82 FR 10615 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To List and Trade Under BZX Rule 14.11(c)(4) the Shares of the VanEck Vectors AMT-Free National Municipal Index ETF of VanEck Vectors ETF Trust
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 29 (February 14, 2017)
Federal Register Volume 82, Issue 29 (February 14, 2017)
| Page Range | 10615-10623 | |
| FR Document | 2017-02910 |
[Federal Register Volume 82, Number 29 (Tuesday, February 14, 2017)] [Notices] [Pages 10615-10623] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-02910] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79989; File No. SR-BatsBZX-2017-07] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To List and Trade Under BZX Rule 14.11(c)(4) the Shares of the VanEck Vectors AMT-Free National Municipal Index ETF of VanEck Vectors ETF Trust February 8, 2017. 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 January 27, 2017, Bats BZX Exchange, Inc. (``Exchange'' or ``BZX'') 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 the Exchange. 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 Substance of the Proposed Rule Change The Exchange filed a proposal to list and trade under BZX Rule 14.11(c)(4) the shares of the VanEck Vectors AMT-Free National Municipal Index ETF (the ``Fund'') of VanEck Vectors ETF Trust (the ``Trust''). The text of the proposed rule change is available at the Exchange's Web site at www.bats.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 Exchange 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 these 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. [[Page 10616]] 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 shares (``Shares'') of the Fund under BZX Rule 14.11(c)(4),\3\ which governs the listing and trading of index fund shares based on fixed income securities indexes.\4\ The Shares will be offered by the Trust, which was established as a Delaware statutory trust on March 15, 2001. The Trust is registered with the Commission as an open-end investment company and has filed a registration statement on behalf of the Fund on Form N-1A (``Registration Statement'') with the Commission.\5\ All statements and representations made in this filing regarding (a) the description of the 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. --------------------------------------------------------------------------- \3\ The Commission approved BZX Rule 14.11(c) in Securities Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148 (September 6, 2011) (SR-BATS-2011-018). \4\ The Commission previously has approved a proposed rule change [sic] relating to listing and trading of funds based on municipal bond indexes. See Securities Exchange Act Release Nos. 78329 (July 14, 2016), 81 FR 47217 (July 20, 2016) (SR-BatsBZX-2016- 01) (order approving the listing and trading of the following series of VanEck Vectors ETF Trust: VanEck Vectors AMT-Free 6-8 Year Municipal Index ETF; VanEck Vectors AMT-Free 8-12 Year Municipal Index ETF; and VanEck Vectors AMT-Free 12-17 Year Municipal Index ETF); 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, Inc. (``NYSE Arca'') Rule 5.2(j)(3), Commentary .02); 72523 (July 2, 2014), 79 FR 39016 (July 9, 2014) (SR-NYSEArca-2014-37) (order approving proposed rule change relating to the listing and trading of iShares 2020 S&P AMT-Free Municipal Series under NYSE Arca Rule 5.2(j)(3), Commentary .02); and 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 the iShares iBonds Dec 2021 AMT-Free Muni Bond ETF and iShares iBonds Dec 2022 AMT-Free Muni Bond ETF under NYSE Arca Rule 5.2(j)(3), Commentary .02). The Commission also has issued a notice of filing and immediate effectiveness of a proposed rule change relating to listing and trading on the Exchange [sic] of the iShares Taxable Municipal Bond Fund. See Securities Exchange Act Release No. 63176 (October 25, 2010), 75 FR 66815 (October 29, 2010) (SR-NYSEArca- 2010-94). The Commission has approved two actively managed funds of the PIMCO ETF Trust that hold municipal bonds. See Securities Exchange Act Release No. 60981 (November 10, 2009), 74 FR 59594 (November 18, 2009) (SR-NYSEArca-2009-79) (order approving listing and trading of PIMCO ShortTerm Municipal Bond Strategy Fund and PIMCO Intermediate Municipal Bond Strategy Fund, among others). The Commission also has approved listing and trading of the SPDR Nuveen S&P High Yield Municipal Bond Fund. See Securities Exchange Act Release No. 63881 (February 9, 2011), 76 FR 9065 (February 16, 2011) (SR-NYSEArca-2010-120). \5\ See Registration Statement on Form N-1A for the Trust, dated October 31, 2016 (File Nos. 333-123257 and 811-10325). The descriptions of the Fund and the Shares contained herein are based, in part, on information in the Registration Statement. The Commission has issued an order granting certain exemptive relief to the Trust under the Investment Company Act of 1940 (15 U.S.C. 80a-1) (``1940 Act'') (the ``Exemptive Order''). See Investment Company Act Release No. 28021 (October 24, 2007) (File No. 812-13426). --------------------------------------------------------------------------- Description of the Shares and the Fund Van Eck Associates Corporation will be the investment adviser (``Adviser'') to the Fund.\6\ The Adviser will serve as the administrator for the Fund (the ``Administrator''). The Bank of New York Mellon will serve as the custodian (``Custodian'') and transfer agent (``Transfer Agent'') for the Fund. Van Eck Securities Corporation (the ``Distributor'') will be the distributor of the Shares. Bloomberg Finance L.P. and its affiliates will be the index provider (``Index Provider''). --------------------------------------------------------------------------- \6\ 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 all 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. --------------------------------------------------------------------------- VanEck Vectors AMT-Free National Municipal Index ETF According to the Registration Statement, the Fund will seek to replicate as closely as possible, before fees and expenses, the price and yield performance of the Bloomberg Barclays AMT-Free National Municipal Index (the ``Index''). As of November 30, 2016, there were 50,615 issues in the Index. Unless otherwise noted, all statistics related to the Index presented hereafter were accurate as of November 30, 2016. The Index tracks the municipal bond market with a 75% weight in investment grade municipal bonds (i.e., rated Baa3/BBB- or higher) through the Muni Investment-Grade Rated/$75 Million Deal Size Index and the high yield municipal bond market with a 25% weight in non- investment grade municipal bonds (i.e., unrated or rated Ba1/BB+ or lower) through the Muni High Yield/$20 Million Deal Size Index. To be included in the Muni Investment-Grade Rated/$75 Million Deal Size Index, a bond must be rated Baa3/BBB- or higher by at least two of the following rating agencies if all three agencies rate the bond: Moody's Investors Service (``Moody's''), Standard & Poor's Ratings Services (``S&P'') and Fitch Ratings, Inc. (``Fitch''). If only two of the three agencies rate the bond, the lower rating is used to determine index eligibility. If only one of the three agencies rates the bond, the rating must be Baa3/BBB- or higher. Bonds in the Muni Investment-Grade Rated/$75 Million Deal Size Index must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $75 million. To be included in the Muni High Yield/$20 Million Deal Size Index, a bond must be unrated or rated Ba1/BB+ or lower by at least two of the following rating agencies if all three agencies rate the bond: Moody's, S&P and Fitch. If only two of the three agencies rate the bond, the lower rating is used to determine index eligibility. If only one of the three agencies rates the bond, the rating must be Ba1/BB+ or lower. Bonds in the Muni High Yield/$20 Million Deal Size Index must have an outstanding par value of at least $3 million and be issued as part of a transaction of at least $20 million. All bonds included in the Index must have a fixed rate, a dated date (i.e., the date when interest begins to accrue) after December 31, 1990, and a nominal maturity of 1 to 30 years. Bonds subject to the alternative minimum tax, taxable municipal bonds, bonds with floating rates, derivatives and municipal bonds of issuers from the territories of the United States (e.g., Puerto Rico) are excluded from the Index. The composition of the Index is rebalanced monthly. Interest and principal payments earned by the component securities are held in the Index without a reinvestment return until month end when they are removed from the Index. Qualifying securities issued, but not necessarily settled, on or before the month end rebalancing date qualify for inclusion in the Index in the following month. The Fund normally invests at least 80% of its total assets in securities that [[Page 10617]] comprise the Fund's benchmark index. The Index is comprised of publicly traded municipal bonds that cover the U.S. dollar-denominated investment grade and high yield tax-exempt bond market. The Fund's 80% investment policy is non-fundamental and may be changed without shareholder approval upon 60 days' prior written notice to shareholders.\7\ The Fund also has adopted a fundamental investment policy to invest at least 80% of its assets in municipal securities.\8\ Currently, when issued transactions (``WIs'') \9\ representing securities eligible for inclusion in the Index may be used by the Fund in seeking performance that corresponds to the Index and in such cases would count towards the Fund's 80% Investment Policy. --------------------------------------------------------------------------- \7\ As noted herein, the Fund's policy to invest 80% of its total assets in securities that comprise the Fund's benchmark index (the ``80% Investment Policy'') is non-fundamental and may be changed without shareholder approval upon 60 days' prior written notice to shareholders. The Exchange notes that, notwithstanding the foregoing, all statements and representations made in this filing regarding (a) the description of the portfolios [sic], (b) limitations on portfolio holdings or reference assets (including, for example, the Fund's 80% Investment Policy), or (c) the applicability of Exchange rules and surveillance procedures shall constitute continued listing requirements for listing the Shares on the Exchange. As noted below, the issuer has represented to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements (or any changes made with respect to the Fund's 80% Investment Policy), and, pursuant to its obligations under Section 19(g)(1) of the Exchange Act, the Exchange will surveil 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 Exchange Rule 14.12. \8\ The Fund's policy to invest 80% of its assets in municipal securities (the ``Secondary 80% Policy'') is a fundamental investment policy. Fundamental investment policies, including the Secondary 80% Policy, cannot be changed without the approval of the holders of a majority of the Fund's outstanding voting securities. For purposes of the 1940 Act, a majority of the outstanding voting securities of the Fund means the vote, at an annual or a special meeting of the security holders of the Trust, of the lesser of (1) 67% or more of the voting securities of the Fund present at such meeting, if the holders of more than 50% of the outstanding voting securities of the Fund are present or represented by proxy, or (2) more than 50% of the outstanding voting securities of the Fund. \9\ When issued is a transaction that is made conditionally because a security has been authorized but not yet issued. Treasury securities, stock splits, and new issues of stocks and bonds are all traded on a when-issued basis. --------------------------------------------------------------------------- Other Portfolio Holdings While the Fund normally will invest at least 80% of its total assets in securities that compose the Index, as described above, the Fund may invest its remaining assets in other financial instruments, as described below. The Fund may invest its remaining assets in securities not included in the Index including only the following instruments: Municipal bonds not described above; money market instruments, including repurchase agreements or other funds which invest exclusively in money market instruments; convertible securities; structured notes (notes on which the amount of principal repayment and interest payments are based on the movement of one or more specified factors, such as the movement of a particular stock or stock index); \10\ certain derivative instruments described below; and, to the extent permitted by the 1940 Act, affiliated and unaffiliated funds, such as open-end or closed-end management investment companies, including other exchange-traded funds (``ETFs'').