[Federal Register Volume 80, Number 41 (Tuesday, March 3, 2015)]
[Notices]
[Pages 11509-11517]
[FR Doc No: 2015-04334]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74378; File No. SR-NASDAQ-2015-011]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing of Proposed Rule Change Relating to the Listing and
Trading of the Shares of the First Trust Strategic Floating Rate ETF of
First Trust Exchange-Traded Fund IV

February 25, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 12, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by Nasdaq. The

Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    Nasdaq proposes to list and trade the shares of the First Trust
Strategic Floating Rate ETF (the ``Fund'') of the First Trust Strategic
Floating Rate ETF (the ``Fund'') of First Trust Exchange-Traded Fund IV
(the ``Trust'') under Nasdaq Rule 5735 (``Managed Fund Shares'').\3\
The shares of the Fund are collectively referred to herein as the
``Shares.''
---------------------------------------------------------------------------

    \3\ The Commission approved Nasdaq Rule 5735 in Securities
Exchange Act Release No. 57962 (June 13, 2008), 73 FR 35175 (June
20, 2008) (SR-NASDAQ-2008-039). There are already multiple actively-
managed funds listed on the Exchange; see, e.g., Securities Exchange
Act Release Nos. 69464 (April 26, 2013), 78 FR 25774 (May 2, 2013)
(SR-NASDAQ-2013-036) (order approving listing and trading of First
Trust Senior Loan Fund); 68972 (February 22, 2013), 78 FR 13721
(February 28, 2013) (SR-NASDAQ-2012-147) (order approving listing
and trading of First Trust High Yield Long/Short ETF); 66489
(February 29, 2012), 77 FR 13379 (March 6, 2012) (SR-NASDAQ-2012-
004) (order approving listing and trading of WisdomTree Emerging
Markets Corporate Bond Fund). The Exchange believes the proposed
rule change raises no significant issues not previously addressed in
those prior Commission orders.
---------------------------------------------------------------------------

    The text of the proposed rule change is available at http://nasdaq.cchwallstreet.com/, at Nasdaq's principal office, and at the
Commission's Public Reference Room.

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

    In its filing with the Commission, Nasdaq included statements
concerning the purpose of, and basis for, the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. Nasdaq has prepared summaries, set forth in Sections A,
B, and C below, of the most significant aspects of such statements.

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

1. Purpose
    The Exchange proposes to list and trade the Shares of the Fund
under Nasdaq Rule 5735, which governs the listing and trading of
Managed Fund Shares\4\ on the Exchange. The Fund will be an actively-
managed exchange-traded fund (``ETF''). The Shares will be offered by
the Trust, which was established as a Massachusetts business trust on
September 15, 2010.\5\ The Trust is registered with the Commission as
an investment company and has filed a registration statement on Form N-
1A (``Registration Statement'') with the Commission.\6\ The Fund will
be a series of the Trust. The Fund intends to qualify each year as a
regulated investment company (``RIC'') under Subchapter M of the
Internal Revenue Code of 1986, as amended.
---------------------------------------------------------------------------

    \4\ A Managed Fund Share is a security that represents an
interest in an investment company registered under the Investment
Company Act of 1940 (15 U.S.C. 80a-1) (the ``1940 Act'') organized
as an open-end investment company or similar entity that invests in
a portfolio of securities selected by its investment adviser
consistent with its investment objectives and policies. In contrast,
an open-end investment company that issues Index Fund Shares, listed
and traded on the Exchange under Nasdaq Rule 5705, seeks to provide
investment results that correspond generally to the price and yield
performance of a specific foreign or domestic stock index, fixed
income securities index or combination thereof.
    \5\ The Commission has issued an order, upon which the Trust may
rely, granting certain exemptive relief under the 1940 Act. See
Investment Company Act Release No. 30029 (April 10, 2012) (File No.
812-13795) (the ``Exemptive Relief''). In addition, the Commission
has issued no-action relief, upon which the Trust may rely,
pertaining to the Fund's ability to invest in derivatives
notwithstanding certain representations in the application for the
Exemptive Relief. See Commission No-Action Letter (December 6,
2012).
    \6\ See Post-Effective Amendment No. 104 to Registration
Statement on Form N-1A for the Trust, dated January 29, 2015 (File
Nos. 333-174332 and 811-22559). The descriptions of the Fund and the
Shares contained herein are based, in part, on information in the
Registration Statement.
---------------------------------------------------------------------------

    First Trust Advisors L.P. will be the investment adviser
(``Adviser'') to the Fund. First Trust Portfolios L.P. (the
``Distributor'') will be the principal underwriter and distributor of
the Fund's Shares. The Bank of New York Mellon Corporation (``BNY'')
will act as the administrator, accounting agent, custodian and transfer
agent to the Fund.
    Paragraph (g) of Rule 5735 provides that if the investment adviser
to the investment company issuing Managed Fund Shares is affiliated
with a broker-dealer, such investment adviser shall erect a ``fire
wall'' between the investment adviser and the broker-dealer with
respect to access to information concerning the composition and/or
changes to such investment company portfolio.\7\ In addition, paragraph
(g) further requires that personnel who make decisions on the open-end
fund's portfolio composition must be subject to procedures designed to
prevent the use and dissemination of material, non-public information
regarding the open-end fund's portfolio. Rule 5735(g) is similar to
Nasdaq Rule 5705(b)(5)(A)(i); however, paragraph (g) in connection with
the establishment of a ``fire wall'' between the investment adviser and
the broker-dealer reflects the applicable open-end fund's portfolio,
not an underlying benchmark index, as is the case with index-based
funds. The Adviser is not a broker-dealer, although it is affiliated
with the Distributor, a broker-dealer. The Adviser has implemented a
fire wall with respect to its broker-dealer affiliate regarding access
to information concerning the composition and/or changes to the
portfolio. In addition, personnel who make decisions on the Fund's
portfolio composition will be subject to procedures designed to prevent
the use and dissemination of material non-public information regarding
the Fund's portfolio. In the event (a) the Adviser becomes, or becomes
newly affiliated with, a broker-dealer, or (b) any new adviser or sub-
adviser is a registered broker-dealer or becomes affiliated with
another broker-dealer, it will implement a fire wall with respect to
its relevant personnel and/or such broker-dealer affiliate, as
applicable, regarding access to information concerning the composition
and/or changes to the portfolio and will be subject to procedures
designed to prevent the use and dissemination of material non-public
information regarding such portfolio. The Fund does not currently
intend to use a sub-adviser.
---------------------------------------------------------------------------

    \7\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Adviser and its related personnel are
subject to the provisions of Rule 204A-1 under the Advisers Act
relating to codes of ethics. This Rule requires investment advisers
to adopt a code of ethics that reflects the fiduciary nature of the
relationship to clients as well as compliance with other applicable
securities laws. Accordingly, procedures designed to prevent the
communication and misuse of non-public information by an investment
adviser must be consistent with Rule 204A-1 under the Advisers Act.
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful
for an investment adviser to provide investment advice to clients
unless such investment adviser has (i) adopted and implemented
written policies and procedures reasonably designed to prevent
violation, by the investment adviser and its supervised persons, of
the Advisers Act and the Commission rules adopted thereunder; (ii)
implemented, at a minimum, an annual review regarding the adequacy
of the policies and procedures established pursuant to subparagraph
(i) above and the effectiveness of their implementation; and (iii)
designated an individual (who is a supervised person) responsible
for administering the policies and procedures adopted under
subparagraph (i) above.
---------------------------------------------------------------------------

