[Federal Register Volume 81, Number 99 (Monday, May 23, 2016)]
[Notices]
[Pages 32371-32376]
[FR Doc No: 2016-12016]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77849; File No. SR-NYSEArca-2016-62]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Relating to a Change to the Underlying Index
for the PowerShares Build America Bond Portfolio

May 17, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on May 3, 2016, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to: (1) Permit the continued listing and
trading of shares of the PowerShares Build America Bond Portfolio (the
``Fund'') following a change to the index underlying the Fund, and (2)
propose changes to the index underlying the Fund and the name of the
Fund, as described below. The proposed rule change is available on the
Exchange's Web site at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received

on the proposed rule change. The text of those statements may be
examined at the places specified in Item IV below. The Exchange has
prepared summaries, set forth in sections A, B, and C below, of the
most significant parts of such statements.

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

1. Purpose
    The Exchange currently lists and trades shares (``Shares'') of the
Fund \4\ under NYSE Arca Equities Rule 5.2(j)(3), Commentary .02, which
governs the listing and trading of Investment Company Units (``Units'')
based on fixed income securities indexes.\5\ The Fund is a series of
the PowerShares Exchange-Traded Fund Trust II (``Trust'').\6\
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    \4\ On February 26, 2016, the Trust filed a post-effective
amendment on Form 485 under the Securities Act of 1933 (15 U.S.C.
77a) (``1933 Act'') to its registration statement on Form N-1A under
the 1933 Act and the Investment Company Act of 1940 (``1940 Act'')
(15 U.S.C. 80a-1) (File Nos. 333-138490 and 811-21977) (the
``Registration Statement''). The description of the operation of the
Trust and the Fund herein is based, in part, on the Registration
Statement. In addition, the Commission has issued an order granting
certain exemptive relief to the Trust under the 1940 Act. See
Investment Company Act Release No. 27841 (May 25, 2007) (File No.
812-13335) (``Exemptive Order'').
    \5\ The PowerShares Build America Bond Portfolio was initially
listed on the Exchange on November 17, 2009 pursuant to the generic
listing criteria of Commentary .02 to NYSE Arca Equities Rule
5.2(j)(3).
    \6\ The Commission previously has approved a proposed rule
change relating to listing and trading on the Exchange of Units
based on municipal bond indexes. See Securities Exchange Act Release
Nos. 75376 (July 7, 2015), 80 FR 40113 (July 13, 2015) (SR-NYSEArca-
2015-18) (order approving listing and trading of Vanguard Tax-Exempt
Bond Index Fund under NYSE Arca Equities Rule 5.2(j)(3), Commentary
.02); 71232 (January 3, 2014), 79 FR 1662 (January 9, 2014) (SR-
NYSEArca-2013-118) (order approving listing and trading of Market
Vectors Short High-Yield Municipal Index ETF under NYSE Arca
Equities Rule 5.2(j)(3), Commentary .02); 63881 (February 9, 2011),
76 FR 9065 (February 16, 2011) (SR-NYSEArca-2010-120) (order
approving listing and trading of SPDR Nuveen S&P High Yield
Municipal Bond ETF Fund under NYSE Arca Equities Rule 5.2(j)(3),
Commentary .02); 67985 (October 4, 2012), 77 FR 61804 (October 11,
2012) (SR-NYSEArca-2012-92) (order approving proposed rule change
relating to the listing and trading of iShares 2018 S&P AMT-Free
Municipal Series and iShares 2019 S&P AMT-Free Municipal Series
under NYSE Arca Equities Rule 5.2(j)(3), Commentary .02)); 75468
(July 16, 2015), 80 FR 43500 (July 22, 2015) (SR-NYSEArca-2015-25)
(order approving proposed rule change relating to the listing and
trading of iShares iBonds Dec 2021 AMT Free Municipal Bond ETF and
iShares iBonds Dec 2022 AMT-Free Municipal Bond ETF under NYSE Arca
Equities Rule 5.2(j)(3), Commentary .02); 72464 (June 25, 2014), 79
FR 37373 (July 1, 2014) (SR-NYSEArca-2014-45) (order approving
proposed rule change governing the continued listing and trading of
Shares of the PowerShares Insured California Municipal Bond
Portfolio, PowerShares Insured National Municipal Bond Portfolio and
PowerShares Insured New York Municipal Bond Portfolio under NYSE
Arca Equities Rule 5.2(j)(3), Commentary .02).
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    Invesco PowerShares Capital Management LLC is the investment
adviser (``Adviser'') for the Fund. Invesco Distributors, Inc. is the
Fund's distributor (``Distributor''). The Bank of New York Mellon is
the administrator, custodian and fund accounting and transfer agent for
the Fund.