\11\ In addition to the use described above, WIs not included in the Index may also be used by the Fund in managing cash flows. --------------------------------------------------------------------------- \10\ Structured notes are derivative securities for which the amount of principal repayment and/or interest payments is based on the movement of one or more factors, including, but not limited to, currency exchange rates, interest rates (such as the prime lending rate or LIBOR), referenced bonds and stock indices. \11\ For purposes of this filing, ETFs include Index Fund Shares (as described in Rule 14.11(c)); Portfolio Depositary Receipts (as described in Rule 14.11(b)); and Managed Fund Shares (as described in Rule 14.11(i)). The ETFs all will be listed and traded in the U.S. on registered exchanges. The Fund may invest in the securities of ETFs registered under the 1940 Act consistent with the requirements of Section 12(d)(1) of the 1940 Act, or any rule, regulation or order of the Commission or interpretation thereof. While the Fund may invest in inverse ETFs, the Fund will not invest in leveraged (e.g., 2X, -2X, 3X or -3X) ETFs. --------------------------------------------------------------------------- The Fund may invest in repurchase agreements with commercial banks, brokers or dealers to generate income from its excess cash balances and to invest securities lending cash collateral. The Fund may use exchange-traded futures contracts and exchange- traded options thereon, together with positions in cash and money market instruments, to simulate full investment in the Index. The Fund may use cleared or non-cleared index, interest rate or credit default swap agreements. Swap agreements are contracts between parties in which one party agrees to make payments to the other party based on the change in market value or level of a specified index or asset. Currently, interest rate swaps and credit default swaps on indexes may be cleared, however, credit default swaps on a specific security are currently uncleared. The Fund may invest in exchange-traded warrants, which are equity securities in the form of options issued by a corporation which give the holder the right to purchase stock, usually at a price that is higher than the market price at the time the warrant is issued. The Fund may invest in participation notes, which are issued by banks or broker-dealers and are designed to offer a return linked to the performance of a particular underlying equity security or market. The Fund will only enter into transactions in derivative instruments with counterparties that the Adviser reasonably believes are capable of performing under the contract and will post collateral as required by the counterparty.\12\ --------------------------------------------------------------------------- \12\ The Fund will seek, where possible, to use counterparties, as applicable, whose financial status is such that the risk of default is reduced; however, the risk of losses resulting from default is still possible. The Adviser will evaluate the creditworthiness of counterparties on a regular basis. In addition to information provided by credit agencies, the Adviser will review approved counterparties using various factors, which may include the counterparty's reputation, the Adviser's past experience with the counterparty and the price/market actions of debt of the counterparty. --------------------------------------------------------------------------- Index Overview The Exchange is submitting this proposed rule change because the Index for the Fund does not meet all of the ``generic'' listing requirements of Rule 14.11(c)(4) applicable to the listing of index fund shares based on fixed income securities indexes. The Index meets all such requirements except for those set forth in Rule 14.11(c)(4)(B)(i)(b).\13\ Specifically, as of November 30, 2016, 25.04% of the weight of the Index components have a minimum original principal amount outstanding of $100 million or more. --------------------------------------------------------------------------- \13\ Rule 14.11(c)(4)(B)(i)(b) 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. --------------------------------------------------------------------------- As of November 30, 2016, 86.49% of the weight of the Index components was comprised of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding $100 million or more for all maturities of the offering. In addition, the total dollar amount outstanding of issues in the Index was approximately $1.5 trillion and the average dollar amount outstanding of issues in the Index was approximately $30.4 million. Further, the most heavily weighted component represented 1.57% of the weight of the Index and the five most heavily weighted components represented 3.93% of the weight of the Index.\14\ [[Page 10618]] Therefore, the Exchange believes that, notwithstanding that the Index does not satisfy the criterion in Rule 14.11(c)(4)(B)(i)(b), the Index is sufficiently broad-based to deter potential manipulation, given that it is comprised of approximately 50,615 issues. In addition, the Index securities are sufficiently liquid to deter potential manipulation in that a substantial portion (86.49%) of the Index weight is comprised of maturities that are part of a minimum original principal amount outstanding of $100 million or more, and in view of the substantial total dollar amount outstanding and the average dollar amount outstanding of the Index issues, as referenced above.\15\ 63.8% of the Index weight consisted of issues with a rating of AA/Aa2 or higher. --------------------------------------------------------------------------- \14\ Rule 14.11(c)(4)(B)(i)(d) provides that no component fixed- income security (excluding Treasury 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. \15\ The Adviser represents that when bonds are close substitutes for one another, pricing vendors can use executed trade information from all similar bonds as pricing inputs for an individual security. This can make individual securities more liquid. --------------------------------------------------------------------------- The Index value, calculated and disseminated at least once daily, as well as the components of the Index and their percentage weighting, 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 at www.vaneck.com/etfs. Correlation Among Municipal Bond Instruments With Common Characteristics With respect to the Fund, the Adviser represents that the nature of the municipal bond market and municipal bond instruments makes it feasible to categorize individual issues represented by CUSIPs (i.e., the specific identifying number for a security) into categories according to common characteristics, specifically, rating, geographical region, purpose, and maturity. Bonds that share similar characteristics tend to trade similarly to one another; therefore, within these categories, the issues may be considered fungible from a portfolio management perspective, allowing one CUSIP to be represented by another that shares similar characteristics for purposes of developing an investment strategy. Therefore, while 25.04% of the weight of the Index components have a minimum original principal amount outstanding of $100 million or more, the nature of the municipal bond market makes the issues relatively fungible for investment purposes when aggregated into categories such as ratings, geographical region, purpose and maturity. In addition, within a single municipal bond issuer, there are often multiple contemporaneous or sequential issuances that have the same rating, structure and maturity, but have different CUSIPs; these separate issues by the same issuer are also likely to trade similarly to one another. The Adviser represents that the Fund are [sic] managed utilizing the principle that municipal bond issues are generally fungible in nature when sharing common characteristics, and specifically make use of the four categories referred to above. In addition, this principle is used in, and consistent with, the portfolio construction process in order to facilitate the creation and redemption process, and to enhance liquidity (among other benefits, such as reducing transaction costs), while still allowing the Fund to closely track the Index. Net Asset Value According to the Registration Statement, the net asset value (``NAV'') of the Fund will be determined each business day as of the close of trading (ordinarily 4:00 p.m. Eastern time) on the Exchange. The values of the Fund's portfolio securities are based on the securities' closing prices, when available. In the absence of a last reported sales price, or if no sales were reported, and for other assets for which market quotes are not readily available, values may be based on quotes obtained from a quotation reporting system, established market makers or by an outside independent pricing service. Fixed income securities, repurchase agreements and money market instruments with maturities of more than 60 days are normally valued on the basis of quotes from brokers or dealers, established market makers or an outside independent pricing service. Prices obtained by an outside independent pricing service may use information provided by market makers or estimates of market values obtained from yield data related to investments or securities with similar characteristics and may use a computerized grid matrix of securities and its evaluations in determining what it believes is the fair value of the portfolio securities. Any assets or liabilities denominated in currencies other than the U.S. dollar are converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more sources. Short-term investments and money market instruments having a maturity of 60 days or less are valued at amortized cost. Futures contracts will be valued at the settlement price established each day by the board or exchange on which they are traded. Exchange-traded options will be valued at the closing price in the market where such contracts are principally traded. Swaps, structured notes, participation notes, convertible securities, and WIs will be valued based on valuations provided by independent, third-party pricing agents. Securities of non- exchange-traded investment companies will be valued at NAV. Exchange- traded instruments, including investment companies and warrants, will be valued at the last reported sale price on the primary exchange or market on which they are traded. If a market quotation for a security or other asset is not readily available or the Adviser believes it does not otherwise accurately reflect the market value of the security or asset at the time the Fund calculates its NAV, the security or asset will be fair valued by the Adviser in accordance with the Trust's valuation policies and procedures approved by the Board of Trustees and in accordance with the 1940 Act. The Fund may also use fair value pricing in a variety of circumstances, including but not limited to, situations when the value of a security in the Fund's portfolio has been materially affected by events occurring after the close of the market on which the security is principally traded (such as a corporate action or other news that may materially affect the price of a security) or trading in a security has been suspended or halted. The Fund currently expects that futures contracts will be valued at the settlement price established each day by the board or exchange on which they are traded and exchange. Exchange-traded options will be valued at the closing price in the market where such contracts are principally traded. Additionally, the Fund currently expects that swaps, structured notes, participation notes, convertible securities, and WIs will be valued at the closing price, if exchange listed, or based on valuations provided by independent, third-party pricing agents. Securities of non-exchange-traded investment companies will be valued at NAV. Exchange-traded instruments, including investment companies and warrants, will be valued at the last reported sale price on the primary exchange or market on which they are traded. Creation and Redemption of Shares The NAV of the Fund will be determined each business day as of the close of trading, (normally 4:00 p.m. Eastern time) on the exchange. The Fund currently anticipates that a ``Creation Unit'' will consist of 50,000 [[Page 10619]] Shares, though this number may change from time to time, including prior to the listing of the Fund. The exact number of Shares that will comprise a Creation Unit will be disclosed in the Registration Statement of the Fund. The Trust will issue and sell Shares of the Fund only in Creation Units on a continuous basis through the Distributor, without an initial sales load (but subject to transaction fees), at their NAV per Share next determined after receipt, on any business day, of an order in proper form. The consideration for purchase of a Creation Unit of the Fund generally will consist of either (i) the in-kind deposit of a designated portfolio of fixed income securities (the ``Deposit Securities'') per each Creation Unit and the Cash Component (defined below), computed as described below, or (ii) as permitted or required by the Fund, of cash. The Cash Component together with the Deposit Securities, as applicable, are referred to as the ``Fund Deposit,'' which represents the minimum initial and subsequent investment amount for Shares. The Cash Component represents the difference between the NAV of a Creation Unit and the market value of Deposit Securities and may include a Dividend Equivalent Payment. The ``Dividend Equivalent Payment'' enables the Fund to make a complete distribution of dividends on the next dividend payment date, and is an amount equal, on a per Creation Unit basis, to the dividends on all the securities held by each [sic] of the Fund (``Fund Securities'') with ex-dividend dates within the accumulation period for such distribution (the ``Accumulation Period''), net of expenses and liabilities for such period, as if all of the Fund Securities had been held by the Trust for the entire Accumulation Period. The Accumulation Period begins on the ex-dividend date for the Fund and ends on the next ex-dividend date. The Administrator, through the National Securities Clearing Corporation (``NSCC''), makes available on each business day, immediately prior to the opening of business on the Exchange (currently 9:30 a.m. Eastern time), the list of the names and the required number of shares of each Deposit Security to be included in the current Fund Deposit (based on information at the end of the previous business day) as well as the Cash Component for the Fund. Such Fund Deposit is applicable, subject to any adjustments as described below, in order to effect creations of Creation Units of the Fund until such time as the next-announced Fund Deposit composition is made available. Shares may be redeemed only in Creation Units at their NAV next determined after receipt of a redemption request in proper form by the Distributor,\16\ only on a business day and only through a Participating Party or DTC Participant who has executed a Participation Agreement. --------------------------------------------------------------------------- \16\ To be eligible to place orders with the Distributor to create Creation Units of the Funds [sic], an entity or person either must be: (1) A ``Participating Party,'' i.e., a broker-dealer or other participant in the Clearing Process through the Continuous Net Settlement System of the NSCC; or (2) a DTC Participant (as defined below); and, in either case, must have executed an agreement with the Distributor and the Transfer Agent (as it may be amended from time to time in accordance with its terms) (``Participant Agreement''). DTC Participants are participants of the Depository Trust Company (``DTC'') that acts as securities depositary for Index Fund Shares. A Participating Party and DTC Participant are collectively referred to as an ``Authorized Participant.'' --------------------------------------------------------------------------- The Administrator, through NSCC, makes available immediately prior to the opening of business on the Exchange (currently 9:30 a.m. Eastern time) on each day that the Exchange is open for business, the Fund Securities that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form (as defined below) on that day. Unless cash redemptions are permitted or required for the Fund, the redemption proceeds for a Creation Unit generally consist of Fund Securities as announced by the Administrator on the business day of the request for redemption, plus cash in an amount equal to the difference between the NAV of the Shares being redeemed, as next determined after a receipt of a request in proper form, and the value of the Fund Securities, less the redemption transaction fee and variable fees described below. Should the Fund Securities have a value greater than the NAV of the Shares being redeemed, a compensating cash payment to the Trust equal to the differential plus the applicable redemption transaction fee will be required to be arranged for by or on behalf of the redeeming shareholder. The Fund reserves the right to honor a redemption request by delivering a basket of securities or cash that differs from the Fund Securities.\17\ --------------------------------------------------------------------------- \17\ The Adviser represents that, to the extent that the Trust permits or requires a ``cash in lieu'' amount, such transactions will be effected in the same or equitable manner for all Authorized Participants. --------------------------------------------------------------------------- Orders to redeem Creation Units of the Fund must be delivered through a DTC Participant that has executed the Participant Agreement with the Distributor and with the Trust. A DTC Participant who wishes to place an order for redemption of Creation Units of the Fund to be effected need not be a Participating Party, but such orders must state that redemption of Creation Units of the Fund will instead be effected through transfer of Creation Units of the Fund directly through DTC. An order to redeem Creation Units of the Fund is deemed received by the Administrator on the transmittal date if (i) such order is received by the Administrator not later than 4:00 p.m. Eastern time on such transmittal date; (ii) such order is preceded or accompanied by the requisite number of Shares of Creation Units specified in such order, which delivery must be made through DTC to the Administrator no later than 11:00 a.m. Eastern time, on such transmittal date (the ``DTC Cut- Off-Time''); and (iii) all other procedures set forth in the Participant Agreement are properly followed. After the Administrator has deemed an order for redemption received, the Administrator will initiate procedures to transfer the requisite Fund Securities (or contracts to purchase such Fund Securities) which are expected to be delivered within three business days and the cash redemption payment to the redeeming beneficial owner by the third business day following the transmittal date on which such redemption order is deemed received by the Administrator. Availability of Information The Fund's Web site, 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 additional quantitative information updated on a daily basis, including, for the Fund: (1) The prior business day's reported NAV, daily trading volume, 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. Daily trading volume information for the Fund will also be available in the financial section of newspapers, through subscription services such as Bloomberg, Thomson Reuters, and International Data Corporation, which can be accessed by authorized participants and other investors, as well as through other electronic services, including major public Web sites. On each business day, before commencement of trading in Shares during Regular Trading Hours \18\ [[Page 10620]] on the Exchange, the Fund will disclose on its Web site the identities and quantities of the portfolio of securities and other assets in the daily disclosed portfolio held by the Fund that formed the basis for the Fund's calculation of NAV at the end of the previous business day. The daily disclosed portfolio will include, as applicable: The ticker symbol; CUSIP number or other identifier, if any; a description of the holding (including the type of holding, such as the type of swap); the identity of the security, index 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 the percentage weighting of the holding in the Fund's portfolio. The Web site and information will be publicly available at no charge. The value, components, and percentage weightings of each of the Indices will be calculated and disseminated at least once daily and will be available from major market data vendors. Rules governing the Indices are available on Barclays' Web site and in each respective Fund's prospectus. --------------------------------------------------------------------------- \18\ Regular Trading Hours are 9:30 a.m. to 4:00 p.m. Eastern Time. --------------------------------------------------------------------------- In addition, an estimated value, defined in BZX Rule 14.11(c)(6)(A) as the ``Intraday Indicative Value,'' that reflects an estimated intraday value of the Fund's portfolio, will be disseminated. Moreover, the Intraday Indicative Value will be based upon the current value for the components of the daily disclosed portfolio and will be updated and widely disseminated by one or more major market data vendors at least every 15 seconds during the Exchange's Regular Trading Hours.\19\ In addition, the quotations of certain of the Fund's holdings may not be updated during U.S. trading hours if updated prices cannot be ascertained. --------------------------------------------------------------------------- \19\ Currently, it is the Exchange's understanding that several major market data vendors display and/or make widely available Intraday Indicative Values published via the Consolidated Tape Association (``CTA'') or other data feeds. --------------------------------------------------------------------------- The dissemination of the Intraday Indicative Value, together with the daily disclosed portfolio, will allow investors to determine the value of the underlying portfolio of the Fund on a daily basis and provide a close estimate of that value throughout the trading day. Quotation and last sale information for the Shares of the Fund will be available via the CTA high speed line. Quotation information for investment company securities (excluding ETFs) may be obtained through nationally recognized pricing services through subscription agreements or from brokers and dealers who make markets in such securities. Price information regarding municipal bonds, convertible securities, and non- exchange traded assets, including investment companies, derivatives, money market instruments, repurchase agreements, structured notes, participation notes, and WIs is available from third party pricing services and major market data vendors. For exchange-traded assets, including investment companies, futures, warrants, and options, such intraday information is available directly from the applicable listing exchange. Initial and Continued Listing The Shares of the Fund will conform to the initial and continued listing criteria under BZX Rule 14.11(c)(4), except for those set forth in 14.11(c)(4)(B)(i)(b). The Exchange represents that, for initial and/ or continued listing, the Fund and the Trust must be in compliance with Rule 10A-3 under the Act. \20\ A minimum of 50,000 Shares of the Fund 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 for the Fund will be calculated daily and will be made available to all market participants at the same time. --------------------------------------------------------------------------- \20\ 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. The Exchange will halt trading in the Shares under the conditions specified in BZX Rule 11.18. 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 financial instruments composing the daily 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 14.11(c)(1)(B)(iv), which sets forth circumstances under which Shares of the Fund may be halted. Trading Rules The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. The Exchange will allow trading in the Shares from 8:00 a.m. until 5:00 p.m. Eastern Time and has the appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in BZX Rule 11.11(a), the minimum price variation for quoting and entry of orders in securities traded on the Exchange is $0.01, with the exception of securities that are priced less than $1.00, for which the minimum price variation for order entry is $0.0001. Surveillance The Exchange believes that its surveillance procedures are adequate to properly monitor the trading of the Shares on the Exchange during all trading sessions and to deter and detect violations of Exchange rules and the applicable federal securities laws. Trading of the Shares through the Exchange will be subject to the Exchange's surveillance procedures for derivative products, including Index Fund Shares. The issuer has represented to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Exchange Act, the Exchange will surveil 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 Exchange Rule 14.12. The Exchange may obtain information regarding trading in the Shares and the underlying shares in exchange traded equity securities via the ISG, from other exchanges that are members or affiliates of the ISG, or with which the Exchange has entered into a comprehensive surveillance sharing agreement.\21\ In addition, the Exchange is able to access, as needed, trade information for certain fixed income instruments reported to FINRA's Trade Reporting and Compliance Engine (``TRACE''). FINRA also can access data obtained from the Municipal Securities Rulemaking Board (``MSRB'') relating to municipal bond trading activity for surveillance purposes in connection with trading in the Shares. In addition, the Exchange may obtain information regarding trading in the Shares and the underlying shares in exchange-traded investment companies, futures, options, and warrants from markets or other entities that are members of ISG or with which [[Page 10621]] the Exchange has in place a comprehensive surveillance sharing agreement. The Exchange prohibits the distribution of material non- public information by its employees. --------------------------------------------------------------------------- \21\ For a list of the current members of ISG, see www.isgportal.org. The Exchange notes that not all components of the Disclosed Portfolio for the Fund may trade on markets that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. --------------------------------------------------------------------------- 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) BZX Rule 3.7, which imposes suitability obligations on Exchange 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-Opening \22\ and After Hours Trading Sessions \23\ 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. --------------------------------------------------------------------------- \22\ The Pre-Opening Session is from 8:00 a.m. to 9:30 a.m. Eastern Time. \23\ The After Hours Trading Session is from 4:00 p.m. to 5:00 p.m. Eastern Time. --------------------------------------------------------------------------- In addition, the Information Circular will advise members, prior to the commencement of trading, of the prospectus delivery requirements applicable to the Fund. Members purchasing Shares from the Fund for resale to investors will deliver a prospectus to such investors. The Information Circular will also discuss any exemptive, no-action, and interpretive relief granted by the Commission from any rules under the Act. In addition, 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. In addition, the Information Circular will reference that the Trust is subject to various fees and expenses described in the Fund's Registration Statement. 