First Trust Strategic Floating Rate ETF
    The investment objective of the Fund will be to seek current
income. To achieve its objective, the Fund will invest, under normal
market

conditions,\8\ at least 80% of its net assets in a portfolio of the
following types of floating-rate\9\ debt instruments issued by U.S. and
non-U.S. public- and private-sector entities: floating-rate
corporate\10\ and government bonds and notes; floating-rate agency
securities;\11\ floating-rate instruments of non-U.S. issuers;
floating-rate privately-issued securities;\12\ floating-rate asset-
backed securities;\13\ floating-rate mortgage-backed securities;\14\
floating-rate loans;\15\ and investment companies\16\ (including
investment companies advised by the Adviser) that invest primarily in
the foregoing types of debt instruments\17\ (collectively, ``Floating
Rate Debt Instruments'').
---------------------------------------------------------------------------

    \8\ The term ``under normal market conditions'' as used herein
includes, but is not limited to, the absence of adverse market,
economic, political or other conditions, including extreme
volatility or trading halts in the fixed income markets or the
financial markets generally; operational issues causing
dissemination of inaccurate market information; or force majeure
type events such as systems failure, natural or man-made disaster,
act of God, armed conflict, act of terrorism, riot or labor
disruption or any similar intervening circumstance. For temporary
defensive purposes, during the initial invest-up period and during
periods of high cash inflows or outflows, the Fund may depart from
its principal investment strategies; for example, it may hold a
higher than normal proportion of its assets in cash. During such
periods, the Fund may not be able to achieve its investment
objective. The Fund may adopt a defensive strategy when the Adviser
believes securities in which the Fund normally invests have elevated
risks due to political or economic factors and in other
extraordinary circumstances.
    \9\ For the avoidance of doubt, the term ``floating-rate'' shall
also include similar terms, such as ``variable-rate'' and
``adjustable-rate.''
    \10\ The Adviser expects that, under normal market conditions,
generally, for a corporate bond to be considered as an eligible
investment, after taking into account such an investment, at least
75% of the Fund's net assets that are invested in floating-rate
corporate bonds and, as described below, fixed-rate corporate bonds
(in the aggregate), will be comprised of corporate bonds that have,
at the time of original issuance, $100 million or more par amount
outstanding.
    \11\ ``Agency securities'' for these purposes generally includes
securities issued by the following entities: Government National
Mortgage Association (Ginnie Mae), Federal National Mortgage
Association (Fannie Mae), Federal Home Loan Banks (FHLBanks),
Federal Home Loan Mortgage Corporation (Freddie Mac), Farm Credit
System (FCS) Farm Credit Banks (FCBanks), Student Loan Marketing
Association (Sallie Mae), Resolution Funding Corporation (REFCORP),
Financing Corporation (FICO), and the Farm Credit System (FCS)
Financial Assistance Corporation (FAC). Agency securities can
include, but are not limited to, mortgage-backed securities.
    \12\ ``Privately-issued securities'' for these purposes
generally includes Rule 144A securities other than mortgage-backed
Rule 144A securities. Under normal market conditions, privately-
issued securities will have, at the time of original issuance, $100
million or more principal amount outstanding to be considered
eligible investments.
    \13\ Asset-backed securities are securities that are backed by a
pool of assets. The Fund currently intends to invest in asset-backed
securities that are consumer asset-backed securities.
    \14\ Mortgage-backed securities, which are securities that
directly or indirectly represent a participation in, or are secured
by and payable from, mortgage loans on real property, will consist
of: (1) residential mortgage-backed securities (``RMBS''); (2)
commercial mortgage-backed securities (``CMBS''); (3) stripped
mortgage-backed securities (``SMBS''), which are mortgage-backed
securities where mortgage payments are divided between paying the
loan's principal and paying the loan's interest; (4) collateralized
mortgage obligations (``CMOs'') and real estate mortgage investment
conduits (``REMICs''), which are mortgage-backed securities that are
divided into multiple classes, with each class being entitled to a
different share of the principal and interest payments received from
the pool of underlying assets.
    \15\ The floating-rate loans in which the Fund will invest will
represent amounts borrowed by companies or other entities from banks
and other lenders and a significant portion of such floating-rate
loans may be rated below investment grade or unrated. Floating-rate
loans held by the Fund may be senior or subordinate obligations of
the borrower and may or may not be secured by collateral. First lien
senior secured floating-rate loans are referred to herein as
``senior loans.'' Floating-rate loans that are not senior loans
(i.e., unsecured floating-rate loans and secured floating-rate loans
that are not first lien floating-rate loans) are referred to herein
as ``junior loans.'' The Fund will generally invest in floating-rate
loans that the Adviser deems to be liquid with readily available
prices; notwithstanding the foregoing, the Fund may invest in
floating-rate loans that are deemed illiquid so long as the Fund
complies with the 15% limitation on investments of its net assets in
illiquid assets described below under ``Investment Restrictions.''
    \16\ The Fund currently anticipates investing only in registered
open-end investment companies that are listed and traded in the U.S.
on registered exchanges (i.e., other ETFs). An ETF is an investment
company registered under the 1940 Act that holds a portfolio of
securities. Many ETFs are designed to track the performance of a
securities index, including industry, sector, country and region
indexes. The Fund may invest in the securities of ETFs in excess of
the limits imposed under the 1940 Act pursuant to exemptive orders
obtained by other ETFs and their sponsors from the Commission. In
addition, the Fund may invest in the securities of certain
investment companies in excess of the limits imposed under the 1940
Act pursuant to an exemptive order obtained by the Trust and the
Adviser from the Commission. See Investment Company Act Release No.
30377 (February 5, 2013) (File No. 812-13895). The ETFs in which the
Fund may invest include Index Fund Shares (as described in Nasdaq
Rule 5705), Portfolio Depository Receipts (as described in Nasdaq
Rule 5705), and Managed Fund Shares (as described in Nasdaq Rule
5735). While the Fund may invest in inverse ETFs, the Fund will not
invest in leveraged or inverse leveraged (e.g., 2X or -3X) ETFs.
    \17\ The liquidity of a security, especially in the case of
asset-backed and mortgage-backed securities, will be a substantial
factor in the Fund's security selection process. Consistent with the
discussion below under ``Investment Restrictions,'' the Fund will
not purchase any Floating Rate Debt Instruments (including asset-
backed securities and mortgage-backed securities) that, in the
Adviser's opinion, are illiquid if, as a result, more than 15% of
the value of the Fund's net assets will be invested in illiquid
assets.
---------------------------------------------------------------------------

    At least 65% of the Fund's net assets will be invested in Floating
Rate Debt Instruments that are, at the time of purchase, investment
grade. To be considered ``investment grade,'' under normal market
conditions, rated Floating Rate Debt Instruments will carry, at the
time of purchase, a rating in the highest four rating categories of at
least one nationally recognized statistical ratings organization
(``NRSRO'') (e.g., BBB- or higher by Standard & Poor's Ratings Services
(``S&P''), and/or Fitch Ratings (``Fitch''), or Baa3 or higher by
Moody's Investors Service, Inc. (``Moody's'').\18\ For unrated
securities to be considered ``investment grade,'' under normal market
conditions, such securities will be determined, at the time of
purchase, to be of comparable quality\19\ by the Adviser. The Fund may
invest up to 35% of its net assets in securities that are, at the time
of investment, rated below investment grade by each NRSRO rating such
securities (or securities that are unrated and determined by the
Adviser to be of comparable quality), commonly referred to as ``high
yield'' or ``junk'' bonds. If, subsequent to purchase by the Fund, a
security held by the Fund experiences a decline in credit quality and
falls below investment grade, the Fund may continue to hold the
security, and it will not cause the Fund to violate the 35% investment
limitation; however, the security will be taken into account for
purposes of determining whether purchases of additional securities will
cause the Fund to violate such limitation.
---------------------------------------------------------------------------

