reasons that, in the
view of the Exchange, make trading in the series of Active Proxy
Portfolio Shares inadvisable. These may include: (a) The extent to
which trading is not occurring in the securities and/or the financial
instruments composing the portfolio; or (b) whether other unusual
conditions or circumstances detrimental to the maintenance of a fair
and orderly market are present; (ii) If a series of Active Proxy
Portfolio Shares is trading on the Exchange pursuant to unlisted
trading privileges, the Exchange shall halt trading in that series as
specified in Rule 7.18-E(d)(1); and (iii) Upon notification to the
Exchange by the issuer of a series of Active Proxy Portfolio Shares,
that the NAV, Proxy Portfolio or Actual Portfolio with respect to a
series of Active Proxy Portfolio Shares is not disseminated to all
market participants at the same time, the Exchange shall halt trading
in such series until such time as the NAV, Proxy Portfolio or Actual
Portfolio is available to all market participants at the same time.
    Proposed Rule 8.601-E(d)(2)(E) provides that, upon termination of
an Investment Company, the Exchange requires that Active Proxy
Portfolio Shares issued in connection with such entity be removed from
Exchange listing.
    Proposed Rule 8.601-E(d)(2)(F) provides that voting rights shall be
as set forth in the applicable Investment Company prospectus.
    Proposed Rule 8.601-E(e) (Limitation of Exchange Liability)
provides that neither the Exchange, the Reporting Authority, when the
Exchange is acting in the capacity of a Reporting Authority, nor any
agent of the Exchange shall have any liability for damages, claims,
losses or expenses caused by any errors, omissions, or delays in
calculating or disseminating any current portfolio value; the current
value of the portfolio of securities required to be deposited to the
Investment Company in connection with issuance of Active Proxy
Portfolio Shares; the amount of any dividend equivalent payment or cash
distribution to holders of Active Proxy Portfolio Shares; NAV; or other
information relating to the purchase, redemption, or trading of Active
Proxy Portfolio Shares, resulting from any negligent act or omission by
the Exchange, the Reporting Authority, when the Exchange is acting in
the capacity of a Reporting Authority, or any agent of the Exchange, or
any act, condition, or cause beyond the reasonable control of the
Exchange, when the Exchange is acting in the capacity of a Reporting
Authority, its agent, or the Reporting Authority, including, but not
limited to, an act of God; fire; flood; extraordinary weather
conditions; war; insurrection; riot; strike; accident; action of
government; communications or power failure; equipment or software
malfunction; or any error, omission, or delay in the reports of
transactions in one or more underlying securities.
    Proposed Commentary .01 to Rule 8.601-E provides that the Exchange
will file separate proposals under Section 19(b) of the Act before the
listing and trading of a series of Active Proxy Portfolio Shares. All
statements or representations contained in such rule filing regarding
(a) the description of the portfolio, (b) limitations on portfolio
holdings, or (c) the applicability of

Exchange listing rules specified in such rule filing will constitute
continued listing requirements. An issuer of such securities must
notify the Exchange of any failure to comply with such continued
listing requirements.
    Proposed Commentary .02 provides that transactions in Active Proxy
Portfolio Shares shall occur during the trading hours specified in NYSE
Arca Rule 7.34-E(a).
    Proposed Commentary .03 provides that the Exchange will implement
and maintain written surveillance procedures for Active Proxy Portfolio
Shares. As part of these surveillance procedures, the Investment
Company's investment adviser will upon request by the Exchange or
FINRA, on behalf of the Exchange, make available to the Exchange or
FINRA the daily portfolio holdings of each series of Active Proxy
Portfolio Shares.
    Proposed Commentary.04 provides that, if the investment adviser to
the Investment Company issuing Active Proxy Portfolio Shares is
registered as a broker-dealer or is affiliated with a broker-dealer,
such investment adviser will erect and maintain a ``fire wall'' between
the investment adviser and personnel of the broker-dealer or broker-
dealer affiliate, as applicable, with respect to access to information
concerning the composition and/or changes to such Investment Company's
Actual Portfolio and/or Proxy Portfolio. Any person related to the
investment adviser or Investment Company who makes decisions pertaining
to the Investment Company's portfolio composition or has access to non-
public information regarding the Investment Company's Actual Portfolio
or changes thereto or the Proxy Portfolio must be subject to procedures
reasonably designed to prevent the use and dissemination of material
non-public information regarding the Actual Portfolio or changes
thereto or the Proxy Portfolio.\10\
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    \10\ The Exchange will propose applicable NYSE Arca listing fees
for Active Proxy Portfolio Shares in the NYSE Arca Equities Schedule
of Fees and Charges via a separate proposed rule change.
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    The Exchange also proposes non-substantive amendments to include
Active Proxy Portfolio Shares in other Exchange rules. Specifically,
the Exchange proposes to amend Rule 5.3-E, concerning Corporate
Governance and Disclosure Policies, and Rule 5.3-E(e), concerning
Shareholder/Annual Meetings, to add Active Proxy Portfolio Shares to
the enumerated derivative and special purpose securities that are
subject to the respective Rules. Thus, Active Proxy Portfolio Shares
would be subject to corporate governance, disclosure and shareholder/
annual meeting requirements that are consistent with other derivative
and special purpose securities enumerated in those Rules.
Key Features of Active Proxy Portfolio Shares
    While funds issuing Active Proxy Portfolio Shares will be actively-
managed and, to that extent, will be similar to Managed Fund Shares,
Active Proxy Portfolio Shares differ from Managed Fund Shares in the
following important respects. First, in contrast to Managed Fund
Shares, which are actively-managed funds listed and traded under NYSE
Arca Rule 8.600-E \11\ and for which a ``Disclosed Portfolio'' is
required to be disseminated at least once daily,\12\ the portfolio for
an issue of Active Proxy Portfolio Shares will be publicly disclosed
within at least 60 days following the end of every fiscal quarter in
accordance with normal disclosure requirements otherwise applicable to
open-end management investment companies registered under the 1940
Act.\13\ The composition of the portfolio of an issue of Active Proxy
Portfolio Shares would not be available at commencement of Exchange
listing and trading. Second, in connection with the creation and
redemption of Active Proxy Portfolio Shares, such creation or
redemption may be exchanged for a Proxy Portfolio with a value equal to
the next-determined NAV. A series of Active Proxy Portfolio Shares will
disclose the Proxy Portfolio on a daily basis, which, as described
above, is designed to track closely the daily performance of the Actual
Portfolio of a series of Active Proxy Portfolio Shares, instead of the
actual holdings of the Investment Company, as provided by a series of
Managed Fund Shares.
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    \11\ The Commission has previously approved listing and trading
on the Exchange of a number of issues of Managed Fund Shares under
NYSE Arca Rule 8.600-E. See, e.g., Securities Exchange Act Release
Nos. 57801 (May 8, 2008), 73 FR 27878 (May 14, 2008) (SR-NYSEArca-
2008-31) (order approving Exchange listing and trading of twelve
actively-managed funds of the WisdomTree Trust); 60460 (August 7,
2009), 74 FR 41468 (August 17, 2009) (SR-NYSEArca-2009-55) (order
approving listing of Dent Tactical ETF); 63076 (October 12, 2010),
75 FR 63874 (October 18, 2010) (SR-NYSEArca-2010-79) (order
approving Exchange listing and trading of Cambria Global Tactical
ETF); 63802 (January 31, 2011), 76 FR 6503 (February 4, 2011) (SR-
NYSEArca-2010-118) (order approving Exchange listing and trading of
the SiM Dynamic Allocation Diversified Income ETF and SiM Dynamic
Allocation Growth Income ETF). The Commission also has approved a
proposed rule change relating to generic listing standards for
Managed Fund Shares. Securities Exchange Act Release No. 78397 (July
22, 2016), 81 FR 49320 (July 27, 2016 (SR-NYSEArca-2015-110)
(amending NYSE Arca Equities Rule 8.600 to adopt generic listing
standards for Managed Fund Shares).
    \12\ NYSE Arca Rule 8.600-E(c)(2) defines the term ``Disclosed
Portfolio'' as the identities and quantities of the securities and
other assets held by the Investment Company that will form the basis
for the Investment Company's calculation of net asset value at the
end of the business day. NYSE Arca Rule 8.600-E(d)(2)(B)(i) requires
that the Disclosed Portfolio will be disseminated at least once
daily and will be made available to all market participants at the
same time.
    \13\ A mutual fund is required to file with the Commission its
complete portfolio schedules for the second and fourth fiscal
quarters on Form N-CSR under the 1940 Act. Information reported on
Form N-PORT for the third month of a Fund's fiscal quarter will be
made publicly available 60 days after the end of a Fund's fiscal
quarter. Form N-PORT requires reporting of a fund's complete
portfolio holdings on a position-by-position basis on a quarterly
basis within 60 days after fiscal quarter end. Investors can obtain
a fund's Statement of Additional Information, its Shareholder
Reports, its Form N-CSR, filed twice a year, and its Form N-CEN,
filed annually. A fund's statement of additional information
(``SAI'') and Shareholder Reports are available free upon request
from the Investment Company, and those documents and the Form N-
PORT, Form N-CSR, and Form N-CEN may be viewed on-screen or
downloaded from the Commission's website at www.sec.gov.
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    The Exchange, after consulting with various Lead Market Makers that
trade exchange-traded funds (``ETFs'') on the Exchange, believes that
market makers will be able to make efficient and liquid markets priced
near the NAV in light of the daily Proxy Portfolio dissemination Market
makers employ market making techniques such as ``statistical
arbitrage,'' including correlation hedging, beta hedging, and
dispersion trading, which is currently used throughout the financial
services industry, to make efficient markets in exchange-traded
products.\14\ These techniques should permit market makers to make
efficient markets in an issue of Active Proxy Portfolio Shares