2. Statutory Basis The Exchange believes that the proposal is consistent with Section 6(b) of the Act \24\ in general and Section 6(b)(5) of the Act \25\ 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, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \24\ 15 U.S.C. 78f. \25\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- 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 listing criteria in BZX Rule 14.11(c). The Exchange believes that its surveillances, which generally focus on detecting securities trading outside of their normal patterns which could be indicative of manipulative or other violative activity, and associated surveillance procedures are adequate to properly monitor the trading of the Shares on the Exchange during all trading sessions and to deter and detect violations of Exchange rules and the applicable federal securities laws. The Exchange will communicate as needed regarding trading in the Shares with other markets or other entities that are members of the Intermarket Surveillance group (``ISG''), and may obtain trading information regarding trading in the Shares from such markets or entities. The Exchange can also access data obtained from the Municipal Securities Rulemaking Board relating to municipal bond trading activity for surveillance purposes in connection with trading in the Shares. The Exchange is able to access, as needed, trade information for certain fixed income securities held by the Fund reported to FINRA's TRACE. FINRA also can access data obtained from the Municipal Securities Rulemaking Board (``MSRB'') relating to municipal bond trading activity for surveillance purposes in connection with trading in the Shares. In addition, the Exchange may obtain information regarding trading in the Shares and the underlying shares in exchange-traded investment companies, futures, options, and warrants from markets or other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. The Index Provider is not a broker-dealer, but is affiliated with a broker-dealer and has implemented a ``fire wall'' with respect to such broker-dealer regarding access to information concerning the composition and/or changes to the Indices. The Index Provider has also implemented procedures designed to prevent the use and dissemination of material, non-public information regarding the Indices. As of November 30, 2016, 86.49% of the weight of the Index components was comprised of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding $100 million or more for all maturities of the offering. In addition, the total dollar amount outstanding of issues in the Index was approximately $1.5 trillion and the average dollar amount outstanding of issues in the Index was approximately $30.4 million. Further, the most heavily weighted component represented 1.57% of the weight of the Index and the five most heavily weighted components represented 3.93% of the weight of the Index.\26\ Therefore, the Exchange believes that, notwithstanding that the Index does not satisfy the criterion in Rule 14.11(c)(4)(B)(i)(b), the Index is sufficiently broad-based to deter potential manipulation, given that it is comprised of approximately 50,615 issues. --------------------------------------------------------------------------- \26\ Rule 14.11(c)(4)(B)(i)(d) provides that no component fixed- income security (excluding Treasury 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. --------------------------------------------------------------------------- The value, components, and percentage weightings of each of the Indices will be calculated and disseminated at least once daily and 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 at www.vaneck.com/etfs. The intraday indicative value for Shares of the Fund will be disseminated by one or more major market data vendors, updated at least every 15 seconds during Regular Trading Hours. The Adviser represents that bonds that share similar characteristics, as described above, tend to trade similarly to one another; therefore, within these categories, the issues may be considered fungible from a portfolio management perspective. Within a single municipal bond issuer, [[Page 10622]] Adviser represents that separate issues by the same issuer are also likely to trade similarly to one another. 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 will be 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 will be widely disseminated by one or more major market data vendors at least every 15 seconds during Regular Trading Hours. The current value of each of the Indices 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 NAV and other applicable quantitative information. Moreover, 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. 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. These may include: (1) The extent to which trading is not occurring in the securities and/or the financial instruments composing the daily 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 14.11(c)(1)(B)(iv), which sets forth circumstances under which Shares of the Fund may be halted. If the IIV of any [sic] of the Fund or value of the Indices are not being disseminated as required, the Exchange may halt trading during the day in which the interruption to the dissemination of the IIV or index value occurs. 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 additional types of exchange-traded funds that holds [sic] municipal bonds and that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information in the Shares and the underlying shares in exchange-traded investment companies, futures, options, and warrants 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. For the above reasons, the Exchange believes that 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 purpose of the Act. The Exchange notes that the proposed rule change will facilitate the listing and trading of additional exchange-traded products 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 The Exchange has neither solicited nor received written comments on 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 the 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 proposal is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File No. SR-BatsBZX-2017-07 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 No. SR-BatsBZX-2017-07. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-BatsBZX-2017-07 and should be submitted on or before March 7, 2017. [[Page 10623]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\27\ --------------------------------------------------------------------------- \27\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-02910 Filed 2-13-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices 10615
the municipal entity or obligated person rely on the exemption in connection SECURITIES AND EXCHANGE
client will be approximately 0.25 hours. with services provided to approximately COMMISSION
Thus, the Commission estimates that the 25,420 clients. The Commission further
total annual burden borne by estimates that the burden of obtaining [Release No. 34–79989; File No. SR–
respondents seeking to rely on the the required written consents from the BatsBZX–2017–07]
independent registered municipal respondent’s client will be
advisor exemption will be approximately 0.25 hours. Thus, the Self-Regulatory Organizations; Bats
approximately 1,850 hours.14 Commission estimates that the total BZX Exchange, Inc.; Notice of Filing of
Definition of Municipal Escrow annual burden borne by respondents a Proposed Rule Change To List and
Investments Exemption seeking to rely on proceeds of municipal Trade Under BZX Rule 14.11(c)(4) the
The Commission estimates that securities exemption will be Shares of the VanEck Vectors AMT-
approximately 700 respondents will approximately 6,355 hours.18 Free National Municipal Index ETF of
seek to rely on the municipal escrow Written comments are invited on: (a) VanEck Vectors ETF Trust
investments exemption. The Whether the proposed collection of February 8, 2017.
Commission further estimates that the information is necessary for the proper
one-time burden of creating a template performance of the functions of the Pursuant to Section 19(b)(1) of the
document to use in obtaining the Commission, including whether the Securities Exchange Act of 1934
written representations necessary to rely information shall have practical utility; (‘‘Act’’),1 and Rule 19b–4 thereunder,2
on the exemption will be approximately (b) the accuracy of the Commission’s notice is hereby given that on January
one hour. Thus, the Commission estimates of the burden of the proposed 27, 2017, Bats BZX Exchange, Inc.
estimates that the total one-time burden collection of information; (c) ways to (‘‘Exchange’’ or ‘‘BZX’’) filed with the
borne by respondents developing a enhance the quality, utility, and clarity Securities and Exchange Commission
template document will be of the information to be collected; and (‘‘Commission’’) the proposed rule
approximately 700 hours.15 The change as described in Items I and II
(d) ways to minimize the burden of the
Commission also recognizes that below, which Items have been prepared
collection of information on
respondents will be subject to a by the Exchange. The Commission is
respondents, including through the use
recurring burden each time they seek to publishing this notice to solicit
rely on the exemption. The Commission of automated collection techniques or
other forms of information technology. comments on the proposed rule change
estimates the respondents will seek to from interested persons.
rely on the exemption with Consideration will be given to
approximately 8,620 municipal entity comments and suggestions submitted in I. Self-Regulatory Organization’s
clients. The Commission further writing within 30 days of this Statement of the Terms of Substance of
estimates that the burden of obtaining publication. the Proposed Rule Change
the required written representations An agency may not conduct or
from the respondent’s client will be sponsor, and a person is not required to The Exchange filed a proposal to list
approximately 0.25 hours. Thus, the respond to, a collection of information and trade under BZX Rule 14.11(c)(4)
Commission estimates that the total under the PRA unless it displays a the shares of the VanEck Vectors AMT-
annual burden borne by respondents currently valid OMB control number. Free National Municipal Index ETF (the
seeking to rely on the municipal escrow Please direct your written comments to: ‘‘Fund’’) of VanEck Vectors ETF Trust
investments exemption will be Pamela C. Dyson, Director/Chief (the ‘‘Trust’’).
approximately 2,155 hours.16 Information Officer, Securities and The text of the proposed rule change
Definition of Proceeds of Municipal Exchange Commission, c/o Remi Pavlik- is available at the Exchange’s Web site
Securities Exemption Simon, 100 F Street NE., Washington, at www.bats.com, at the principal office
The Commission estimates that DC 20549 or send an email to: PRA_ of the Exchange, and at the
approximately 880 respondents will Mailbox@sec.gov. Commission’s Public Reference Room.
seek to rely on the proceeds of Dated: February 8, 2017. II. Self-Regulatory Organization’s
municipal securities exemption. The Eduardo A. Aleman, Statement of the Purpose of, and
Commission further estimates that the Statutory Basis for, the Proposed Rule
Assistant Secretary.
one-time burden of creating a template Change
[FR Doc. 2017–02933 Filed 2–13–17; 8:45 am]
document to use in obtaining the
written representations necessary to rely BILLING CODE 8011–01–P In its filing with the Commission, the
on the exemption will be approximately Exchange included statements
one hour. Thus, the Commission concerning the purpose of and basis for
estimates that the total one-time burden the proposed rule change and discussed
borne by respondents developing a any comments it received on the
template document will be proposed rule change. The text of these
approximately 880 hours.17 The statements may be examined at the
Commission also recognizes that places specified in Item IV below. The
respondents will be subject to a Exchange has prepared summaries, set
sradovich on DSK3GMQ082PROD with NOTICES
recurring burden each time they seek to forth in Sections A, B, and C below, of
rely on the exemption. The Commission the most significant parts of such
estimates that respondents will seek to
statements.