    The Exchange is submitting this proposed rule change (1) to permit
the continued listing and trading of Shares of the Fund following a
change to the index underlying the Fund, and (2) to propose changes to
the index underlying the Fund and the name of the Fund, as described
below.
    The Fund seeks investment results that generally correspond to the
price and yield (before fees and expenses) of The BofA Merrill Lynch
Build America Bond Index (the ``Build America Bond Index''). The Fund
generally invests at least 80% of its total assets in taxable municipal
securities eligible to participate in the Build America Bond program
created under the American Recovery and Reinvestment Act of 2009 or
other legislation providing for the issuance of taxable municipal
securities on which the issuer receives federal support of the interest
paid (``Build America Bonds'') and that comprise the Build America Bond
Index. The Build America Bond Index is designed to track the
performance of U.S. dollar-denominated investment grade taxable
municipal debt publicly issued under the Build America Bond program by
U.S. states and territories, and their political subdivisions, in the
U.S. market. Qualifying securities must have a minimum amount
outstanding of $1 million, at least 18 months remaining term to final
maturity at the time of issuance and at least one year remaining term
to final maturity, a fixed coupon schedule and an investment grade
rating (based on an average of Moody's Investors Services, Inc.
(``Moody's''), Standard & Poor's, a division of The McGraw-Hill
Company, Inc. (``S&P'') and Fitch Ratings, Inc. (``Fitch'').
    As described below, the Trust has proposed to change the index
underlying the Fund to the BofA Merrill Lynch US Taxable Municipal
Securities Plus Index (the ``New Index'') and to change the name of the
Fund to PowerShares Taxable Municipal Bond Portfolio. The New Index
does not meet the generic listing criteria of NYSE Arca Equities Rule
5.2(j)(3), as described below. The Exchange is submitting this proposed
rule change to permit the continued listing of the Fund. The New Index
meets all of the requirements of the generic listing criteria of NYSE
Arca Equities Rule 5.2(j)(3), except for those set forth in Commentary
.02(a)(2).\7\ Specifically, as of February 4, 2016, approximately
60.51% of the New Index weight was composed of individual maturities of
$100 million or more (determined at the time of issuance).
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    \7\ Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3)
provides that components that in the aggregate account for at least
75% of the weight of the index or portfolio each shall have a
minimum original principal amount outstanding of $100 million or
more.
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Changes to Index Underlying the Fund
    As stated in the Registration Statement, the Fund currently has a
non-fundamental policy to invest at least 80% of its net assets (plus
the amount of any borrowings for investment purposes) in Build America
Bonds. Moreover, as stated in the Registration Statement, the Fund
complies with that non-fundamental policy because it also is required
generally to invest at least 80% of the value of its total assets in
the Build America Bonds that comprise the Build America Bond Index, in
accordance with the terms of the relief set forth in the Trust's
Exemptive Order.
    However, in response to a changing market environment that includes
a reduction in the number of Build America Bonds, the Adviser has
proposed that the Fund's underlying index be changed from one that is
focused on Build America Bonds to one that is more broadly focused on
taxable municipal debt in general, and which may include Build America
Bonds. Changing the Fund's underlying index would require changing the
non-fundamental policy set forth above; accordingly, before the Fund
can change its underlying index, the Registration Statement states that
the Fund's board of trustees (the ``Board'') must approve the
underlying index change, and the Fund must provide shareholders with
sixty days written notice of the change.
    Thus, after this proposed rule change is approved, the Trust
represents that it intends to seek to obtain Board approval and provide
the requisite shareholder notice. Subject to that Board approval and
shareholder notice, the Fund intends to change its underlying index to
one that is composed of taxable municipal securities, including both
Build America Bonds and non-Build America Bonds. Following such change,
the proposed underlying index for the Fund will be the New Index.
    According to the Trust, the change in Fund's underlying index is
designed to

enable the Fund to expand its range of investments in light of a
diminishing supply of Build America Bonds; otherwise, there is no other
change to the Fund's investment strategies or objective. After such
change, the Fund's investment objective will be to seek investment
results that generally correspond (before fees and expenses) to the
price and yield of the New Index.