without precise knowledge of a fund's underlying portfolio.
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    \14\ Statistical arbitrage enables a trader to construct an
accurate proxy for another instrument, allowing it to hedge the
other instrument or buy or sell the instrument when it is cheap or
expensive in relation to the proxy. Statistical analysis permits
traders to discover correlations based purely on trading data
without regard to other fundamental drivers. These correlations are
a function of differentials, over time, between one instrument or
group of instruments and one or more other instruments. Once the
nature of these price deviations have been quantified, a universe of
securities is searched in an effort to, in the case of a hedging
strategy, minimize the differential. Once a suitable hedging proxy
has been identified, a trader can minimize portfolio risk by
executing the hedging basket. The trader then can monitor the
performance of this hedge throughout the trade period making
correction where warranted. In the case of correlation hedging, the
analysis seeks to find a proxy that matches the pricing behavior of
a fund. In the case of beta hedging, the analysis seeks to determine
the relationship between the price movement over time of a fund and
that of another stock. Dispersion trading is a hedged strategy
designed to take advantage of relative value differences in implied
volatilities between an index and the component stocks of that
index.
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    The Exchange understands that traders use statistical analysis to
derive correlations between different sets of instruments to identify
opportunities to buy or sell one set of instruments when it is
mispriced relative to the others. For Active Proxy Portfolio Shares,
market makers may use the knowledge of a fund's means of achieving its
investment objective, as described in the applicable fund registration
statement, together with the Proxy Portfolio to manage a market maker's
quoting risk in connection with trading shares of a fund. Market makers
can then conduct statistical arbitrage between Proxy Portfolio and
shares of a fund, buying and selling one against the other over the
course of the trading day. They will evaluate how the Proxy Portfolio
performed in comparison to the price of a fund's shares, and use that
analysis as well as knowledge of risk metrics, such as volatility and
turnover, to provide a more efficient hedge.
    Market makers have indicated to the Exchange that there will be
sufficient data to run a statistical analysis which will lead to
spreads being tightened substantially around NAV of a fund's shares.
This is similar to certain other existing exchange traded products (for
example, ETFs that invest in foreign securities that do not trade
during U. S. trading hours), in which spreads may be generally wider in
the early days of trading and then narrow as market makers gain more
confidence in their real-time hedges.
Description of the Fund and the Trust
    The Fund will be a series of Natixis ETF Trust II (``Trust''),
which will be registered with the Commission as an open-end management
investment company.\15\
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    \15\ The Trust is registered under the 1940 Act. On December 12,
2019, the Trust filed a registration statement on Form N-1A under
the Securities Act of 1933 (the ``1933 Act'') (15 U.S.C. 77a), and
under the 1940 Act relating to the Fund (File Nos. 333-235466 and
811-23500) (the ``Registration Statement''). The Trust and NYSE
Group, Inc. filed a Seventh Amended and Restated Application for an
Order under Section 6(c) of the 1940 Act for exemptions from various
provisions of the 1940 Act and rules thereunder (File No. 812-
14870), dated October 21, 2019 (``Application''). On November 14,
2019, the Commission issued a notice regarding the Application.
Investment Company Release No. 33684 (File No. 812-14870). On
December 10, 2019, the Commission issued an order (``Exemptive
Order'') under the 1940 Act granting the exemptions requested in the
Application (Investment Company Act Release No. 33711 (December 10,
2019)). Investments made by the Fund will comply with the conditions
set forth in the Application and the Exemptive Order. The
description of the operation of the Trust and the Fund herein is
based, in part, on the Registration Statement and the Application.
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    Natixis Advisors, L.P. (``Adviser'') will be the investment adviser
to the Fund. ALPS Distributors, Inc. will act as the distributor and
principal underwriter (``Distributor'') for the Fund.
    As noted above, proposed Commentary.04 provides that, if the
investment adviser to the Investment Company issuing Active Proxy
Portfolio Shares is affiliated with a broker-dealer, such investment
adviser will erect and maintain a ``fire wall'' between the investment
adviser and personnel of the broker-dealer or broker-dealer affiliate,
as applicable, with respect to access to information concerning the
composition and/or changes to such Investment Company portfolio. Any
person related to the investment adviser or Investment Company who
makes decisions pertaining to the Investment Company's portfolio
composition or has access to information regarding the Investment
Company's Actual Portfolio or changes thereto must be subject to
procedures designed to prevent the use and dissemination of material
non-public information regarding the Actual Portfolio Proposed
Commentary .04 is similar to Commentary .03(a)(i) and (iii) to NYSE
Arca Rule 5.2-E(j)(3); however, Commentary .04, 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.\16\ Proposed Commentary .04 is also similar to Commentary .06 to
Rule 8.600-E related to Managed Fund Shares, except that proposed
Commentary .04 relates to establishment and maintenance of a ``fire
wall'' between the investment adviser and the broker-dealer applicable
to an Investment Company's Actual Portfolio and/or Proxy Portfolio, and
not just to the underlying portfolio, as is the case with Managed Fund
Shares. The Adviser is not registered as a broker-dealer but is
affiliated with a broker-dealer. The Adviser has implemented and will
maintain a ``fire wall'' with respect to such broker-dealer affiliate
regarding access to information concerning the composition of and/or
changes to the Fund's portfolio.
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    \16\ 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 will be
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
violations, 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.
---------------------------------------------------------------------------