14 7,400 transactions × 0.25 hours.
15 700 respondents × 1 hour.
16 8,620 clients × 0.25 hours. 1 15 U.S.C. 78s(b)(1).
17 880 respondents × 1 hour. 18 25,420 clients × 0.25 hours. 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 E:\FR\FM\14FEN1.SGM 14FEN1](https://thefederalregister.org/doc/82_FR_10644/page/1.svg)
![10616 Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices
A. Self-Regulatory Organization’s representations made in this filing The Index tracks the municipal bond
Statement of the Purpose of, and regarding (a) the description of the market with a 75% weight in
Statutory Basis for, the Proposed Rule portfolio, (b) limitations on portfolio investment grade municipal bonds (i.e.,
Change holdings or reference assets, or (c) the rated Baa3/BBB¥ or higher) through the
applicability of Exchange rules and Muni Investment-Grade Rated/$75
1. Purpose
surveillance procedures shall constitute Million Deal Size Index and the high
The Exchange proposes to list and continued listing requirements for yield municipal bond market with a
trade shares (‘‘Shares’’) of the Fund listing the Shares on the Exchange. 25% weight in non-investment grade
under BZX Rule 14.11(c)(4),3 which municipal bonds (i.e., unrated or rated
governs the listing and trading of index Description of the Shares and the Fund Ba1/BB+ or lower) through the Muni
fund shares based on fixed income Van Eck Associates Corporation will High Yield/$20 Million Deal Size Index.
securities indexes.4 The Shares will be be the investment adviser (‘‘Adviser’’) to To be included in the Muni Investment-
offered by the Trust, which was the Fund.6 The Adviser will serve as the Grade Rated/$75 Million Deal Size
established as a Delaware statutory trust administrator for the Fund (the Index, a bond must be rated Baa3/BBB¥
on March 15, 2001. The Trust is ‘‘Administrator’’). The Bank of New or higher by at least two of the following
registered with the Commission as an York Mellon will serve as the custodian rating agencies if all three agencies rate
open-end investment company and has (‘‘Custodian’’) and transfer agent the bond: Moody’s Investors Service
filed a registration statement on behalf (‘‘Transfer Agent’’) for the Fund. Van (‘‘Moody’s’’), Standard & Poor’s Ratings
of the Fund on Form N–1A Eck Securities Corporation (the Services (‘‘S&P’’) and Fitch Ratings, Inc.
(‘‘Registration Statement’’) with the (‘‘Fitch’’). If only two of the three
‘‘Distributor’’) will be the distributor of
Commission.5 All statements and agencies rate the bond, the lower rating
the Shares. Bloomberg Finance L.P. and
its affiliates will be the index provider is used to determine index eligibility. If
3 The Commission approved BZX Rule 14.11(c) in
(‘‘Index Provider’’). only one of the three agencies rates the
Securities Exchange Act Release No. 65225 (August
30, 2011), 76 FR 55148 (September 6, 2011) (SR–
bond, the rating must be Baa3/BBB¥ or
BATS–2011–018). VanEck Vectors AMT-Free National higher. Bonds in the Muni Investment-
4 The Commission previously has approved a Municipal Index ETF Grade Rated/$75 Million Deal Size
proposed rule change [sic] relating to listing and Index must have an outstanding par
trading of funds based on municipal bond indexes. According to the Registration
value of at least $7 million and be
See Securities Exchange Act Release Nos. 78329 Statement, the Fund will seek to
(July 14, 2016), 81 FR 47217 (July 20, 2016) (SR– issued as part of a transaction of at least
replicate as closely as possible, before
BatsBZX–2016–01) (order approving the listing and $75 million. To be included in the Muni
fees and expenses, the price and yield
trading of the following series of VanEck Vectors High Yield/$20 Million Deal Size Index,
ETF Trust: VanEck Vectors AMT-Free 6–8 Year performance of the Bloomberg Barclays
a bond must be unrated or rated Ba1/
Municipal Index ETF; VanEck Vectors AMT-Free 8– AMT-Free National Municipal Index
12 Year Municipal Index ETF; and VanEck Vectors BB+ or lower by at least two of the
(the ‘‘Index’’). As of November 30, 2016,
AMT-Free 12–17 Year Municipal Index ETF); 67985 following rating agencies if all three
there were 50,615 issues in the Index.
(October 4, 2012), 77 FR 61804 (October 11, 2012) agencies rate the bond: Moody’s, S&P
(SR–NYSEArca–2012–92) (order approving Unless otherwise noted, all statistics and Fitch. If only two of the three
proposed rule change relating to the listing and related to the Index presented hereafter agencies rate the bond, the lower rating
trading of iShares 2018 S&P AMT-Free Municipal were accurate as of November 30, 2016.
Series and iShares 2019 S&P AMT-Free Municipal is used to determine index eligibility. If
Series under NYSE Arca, Inc. (‘‘NYSE Arca’’) Rule only one of the three agencies rates the
5.2(j)(3), Commentary .02); 72523 (July 2, 2014), 79 part, on information in the Registration Statement. bond, the rating must be Ba1/BB+ or
FR 39016 (July 9, 2014) (SR–NYSEArca–2014–37) The Commission has issued an order granting
(order approving proposed rule change relating to certain exemptive relief to the Trust under the lower. Bonds in the Muni High Yield/
the listing and trading of iShares 2020 S&P AMT- Investment Company Act of 1940 (15 U.S.C. 80a– $20 Million Deal Size Index must have
Free Municipal Series under NYSE Arca Rule 1) (‘‘1940 Act’’) (the ‘‘Exemptive Order’’). See an outstanding par value of at least $3
5.2(j)(3), Commentary .02); and 75468 (July 16, Investment Company Act Release No. 28021 million and be issued as part of a
2015), 80 FR 43500 (July 22, 2015) (SR–NYSEArca– (October 24, 2007) (File No. 812–13426).
2015–25) (order approving proposed rule change 6 An investment adviser to an open-end fund is
transaction of at least $20 million.
relating to the listing and trading of the iShares required to be registered under the Investment All bonds included in the Index must
iBonds Dec 2021 AMT-Free Muni Bond ETF and Advisers Act of 1940 (the ‘‘Advisers Act’’). As a have a fixed rate, a dated date (i.e., the
iShares iBonds Dec 2022 AMT-Free Muni Bond result, the Adviser and its related personnel are date when interest begins to accrue)
ETF under NYSE Arca Rule 5.2(j)(3), Commentary subject to the provisions of Rule 204A–1 under the
.02). The Commission also has issued a notice of
after December 31, 1990, and a nominal
Advisers Act relating to codes of ethics. This Rule
filing and immediate effectiveness of a proposed requires investment advisers to adopt a code of
maturity of 1 to 30 years. Bonds subject
rule change relating to listing and trading on the ethics that reflects the fiduciary nature of the to the alternative minimum tax, taxable
Exchange [sic] of the iShares Taxable Municipal relationship to clients as well as compliance with municipal bonds, bonds with floating
Bond Fund. See Securities Exchange Act Release all applicable securities laws. Accordingly, rates, derivatives and municipal bonds
No. 63176 (October 25, 2010), 75 FR 66815 (October procedures designed to prevent the communication
29, 2010) (SR–NYSEArca–2010–94). The and misuse of non-public information by an
of issuers from the territories of the
Commission has approved two actively managed investment adviser must be consistent with Rule United States (e.g., Puerto Rico) are
funds of the PIMCO ETF Trust that hold municipal 204A–1 under the Advisers Act. In addition, Rule excluded from the Index. The
bonds. See Securities Exchange Act Release No. 206(4)–7 under the Advisers Act makes it unlawful composition of the Index is rebalanced
60981 (November 10, 2009), 74 FR 59594 for an investment adviser to provide investment
(November 18, 2009) (SR–NYSEArca–2009–79) advice to clients unless such investment adviser has
monthly. Interest and principal
(order approving listing and trading of PIMCO (i) adopted and implemented written policies and payments earned by the component
ShortTerm Municipal Bond Strategy Fund and procedures reasonably designed to prevent securities are held in the Index without
PIMCO Intermediate Municipal Bond Strategy violation, by the investment adviser and its a reinvestment return until month end
Fund, among others). The Commission also has supervised persons, of the Advisers Act and the
sradovich on DSK3GMQ082PROD with NOTICES
approved listing and trading of the SPDR Nuveen
when they are removed from the Index.
Commission rules adopted thereunder; (ii)
S&P High Yield Municipal Bond Fund. See implemented, at a minimum, an annual review Qualifying securities issued, but not
Securities Exchange Act Release No. 63881 regarding the adequacy of the policies and necessarily settled, on or before the
(February 9, 2011), 76 FR 9065 (February 16, 2011) procedures established pursuant to subparagraph (i) month end rebalancing date qualify for
(SR–NYSEArca–2010–120). above and the effectiveness of their
5 See Registration Statement on Form N–1A for
inclusion in the Index in the following
implementation; and (iii) designated an individual
the Trust, dated October 31, 2016 (File Nos. 333– (who is a supervised person) responsible for month.