    \18\ For the avoidance of doubt, if a security is rated by
multiple NRSROs and receives different ratings, the Fund will treat
the security as being rated in the highest rating category received
from an NRSRO.
    \19\ Comparable quality of unrated securities will be determined
by the Adviser based on fundamental credit analysis of the unrated
security and comparable NRSRO-rated securities. On a best efforts
basis, the Adviser will attempt to make a rating determination based
on publicly available data. In making a ``comparable quality''
determination, the Adviser may consider, for example, whether the
issuer of the security has issued other rated securities, the nature
and provisions of the relevant security, whether the obligations
under the relevant security are guaranteed by another entity and the
rating of such guarantor (if any), relevant cash flows,
macroeconomic analysis, and/or sector or industry analysis.
---------------------------------------------------------------------------

    The Fund will limit its investments in asset-backed securities
(excluding agency mortgage-backed securities) and non-agency mortgage-
backed securities (in the aggregate) to 20% of its net assets.\20\ In
addition, the Fund will limit its investments in junior loans to 20% of
its net assets.
---------------------------------------------------------------------------

    \20\ For the avoidance of doubt, there is no limitation on the
Fund's investments in agency mortgage-backed securities.
---------------------------------------------------------------------------

    The Fund will hold debt securities (including, in the aggregate,
Floating Rate Debt Instruments and the fixed-rate debt securities
described below) of at least 13 non-affiliated issuers.

Other Investments
    Under normal market conditions, the Fund will invest primarily in
the Floating Rate Debt Instruments described above to meet its
investment objective. In addition, the Fund may invest up to 20% of its
net assets in the following types of fixed-rate debt securities:
corporate\21\ and government bonds and notes; agency securities;\22\
instruments of non-U.S. issuers in developed markets; privately-issued
securities;\23\ asset-backed securities;\24\ mortgage-backed
securities;\25\ municipal bonds; money market securities;\26\ and
investment companies\27\ (including investment companies advised by the
Adviser) that invest primarily in the foregoing types of debt
securities.
---------------------------------------------------------------------------

    \21\ See footnote 10 above.
    \22\ See footnote 11 above.
    \23\ See footnote 12 above.
    \24\ See footnote 13 above.
    \25\ See footnote 14 above.
    \26\ ``Money market securities'' for these purposes generally
includes: short-term high-quality obligations issued or guaranteed
by the U.S. Treasury or the agencies or instrumentalities of the
U.S. government; short-term high-quality securities issued or
guaranteed by non-U.S. governments, agencies and instrumentalities;
repurchase agreements; commercial paper (both asset-backed and non-
asset-backed); and deposits and other obligations of U.S. and non-
U.S. banks and financial institutions.
    \27\ See footnote 16 above.
---------------------------------------------------------------------------

    Further, to pursue its investment objective, the Fund may invest up
to 20% of the value of its net assets in exchange-listed options on
U.S. Treasury securities, exchange-listed options on U.S. Treasury
futures contracts and exchange-listed U.S. Treasury futures
contracts.\28\ The use of these derivative transactions may allow the
Fund to obtain net long or short exposures to selected interest rates.
These derivatives may also be used to hedge risks, including interest
rate risks and credit risks, associated with the Fund's portfolio
investments. The Fund's investments in derivative instruments will be
consistent with the Fund's investment objective and the 1940 Act and
will not be used to seek to achieve a multiple or inverse multiple of
an index.
---------------------------------------------------------------------------

    \28\ At least 90% of the Fund's net assets that are invested in
exchange-traded derivative instruments will be invested in
instruments that trade in markets that are members of the
Intermarket Surveillance Group (``ISG'') (see footnote 40 below) or
are parties to a comprehensive surveillance sharing agreement with
the Exchange.
---------------------------------------------------------------------------

Investment Restrictions
    The Fund will not invest 25% or more of the value of its total
assets in securities of issuers in any one industry. This restriction
does not apply to (a) obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities or (b) securities of
other investment companies.\29\
---------------------------------------------------------------------------

    \29\ See Form N-1A, Item 9. The Commission has taken the
position that a fund is concentrated if it invests more than 25% of
the value of its total assets in any one industry. See, e.g.,
Investment Company Act Release No. 9011 (October 30, 1975), 40 FR
54241 (November 21, 1975).
---------------------------------------------------------------------------

    The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid assets (calculated at the time of investment),
including Rule 144A securities deemed illiquid by the Adviser.\30\ The
Fund will monitor its portfolio liquidity on an ongoing basis to
determine whether, in light of current circumstances, an adequate level
of liquidity is being maintained, and will consider taking appropriate
steps in order to maintain adequate liquidity if, through a change in
values, net assets, or other circumstances, more than 15% of the Fund's
net assets are held in illiquid assets. Illiquid assets include
securities subject to contractual or other restrictions on resale and
other instruments that lack readily available markets as determined in
accordance with Commission staff guidance.\31\
---------------------------------------------------------------------------

    \30\ In reaching liquidity decisions, the Adviser may consider
the following factors: the frequency of trades and quotes for the
security; the number of dealers wishing to purchase or sell the
security and the number of other potential purchasers; dealer
undertakings to make a market in the security; and the nature of the
security and the nature of the marketplace in which it trades (e.g.,
the time needed to dispose of the security, the method of soliciting
offers and the mechanics of transfer).
    \31\ The Commission has stated that long-standing Commission
guidelines have required open-end funds to hold no more than 15% of
their net assets in illiquid securities and other illiquid assets.
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR
14618 (March 18, 2008), footnote 34. See also Investment Company Act
Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 1970)
(Statement Regarding ``Restricted Securities''); Investment Company
Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 20, 1992)
(Revisions of Guidelines to Form N-1A). A fund's portfolio security
is illiquid if it cannot be disposed of in the ordinary course of
business within seven days at approximately the value ascribed to it
by the fund. See Investment Company Act Release No. 14983 (March 12,
1986), 51 FR 9773 (March 21, 1986) (adopting amendments to Rule 2a-7
under the 1940 Act); Investment Company Act Release No. 17452 (April
23, 1990), 55 FR 17933 (April 30, 1990) (adopting Rule 144A under
the Securities Act of 1933).
---------------------------------------------------------------------------

    The Fund will not invest in non-U.S. equity securities.
Creation and Redemption of Shares
    The Fund will issue and redeem Shares on a continuous basis at net
asset value (``NAV'') \32\ only in large blocks of Shares (``Creation
Units'') in transactions with authorized participants, generally
including broker-dealers and large institutional investors
(``Authorized Participants''). Creation Units generally will consist of
50,000 Shares, although this may change from time to time. Creation
Units, however, are not expected to consist of less than 50,000 Shares.
As described in the Registration Statement and consistent with the
Exemptive Relief, the Fund will issue and redeem Creation Units in
exchange for an in-kind portfolio of instruments and/or cash in lieu of
such instruments (the ``Creation Basket''). In addition, if there is a
difference between the NAV attributable to a Creation Unit and the
market value of the Creation Basket exchanged for the Creation Unit,
the party conveying instruments with the lower value will pay to the
other an amount in cash equal to the difference (referred to as the
``Cash Component'').
---------------------------------------------------------------------------

    \32\ The NAV of the Fund's Shares generally will be calculated
once daily Monday through Friday as of the close of regular trading
on the New York Stock Exchange, generally 4:00 p.m., Eastern Time
(the ``NAV Calculation Time''). NAV per Share will be calculated by
dividing the Fund's net assets by the number of Fund Shares
outstanding. For more information regarding the valuation of Fund
investments in calculating the Fund's NAV, see the Registration
Statement.
---------------------------------------------------------------------------

    Creations and redemptions must be made by or through an Authorized
Participant that has executed an agreement that has been agreed to by
the Distributor and BNY with respect to creations and redemptions of
Creation Units. All standard orders to create Creation Units must be
received by the transfer agent no later than the closing time of the
regular trading session on the New York Stock Exchange (ordinarily 4:00
p.m., Eastern Time) (the ``Closing Time'') in each case on the date
such order is placed in order for the creation of Creation Units to be
effected based on the NAV of Shares as next determined on such date
after receipt of the order in proper form. Shares may be redeemed only
in Creation Units at their NAV next determined after receipt not later
than the Closing Time of a redemption request in proper form by the
Fund through the transfer agent and only on a business day.
    The Fund's custodian, through the National Securities Clearing
Corporation, will make available on each business day, prior to the
opening of business of the Exchange, the list of the names and
quantities of the instruments comprising the Creation Basket, as well
as the estimated Cash Component (if any), for that day. The published
Creation Basket will apply until a new Creation Basket is announced on
the following business day prior to commencement of trading in the
Shares.