    In the event (a) the Adviser or any sub-adviser becomes registered
as a broker-dealer 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 and maintain
a fire wall with respect to its relevant personnel or its broker-dealer
affiliate 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.
Natixis ETF
    According to the Application, the Adviser believes the Fund would
allow for efficient trading of Shares through an effective Fund
portfolio transparency substitute and publication of related
information metrics, while still shielding the identity of the full
Fund portfolio contents to protect the Fund's performance-seeking
strategies. Even though the Fund would not publish its full portfolio
contents daily, the Adviser believes that the NYSE Proxy Portfolio
Methodology would allow market participants to assess the intraday
value and associated risk of the Fund's Actual Portfolio. As a result,
the Adviser believes that investors would be able to purchase and sell
Shares in the secondary market at prices that are close to their NAV.
    In this regard, the Fund will utilize a proxy portfolio
methodology-- the ``NYSE Proxy Portfolio Methodology''-- that would
allow market participants to assess the intraday value and associated
risk of the Fund's Actual Portfolio and thereby facilitate the purchase
and sale of Shares by investors in the secondary market at prices that
do not vary materially from their NAV.\17\ The NYSE

Proxy Portfolio Methodology would utilize creation of a Proxy Portfolio
for hedging and arbitrage purposes.\18\
---------------------------------------------------------------------------

    \17\ The NYSE Proxy Portfolio Methodology is owned by the NYSE
Group, Inc. and licensed for use by the Fund. NYSE Group, Inc. is
not affiliated with the Fund, Adviser or Distributor. Not all series
of Active Proxy Portfolio Shares will utilize the NYSE Proxy
Portfolio Methodology.
    \18\ With respect to the Fund, the Fund will have in place
policies and procedures regarding the construction and composition
of its Proxy Portfolio. Such policies and procedures will be covered
by the Fund's compliance program and other requirements under Rule
38a-1 under the 1940 Act.
---------------------------------------------------------------------------

    The Fund's holdings will conform to the permissible investments as
set forth in the Application and Exemptive Order and the holdings will
be consistent with all requirements in the Application and Exemptive
Order.\19\
---------------------------------------------------------------------------

    \19\ Pursuant to the Application and Exemptive Order, the
permissible investments include only the following instruments:
Exchange traded funds (``ETFs'') traded on a U.S. exchange;
exchange-traded notes (``ETNs'') traded on a U.S. exchange; U.S.
exchange-traded common stocks; common stocks listed on a foreign
exchange that trade on such exchange contemporaneously with the
Shares (``foreign common stocks'') in the Exchange's Core Trading
Session (normally 9:30 a.m. and 4:00 p.m. Eastern time (``E.T.''));
U.S. exchange-traded preferred stocks; U.S. exchange-traded American
Depositary Receipts (``ADRs''); U.S. exchange-traded real estate
investment trusts; U.S. exchange-traded commodity pools; U.S.
exchange-traded metals trusts; U.S. exchange-traded currency trusts;
and U.S. exchange-traded futures that trade contemporaneously with
Fund Shares. In addition, the Fund may hold cash and cash
equivalents (short-term U.S. Treasury securities, government money
market funds, and repurchase agreements).
---------------------------------------------------------------------------

    According to the Registration Statement, the Fund will invest only
in together, the ``Permissible Investments'').\20\ The Fund will not
hold short positions or invest in derivatives other than U.S. exchange-
traded futures. The Fund will not borrow for investment purposes.
---------------------------------------------------------------------------

    \20\ For purposes of this filing, cash equivalents are short-
term U.S. Treasury securities, government money market funds, and
repurchase agreements.
---------------------------------------------------------------------------

    Under normal market conditions,\21\ the Fund will primarily invest
in U.S. exchange-traded common stocks of U.S. companies. The Fund
generally will invest in securities of larger capitalization companies
in any industry.
---------------------------------------------------------------------------

    \21\ The term ``normal market conditions'' is defined in
proposed Rule 8.6018.601-E(c)(6).
---------------------------------------------------------------------------