123257 and 811–10325). The descriptions of the administering the policies and procedures adopted The Fund normally invests at least
Fund and the Shares contained herein are based, in under subparagraph (i) above. 80% of its total assets in securities that
VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 E:\FR\FM\14FEN1.SGM 14FEN1](https://thefederalregister.org/doc/82_FR_10644/page/2.svg)
![Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices 10617
comprise the Fund’s benchmark index. Index including only the following price that is higher than the market
The Index is comprised of publicly instruments: Municipal bonds not price at the time the warrant is issued.
traded municipal bonds that cover the described above; money market The Fund may invest in participation
U.S. dollar-denominated investment instruments, including repurchase notes, which are issued by banks or
grade and high yield tax-exempt bond agreements or other funds which invest broker-dealers and are designed to offer
market. The Fund’s 80% investment exclusively in money market a return linked to the performance of a
policy is non-fundamental and may be instruments; convertible securities; particular underlying equity security or
changed without shareholder approval structured notes (notes on which the market.
upon 60 days’ prior written notice to amount of principal repayment and The Fund will only enter into
shareholders.7 The Fund also has interest payments are based on the transactions in derivative instruments
adopted a fundamental investment movement of one or more specified with counterparties that the Adviser
policy to invest at least 80% of its assets factors, such as the movement of a reasonably believes are capable of
in municipal securities.8 Currently, particular stock or stock index); 10 performing under the contract and will
when issued transactions (‘‘WIs’’) 9 certain derivative instruments described post collateral as required by the
representing securities eligible for below; and, to the extent permitted by counterparty.12
inclusion in the Index may be used by the 1940 Act, affiliated and unaffiliated Index Overview
the Fund in seeking performance that funds, such as open-end or closed-end
corresponds to the Index and in such management investment companies, The Exchange is submitting this
cases would count towards the Fund’s including other exchange-traded funds proposed rule change because the Index
80% Investment Policy. (‘‘ETFs’’).11 In addition to the use for the Fund does not meet all of the
described above, WIs not included in ‘‘generic’’ listing requirements of Rule
Other Portfolio Holdings 14.11(c)(4) applicable to the listing of
the Index may also be used by the Fund
While the Fund normally will invest in managing cash flows. index fund shares based on fixed
at least 80% of its total assets in The Fund may invest in repurchase income securities indexes. The Index
securities that compose the Index, as agreements with commercial banks, meets all such requirements except for
described above, the Fund may invest brokers or dealers to generate income those set forth in Rule
its remaining assets in other financial from its excess cash balances and to 14.11(c)(4)(B)(i)(b).13 Specifically, as of
instruments, as described below. invest securities lending cash collateral. November 30, 2016, 25.04% of the
The Fund may invest its remaining weight of the Index components have a
The Fund may use exchange-traded
assets in securities not included in the minimum original principal amount
futures contracts and exchange-traded
options thereon, together with positions outstanding of $100 million or more.
7 As noted herein, the Fund’s policy to invest
As of November 30, 2016, 86.49% of
80% of its total assets in securities that comprise in cash and money market instruments,
the weight of the Index components was
the Fund’s benchmark index (the ‘‘80% Investment to simulate full investment in the Index.
Policy’’) is non-fundamental and may be changed comprised of individual maturities that
The Fund may use cleared or non-
without shareholder approval upon 60 days’ prior were part of an entire municipal bond
cleared index, interest rate or credit
written notice to shareholders. The Exchange notes offering with a minimum original
that, notwithstanding the foregoing, all statements default swap agreements. Swap
principal amount outstanding $100
and representations made in this filing regarding (a) agreements are contracts between
the description of the portfolios [sic], (b) limitations million or more for all maturities of the
parties in which one party agrees to
on portfolio holdings or reference assets (including, offering. In addition, the total dollar
for example, the Fund’s 80% Investment Policy), or make payments to the other party based
amount outstanding of issues in the
(c) the applicability of Exchange rules and on the change in market value or level
Index was approximately $1.5 trillion
surveillance procedures shall constitute continued of a specified index or asset. Currently,
listing requirements for listing the Shares on the and the average dollar amount
interest rate swaps and credit default
Exchange. As noted below, the issuer has outstanding of issues in the Index was
represented to the Exchange that it will advise the swaps on indexes may be cleared,
approximately $30.4 million. Further,
Exchange of any failure by the Fund to comply with however, credit default swaps on a
the continued listing requirements (or any changes the most heavily weighted component
specific security are currently
made with respect to the Fund’s 80% Investment represented 1.57% of the weight of the
uncleared.
Policy), and, pursuant to its obligations under Index and the five most heavily
Section 19(g)(1) of the Exchange Act, the Exchange The Fund may invest in exchange-
weighted components represented
will surveil for compliance with the continued traded warrants, which are equity
listing requirements. If the Fund is not in 3.93% of the weight of the Index.14
securities in the form of options issued
compliance with the applicable listing
requirements, the Exchange will commence
by a corporation which give the holder 12 The Fund will seek, where possible, to use
delisting procedures under Exchange Rule 14.12. the right to purchase stock, usually at a counterparties, as applicable, whose financial status
8 The Fund’s policy to invest 80% of its assets in is such that the risk of default is reduced; however,
municipal securities (the ‘‘Secondary 80% Policy’’) 10 Structured notes are derivative securities for the risk of losses resulting from default is still
is a fundamental investment policy. Fundamental which the amount of principal repayment and/or possible. The Adviser will evaluate the
investment policies, including the Secondary 80% interest payments is based on the movement of one creditworthiness of counterparties on a regular
Policy, cannot be changed without the approval of or more factors, including, but not limited to, basis. In addition to information provided by credit
the holders of a majority of the Fund’s outstanding currency exchange rates, interest rates (such as the agencies, the Adviser will review approved
voting securities. For purposes of the 1940 Act, a prime lending rate or LIBOR), referenced bonds and counterparties using various factors, which may
majority of the outstanding voting securities of the stock indices. include the counterparty’s reputation, the Adviser’s
Fund means the vote, at an annual or a special 11 For purposes of this filing, ETFs include Index past experience with the counterparty and the
meeting of the security holders of the Trust, of the Fund Shares (as described in Rule 14.11(c)); price/market actions of debt of the counterparty.
lesser of (1) 67% or more of the voting securities Portfolio Depositary Receipts (as described in Rule 13 Rule 14.11(c)(4)(B)(i)(b) provides that
of the Fund present at such meeting, if the holders 14.11(b)); and Managed Fund Shares (as described components that in the aggregate account for at
sradovich on DSK3GMQ082PROD with NOTICES
of more than 50% of the outstanding voting in Rule 14.11(i)). The ETFs all will be listed and least 75% of the weight of the index or portfolio
securities of the Fund are present or represented by traded in the U.S. on registered exchanges. The each shall have a minimum original principal
proxy, or (2) more than 50% of the outstanding Fund may invest in the securities of ETFs registered amount outstanding of $100 million or more.
voting securities of the Fund. under the 1940 Act consistent with the 14 Rule 14.11(c)(4)(B)(i)(d) provides that no
9 When issued is a transaction that is made requirements of Section 12(d)(1) of the 1940 Act, or component fixed-income security (excluding
conditionally because a security has been any rule, regulation or order of the Commission or Treasury Securities, as defined therein) shall
authorized but not yet issued. Treasury securities, interpretation thereof. While the Fund may invest represent more than 30% of the weight of the index
stock splits, and new issues of stocks and bonds are in inverse ETFs, the Fund will not invest in or portfolio, and the five most heavily weighted
all traded on a when-issued basis. leveraged (e.g., 2X, –2X, 3X or –3X) ETFs. Continued
VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 E:\FR\FM\14FEN1.SGM 14FEN1](https://thefederalregister.org/doc/82_FR_10644/page/3.svg)
![10618 Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices
Therefore, the Exchange believes that, maturity. In addition, within a single exchange on which they are traded.
notwithstanding that the Index does not municipal bond issuer, there are often Exchange-traded options will be valued
satisfy the criterion in Rule multiple contemporaneous or sequential at the closing price in the market where
14.11(c)(4)(B)(i)(b), the Index is issuances that have the same rating, such contracts are principally traded.
sufficiently broad-based to deter structure and maturity, but have Swaps, structured notes, participation
potential manipulation, given that it is different CUSIPs; these separate issues notes, convertible securities, and WIs
comprised of approximately 50,615 by the same issuer are also likely to will be valued based on valuations
issues. In addition, the Index securities trade similarly to one another. provided by independent, third-party
are sufficiently liquid to deter potential The Adviser represents that the Fund pricing agents. Securities of non-
manipulation in that a substantial are [sic] managed utilizing the principle exchange-traded investment companies
portion (86.49%) of the Index weight is that municipal bond issues are generally will be valued at NAV. Exchange-traded
comprised of maturities that are part of fungible in nature when sharing instruments, including investment
a minimum original principal amount common characteristics, and companies and warrants, will be valued
outstanding of $100 million or more, specifically make use of the four at the last reported sale price on the
and in view of the substantial total categories referred to above. In addition, primary exchange or market on which
dollar amount outstanding and the this principle is used in, and consistent they are traded.
average dollar amount outstanding of with, the portfolio construction process If a market quotation for a security or
the Index issues, as referenced above.15 in order to facilitate the creation and other asset is not readily available or the
63.8% of the Index weight consisted of redemption process, and to enhance Adviser believes it does not otherwise
issues with a rating of AA/Aa2 or liquidity (among other benefits, such as accurately reflect the market value of
higher. reducing transaction costs), while still the security or asset at the time the
The Index value, calculated and allowing the Fund to closely track the Fund calculates its NAV, the security or
disseminated at least once daily, as well Index. asset will be fair valued by the Adviser
as the components of the Index and in accordance with the Trust’s valuation
Net Asset Value
their percentage weighting, will be policies and procedures approved by
available from major market data According to the Registration the Board of Trustees and in accordance
vendors. In addition, the portfolio of Statement, the net asset value (‘‘NAV’’) with the 1940 Act. The Fund may also
securities held by the Fund will be of the Fund will be determined each use fair value pricing in a variety of
disclosed on the Fund’s Web site at business day as of the close of trading circumstances, including but not
www.vaneck.com/etfs. (ordinarily 4:00 p.m. Eastern time) on limited to, situations when the value of
the Exchange. a security in the Fund’s portfolio has
Correlation Among Municipal Bond The values of the Fund’s portfolio been materially affected by events
Instruments With Common securities are based on the securities’ occurring after the close of the market
Characteristics closing prices, when available. In the on which the security is principally
With respect to the Fund, the Adviser absence of a last reported sales price, or traded (such as a corporate action or
represents that the nature of the if no sales were reported, and for other other news that may materially affect
municipal bond market and municipal assets for which market quotes are not the price of a security) or trading in a
bond instruments makes it feasible to readily available, values may be based security has been suspended or halted.