Net Asset Value
    The Fund's NAV will be determined as of the close of trading
(normally 4:00 p.m., Eastern Time) on each day the New York Stock
Exchange is open for business. NAV will be calculated for the Fund by
taking the market price of the Fund's total assets, including interest
or dividends accrued but not yet collected, less all liabilities, and
dividing such amount by the total number of Shares outstanding. The
result, rounded to the nearest cent, will be the NAV per Share. All
valuations will be subject to review by the Board of Trustees of the
Trust (``Trust Board'') or its delegate.
    The Fund's investments will be valued daily at market value or, in
the absence of market value with respect to any investment, at fair
value, in each case in accordance with valuation procedures (which may
be revised from time to time) adopted by the Trust Board (the
``Valuation Procedures'') and in accordance with the 1940 Act. A market
valuation generally means a valuation (i) obtained from an exchange, an
independent pricing service (``Pricing Service''), or a major market
maker (or dealer) or (ii) based on a price quotation or other
equivalent indication of value supplied by an exchange, a Pricing
Service, or a major market maker (or dealer). The information
summarized below is based on the Valuation Procedures as currently in
effect; however, as noted above, the Valuation Procedures are amended
from time to time and, therefore, such information is subject to
change.
    Certain securities, including Floating Rate Debt Instruments, in
which the Fund may invest will not be listed on any securities exchange
or board of trade. Such securities will typically be bought and sold by
institutional investors in individually negotiated private transactions
that function in many respects like an over-the-counter secondary
market, although typically no formal market makers will exist. Certain
securities, particularly debt securities, will have few or no trades,
or trade infrequently, and information regarding a specific security
may not be widely available or may be incomplete. Accordingly,
determinations of the fair value of debt securities may be based on
infrequent and dated information. Because there is less reliable,
objective data available, elements of judgment may play a greater role
in valuation of debt securities than for other types of securities.
Typically, Floating Rate Debt Instruments and other debt securities in
which the Fund may invest (other than those described below) will be
valued using information provided by a Pricing Service. Debt securities
having a remaining maturity of 60 days or less when purchased will be
valued at cost adjusted for amortization of premiums and accretion of
discounts, provided the Adviser's pricing committee (the ``Pricing
Committee'') has determined that the use of amortized cost is an
appropriate reflection of fair value given market and issuer-specific
conditions existing at the time of the determination. Overnight
repurchase agreements will be valued at cost and term repurchase
agreements (i.e., those whose maturity exceeds seven days) will be
valued at the average of the bid quotations obtained daily from at
least two recognized dealers.
    Asset-backed and mortgage-backed securities will generally be
valued by using a Pricing Service. If a Pricing Service does not cover
a particular asset-backed or mortgage-backed security, or discontinues
covering a particular asset-backed or mortgage-backed security, the
security will be priced using broker quotes generally provided by
brokers that make or participate in markets in the security. To derive
values, Pricing Services and broker-dealers may use matrix pricing and
valuation models, as well as recent market transactions for the same or
similar assets. As it deems appropriate, the Pricing Committee may
determine that a Pricing Service price does not represent an accurate
value of an asset-backed or mortgage-backed security, based on broker
quotes it receives, a recent trade in the security by the Fund,
information from a portfolio manager, or other market information. In
the event that the Pricing Committee determines that the Pricing
Service price is unreliable or inaccurate based on such other
information, broker quotes may be used. Additionally, if the Pricing
Committee determines that the price of an asset-backed or mortgage-
backed security obtained from a Pricing Service and available broker
quotes is unreliable or inaccurate due to market conditions or other
reasons, or if a Pricing Service price or broker quote is unavailable,
the security will be valued using fair value pricing, as described
below.
    Equity securities listed on any exchange other than the Exchange
will be valued at the last sale price on the exchange on which they are
principally traded on the business day as of which such value is being
determined. Equity securities listed on the Exchange will be valued at
the official closing price on the business day as of which such value
is being determined. If there has been no sale on such day, or no
official closing price in the case of securities traded on the
Exchange, the securities will be valued using fair value pricing, as
described below. Equity securities traded on more than one securities
exchange will be valued at the last sale price or official closing
price, as applicable, on the business day as of which such value is
being determined at the close of the exchange representing the
principal market for such securities.
    Exchange-traded options and futures contracts will be valued at the
closing price in the market where such contracts are principally
traded.
    Certain securities, including Floating Rate Debt Instruments, in
which the Fund will invest will not be able to be priced by pre-
established pricing methods. Such securities may be valued by the Trust
Board or its delegate at fair value. The use of fair value pricing by
the Fund will be governed by the Valuation Procedures and conducted in
accordance with the provisions of the 1940 Act. Valuing the Fund's
securities using fair value pricing will result in using prices for
those securities that may differ from current market valuations or
official closing prices on the applicable exchange.
Availability of Information
    The Fund's Web site (www.ftportfolios.com), which will be publicly
available prior to the public offering of Shares, will include a form
of the prospectus for the Fund that may be downloaded. The Web site
will include the Shares' ticker, CUSIP and exchange information along
with additional quantitative information updated on a daily basis,
including, for the Fund: (1) Daily trading volume, the prior business
day's reported NAV and closing price, mid-point of the bid/ask spread
at the time of calculation of such NAV (the ``Bid/Ask Price''),\33\ and
a calculation of the premium and discount of the Bid/Ask Price against
the NAV; and (2) data in chart format displaying the frequency
distribution of discounts and premiums of the daily Bid/Ask Price
against the NAV, within appropriate ranges, for each of the four
previous calendar quarters. On each business day, before commencement
of trading in Shares in the Regular Market Session \34\ on the
Exchange, the Fund

will disclose on its Web site the identities and quantities of the
portfolio of securities, and other assets (the ``Disclosed Portfolio''
as defined in Nasdaq Rule 5735(c)(2)) held by the Fund that will form
the basis for the Fund's calculation of NAV at the end of the business
day.\35\ The Fund's disclosure of derivative positions in the Disclosed
Portfolio will include information that market participants can use to
value these positions intraday. On a daily basis, the Fund will
disclose on the Fund's Web site the following information regarding
each portfolio holding, as applicable to the type of holding: Ticker
symbol, CUSIP number or other identifier, if any; a description of the
holding (including the type of holding), the identity of the security
or other asset or instrument underlying the holding, if any; for
options, the option strike price; quantity held (as measured by, for
example, par value, notional value or number of shares, contracts or
units); maturity date, if any; coupon rate, if any; effective date, if
any; market value of the holding; and percentage weighting of the
holding in the Fund's portfolio. The Web site information will be
publicly available at no charge.
---------------------------------------------------------------------------