Creations and Redemptions of Shares
    According to the Application, the ``Creation Basket'' (as defined
below) for the Fund's Shares will be based on the Fund's Proxy
Portfolio, which is designed to approximate the value and performance
of the Actual Portfolio. All Creation Basket instruments will be valued
in the same manner as they are valued for purposes of calculating the
Fund's NAV, and such valuation will be made in the same manner
regardless of the identity of the purchaser or redeemer. Further, the
total consideration paid for the purchase or redemption of a Creation
Unit of Shares will be based on the NAV of the Fund, as calculated in
accordance with the policies and procedures set forth in the
Registration Statement.
    According to the Application, the Trust will offer, issue and sell
Shares of the Fund to investors only in Creation Units through the
Distributor on a continuous basis at the NAV per Share next determined
after an order in proper form is received. The NAV of the Fund is
expected to be determined as of 4:00 p.m. E.T. on each Business Day.
The Trust will sell and redeem Creation Units of the Fund only on a
Business Day. Creation Units of the Fund may be purchased and/or
redeemed entirely for cash, as permissible under the procedures
described below.
    Shares will be purchased and redeemed in Creation Units and
generally on an in-kind basis. Accordingly, except where the purchase
or redemption will include cash under the circumstances specified
below, purchasers will be required to purchase Creation Units by making
an in-kind deposit of specified instruments (``Deposit Instruments''),
and shareholders redeeming their Shares will receive an in-kind
transfer of specified instruments (``Redemption Instruments''). The
names and quantities of the instruments that constitute the Deposit
Instruments and the Redemption Instruments for the Fund (collectively,
the ``Creation Basket'') will be the same as the Fund's Proxy
Portfolio, except to the extent purchases and redemptions are made
entirely or in part on a cash basis.
    If there is a difference between the NAV attributable to a Creation
Unit and the aggregate market value of the Creation Basket exchanged
for the Creation Unit, the party conveying instruments with the lower
value will also pay to the other an amount in cash equal to that
difference (the ``Cash Amount'').
    While the Fund normally will issue and redeem Shares in kind, the
Fund may require purchases and redemptions to be made entirely or in
part on a cash basis. In such an instance, the Fund will announce,
before the open of trading in the Core Trading Session (normally, 9:30
a.m. to 4:00 p.m. E.T.) on a given Business Day, that all purchases,
all redemptions, or all purchases and redemptions on that day will be
made wholly or partly in cash. The Fund may also determine, upon
receiving a purchase or redemption order from an Authorized
Participant, to have the purchase or redemption, as applicable, be made
entirely or in part in cash. Each Business Day, before the open of
trading on the Exchange, the Fund will cause to be published through
the National Securities Clearing Corporation (``NSCC'') the names and
quantities of the instruments comprising the Creation Basket, as well
as the estimated Cash Amount (if any), for that day. The published
Creation Basket will apply until a new Creation Basket is announced on
the following Business Day, and there will be no intra-day changes to
the Creation Basket except to correct errors in the published Creation
Basket.
    All orders to purchase Creation Units must be placed with the
Distributor by or through an Authorized Participant, which is either:
(1) A ``participating party'' (i.e., a broker or other participant), in
the Continuous Net Settlement (``CNS'') System of the NSCC, a clearing
agency registered with the Commission and affiliated with the
Depository Trust Company (``DTC''), or (2) a DTC Participant, which in
any case has executed a participant agreement with the Distributor and
the transfer agent.
Timing and Transmission of Purchase Orders
    All orders to purchase (or redeem) Creation Units, whether using
the NSCC Process or the DTC Process, must be received by the
Distributor no later than the NAV calculation time (``NAV Calculation
Time''), generally 4:00 p.m. E.T. on the date the order is placed
(``Transmittal Date'') in order for the purchaser (or redeemer) to
receive the NAV determined on the Transmittal Date. In the case of
custom orders, the order must be received by the Distributor
sufficiently in advance of the NAV Calculation Time in order to help
ensure that the Fund has an opportunity to purchase the missing
securities with the cash in lieu amounts or to sell securities to
generate the cash in lieu amounts prior to the NAV Calculation Time. On
days when the Exchange closes earlier than normal, the Fund may require
custom orders to be placed earlier in the day.
Availability of Information for the Fund's Shares
    The Fund's website (www.im.natixis.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 Fund's
website will include on a daily basis, per Share for the Fund, (1)
daily trading volume, the prior Business Day's NAV and the ``Closing
Price'' or ``Bid/Ask Price,'' \22\

and a calculation of the premium/discount of the Closing Price or Bid/
Ask Price against such NAV \23\, 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. The website and
information will be publicly available at no charge.
---------------------------------------------------------------------------

    \22\ The records relating to Bid/Ask Prices will be retained by
the Fund or its service providers. The ``Bid/Ask Price'' is the
midpoint of the highest bid and lowest offer based upon the National
Best Bid and Offer as of the time of calculation of the Fund's NAV.
The ``National Best Bid and Offer'' is the current national best bid
and national best offer as disseminated by the Consolidated
Quotation System or UTP Plan Securities Information Processor. The
``Closing Price'' of Shares is the official closing price of the
Shares on the Exchange.
    \23\ The ``premium/discount'' refers to the premium or discount
to NAV at the end of a trading day and will be calculated based on
the last Bid/Ask Price or the Closing Price on a given trading day.
---------------------------------------------------------------------------

    The Proxy Portfolio holdings (including the identity and quantity
of investments in the Proxy Portfolio) will be publicly available on
the Fund's website before the commencement of trading in Shares on each
Business Day.
    Typical mutual fund-style annual, semi-annual and quarterly
disclosures contained in the Fund's Commission filings will be provided
on the Fund's website on a current basis.\24\ Thus, the Fund will
publish the portfolio contents of its Actual Portfolio on a periodic
basis, and no less than 60 days after the end of every fiscal quarter.
---------------------------------------------------------------------------

    \24\ See note 13, supra.
---------------------------------------------------------------------------

    Investors can also obtain the Fund's SAI, Shareholder Reports, Form
N-CSR, N-PORT and Form N-CEN. The prospectus, SAI and Shareholder
Reports are available free upon request from the Trust, and those
documents and the Form N-CSR, N-PORT, and Form N-CEN may be viewed on-
screen or downloaded from the Commission's website.
    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, equity securities and ETFs will be available via the
Consolidated Tape Association (``CTA'') high-speed line.
Investment Restrictions
    The Shares of the Fund will conform to the initial and continued
listing criteria under proposed Rule 8.601-E. The Fund's holdings will
be limited to and consistent with permissible holdings as described in
the Exemptive Application.
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.\25\ Trading in Shares of the Fund
will be halted if the circuit breaker parameters in NYSE Arca Rule
7.12-E have been reached. Trading also may be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. Trading in the Shares will be
subject to NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth
circumstances under which Shares of the Fund will be halted.
---------------------------------------------------------------------------

    \25\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------

    Specifically, proposed Rule 8.601-E(d)(2)(D) provides that the
Exchange may consider all relevant factors in exercising its discretion
to halt trading in a series of Active Proxy Portfolio Shares. Trading
may be halted because of market conditions or for reasons that, in the
view of the Exchange, make trading in the series of Active Proxy
Portfolio Shares inadvisable. These may include: (a) The extent to
which trading is not occurring in the securities and/or the financial
instruments composing the portfolio; or (b) whether other unusual
conditions or circumstances detrimental to the maintenance of a fair
and orderly market are present. In addition, upon notification to the
Exchange by the issuer of a series of Active Proxy Portfolio Shares,
that the NAV, Proxy Portfolio or Actual Portfolio with respect to a
series of Active Proxy Portfolio Shares is not disseminated to all
market participants at the same time, the Exchange shall halt trading
in such series until such time as the NAV, Proxy Portfolio or Actual
Portfolio is available to all market participants at the same time. The
issuer has represented to the Exchange that it will provide the
Exchange with prompt notification upon the existence of any such
condition or set of conditions.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace in all trading sessions in accordance with
NYSE Arca Rule 7.34-E(a). As provided in NYSE Arca Rule 7.6-E, the
minimum price variation (``MPV'') for quoting and entry of orders in
equity securities traded on the NYSE Arca Marketplace is $0.01, with
the exception of securities that are priced less than $1.00 for which
the MPV for order entry is $0.0001.
    The Shares will conform to the initial and continued listing
criteria under NYSE Arca Rule 8.601-E. The Exchange deems the Shares to
be equity securities, thus rendering trading in the Shares subject to
the Exchange's existing rules governing the trading of equity
securities. The Exchange has appropriate rules to facilitate trading in
the Shares during all trading sessions.
Surveillance
    The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances, administered by the Exchange, as
well as cross-market surveillances administered by the Financial
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange,
which are designed to detect violations of Exchange rules and
applicable federal securities laws.\26\ 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 federal securities laws applicable to trading on
the Exchange.
---------------------------------------------------------------------------