categorize individual issues represented on quotes obtained from a quotation The Fund currently expects that
by CUSIPs (i.e., the specific identifying reporting system, established market futures contracts will be valued at the
number for a security) into categories makers or by an outside independent settlement price established each day by
according to common characteristics, pricing service. Fixed income securities, the board or exchange on which they are
specifically, rating, geographical region, repurchase agreements and money traded and exchange. Exchange-traded
purpose, and maturity. Bonds that share market instruments with maturities of options will be valued at the closing
similar characteristics tend to trade more than 60 days are normally valued price in the market where such
similarly to one another; therefore, on the basis of quotes from brokers or contracts are principally traded.
within these categories, the issues may dealers, established market makers or an Additionally, the Fund currently
be considered fungible from a portfolio outside independent pricing service. expects that swaps, structured notes,
management perspective, allowing one Prices obtained by an outside participation notes, convertible
CUSIP to be represented by another that independent pricing service may use securities, and WIs will be valued at the
shares similar characteristics for information provided by market makers closing price, if exchange listed, or
purposes of developing an investment or estimates of market values obtained based on valuations provided by
strategy. Therefore, while 25.04% of the from yield data related to investments or independent, third-party pricing agents.
weight of the Index components have a securities with similar characteristics Securities of non-exchange-traded
minimum original principal amount and may use a computerized grid matrix investment companies will be valued at
outstanding of $100 million or more, the of securities and its evaluations in NAV. Exchange-traded instruments,
nature of the municipal bond market determining what it believes is the fair including investment companies and
makes the issues relatively fungible for value of the portfolio securities. Any warrants, will be valued at the last
investment purposes when aggregated assets or liabilities denominated in reported sale price on the primary
into categories such as ratings, currencies other than the U.S. dollar are exchange or market on which they are
geographical region, purpose and converted into U.S. dollars at the traded.
current market rates on the date of
sradovich on DSK3GMQ082PROD with NOTICES
valuation as quoted by one or more Creation and Redemption of Shares
component fixed-income securities in the index or
portfolio shall not in the aggregate account for more sources. Short-term investments and The NAV of the Fund will be
than 65% of the weight of the index or portfolio. money market instruments having a determined each business day as of the
15 The Adviser represents that when bonds are
maturity of 60 days or less are valued close of trading, (normally 4:00 p.m.
close substitutes for one another, pricing vendors
can use executed trade information from all similar
at amortized cost. Futures contracts will Eastern time) on the exchange. The
bonds as pricing inputs for an individual security. be valued at the settlement price Fund currently anticipates that a
This can make individual securities more liquid. established each day by the board or ‘‘Creation Unit’’ will consist of 50,000
VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 E:\FR\FM\14FEN1.SGM 14FEN1](https://thefederalregister.org/doc/82_FR_10644/page/4.svg)
![Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices 10619
Shares, though this number may change Shares may be redeemed only in a Participating Party, but such orders
from time to time, including prior to the Creation Units at their NAV next must state that redemption of Creation
listing of the Fund. The exact number of determined after receipt of a redemption Units of the Fund will instead be
Shares that will comprise a Creation request in proper form by the effected through transfer of Creation
Unit will be disclosed in the Distributor,16 only on a business day Units of the Fund directly through DTC.
Registration Statement of the Fund. The and only through a Participating Party An order to redeem Creation Units of
Trust will issue and sell Shares of the or DTC Participant who has executed a the Fund is deemed received by the
Fund only in Creation Units on a Participation Agreement. Administrator on the transmittal date if
continuous basis through the The Administrator, through NSCC, (i) such order is received by the
Distributor, without an initial sales load makes available immediately prior to Administrator not later than 4:00 p.m.
(but subject to transaction fees), at their the opening of business on the Exchange Eastern time on such transmittal date;
NAV per Share next determined after (currently 9:30 a.m. Eastern time) on (ii) such order is preceded or
receipt, on any business day, of an order each day that the Exchange is open for accompanied by the requisite number of
in proper form. business, the Fund Securities that will Shares of Creation Units specified in
The consideration for purchase of a be applicable (subject to possible such order, which delivery must be
Creation Unit of the Fund generally will amendment or correction) to made through DTC to the Administrator
consist of either (i) the in-kind deposit redemption requests received in proper no later than 11:00 a.m. Eastern time, on
of a designated portfolio of fixed income form (as defined below) on that day. such transmittal date (the ‘‘DTC Cut-Off-
securities (the ‘‘Deposit Securities’’) per Unless cash redemptions are Time’’); and (iii) all other procedures set
each Creation Unit and the Cash permitted or required for the Fund, the forth in the Participant Agreement are
Component (defined below), computed redemption proceeds for a Creation Unit properly followed.
as described below, or (ii) as permitted generally consist of Fund Securities as
announced by the Administrator on the After the Administrator has deemed
or required by the Fund, of cash. The
business day of the request for an order for redemption received, the
Cash Component together with the
redemption, plus cash in an amount Administrator will initiate procedures
Deposit Securities, as applicable, are
equal to the difference between the NAV to transfer the requisite Fund Securities
referred to as the ‘‘Fund Deposit,’’
of the Shares being redeemed, as next (or contracts to purchase such Fund
which represents the minimum initial
determined after a receipt of a request Securities) which are expected to be
and subsequent investment amount for
in proper form, and the value of the delivered within three business days
Shares. The Cash Component represents
the difference between the NAV of a Fund Securities, less the redemption and the cash redemption payment to the
Creation Unit and the market value of transaction fee and variable fees redeeming beneficial owner by the third
Deposit Securities and may include a described below. Should the Fund business day following the transmittal
Dividend Equivalent Payment. The Securities have a value greater than the date on which such redemption order is
‘‘Dividend Equivalent Payment’’ enables NAV of the Shares being redeemed, a deemed received by the Administrator.
the Fund to make a complete compensating cash payment to the Trust Availability of Information
distribution of dividends on the next equal to the differential plus the
dividend payment date, and is an applicable redemption transaction fee The Fund’s Web site, which will be
amount equal, on a per Creation Unit will be required to be arranged for by or publicly available prior to the public
basis, to the dividends on all the on behalf of the redeeming shareholder. offering of Shares, will include a form
securities held by each [sic] of the Fund The Fund reserves the right to honor a of the prospectus for the Fund that may
(‘‘Fund Securities’’) with ex-dividend redemption request by delivering a be downloaded. The Web site will
dates within the accumulation period basket of securities or cash that differs include additional quantitative
for such distribution (the from the Fund Securities.17 information updated on a daily basis,
‘‘Accumulation Period’’), net of Orders to redeem Creation Units of including, for the Fund: (1) The prior
expenses and liabilities for such period, the Fund must be delivered through a business day’s reported NAV, daily
as if all of the Fund Securities had been DTC Participant that has executed the trading volume, and a calculation of the
held by the Trust for the entire Participant Agreement with the premium and discount of the Bid/Ask
Accumulation Period. The Distributor and with the Trust. A DTC Price against the NAV; and (2) data in
Accumulation Period begins on the ex- Participant who wishes to place an chart format displaying the frequency
dividend date for the Fund and ends on order for redemption of Creation Units distribution of discounts and premiums
the next ex-dividend date. of the Fund to be effected need not be of the daily Bid/Ask Price against the
The Administrator, through the NAV, within appropriate ranges, for
National Securities Clearing Corporation 16 To be eligible to place orders with the
each of the four previous calendar
(‘‘NSCC’’), makes available on each Distributor to create Creation Units of the Funds quarters. Daily trading volume
[sic], an entity or person either must be: (1) A
business day, immediately prior to the ‘‘Participating Party,’’ i.e., a broker-dealer or other information for the Fund will also be
opening of business on the Exchange participant in the Clearing Process through the available in the financial section of
(currently 9:30 a.m. Eastern time), the Continuous Net Settlement System of the NSCC; or newspapers, through subscription
list of the names and the required (2) a DTC Participant (as defined below); and, in services such as Bloomberg, Thomson
either case, must have executed an agreement with
number of shares of each Deposit the Distributor and the Transfer Agent (as it may be Reuters, and International Data
Security to be included in the current amended from time to time in accordance with its Corporation, which can be accessed by
Fund Deposit (based on information at terms) (‘‘Participant Agreement’’). DTC Participants authorized participants and other
are participants of the Depository Trust Company
sradovich on DSK3GMQ082PROD with NOTICES
the end of the previous business day) as investors, as well as through other
(‘‘DTC’’) that acts as securities depositary for Index
well as the Cash Component for the Fund Shares. A Participating Party and DTC electronic services, including major
Fund. Such Fund Deposit is applicable, Participant are collectively referred to as an public Web sites. On each business day,
subject to any adjustments as described ‘‘Authorized Participant.’’ before commencement of trading in
17 The Adviser represents that, to the extent that
below, in order to effect creations of Shares during Regular Trading Hours 18
the Trust permits or requires a ‘‘cash in lieu’’
Creation Units of the Fund until such amount, such transactions will be effected in the
time as the next-announced Fund same or equitable manner for all Authorized 18 Regular Trading Hours are 9:30 a.m. to 4:00
Deposit composition is made available. Participants. p.m. Eastern Time.
VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 E:\FR\FM\14FEN1.SGM 14FEN1](https://thefederalregister.org/doc/82_FR_10644/page/5.svg)
![10622 Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices
Adviser represents that separate issues the day in which the interruption to the (B) institute proceedings to determine
by the same issuer are also likely to dissemination of the IIV or index value whether the proposed rule change
trade similarly to one another. occurs. should be disapproved.