    \33\ The Bid/Ask Price of the Fund will be determined using the
mid-point of the highest bid and the lowest offer on the Exchange as
of the time of calculation of the Fund's NAV. The records relating
to Bid/Ask Prices will be retained by the Fund and its service
providers.
    \34\ See Nasdaq Rule 4120(b)(4) (describing the three trading
sessions on the Exchange: (1) Pre-Market Session from 4 a.m. to 9:30
a.m., Eastern Time; (2) Regular Market Session from 9:30 a.m. to 4
p.m. or 4:15 p.m., Eastern Time; and (3) Post-Market Session from 4
p.m. or 4:15 p.m. to 8 p.m., Eastern Time).
    \35\ Under accounting procedures to be followed by the Fund,
trades made on the prior business day (``T'') will be booked and
reflected in NAV on the current business day (``T+1''). Accordingly,
the Fund will be able to disclose at the beginning of the business
day the portfolio that will form the basis for the NAV calculation
at the end of the business day.
---------------------------------------------------------------------------

    In addition, for the Fund, an estimated value, defined in Rule
5735(c)(3) as the ``Intraday Indicative Value,'' that reflects an
estimated intraday value of the Fund's Disclosed Portfolio, will be
disseminated. Moreover, the Intraday Indicative Value, available on the
NASDAQ OMX Information LLC proprietary index data service,\36\ will be
based upon the current value for the components of the Disclosed
Portfolio and will be updated and widely disseminated by one or more
major market data vendors and broadly displayed at least every 15
seconds during the Regular Market Session. The Intraday Indicative
Value will be based on quotes and closing prices from the securities'
local market and may not reflect events that occur subsequent to the
local market's close. Premiums and discounts between the Intraday
Indicative Value and the market price may occur. This should not be
viewed as a ``real time'' update of the NAV per Share of the Fund,
which is calculated only once a day.
---------------------------------------------------------------------------

    \36\ Currently, the NASDAQ OMX Global Index Data Service
(``GIDS'') is the NASDAQ OMX global index data feed service,
offering real-time updates, daily summary messages, and access to
widely followed indexes and Intraday Indicative Values for ETFs.
GIDS provides investment professionals with the daily information
needed to track or trade NASDAQ OMX indexes, listed ETFs, or third-
party partner indexes and ETFs.
---------------------------------------------------------------------------

    The dissemination of the Intraday Indicative Value, together with
the Disclosed Portfolio, will allow investors to determine the value of
the underlying portfolio of the Fund on a daily basis and will provide
a close estimate of that value throughout the trading day.
    Investors will also be able to obtain the Fund's Statement of
Additional Information (``SAI''), the Fund's annual and semi-annual
reports (together, ``Shareholder Reports''), and its Form N-CSR and
Form N-SAR, filed twice a year. The Fund's SAI and Shareholder Reports
will be available free upon request from the Fund, and those documents
and the Form N-CSR and Form N-SAR may be viewed on-screen or downloaded
from the Commission's Web site at www.sec.gov. Information regarding
market price and trading volume of the Shares will be continually
available on a real-time basis throughout the day on brokers' computer
screens and other electronic services. Information regarding the
previous day's closing price and trading volume information for the
Shares will be published daily in the financial section of newspapers.
Quotation and last sale information for the Shares will be available
via Nasdaq proprietary quote and trade services, as well as in
accordance with the Unlisted Trading Privileges and the Consolidated
Tape Association (``CTA'') plans for the Shares. Quotation and last
sale information for the other ETFs in which the Fund will invest will
be available via the quote and trade services of their respective
primary exchanges, as well as in accordance with the Unlisted Trading
Privileges and the CTA plans, as applicable. Quotation and last sale
information for exchange-traded options will be available via the
Options Price Reporting Authority. Intraday executable price quotations
on Floating Rate Debt Instruments and other assets not traded on an
exchange will be available from major broker-dealer firms or market
data vendors, as well as from automated quotation systems, published or
other public sources, or online information services. Additionally, the
Trade Reporting and Compliance Engine (``TRACE'') of the Financial
Industry Regulatory Authority (``FINRA'') will be a source of price
information for corporate bonds, privately-issued securities, mortgage-
backed securities and asset-backed securities to the extent
transactions in such securities are reported to TRACE.\37\ For
exchange-traded assets, intraday pricing information will be available
directly from the applicable listing exchange.
---------------------------------------------------------------------------

    \37\ Broker-dealers that are FINRA member firms have an
obligation to report transactions in specified debt securities to
TRACE to the extent required under applicable FINRA rules.
Generally, such debt securities will have at issuance a maturity
that exceeds one calendar year.
---------------------------------------------------------------------------

    Additional information regarding the Fund and the Shares, including
investment strategies, risks, creation and redemption procedures, fees,
Fund holdings disclosure policies, distributions and taxes will be
included in the Registration Statement.
Initial and Continued Listing
    The Shares will be subject to Rule 5735, which sets forth the
initial and continued listing criteria applicable to Managed Fund
Shares. The Exchange represents that, for initial and/or continued
listing, the Fund must be in compliance with Rule 10A-3 \38\ under the
Act. A minimum of 100,000 Shares will be outstanding at the
commencement of trading on the Exchange. The Exchange will obtain a
representation from the issuer of the Shares that the NAV per Share
will be calculated daily and that the NAV and the Disclosed Portfolio
will be made available to all market participants at the same time.
---------------------------------------------------------------------------

    \38\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Trading Halts
    With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund. Nasdaq will halt trading in the
Shares under the conditions specified in Nasdaq Rules 4120 and 4121,
including the trading pauses under Nasdaq Rules 4120(a)(11) and (12).
Trading may be halted because of market conditions or for reasons that,
in the view of the Exchange, make trading in the Shares inadvisable.
These may include: (1) The extent to which trading is not occurring in
the securities and/or the other assets constituting the Disclosed
Portfolio of the Fund; or (2) whether other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present. Trading in the Shares also will be subject to Rule
5735(d)(2)(D), which sets forth circumstances under which Shares of the
Fund may be halted.
Trading Rules
    Nasdaq deems the Shares to be equity securities, thus rendering
trading in the Shares subject to Nasdaq's existing rules

governing the trading of equity securities. Nasdaq will allow trading
in the Shares from 4:00 a.m. until 8:00 p.m., Eastern Time. The
Exchange has appropriate rules to facilitate transactions in the Shares
during all trading sessions. As provided in Nasdaq Rule 5735(b)(3), the
minimum price variation for quoting and entry of orders in Managed Fund
Shares traded on the Exchange is $0.01.
Surveillance
    The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances, administered by both Nasdaq and
also FINRA on behalf of the Exchange, which are designed to detect
violations of Exchange rules and applicable federal securities
laws.\39\ The Exchange represents that these procedures are adequate to
properly monitor Exchange trading of the Shares in all trading sessions
and to deter and detect violations of Exchange rules and applicable
federal securities laws.
---------------------------------------------------------------------------

    \39\ FINRA surveils trading on the Exchange pursuant to a
regulatory services agreement. The Exchange is responsible for
FINRA's performance under this regulatory services agreement.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
    FINRA, on behalf of the Exchange, will communicate as needed
regarding trading in the Shares and the exchange-traded securities and
instruments held by the Fund with other markets and other entities that
are members of ISG,\40\ and FINRA may obtain trading information
regarding trading in the Shares and the exchange-traded securities and
instruments held by the Fund from such markets and other entities. In
addition, the Exchange may obtain information regarding trading in the
Shares and the exchange-traded securities and instruments held by the
Fund from markets and other entities that are members of ISG, which
includes securities and futures exchanges, or with which the Exchange
has in place a comprehensive surveillance sharing agreement. Moreover,
FINRA, on behalf of the Exchange, will be able to access, as needed,
trade information for certain Floating Rate Debt Instruments and other
debt securities held by the Fund reported to FINRA's TRACE.
---------------------------------------------------------------------------

    \40\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Disclosed Portfolio may trade on markets that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.
---------------------------------------------------------------------------