    \26\ FINRA conducts cross-market surveillances on behalf of 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.
    The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and underlying
exchange-traded instruments with other markets and other entities that
are members of the ISG, and the Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading information regarding trading
such securities and financial instruments from such markets and other
entities. In addition, the Exchange may obtain information regarding
trading in such securities and financial instruments from markets and
other entities that are members of ISG or with which the Exchange has
in place

a comprehensive surveillance sharing agreement.\27\
---------------------------------------------------------------------------

    \27\ For a list of the current members of ISG, see
www.isgportal.org.
---------------------------------------------------------------------------

    The Adviser will make available daily to FINRA and the Exchange the
Actual Portfolio of the Fund, upon request, in order to facilitate the
performance of the surveillances referred to above.
    In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
    As noted above, proposed Commentary .03 to NYSE Arca Rule 8.601-E
provides that the Exchange will implement and maintain written
surveillance procedures for Active Proxy Portfolio Shares. As part of
these surveillance procedures, the Investment Company's investment
adviser will upon request by the Exchange or FINRA, on behalf of the
Exchange, make available to the Exchange or FINRA the daily portfolio
holdings of each series of Active Proxy Portfolio Shares. The Exchange
believes that the ability to access the information on an as needed
basis will provide it with sufficient information to perform the
necessary regulatory functions associated with listing and trading
series of Active Proxy Portfolio Shares on the Exchange, including the
ability to monitor compliance with the initial and continued listing
requirements as well as the ability to surveil for manipulation of
Active Proxy Portfolio Shares.
    The Exchange will utilize its existing procedures to monitor issuer
compliance with the requirements of proposed Rule 8.601-E. For example,
the Exchange will continue to use intraday alerts that will notify
Exchange personnel of trading activity throughout the day that may
indicate that unusual conditions or circumstances are present that
could be detrimental to the maintenance of a fair and orderly market.
The Exchange will require from the issuer of a series of Active Proxy
Portfolio Shares, upon initial listing and periodically thereafter, a
representation that it is in compliance with Rule 8.601-E. The Exchange
notes that proposed Commentary .01 to Rule 8.601-E would require an
issuer of Active Proxy Portfolio Shares to notify the Exchange of any
failure to comply with the continued listing requirements of Rule
8.601-E. In addition, the Exchange will require issuers to represent
that they will notify the Exchange of any failure to comply with the
terms of applicable exemptive and no-action relief. The Exchange will
rely on the foregoing procedures to become aware of any non-compliance
with the requirements of Rule 8.601-E.
    With respect to the Fund, all statements and representations made
in this filing regarding (a) the description of the portfolio or
reference asset, (b) limitations on portfolio holdings or reference
assets, or (c) the applicability of Exchange listing rules specified in
this rule filing shall constitute continued listing requirements for
listing the Shares on the Exchange. The issuer has represented to the
Exchange that it will advise the Exchange of any failure by the Fund to
comply with the continued listing requirements, and, pursuant to its
obligations under Section 19(g)(1) of the Act, the Exchange will
monitor for compliance with the continued listing requirements. If the
Fund is not in compliance with the applicable listing requirements, the
Exchange will commence delisting procedures under NYSE Arca Rule 5.5-
E(m).
Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its
Equity Trading Permit (``ETP'') Holders in an Information Bulletin
(``Bulletin'') of the special characteristics and risks associated with
trading the Shares. Specifically, the Bulletin will discuss the
following: (1) The procedures for purchases and redemptions of Shares;
(2) NYSE Arca Rule 9.2-E(a), which imposes a duty of due diligence on
its ETP Holders to learn the essential facts relating to every customer
prior to trading the Shares; (3) how information regarding the Proxy
Portfolio will be disseminated; (4) the requirement that ETP Holders
deliver a prospectus to investors purchasing newly issued Shares prior
to or concurrently with the confirmation of a transaction; (5) the
requirement that the Fund's portfolio holdings will be disclosed
quarterly, and (6) trading information.
    In addition, the Bulletin will reference that the Fund is subject
to various fees and expenses described in the Registration Statement.
The Bulletin will discuss any exemptive, no-action, and interpretive
relief granted by the Commission from any rules under the Act. The
Bulletin will also disclose that the NAV for the Shares will be
calculated after 4:00 p.m. E.T. each trading day.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\28\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\29\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78f(b).
    \29\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that proposed Rule 8.601-E is designed to
prevent fraudulent and manipulative acts and practices in that the
proposed rules relating to listing and trading of Active Proxy
Portfolio Shares provide specific initial and continued listing
criteria required to be met by such securities.
    Proposed Rule 8.601-E(d) sets forth initial and continued listing
criteria applicable to Active Proxy Portfolio Shares. Proposed Rule
8.601-E(d)(1)(A) provides that, for each series of Active Proxy
Portfolio Shares, the Exchange will establish a minimum number of
Active Proxy Portfolio Shares required to be outstanding at the time of
commencement of trading on the Exchange. In addition, proposed Rule
8.601-E(d)(1)(B) provides that the Exchange will obtain a
representation from the issuer of each series of Active Proxy Portfolio
Shares that the NAV per share for the series will be calculated daily
and that the NAV, Proxy Portfolio and the Actual Portfolio will be made
available to all market participants at the same time. Proposed Rule
8.601-E(d)(2) provides that each series of Active Proxy Portfolio
Shares will be listed and traded subject to application of specified
continued listing criteria, as set forth above.
    Proposed Rule 8.601-E(d)(2)(D)(i) provides that the Exchange may
consider all relevant factors in exercising its discretion to halt
trading in a series of Active Proxy Portfolio Shares. Trading may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the series of Active Proxy Portfolio
Shares inadvisable. These may include: (a) The extent to which trading
is not occurring in the securities and/or the financial instruments
composing the portfolio; or (b) whether other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present.
    Proposed Rule 8.601-E(d)(2)(D)(iii) provides that, upon
notification to the Exchange by the issuer of a series of Active Proxy
Portfolio Shares, that the NAV, Proxy Portfolio or Actual Portfolio
with respect to a series of Active Proxy Portfolio Shares is not
disseminated to all market participants at the same time,