    In addition, the Fund will adopt a new non-fundamental investment
policy to invest at least 80% of its net assets (plus borrowings for
investment purposes) in taxable municipal securities. In addition, the
Fund generally will invest at least 80% of its total assets in the
securities that will compose the New Index, in accordance with the
terms of the Trust's Exemptive Order. However, the Fund may invest up
to 20% of its total assets in securities not included in the New Index,
in money market instruments, including repurchase agreements or other
funds that invest exclusively in money market instruments (subject to
applicable limitations under the 1940 Act or exemptions therefrom),
convertible securities and structured notes (notes on which the amount
of principal repayment and interest payments is based on the movement
of one or more specified factors, such as the movement of a particular
security or securities index), all to the extent that the Adviser
believes investment in such instruments will facilitate the Fund's
ability to achieve its new investment objective. In addition, the Fund
intends to change its name to PowerShares Taxable Municipal Bond
Portfolio.\8\
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    \8\ The changes described herein with respect to use of the New
Index will be effective upon: (1) Approval by the Trust's Board; (2)
shareholders' receipt of sixty days written notice of the proposed
change; and (3) completing a filing with the Commission of another
amendment to the Trust's Registration Statement, or a prospectus
supplement reflecting these changes. The Adviser represents that the
Adviser has managed and will continue to manage the Fund in the
manner described in the Registration Statement and will not
implement the changes described herein until this proposed rule
change is operative.
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Description of the New Index \9\
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    \9\ The description of the New Index is based on information
provided by Bank of America (``BofA'') Merrill Lynch. BofA Merrill
Lynch is the ``Index Provider'' with respect to the Underlying Index
and the New Index. The Index Provider is a broker-dealer and has
implemented a firewall with respect to and will maintain procedures
designed to prevent the use and dissemination of material non-public
information regarding the New Index.
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    The New Index tracks the performance of U.S. dollar denominated
taxable municipal debt publicly issued by U.S. states and territories,
and their political subdivisions, in the U.S. domestic market.
Qualifying securities must be subject to U.S. federal taxes and must
have at least 18 months to maturity at point of issuance, at least one
year remaining term to final maturity, a fixed coupon schedule
(including zero coupon bonds) and an investment grade rating (based on
an average of Moody's, S&P and Fitch). The call date on which a pre-
refunded bond will be redeemed is used for purposes of determining
qualification with respect to final maturity requirements. For Build
America Bonds the minimum amount outstanding is $1 million, and only
``direct pay'' (i.e., a direct federal subsidy is paid to the issuer)
securities qualify for inclusion. ``Tax-Credit'' (i.e., where the
investor receives a tax credit on the interest payments) Build America
Bonds are excluded. For all other securities, minimum size requirements
vary based on the initial term to final maturity at time of issuance.
Securities with an initial term to final maturity greater than or equal
to one year and less than five years must have a current amount
outstanding of at least $10 million. Securities with an initial term to
final maturity greater than or equal to five years and less than ten
years must have a current amount outstanding of at least $15 million.
Securities with an initial term to final maturity of ten years or more
must have a current amount outstanding of at least $25 million. Local
bonds issued by U.S. territories within their jurisdictions that are
tax exempt within the U.S. territory but not elsewhere are excluded
from the New Index. All Rule 144A securities, both with and without
registration rights, and securities in legal default are excluded from
the New Index. New Index constituents are capitalization-weighted based
on their current amount outstanding times the market price plus accrued
interest. Accrued interest is calculated assuming next-day settlement.
Cash flows from bond payments that are received during the month are
retained in the index until the end of the month and then are removed
as part of the rebalancing. Cash does not earn any reinvestment income
while it is held in the New Index.\10\ The index is rebalanced on the
last calendar day of the month, based on information available up to
and including the third business day before the last business day of
the month. No changes are made to constituent holdings other than on
month end rebalancing dates.
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    \10\ Information concerning constituent bond prices, timing and
conventions is provided in the BofA Merrill Lynch Bond Index Guide,
which can be accessed on Bloomberg (IND2[go], 4[go]) [sic].
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    As of February 4, 2016, approximately 84.39% of the weight of the
New Index components was composed of individual maturities that were
part of an entire municipal bond offering with a minimum original
principal amount outstanding of $100 million or more for all maturities
of the offering. In addition, as of February 4, 2016, the total dollar
amount outstanding of issues in the New Index was approximately
$281,589,346,769 and the average dollar amount outstanding of issues in
the New Index was approximately $27,808,547. Further, the most heavily
weighted component represents 2.27% of the weight of the Index and the
five most heavily weighted components represent 6.33% of the weight of
the New Index.\11\ Therefore, the Exchange believes that,
notwithstanding that the New Index does not satisfy the criterion in
NYSE Arca Equities Rule 5.2(j)(3), Commentary .02(a)(2), the New Index
is sufficiently broad-based to deter potential manipulation, given that
it is composed of approximately 10,126 issues and 1,811 unique issuers.