    All of the Fund's net assets that are invested in exchange-traded
equity securities will be invested in securities that trade in markets
that are members of ISG or are parties to a comprehensive surveillance
sharing agreement with the Exchange. At least 90% of the Fund's net
assets that are invested in exchange-traded derivative instruments will
be invested in instruments that trade in markets that are members of
ISG or are parties to a comprehensive surveillance sharing agreement
with the Exchange.
    In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Information Circular
    Prior to the commencement of trading, the Exchange will inform its
members in an Information Circular of the special characteristics and
risks associated with trading the Shares. Specifically, the Information
Circular will discuss the following: (1) The procedures for purchases
and redemptions of Shares in Creation Units (and that Shares are not
individually redeemable); (2) Nasdaq Rule 2111A, which imposes
suitability obligations on Nasdaq members with respect to recommending
transactions in the Shares to customers; (3) how information regarding
the Intraday Indicative Value is disseminated; (4) the risks involved
in trading the Shares during the Pre-Market and Post-Market Sessions
when an updated Intraday Indicative Value will not be calculated or
publicly disseminated; (5) the requirement that members deliver a
prospectus to investors purchasing newly issued Shares prior to or
concurrently with the confirmation of a transaction; and (6) trading
information. The Information Circular will also discuss any exemptive,
no-action and interpretive relief granted by the Commission from any
rules under the Act.
    Additionally, the Information Circular will reference that the Fund
is subject to various fees and expenses described in the Registration
Statement. The Information Circular will also disclose the trading
hours of the Shares of the Fund and the applicable NAV Calculation Time
for the Shares. The Information Circular will disclose that information
about the Shares of the Fund will be publicly available on the Fund's
Web site.
2. Statutory Basis
    Nasdaq believes that the proposal is consistent with Section 6(b)
of the Act in general and Section 6(b)(5) of the Act in particular in
that it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to remove impediments to and perfect
the mechanism of a free and open market and, in general, to protect
investors and the public interest.
    The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in Nasdaq Rule 5735. The
Exchange represents that trading in the Shares will be subject to the
existing trading surveillances, administered by both Nasdaq and also
FINRA on behalf of the Exchange, which are designed to detect
violations of Exchange rules and applicable federal securities laws.
    The Adviser is not a broker-dealer, although it is affiliated with
the Distributor, a broker-dealer, and is required to implement a ``fire
wall'' with respect to such broker-dealer affiliate regarding access to
information concerning the composition and/or changes to the Fund's
portfolio. In addition, paragraph (g) of Nasdaq Rule 5735 further
requires that personnel who make decisions on the open-end fund's
portfolio composition must be subject to procedures designed to prevent
the use and dissemination of material non-public information regarding
the open-end fund's portfolio.
    FINRA, on behalf of the Exchange, will communicate as needed
regarding trading in the Shares and the exchange-traded securities and
instruments held by the Fund with other markets and other entities that
are members of ISG, and FINRA may obtain trading information regarding
trading in the Shares and the exchange-traded securities and
instruments held by the Fund from such markets and other entities. In
addition, the Exchange may obtain information regarding trading in the
Shares and the exchange-traded securities and instruments held by the
Fund from markets and other entities that are members of ISG, which
includes securities and futures exchanges, or with which the Exchange
has in place a comprehensive surveillance sharing agreement. Moreover,
FINRA, on behalf of the Exchange, will be able to access, as needed,
trade information for certain

Floating Rate Debt Instruments and other debt securities held by the
Fund reported to FINRA's TRACE.
    All of the Fund's net assets that are invested in exchange-traded
equity securities will be invested in securities that trade in markets
that are members of ISG or are parties to a comprehensive surveillance
sharing agreement with the Exchange. At least 90% of the Fund's net
assets that are invested in exchange-traded derivative instruments will
be invested in instruments that trade in markets that are members of
ISG or are parties to a comprehensive surveillance sharing agreement
with the Exchange.
    The investment objective of the Fund will be to seek current
income. To achieve its objective, the Fund will invest, under normal
market conditions, at least 80% of its net assets in a portfolio of
Floating Rate Debt Instruments. In addition, the Fund may invest up to
20% of its net assets in certain fixed-rate debt securities. The Fund
may invest up to 20% of the value of its net assets in exchange-listed
options on U.S. Treasury securities, exchange-listed options on U.S.
Treasury futures contracts and exchange-listed U.S. Treasury futures
contracts. The Fund's investments in derivative instruments will be
consistent with the Fund's investment objective and the 1940 Act and
will not be used to seek to achieve a multiple or inverse multiple of
an index. At least 65% of the Fund's net assets will be invested in
Floating Rate Debt Instruments that are, at the time of purchase,
investment grade. The Fund will limit its investments in asset-backed
securities (excluding agency mortgage-backed securities) and non-agency
mortgage-backed securities (in the aggregate) to 20% of its net assets.
In addition, the Fund will limit its investments in junior loans to 20%
of its net assets. The Fund may hold up to an aggregate amount of 15%
of its net assets in illiquid assets (calculated at the time of
investment), including Rule 144A securities deemed illiquid by the
Adviser. The Fund will monitor its portfolio liquidity on an ongoing
basis to determine whether, in light of current circumstances, an
adequate level of liquidity is being maintained, and will consider
taking appropriate steps in order to maintain adequate liquidity if,
through a change in values, net assets, or other circumstances, more
than 15% of the Fund's net assets are held in illiquid assets. Illiquid
assets include securities subject to contractual or other restrictions
on resale and other instruments that lack readily available markets as
determined in accordance with Commission staff guidance.
    The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation from the issuer of the
Shares that the NAV per Share will be calculated daily and that the NAV
and the Disclosed Portfolio will be made available to all market
participants at the same time. In addition, a large amount of
information will be publicly available regarding the Fund and the
Shares, thereby promoting market transparency. Moreover, the Intraday
Indicative Value, available on the NASDAQ OMX Information LLC
proprietary index data service, will be widely disseminated by one or
more major market data vendors and broadly displayed at least every 15
seconds during the Regular Market Session. On each business day, before
commencement of trading in Shares in the Regular Market Session on the
Exchange, the Fund will disclose on its Web site the Disclosed
Portfolio that will form the basis for the Fund's calculation of NAV at
the end of the business day. Information regarding market price and
trading volume of the Shares will be continually available on a real-
time basis throughout the day on brokers' computer screens and other
electronic services, and quotation and last sale information for the
Shares will be available via Nasdaq proprietary quote and trade
services, as well as in accordance with the Unlisted Trading Privileges
and the CTA plans for the Shares. Quotation and last sale information
for the other ETFs in which the Fund will invest will be available via
the quote and trade services of their respective primary exchanges, as
well as in accordance with the Unlisted Trading Privileges and the CTA
plans, as applicable. Quotation and last sale information for exchange-
traded options will be available via the Options Price Reporting
Authority. Intraday executable price quotations on Floating Rate Debt
Instruments and other assets not traded on an exchange will be
available from major broker-dealer firms or market data vendors, as
well as from automated quotation systems, published or other public
sources, or online information services. Additionally, FINRA's TRACE
will be a source of price information for corporate bonds, privately-
issued securities, mortgage-backed securities and asset-backed
securities to the extent transactions in such securities are reported
to TRACE. For exchange-traded assets, intraday pricing information will
be available directly from the applicable listing exchange.
    The Fund's Web site will include a form of the prospectus for the
Fund and additional data relating to NAV and other applicable
quantitative information. Trading in Shares of the Fund will be halted
under the conditions specified in Nasdaq Rules 4120 and 4121 or because
of market conditions or for reasons that, in the view of the Exchange,
make trading in the Shares inadvisable, and trading in the Shares will
be subject to Nasdaq Rule 5735(d)(2)(D), which sets forth circumstances
under which Shares of the Fund may be halted. In addition, as noted
above, investors will have ready access to information regarding the
Fund's holdings, the Intraday Indicative Value, the Disclosed
Portfolio, and quotation and last sale information for the Shares.
    The Fund's investments will be valued daily at market value or, in
the absence of market value with respect to any investment, at fair
value, in each case in accordance with the Valuation Procedures and the
1940 Act.
    The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of actively-managed exchange-traded product that
will enhance competition among market participants, to the benefit of
investors and the marketplace. As noted above, FINRA, on behalf of the
Exchange, will communicate as needed regarding trading in the Shares
and the exchange-traded securities and instruments held by the Fund
with other markets and other entities that are members of ISG, and
FINRA may obtain trading information regarding trading in the Shares
and the exchange-traded securities and instruments held by the Fund
from such markets and other entities. In addition, the Exchange may
obtain information regarding trading in the Shares and in the exchange-
traded securities and instruments held by the Fund from markets and
other entities that are members of ISG, which includes securities and
futures exchanges, or with which the Exchange has in place a
comprehensive surveillance sharing agreement. Furthermore, as noted
above, investors will have ready access to information regarding the
Fund's holdings, the Intraday Indicative Value, the Disclosed
Portfolio, and quotation and last sale information for the Shares.
    For the above reasons, Nasdaq believes the proposed rule change is
consistent with the requirements of Section 6(b)(5) of the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the proposed rule change will facilitate the listing and trading of an
additional type of actively-managed exchange-traded fund that will
enhance competition among market participants, to the benefit of
investors and the marketplace.