the Exchange shall halt trading in such series until such time as the
NAV, Proxy Portfolio or Actual Portfolio is available to all market
participants at the same time.
    Proposed Commentary .01 to NYSE Arca Rule 8.601-E provides that the
Exchange will file separate proposals under Section 19(b) of the Act
before the listing and trading of Active Proxy Portfolio Shares. All
statements or representations contained in such rule filing regarding
(a) the description of the portfolio, (b) limitations on portfolio
holdings, or (c) the applicability of Exchange listing rules specified
in such rule filing will constitute continued listing requirements. An
issuer of such securities must notify the Exchange of any failure to
comply with such continued listing requirements.
    Proposed Commentary .03 to NYSE Arca Rule 8.601-E provides that the
Exchange will implement and maintain written surveillance procedures
for Active Proxy Portfolio Shares. As part of these surveillance
procedures, the Investment Company's investment adviser will, upon
request by the Exchange or FINRA, on behalf of the Exchange, make
available to the Exchange or FINRA the daily portfolio holdings of each
series of Active Proxy Portfolio Shares.
    Proposed Commentary .04 provides that, if the investment adviser to
the Investment Company issuing Active Proxy Portfolio Shares is
registered as a broker-dealer or is affiliated with a broker-dealer,
such investment adviser will erect and maintain a ``fire wall'' between
the investment adviser and personnel of the broker-dealer or broker-
dealer affiliate, as applicable, with respect to access to information
concerning the composition and/or changes to such Investment Company's
Actual Portfolio and or Proxy Portfolio. Any person related to the
investment adviser or Investment Company who makes decisions pertaining
to the Investment Company's portfolio composition or has access to non-
public information regarding the Investment Company's Actual Portfolio
or changes thereto or the Proxy Portfolio must be subject to procedures
reasonably designed to prevent the use and dissemination of material
non-public information regarding the Actual Portfolio or changes
thereto or to the Proxy Portfolio.
    The proposed addition of Active Proxy Portfolio Shares to the
enumerated derivative and special purpose securities that are subject
to the provisions of Rule 5.3-E (Corporate Governance and Disclosure
Policies) and Rule 5.3-E(e) (Shareholder/Annual Meetings) would subject
Active Proxy Portfolio Shares to the same requirements currently
applicable to other 1940 Act-registered investment company securities
(i.e., Investment Company Units, Managed Fund Shares and Portfolio
Depositary Receipts).
    With respect to the proposed listing and trading of Shares of the
Fund, 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 NYSE Arca Rule 8.601-E. All
exchange-listed equity securities held by the Fund will be listed on
U.S. national securities exchanges. The listing and trading of such
securities is subject to rules of the exchanges on which they are
listed and traded, as approved by the Commission. The Fund will
primarily hold U.S.-listed equity securities and shares issued by other
U.S.-listed ETFs. The Fund's holdings will conform to the permissible
investments as set forth in the Application and Exemptive Order and the
holdings will be consistent with all requirements in the Application
and Exemptive Order. The Exchange or FINRA, on behalf of the Exchange,
or both, will communicate as needed regarding trading in the Shares,
exchange-traded equity securities, and futures with other markets and
other entities that are members of the ISG, and the Exchange or FINRA,
on behalf of the Exchange, or both, may obtain trading information
regarding trading such securities and financial instruments from such
markets and other entities. In addition, the Exchange may obtain
information regarding trading in such securities and financial
instruments from markets and other entities that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.
    The Exchange, after consulting with various Lead Market Makers that
trade ETFs on the Exchange, believes that market makers will be able to
make efficient and liquid markets priced near the NAV, and that market
makers have knowledge of a fund's means of achieving its investment
objective even without daily disclosure of a fund's underlying
portfolio. The Exchange believes that market makers will employ risk-
management techniques to make efficient markets in exchange traded
products. This ability should permit market makers to make efficient
markets in shares without knowledge of a fund's underlying portfolio.
    The Exchange understands that traders use statistical analysis to
derive correlations between different sets of instruments to identify
opportunities to buy or sell one set of instruments when it is
mispriced relative to the others. For Active Proxy Portfolio Shares,
market makers utilizing statistical arbitrage use the knowledge of a
fund's means of achieving its investment objective, as described in the
applicable fund registration statement to manage a market maker's
quoting risk in connection with trading fund shares. Market makers will
then conduct statistical arbitrage between the Proxy Portfolio and
shares of a fund, buying and selling one against the other over the
course of the trading day. Eventually, at the end of each day, they
will evaluate how the Proxy Portfolio performed in comparison to the
price of a fund's shares, and use that analysis as well as knowledge of
risk metrics, such as volatility and turnover, to provide a more
efficient hedge.
    The Lead Market Makers also indicated that, as with some other new
exchange-traded products, spreads would tend to narrow as market makers
gain more confidence in the accuracy of their hedges and their ability
to adjust these hedges in real-time and gain an understanding of the
applicable market risk metrics such as volatility and turnover, and as
natural buyers and sellers enter the market. Other relevant factors
cited by Lead Market Makers were that a fund's investment objectives
are clearly disclosed in the applicable prospectus, the existence of
quarterly portfolio disclosure and the ability to create shares in
creation unit size.
    The real-time dissemination of the identity and quantity of Proxy
Portfolio component investments, together with the right of Authorized
Participants to create and redeem each day at the NAV, will be
sufficient for market participants to value and trade shares in a
manner that will not lead to significant deviations between the Bid/Ask
Price and NAV of shares of a series of Active Proxy Portfolio Shares.
    The pricing efficiency with respect to trading a series of Active
Proxy Portfolio Shares will generally rest on the ability of market
participants to arbitrage between the shares and a fund's portfolio, in
addition to the ability of market participants to assess a fund's
underlying value accurately enough throughout the trading day in order
to hedge positions in shares effectively. Professional traders can buy
shares that they perceive to be trading at a price less than that which
will be available at a subsequent time and sell shares they perceive to
be trading at a price higher than that which will be available at a
subsequent time. It is expected that, as

part of their normal day-to-day trading activity, market makers
assigned to shares by the Exchange, off-exchange market makers, firms
that specialize in electronic trading, hedge funds and other
professionals specializing in short-term, non-fundamental trading
strategies will assume the risk of being ``long'' or ``short'' shares
through such trading and will hedge such risk wholly or partly by
simultaneously taking positions in correlated assets \30\ or by netting
the exposure against other, offsetting trading positions--much as such
firms do with existing ETFs and other equities. Disclosure of a fund's
investment objective and principal investment strategies in its
prospectus and SAI should permit professional investors to engage
easily in this type of hedging activity.
---------------------------------------------------------------------------

    \30\ Price correlation trading is used throughout the financial
industry. It is used to discover both trading opportunities to be
exploited, such as currency pairs and statistical arbitrage, as well
as for risk mitigation such as dispersion trading and beta hedging.
These correlations are a function of differentials, over time,
between one or multiple securities pricing. Once the nature of these
price deviations have been quantified, a universe of securities is
searched in an effort to, in the case of a hedging strategy,
minimize the differential. Once a suitable hedging basket has been
identified, a trader can minimize portfolio risk by executing the
hedging basket. The trader then can monitor the performance of this
hedge throughout the trade period, making corrections where
warranted.
---------------------------------------------------------------------------