In addition, the New Index securities are sufficiently liquid to deter
manipulation in that a substantial portion (84.39%) of the New Index
weight is composed of maturities that are part of a minimum original
principal amount outstanding of $100 million or more for all the
maturities of the offering, and in view of the substantial total dollar
amount outstanding and the average dollar amount outstanding of New
Index issues, as referenced above.
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    \11\ Commentary .02(a)(4) to NYSE Arca Equities Rule 5.2(j)(3)
provides that no component fixed-income security (excluding Treasury
Securities and GSE Securities, as defined therein) shall represent
more than 30% of the weight of the index or portfolio, and the five
most heavily weighted component fixed-income securities in the index
or portfolio shall not in the aggregate account for more than 65% of
the weight of the index or portfolio.
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    All components of the New Index have at least an investment grade
composite rating of BBB3 or higher (based on an average of S&P, Moody's
and Fitch).
    The Exchange represents that: (1) With respect to the New Index,
except for Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3),
the Shares of the New Index currently satisfy all of the generic
listing standards under NYSE Arca Equities Rule 5.2(j)(3); (2) the
continued listing standards under NYSE Arca Equities Rules 5.2(j)(3)
and 5.5(g)(2) applicable to Units shall apply to the Shares of the
Fund; and (3) the Trust is required to comply with Rule 10A-3 \12\
under the Act for the initial and continued listing of the Shares of
the Fund. In addition, the Exchange

represents that the Shares of the Fund will comply with all other
requirements applicable to Units including, but not limited to,
requirements relating to the dissemination of key information such as
the value of the New Index and the applicable Intraday Indicative Value
(``IIV''),\13\ rules governing the trading of equity securities,
trading hours, trading halts, surveillance, information barriers and
the Information Bulletin to Equity Trading Permit Holders (``ETP
Holders''), as set forth in Exchange rules applicable to Units and
prior Commission orders approving the generic listing rules applicable
to the listing and trading of Units.\14\
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    \12\ 17 CFR 240.10A-3.
    \13\ The IIV will be widely disseminated by one or more major
market data vendors at least every 15 seconds during the Exchange's
Core Trading Session of 9:30 a.m. to 4:00 p.m., Eastern time.
Currently, it is the Exchange's understanding that several major
market data vendors display and/or make widely available IIVs taken
from the Consolidated Tape Association (``CTA'') or other data
feeds.
    \14\ See, e.g., Securities Exchange Act Release Nos. 55783 (May
17, 2007), 72 FR 29194 (May 24, 2007) (SR-NYSEArca-2007-36) (order
approving NYSE Arca generic listing standards for Units based on a
fixed income index); 44551 (July 12, 2001), 66 FR 37716 (July 19,
2001) (SR-PCX-2001-14) (order approving generic listing standards
for Units and Portfolio Depositary Receipts); 41983 (October 6,
1999), 64 FR 56008 (October 15, 1999) (SR-PCX-98-29) (order
approving rules for listing and trading of Units).
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    The current value of the New Index is widely disseminated by one or
more major market data vendors at least once per day, as required by
NYSE Arca Equities Rule 5.2(j)(3), Commentary .02(b)(ii). The IIV for
Shares of the Fund is disseminated by one or more major market data
vendors, updated at least every 15 seconds during the Exchange's Core
Trading Session, as required by NYSE Arca Equities Rule 5.2(j)(3),
Commentary .02(c). The components and percentage weightings of the New
Index are also available from major market data vendors. In addition,
the portfolio of securities held by the Fund is disclosed daily on the
Fund's Web site at www.invescopowershares.com.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \15\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
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    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Equities Rule
5.2(j)(3). The Exchange represents that trading in the Shares will be
subject to the existing trading surveillances, administered by the
Exchange or the Financial Industry Regulatory Authority (``FINRA'') on
behalf of the Exchange, which are designed to detect violations of
Exchange rules and federal securities laws applicable to trading on the
Exchange.\16\ 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. The
Exchange or FINRA, on behalf of the Exchange, will communicate as
needed regarding trading in the Shares with other markets that are
members of the Intermarket Surveillance Group (``ISG''). In addition,
the Exchange will communicate as needed regarding trading in the Shares
with other markets that are members of the ISG or with which the
Exchange has in place a comprehensive surveillance sharing agreement.
The Index Provider is a broker-dealer and has implemented a firewall
and will maintain procedures designed to prevent the use and
dissemination of material non-public information regarding the New
Index.
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    \16\ 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.
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    As discussed above, the Exchange believes that the New Index is
sufficiently broad-based to deter potential manipulation. As of
February 4, 2016, approximately 84.39% of the weight of the New Index
components was composed of individual maturities that were part of an
entire municipal bond offering with a minimum original principal amount
outstanding of $100 million or more for all maturities of the offering.