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

    Written comments were neither solicited nor received.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period 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 Exchange consents, the Commission shall: (a) By order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2015-011 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2015-011. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NASDAQ-2015-011, and should
be submitted on or before March 24, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\41\
---------------------------------------------------------------------------

    \41\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-04334 Filed 3-2-15; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 74, Number 120 (Wednesday, June 24, 2009)]
[Rules and Regulations]
[Pages 29999-30001]
[FR Doc No: E9-14371]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 541

[Docket No. NHTSA-2009-0061]
RIN 2127-AK47

Federal Motor Vehicle Theft Prevention Standard; Final Listing of
2010 Light Duty Truck Lines Subject to the Requirements of This
Standard and Exempted Vehicle Lines for Model Year 2010

AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule announces NHTSA's determination that there are
no new model year (MY) 2010 light duty truck lines subject to the
parts-marking requirements of the Federal motor vehicle theft
prevention standard because they have been determined by the agency to
be high-theft or because they have a majority of interchangeable parts
with those of a passenger motor vehicle line. This final rule also
identifies those vehicle lines that have been granted an exemption from
the parts-marking requirements because the vehicles are equipped with
antitheft devices determined to meet certain statutory criteria.

DATES: Effective Date: This final rule is effective June 24, 2009.

FOR FURTHER INFORMATION CONTACT: Ms. Rosalind Proctor, Consumer
Standards Division, Office of International Policy, Fuel Economy and
Consumer Programs, NHTSA, West Building, 1200 New Jersey Avenue, SE.,
(NVS-131, Room W43-302) Washington, DC 20590. Ms. Proctor's telephone
number is<PHONE_NUMBER>. Her fax number is<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The theft prevention standard applies to:
(1) All passenger car lines; (2) all multipurpose passenger vehicle
(MPV) lines with a gross vehicle weight rating (GVWR) of 6,000 pounds
or less; (3) low-theft light-duty truck (LDT) lines with a GVWR of
6,000 pounds or less that have major parts that are interchangeable
with a majority of the covered major parts of passenger car or MPV
lines; and (4) high-theft light-duty truck lines with a GVWR of 6,000
pounds or less.
    The purpose of the theft prevention standard (49 CFR Part 541) is
to reduce the incidence of motor vehicle theft by facilitating the
tracing and recovery of parts from stolen vehicles. The standard seeks
to facilitate such tracing by requiring that vehicle identification
numbers (VINs), VIN derivative numbers, or other symbols be placed on
major component vehicle parts. The theft prevention standard requires
motor vehicle manufacturers to inscribe or affix VINs onto covered
original equipment major component parts, and to inscribe or affix a
symbol identifying the manufacturer and a common symbol identifying the
replacement component parts for those original equipment parts, on all
vehicle lines subject to the requirements of the standard.
    Section 33104(d) provides that once a line has become subject to
the theft prevention standard, the line remains subject to the
requirements of the standard unless it is exempted under Sec.  33106.
Section 33106 provides that a manufacturer may petition annually to
have one vehicle line exempted from the requirements of Sec.  33104, if
the line is equipped with an antitheft device meeting certain
conditions as standard equipment. The exemption is granted if NHTSA
determines that the antitheft device is likely to be as effective as
compliance with the theft prevention standard in reducing and deterring
motor vehicle thefts.
    The agency annually publishes the names of those LDT lines that
have been determined to be high theft pursuant to 49 CFR Part 541,
those LDT lines that have been determined to have major parts that are
interchangeable with a majority of the covered major parts of passenger
car or MPV lines and those vehicle lines that are exempted from the
theft prevention standard under section 33104. Appendix A to Part 541
identifies those LDT lines that are or will be subject to the theft
prevention standard beginning in a given model year. Appendix A-I to
Part 541 identifies those vehicle lines that are or have been exempted
from the theft prevention standard.
    For MY 2010, there are no new LDT lines that will be subject to the
theft prevention standard in accordance with the procedures published
in 49 CFR Part 542. Therefore, Appendix A does not need to be amended.
    For MY 2010, the list of lines that have been exempted by the
agency from the parts-marking requirements of Part 541 is amended to
include nine vehicle lines newly exempted in full. The nine exempted
vehicle lines are the Dodge Journey, GMC Terrain, Mazda Tribute,
Mercury Mariner, Mitsubishi Lancer, Nissan Murano, Porsche Panamera,
Subaru Outback and Volkswagen Audi A3.
    We note that the agency removes from the list being published in
the Federal Register each year certain vehicles lines that have been
discontinued more than 5 years ago. Therefore, the Chrysler Conquest,
Cadillac STS/Seville, Mitsubishi Diamante, Infiniti I30, J30, M30, QX4,
and the Volkswagen Cabrio have been removed from the Appendix A-I
listing. The agency will continue to maintain a comprehensive database
of all exemptions on our web site. However, we believe that re-
publishing a list containing vehicle lines that have not been in
production for a considerable period of time is unnecessary.
    The vehicle lines listed as being exempt from the standard have
previously been exempted in accordance with the procedures of 49 CFR
Part 543 and 49 U.S.C., 33106. Therefore, NHTSA finds for good cause
that notice and opportunity for comment on these listings are
unnecessary. Further, public comment

on the listing of selections and exemptions is not contemplated by 49
U.S.C. Chapter 331. For the same reasons, since this revised listing
only informs the public of previous agency actions and does not impose
additional obligations on any party, NHTSA finds for good cause that
the amendment made by this notice should be effective as soon as it is
published in the Federal Register.

Regulatory Impacts

    A. Executive Order 12866 and DOT Regulatory Policies and Procedures
Executive Order 12866, ``Regulatory Planning and Review'' (58 FR 51735,
October 4, 1993), provides for making determinations whether a
regulatory action is ``significant'' and therefore subject to Office of
Management and Budget (OMB) review and to the requirements of the
Executive Order. The Order defines a ``significant regulatory action''
as one that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or Tribal governments or
communities;
    (2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
    (4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
    This final rule was not reviewed under Executive Order 12866. It is
not significant within the meaning of the DOT Regulatory Policies and
Procedures. It will not impose any new burdens on vehicle
manufacturers. This document informs the public of previously granted
exemptions. Since the only purpose of this final rule is to inform the
public of previous actions taken by the agency no new costs or burdens
will result.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.)
requires agencies to evaluate the potential effects of their rules on
small businesses, small organizations and small governmental
jurisdictions. I have considered the effects of this rulemaking action
under the Regulatory Flexibility Act and certify that it would not have
a significant economic impact on a substantial number of small
entities. As noted above, the effect of this final rule is only to
inform the public of agency's previous actions.