    The Exchange believes that the Fund and Active Proxy Portfolio
Shares generally, will provide investors with a greater choice of
active portfolio managers and active strategies through which they can
manage their assets in an ETF structure. This greater choice of active
asset management is expected to be similar to the diversity of active
managers and strategies available to mutual fund investors. Unlike
mutual fund investors, investors in Active Proxy Portfolio Shares would
also accrue the benefits derived from the ETF structure, such as lower
fund costs, tax efficiencies, intraday liquidity, and pricing that
reflects current market conditions rather than end-of-day pricing.
    The Adviser represents that, unlike ETFs that publish their
portfolios on a daily basis, the Fund, as Active Proxy Portfolio
Shares, proposes to allow for efficient trading of Shares through an
effective Fund portfolio transparency substitute--Proxy Portfolio
transparency. The Adviser believes that this approach will provide an
important benefit to investors by protecting the Fund from the
potential for front-running of portfolio transactions and the potential
for free-riding on Fund portfolio strategies, each of which could
adversely impact the performance of the Fund.
    The Fund will utilize the NYSE Proxy Portfolio Methodology,
allowing market participants to assess the intraday value and
associated risk of the Fund's Actual Portfolio and thereby facilitate
the purchase and sale of Shares by investors in the secondary market at
prices that do not vary materially from their NAV.
    The Exchange believes that Active Proxy Portfolio Shares will
provide the platform for many more asset managers to launch ETFs,
increasing the investment choices for consumers of actively managed
funds, which should lead to a greater competitive landscape that can
help to reduce the overall costs of active investment management for
retail investors. Unlike mutual funds, Active Proxy Portfolio Shares
would be able to use the efficient share settlement system in place for
ETFs today, translating into a lower cost of maintaining shareholder
accounts and processing transactions.
    The Adviser represents that investors will also benefit because the
Fund's operating costs, such as transfer agency costs, are generally
lower in ETFs than in mutual funds. The Fund will have access to the
identical clearing and settlement procedures now used by U.S. domiciled
ETFs, and therefore, should experience many of the operational and cost
efficiencies benefitting current ETF investors.
    The Adviser represents further that in-kind Share creation/
redemption orders will allow the Fund to enjoy overall transaction
costs lower than those experienced by mutual funds. The Fund's in-kind
Share creation and redemption process will facilitate and enhance
active management strategies by generally limiting the portfolio
manager's need to transact in a large volume of trades in order to
maintain desired investment exposures. In addition, the Adviser
represents that the Fund will receive tax efficiency benefits of the
ETF structure because of in-kind Share creation and redemption
activity.
    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 a
series of Active Proxy Portfolio Shares that the NAV per share of a
fund will be calculated daily and that the NAV will be made available
to all market participants at the same time. Investors can also obtain
the Fund's SAI, shareholder reports, and its Form N-CSR, Form N-PORT
and Form N-CEN. The Fund's SAI and shareholder reports will be
available free upon request from the Fund, and those documents and the
Form N-CSR, Form N-PORT and Form N-CEN may be viewed on-screen or
downloaded from the Commission's website. In addition, with respect to
the Fund, a large amount of information will be publicly available
regarding the Fund and the Shares, thereby promoting market
transparency. Quotation and last sale information for the Shares will
be available via the CTA high-speed line. The website for the Fund will
include a form of the prospectus for the Fund that may be downloaded,
and additional data relating to NAV and other applicable quantitative
information, updated on a daily basis. Moreover, prior to the
commencement of trading, the Exchange will inform its ETP Holders in an
Information Bulletin of the special characteristics and risks
associated with trading the Shares. Trading in Shares of the Fund will
be halted if the circuit breaker parameters in NYSE Arca Rule 7.12-E
have been reached or because of market conditions or for reasons that,
in the view of the Exchange, make trading in the Shares inadvisable.
Trading in the Shares will be subject to NYSE Arca Rule 8.601-E
(d)(2)(D), which sets forth circumstances under which Shares of the
Fund will be halted. In addition, as noted above, investors will have
ready access to quotation and last sale information for the Shares. The
Shares will conform to the initial and continued listing criteria under
proposed Rule 8.601-E.
    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, the Exchange has in
place surveillance procedures relating to trading in the Shares and may
obtain information via ISG from other exchanges that are members of ISG
or with which the Exchange has entered into a comprehensive
surveillance sharing agreement. In addition, as noted above, investors
will have ready access to information regarding quotation and last sale
information for the Shares.

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 the
proposed rule change would permit listing and trading

of another type of actively-managed ETF that has characteristics
different from existing actively-managed and index ETFs and would
introduce additional competition among various ETF products to the
benefit of investors.

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.

IV. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEArca-2019-95, as Modified by Amendment No. 2, and Grounds for
Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act \31\ to determine whether the proposed
rule change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide comments
on the proposed rule change.
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Exchange Act,\32\ the
Commission is providing notice of the grounds for disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis of the proposed rule change's consistency with
Section 6(b)(5) of the Exchange Act, which requires, among other
things, that the rules of a national securities exchange be ``designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, . . . to remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest.'' \33\
---------------------------------------------------------------------------

    \32\ Id.
    \33\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

V. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposed rule
change, as modified by Amendment No. 2, is consistent with Section
6(b)(5) or any other provision of the Exchange Act, or the rules and
regulations thereunder. Although there do not appear to be any issues
relevant to approval or disapproval that would be facilitated by an
oral presentation of views, data, and arguments, the Commission will
consider, pursuant to Rule 19b-4, any request for an opportunity to
make an oral presentation.\34\
---------------------------------------------------------------------------

    \34\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975),
grants the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change, as modified by
Amendment No. 2, should be approved or disapproved by April 28, 2020.
Any person who wishes to file a rebuttal to any other person's
submission must file that rebuttal by May 12, 2020.
    The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in Amendment No. 2,\35\ and any other issues raised by the proposed
rule change, as modified by Amendment No. 2, under the Exchange Act. In
this regard, the Commission seeks commenters' views regarding whether
the Exchange's proposed rule to list and trade Active Proxy Portfolio
Shares, which are actively managed exchange-traded products for which
the portfolio holdings would be disclosed on a quarterly, rather than
daily, basis, is adequately designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and to protect investors and the public interest,
and is consistent with the maintenance of a fair and orderly market
under the Exchange Act. In particular, the Commission seeks commenters'
views regarding whether the Exchange's proposed listing rule provisions
as they relate to foreign securities are adequate to prevent fraud and
manipulation. In addition, the Commission seeks commenters' views
regarding whether the Exchange's proposed listing rule provisions are
adequate to prevent the use and dissemination of material non-public
information regarding the Actual Portfolio and the Proxy Portfolio and
changes thereto.
---------------------------------------------------------------------------

    \35\ See supra note 7.
---------------------------------------------------------------------------

    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-NYSEArca-2019-95 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-2019-95. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2019-95 and should be submitted
on or before April 28, 2020. Rebuttal comments should be submitted by
May 12, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
---------------------------------------------------------------------------

    \36\ 17 CFR 200.30-3(a)(57).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07226 Filed 4-6-20; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 27 (Friday, February 10, 2017)]
[Notices]
[Pages 10355-10356]
[FR Doc No: 2017-02777]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Notice of Effectiveness of Exempt Wholesale Generator Status

February 6, 2017.