In addition, as of February 4, 2016, the total dollar amount
outstanding of issues in the New Index was approximately
$281,589,346,769 and the average dollar amount outstanding of issues in
the Index was approximately $27,808,547. Further, the most heavily
weighted component represents 2.27% of the weight of the New Index and
the five most heavily weighted components represent 6.33% of the weight
of the New Index.\17\ Therefore, the Exchange believes that,
notwithstanding that the New Index does not satisfy the criterion in
NYSE Arca Equities Rule 5.2(j)(3), Commentary .02(a)(2), the Index is
sufficiently broad-based to deter potential manipulation, given that it
is composed of approximately 10,126 issues and 1,811 unique issuers. In
addition, the New Index securities are sufficiently liquid to deter
manipulation in that a substantial portion (84.39%) of the New Index
weight is composed of maturities that are part of a minimum original
principal amount outstanding of $100 million or more for all the
maturities of the offering, and in view of the substantial total dollar
amount outstanding and the average dollar amount outstanding of New
Index issues, as referenced above.
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    \17\ Commentary .02(a)(4) to NYSE Arca Equities Rule 5.2(j)(3)
provides that no component fixed-income security (excluding Treasury
Securities and GSE Securities, as defined therein) shall represent
more than 30% of the weight of the index or portfolio, and the five
most heavily weighted component fixed-income securities in the index
or portfolio shall not in the aggregate account for more than 65% of
the weight of the index or portfolio.
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    The New Index value, calculated and disseminated at least once
daily, as well as the components of the Index and their percentage
weightings, will be available from major market data vendors. In
addition, the portfolio of securities held by the Fund will be
disclosed on the Fund's Web site. The IIV for Shares of the Fund will
be disseminated by one or more major market data vendors, updated at
least every 15 seconds during the Exchange's Core Trading Session.
    The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that a large amount of information is publicly available regarding the
Fund and the Shares, thereby promoting market transparency. The Fund's
portfolio holdings will be disclosed on the Fund's Web site daily after
the close of trading on the Exchange and prior to the opening of
trading on the Exchange the following day. Moreover, the IIV for Shares
of the Fund will be widely disseminated by one or more major market
data vendors at least every 15 seconds during the Exchange's Core
Trading Session. The current value of the New Index will be
disseminated by one or more major market data vendors at least once per
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 will be available via the CTA high-
speed line. The Web site for the Fund will include the prospectus for
the Fund and additional data relating to

net asset value (``NAV'') and other applicable quantitative
information. 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.
If the Exchange becomes aware that the NAV is not being disseminated to
all market participants at the same time, it will halt trading in the
Shares until such time as the NAV is available to all market
participants. 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. 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. If the applicable IIV, and the
New Index value are not being disseminated as required, the Corporation
may halt trading during the day in which the interruption to the
dissemination of the IIV or New Index value occurs. If the interruption
to the dissemination of the IIV or New Index value persists past the
trading day in which it occurred, the Corporation will halt trading.
Trading in Shares of the Fund will be halted if the circuit breaker
parameters in NYSE Arca Equities Rule 7.12 have been reached or because
of market conditions or for reasons that, in the view of the Exchange,
make trading in the Shares inadvisable, and trading in the Shares will
be subject to NYSE Arca Equities Rule 7.34, which sets forth
circumstances under which Shares of the Fund may be halted. In
addition, investors will have ready access to information regarding the
applicable IIV, and quotation and last sale information for the Shares.
Trade price and other information relating to municipal bonds is
available through the Municipal Securities Rulemaking Board's
Electronic Municipal Market Access (``EMMA'') system.
    All statements and representations made in this filing regarding
(a) the description of the Fund's portfolio, (b) limitations on
portfolio holdings or reference assets, or (c) the applicability of
Exchange rules and surveillance procedures shall constitute continued
listing requirements for listing the Shares on the Exchange. The
Adviser 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(m).
    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 continued listing and
trading of exchange-traded products that principally hold municipal
bonds and that will enhance competition among market participants, to
the benefit of investors and the marketplace. 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, investors will have ready
access to information regarding the IIV and 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 purpose of the Act. The Exchange notes that the
proposed rule change will facilitate the continued listing and trading
of an exchange-traded product that holds municipal securities and will
enhance competition among market participants, to the benefit of
investors and the marketplace.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the
proposed rule change.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(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-NYSEArca-2016-62 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2016-62. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2016-62 and should
be submitted on or before June 13, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-12016 Filed 5-20-16; 8:45 am]
BILLING CODE 8011-01-P