C. National Environmental Policy Act

    NHTSA has analyzed this final rule for the purposes of the National
Environmental Policy Act. The agency has determined that implementation
of this action will not have any significant impact on the quality of
the human environment. Accordingly, no environmental assessment is
required.

D. Executive Order 13132 (Federalism)

    The agency has analyzed this rulemaking in accordance with the
principles and criteria contained in Executive Order 13132 and has
determined that it does not have sufficient federal implications to
warrant consultation with State and local officials or the preparation
of a federalism summary impact statement.

E. Unfunded Mandates Act

    The Unfunded Mandates Reform Act of 1995 requires agencies to
prepare a written assessment of the costs, benefits and other effects
of proposed or final rules that include a Federal mandate likely to
result in the expenditure by State, local or tribal governments, in the
aggregate, or by the private sector, of more than $100 million annually
($120.7 million as adjusted annually for inflation with base year of
1995). The assessment may be combined with other assessments, as it is
here.
    This final rule will not result in expenditures by State, local or
tribal governments or automobile manufacturers and/or their suppliers
of more than $120.7 million annually. This document informs the public
of previously granted exemptions. Since the only purpose of this final
rule is to inform the public of previous actions taken by the agency,
no new costs or burdens will result.

F. Executive Order 12988 (Civil Justice Reform)

    Pursuant to Executive Order 12988, ``Civil Justice Reform,'' \1\
the agency has considered whether this final rule has any retroactive
effect. We conclude that it would not have such an effect. In
accordance with Sec.  33118 when the Theft Prevention Standard is in
effect, a State or political subdivision of a State may not have a
different motor vehicle theft prevention standard for a motor vehicle
or major replacement part. 49 U.S.C. 33117 provides that judicial
review of this rule may be obtained pursuant to 49 U.S.C. 32909.
Section 32909 does not require submission of a petition for
reconsideration or other administrative proceedings before parties may
file suit in court.

G. Paperwork Reduction Act
---------------------------------------------------------------------------

    \1\ See 61 FR 4729, February 7, 1996.
---------------------------------------------------------------------------

    The Department of Transportation has not submitted an information
collection request to OMB for review and clearance under the Paperwork
Reduction Act of 1995 (Pub.L. 104-13, 44 U.S.C. Chapter 35). This rule
does not impose any new information collection requirements on
manufacturers.

List of Subjects in 49 CFR Part 541

    Administrative practice and procedure, Labeling, Motor vehicles,
Reporting and recordkeeping requirements.

0
In consideration of the foregoing, 49 CFR Part 541 is amended as
follows:

PART 541--[AMENDED]

0
1. The authority citation for part 541 continues to read as follows:

    Authority: 49 U.S.C. 33101, 33102, 33103, 33104, 33105 and
33106; delegation of authority at 49 CFR 1.50.

0
2. In part 541, Appendix A-I is revised to read as follows:

    Appendix A-I to Part 541--Lines With Antitheft Devices Which Are
 Exempted From the Parts-Marking Requirements of This Standard Pursuant
                           to 49 CFR Part 543
------------------------------------------------------------------------
              Manufacturer                        Subject lines
------------------------------------------------------------------------
BMW....................................   MINI.
                                         X5.
                                         Z4.
                                         1 Car Line.
                                         3 Car Line.
                                         5 Car Line.
                                         6 Car Line.
                                         7 Car Line.
CHRYSLER...............................  300C.
                                         Jeep Grand Cherokee.
                                         Jeep Wrangler.
                                         Town and Country MPV.
                                         Dodge Charger.
                                         Dodge Challenger.
                                         Dodge Journey \1\.
                                         Dodge Magnum (2008) \2\.
DAIMLER................................  smart USA for two.
                                         SL-Class (the models within
                                          this line are):
                                         300SL.
                                         500SL.
                                         600SL.
                                         SL500.
                                         SL550.
                                         SL600.
                                         SL55.
                                         SL65.

                                         S-Class/CL-Class (the models
                                          within this line are):
                                         S450.
                                         S500.
                                         S550.
                                         S600.
                                         S55.
                                         S65.
                                         CL500.
                                         CL600.
                                         CL55.
                                         CL65.
                                         C-Class/CLK-Class \2\ (the
                                          models within this line are):
                                         C240.
                                         C300.
                                         C350.
                                         CLK 350.
                                         CLK 550.
                                         CLK 63AMG.
                                         E-Class/CLS Class (the models
                                          within this line are):
                                         E320/E320DT CDi.
                                         E350/E500/E55.
                                         CLS500/CLS55.
FORD MOTOR CO..........................  Escape
                                         Ford Five-Hundred (2007).
                                         Ford Focus.
                                         Lincoln Town Car.
                                         Mustang.
                                         Mecury Mariner \1\.
                                         Mercury Grand Marquis.
                                         Mercury Sable.
                                         Taurus.
                                         Taurus X.
GENERAL MOTORS.........................  Buick Lucerne
                                         Buick LeSabre.
                                         Buick LaCrosse/Century.
                                         Buick Park Avenue (1992-2005).
                                         Buick Regal/Century.
                                         Cadillac DTS/Deville.
                                         Chevrolet Camaro.
                                         Chevrolet Cavalier (1997-2005).
                                         Chevrolet Classic.
                                         Chevrolet Cobalt.
                                         Chevrolet Corvette.
                                         Chevrolet Equinox.
                                         Chevrolet Impala/Monte Carlo.
                                         Chevrolet Malibu/Malibu Maxx.
                                         GMC Terrain \1\.
                                         Oldsmobile Alero.
                                         Oldsmobile Aurora.
                                         Pontiac Bonneville.
                                         Pontiac G6.
                                         Pontiac Grand Am.
                                         Pontiac Grand Prix.
                                         Pontiac Sunfire.
                                         Saturn Aura.
HONDA..................................  Acura CL.
                                         Acura NSX.
                                         Acura RL.
                                         Acura TL.
HYUNDAI................................  Azera.
                                         Genesis.
ISUZU..................................  Axiom.
JAGUAR.................................  XK.
MAZDA..................................  3.
                                         5.
                                         6.
                                         CX-7.
                                         CX-9.
                                         MX-5 Miata.
                                         Millenia.
MITSUBISHI.............................  Eclipse.
                                         Endeavor.
                                         Galant.
                                         Lancer \1\.
NISSAN.................................  Altima.
                                         Maxima.
                                         Murano \1\.
                                         Pathfinder.
                                         Quest.
                                         Rogue.
                                         Sentra.
                                         Versa.
                                         Infiniti G35.
                                         Infiniti M45.
                                         Infiniti Q45.
PORSCHE................................  911.
                                         Boxster/Cayman.
                                         Panamera \1\.
SAAB...................................  9-3.
SUBARU.................................  Forester.
                                         Impreza.
                                         B9 Tribeca.
                                         Outback \1\.
SUZUKI.................................  XL-7.
TOYOTA.................................  Lexus ES.
                                         Lexus GS.
                                         Lexus LS.
                                         Lexus SC.
VOLKSWAGEN.............................  Audi 5000S.
                                         Audi A31.
                                         Audi A4.
                                         Audi Allroad.
                                         Audi A6.
                                         Audi Q5.
                                         New Beetle.
                                         Golf/Rabbit/GTI/R32.
                                         Jetta.
                                         Passat.
------------------------------------------------------------------------
\1\ Granted an exemption from the parts marking requirements beginning
  with MY 2010.
\2\ Nameplate changed to Dodge Challenger beginning with MY 2008.

    Issued on: June 15, 2009.
Stephen R. Kratzke,
Associate Administrator for Rulemaking.
[FR Doc. E9-14371 Filed 6-23-09; 8:45 am]
BILLING CODE 4910-59-P