Wolf Hollow II Power, LLC........  EG17-19-000
Colorado Bend II Power, LLC......  EG17-20-000
Portal Ridge Solar C, LLC........  EG17-21-000
Pima Energy Storage System, LLC..  EG17-23-000
Portal Ridge Solar A, LLC........  EG17-24-000
Three Peaks Power, LLC...........  EG17-25-000
Fluvanna Wind Energy, LLC........  EG17-26-000
American Falls Solar, LLC........  EG17-27-000
American Falls Solar II, LLC.....  EG17-28-000
Rocksprings Val Verde Wind LLC...  EG17-29-000
Niles Valley Energy LLC..........  EG17-30-000
IMG Midstream LLC................  EG17-31-000
SR South Loving LLC..............  EG17-32-000
Footprint Power Salem Harbor       EG17-33-000
 Development LP.

    Take notice that during the month of January 2017, the status of
the above-captioned entities as Exempt Wholesale Generators became
effective by operation of the Commission's regulations. 18 CFR 366.7(a)
(2017)

    Dated: February 6, 2017.
 Nathaniel J. Davis, Sr.,
 Deputy Secretary
[FR Doc. 2017-02777 Filed 2-9-17; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 86, Number 37 (Friday, February 26, 2021)]
[Rules and Regulations]
[Pages 11623-11624]
[FR Doc No: 2021-04093]

=======================================================================
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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Parts 11, 21, 43, and 107

[Docket No. FAA-2018-1087]
RIN 2120-AK85

Operation of Small Unmanned Aircraft Systems Over People; Delay
of Effective Date; Correction

AGENCY: Federal Aviation Administration (FAA).

ACTION: Final rule; delay of effective; correction.

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SUMMARY: In accordance with the memorandum of January 20, 2021, from
the Assistant to the President and Chief of Staff, titled ``Regulatory
Freeze Pending Review,'' the Agency delays the March 1, 2021 effective
date of the final rule, Operation of Small Unmanned Aircraft Systems
Over People, until March 16, 2021.

DATES: As of February 26, 2021, the March 1, 2021 effective date of the
final rule published on January 15, 2021, at 86 FR 4314, is delayed to
March 16, 2021. The corrections are effective March 16, 2021.

FOR FURTHER INFORMATION CONTACT: Michael Machnik, General Aviation and
Commercial Division, Flight Standards Service, Federal Aviation
Administration, 55 M Street SE, 8th Floor, Washington, DC 20003;
telephone 1-844-FLY-MYUAS; email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Electronic Access and Filing

    A copy of the notice of proposed rulemaking (NPRM) (84 FR 3856,
Feb.

13, 2019), all comments received, the final rule, and all background
material may be viewed online at http://www.regulations.gov using the
docket number listed above. A copy of this final rule will also be
placed in the docket. Electronic retrieval help and guidelines are
available on the website. It is available 24 hours each day, 365 days
each year. An electronic copy of this document may also be downloaded
from the Office of the Federal Register's website at http://www.ofr.gov
and the Government Publishing Office's website at http://www.gpo.gov.

Background

    On January 20, 2021, the Assistant to the President and Chief of
Staff issued a memorandum titled, ``Regulatory Freeze Pending Review.''
The memorandum requested that the heads of executive departments and
agencies (agencies) take steps to ensure that the President's
appointees or designees have the opportunity to review any new or
pending rules. With respect to rules published in the Federal Register,
but not yet effective, the memorandum asked that agencies consider
postponing the rules' effective dates for 60 days from the date of the
memorandum (i.e., March 21, 2021) for the purpose of reviewing any
questions of fact, law, and policy the rules may raise.
    In accordance with this direction, the Agency has decided to delay
until March 16, 2021, the effective date of the final rule, Operation
of Small Unmanned Aircraft Systems Over People (RIN 2120-AK85),
including the amendments to Sec. Sec.  107.61, 107.63, 107.65, 107.73,
and 107.74. The final rule permits routine operations of small unmanned
aircraft over people, moving vehicles, and at night under certain
conditions. The final rule also makes changes to the recurrent testing
framework and expands the list of persons who may request the
presentation of a remote pilot certificate. The delay in the rule's
effective date will afford the President's appointees or designees an
opportunity to review the rule and will allow for consideration of any
questions of fact, law, or policy that the rule may raise before it
becomes effective.
    Additionally, as a result of the delay in the effective date,
several corrections are necessary. The compliance date for Sec.
107.29(a)(1) regarding the operation of a small unmanned aircraft
system at night must be corrected so that it does not precede the new
effective date. Similarly, a correction to Sec.  107.65(d) regarding
the timing of passing the recurrent aeronautical knowledge test or
satisfying training requirements must also be made to conform to the
delayed effective date.

Waiver of Rulemaking and Delayed Effective Date

    Under the Administrative Procedure Act (APA) (5 U.S.C. 553), the
Agency generally offers interested parties the opportunity to comment
on proposed regulations and publish rules not less than 30 days before
their effective dates. However, the APA provides that an agency is not
required to conduct notice-and-comment rulemaking or delay effective
dates when the agency, for good cause, finds that the requirement is
impracticable, unnecessary, or contrary to the public interest (5
U.S.C. 553(b)(B) and (d)(3)). There is good cause to waive both of
these requirements here as they are impracticable. A delay in the
effective date of the final rule, Operation of Small Unmanned Aircraft
Systems Over People, is necessary for the President's appointees and
designees to have adequate time to review the rule before it takes
effect, and neither the notice and comment process nor the delayed
effective date could be implemented in time to allow for this review.

Corrections

    In FR Doc. 2020-28947 (86 FR 4314) published on January 15, 2021,
the following corrections are made:

Sec.  107.29  [Corrected]

0
1. On page 4382, in the second column, in Sec.  107.29, in paragraph
(a)(1), the date ``March 1, 2021'' is corrected to read ``March 16,
2021''.

Sec.  107.65  [Corrected]

0
2. On page 4383, in the first column, in Sec.  107.65, in paragraph
(d), the date ``March 1, 2021'' is corrected to read ``March 16,
2021''.

    Issued in Washington, DC, under the authority provided by 49
U.S.C. 106(f), 40101 note and 44807, on February 23, 2021.
Steve Dickson,
Administrator, Federal Aviation Administration.
[FR Doc. 2021-04093 Filed 2-24-21; 4:15 pm]
BILLING CODE 4910-13-P