The proposed rule change is designed The proposed rule change is designed
to perfect the mechanism of a free and IV. Solicitation of Comments
to promote just and equitable principles
of trade and to protect investors and the open market and, in general, to protect Interested persons are invited to
public interest in that a large amount of investors and the public interest in that
submit written data, views and
information will be publicly available it will facilitate the listing and trading
arguments concerning the foregoing,
regarding the Fund and the Shares, of additional types of exchange-traded
including whether the proposal is
thereby promoting market transparency. funds that holds [sic] municipal bonds
and that will enhance competition consistent with the Act. Comments may
The Fund’s portfolio holdings will be be submitted by any of the following
disclosed on the Fund’s Web site daily among market participants, to the
benefit of investors and the marketplace. methods:
after the close of trading on the
Exchange and prior to the opening of As noted above, the Exchange has in Electronic Comments
trading on the Exchange the following place surveillance procedures relating to
day. Moreover, the IIV will be widely trading in the Shares and may obtain • Use the Commission’s Internet
disseminated by one or more major information in the Shares and the comment form (http://www.sec.gov/
market data vendors at least every 15 underlying shares in exchange-traded rules/sro.shtml); or
seconds during Regular Trading Hours. investment companies, futures, options, • Send an email to rule-comments@
The current value of each of the Indices and warrants via ISG from other sec.gov. Please include File No. SR–
will be disseminated by one or more exchanges that are members of ISG or BatsBZX–2017–07 on the subject line.
major market data vendors at least once with which the Exchange has entered
per day. Information regarding market into a comprehensive surveillance Paper Comments
price and trading volume of the Shares sharing agreement. In addition,
investors will have ready access to • Send paper comments in triplicate
will be continually available on a real- to Secretary, Securities and Exchange
time basis throughout the day on information regarding the IIV and
quotation and last sale information for Commission, 100 F Street NE.,
brokers’ computer screens and other
the Shares. Washington, DC 20549–1090.
electronic services, and quotation and
last sale information will be available For the above reasons, the Exchange All submissions should refer to File No.
via the CTA high-speed line. The Web believes that the proposed rule change SR–BatsBZX–2017–07. This file number
site for the Fund will include the is consistent with the requirements of should be included on the subject line
prospectus for the Fund and additional Section 6(b)(5) of the Act. if email is used. To help the
data relating to NAV and other B. Self-Regulatory Organization’s Commission process and review your
applicable quantitative information. Statement on Burden on Competition comments more efficiently, please use
Moreover, prior to the commencement The Exchange does not believe that only one method. The Commission will
of trading, the Exchange will inform its the proposed rule change will impose post all comments on the Commission’s
Members in an information circular of any burden on competition that is not Internet Web site (http://www.sec.gov/
the special characteristics and risks necessary or appropriate in furtherance rules/sro.shtml). Copies of the
associated with trading the Shares. If the of the purpose of the Act. The Exchange submission, all subsequent
Exchange becomes aware that the NAV notes that the proposed rule change will amendments, all written statements
is not being disseminated to all market facilitate the listing and trading of with respect to the proposed rule
participants at the same time, it will halt additional exchange-traded products change that are filed with the
trading in the Shares until such time as that will enhance competition among Commission, and all written
the NAV is available to all market market participants, to the benefit of communications relating to the
participants. With respect to trading investors and the marketplace. proposed rule change between the
halts, the Exchange may consider all Commission and any person, other than
relevant factors in exercising its C. Self-Regulatory Organization’s those that may be withheld from the
discretion to halt or suspend trading in Statement on Comments on the
public in accordance with the
the Shares of the Fund. Trading also Proposed Rule Change Received From
provisions of 5 U.S.C. 552, will be
may be halted because of market Members, Participants, or Others
available for Web site viewing and
conditions or for reasons that, in the The Exchange has neither solicited printing in the Commission’s Public
view of the Exchange, make trading in nor received written comments on the Reference Room, 100 F Street NE.,
the Shares inadvisable. These may proposed rule change. Washington, DC 20549, on official
include: (1) The extent to which trading
III. Date of Effectiveness of the business days between the hours of
is not occurring in the securities and/or
Proposed Rule Change and Timing for 10:00 a.m. and 3:00 p.m. Copies of such
the financial instruments composing the
daily disclosed portfolio of the Fund; or Commission Action filing will also be available for
(2) whether other unusual conditions or inspection and copying at the principal
Within 45 days of the date of
circumstances detrimental to the office of the Exchange. All comments
publication of this notice in the Federal
maintenance of a fair and orderly received will be posted without change;
Register or within such longer period
market are present. Trading in the the Commission does not edit personal
sradovich on DSK3GMQ082PROD with NOTICES
up to 90 days (i) as the Commission may
Shares also will be subject to Rule designate if it finds such longer period identifying information from
14.11(c)(1)(B)(iv), which sets forth to be appropriate and publishes its submissions. You should submit only
circumstances under which Shares of reasons for so finding or (ii) as to which information that you wish to make
the Fund may be halted. If the IIV of any the self-regulatory organization available publicly. All submissions
[sic] of the Fund or value of the Indices consents, the Commission will: should refer to File No. SR–BatsBZX–
are not being disseminated as required, (A) By order approve or disapprove 2017–07 and should be submitted on or
the Exchange may halt trading during the proposed rule change, or before March 7, 2017.
VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 E:\FR\FM\14FEN1.SGM 14FEN1](https://thefederalregister.org/doc/82_FR_10644/page/8.svg)
![Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices 10623
For the Commission, by the Division of Percent Percent
Trading and Markets, pursuant to delegated
authority.27 Non-Profit Organizations With- For Physical Damage:
Eduardo A. Aleman, out Credit Available Else- Non-Profit Organizations with
Assistant Secretary. where ..................................... 2.500 Credit Available Elsewhere ... 2.500
[FR Doc. 2017–02910 Filed 2–13–17; 8:45 am]
Non-Profit Organizations with-
The number assigned to this disaster out Credit Available Else-
BILLING CODE 8011–01–P
for physical damage is 15041C and for where ..................................... 2.500
economic injury is 15042C. For Economic Injury:
Non-Profit Organizations with-
SMALL BUSINESS ADMINISTRATION (Catalog of Federal Domestic Assistance out Credit Available Else-
Number 59008) where ..................................... 2.500
[Disaster Declaration #15041 and #15042]
James E. Rivera,
Associate Administrator for Disaster
The number assigned to this disaster
Mississippi Disaster #MS–00098 for physical damage is 15043C and for
Assistance.
AGENCY: U.S. Small Business [FR Doc. 2017–02908 Filed 2–13–17; 8:45 am]
economic injury is 15044C.
Administration. BILLING CODE 8025–01–P (Catalog of Federal Domestic Assistance
ACTION: Notice. Number 59008)
James E. Rivera,
SUMMARY: This is a Notice of the SMALL BUSINESS ADMINISTRATION Associate Administrator for Disaster
Presidential declaration of a major
[Disaster Declaration #15043 and #15044] Assistance.
disaster for Public Assistance Only for
[FR Doc. 2017–02907 Filed 2–13–17; 8:45 am]
the State of Mississippi (FEMA–4295– Georgia Disaster #GA–00092 BILLING CODE 8025–01–P
DR), dated 02/06/2017.
Incident: Severe Storms, Tornadoes, AGENCY: U.S. Small Business
Straight-line Winds, and Flooding. Administration.
Incident Period: 01/20/2017 through ACTION: Notice. SOCIAL SECURITY ADMINISTRATION
01/21/2017. [Docket No: SSA–2017–0003]
Effective Date: 02/06/2017. SUMMARY: This is a Notice of the
Physical Loan Application Deadline Presidential declaration of a major Agency Information Collection
Date: 04/07/2017. disaster for Public Assistance Only for Activities: Proposed Request and
Economic Injury (EIDL) Loan the State of Georgia (FEMA–4297–DR), Comment Request
Application Deadline Date: 11/06/2017. dated 02/07/2017.
Incident: Severe Storms, Tornadoes, The Social Security Administration
ADDRESSES: Submit completed loan
Straight-line Winds, and Flooding. (SSA) publishes a list of information
applications to: U.S. Small Business Incident Period: 01/21/2017 through collection packages requiring clearance
Administration, Processing and 01/22/2017. by the Office of Management and
Disbursement Center, 14925 Kingsport Effective Date: 02/07/2017. Budget (OMB) in compliance with
Road, Fort Worth, TX 76155. Physical Loan Application Deadline Public Law 104–13, the Paperwork
FOR FURTHER INFORMATION CONTACT: A. Date: 04/10/2017. Reduction Act of 1995, effective October
Escobar, Office of Disaster Assistance, Economic Injury (EIDL) Loan 1, 1995. This notice includes a new
U.S. Small Business Administration, Application Deadline Date: 11/07/2017. information collection and revisions of
409 3rd Street SW., Suite 6050, ADDRESSES: Submit completed loan OMB-approved information collections.
Washington, DC 20416. applications to: U.S. Small Business SSA is soliciting comments on the
SUPPLEMENTARY INFORMATION: Notice is Administration, Processing and accuracy of the agency’s burden
hereby given that as a result of the Disbursement Center, 14925 Kingsport estimate; the need for the information;
President’s major disaster declaration on Road, Fort Worth, TX 76155. its practical utility; ways to enhance its
02/06/2017, Private Non-Profit FOR FURTHER INFORMATION CONTACT: quality, utility, and clarity; and ways to
organizations that provide essential A. Escobar, Office of Disaster minimize burden on respondents,
services of governmental nature may file Assistance, U.S. Small Business including the use of automated
disaster loan applications at the address Administration, 409 3rd Street SW., collection techniques or other forms of
listed above or other locally announced Suite 6050, Washington, DC 20416. information technology. Mail, email, or
locations. SUPPLEMENTARY INFORMATION: Notice is fax your comments and
The following areas have been hereby given that as a result of the recommendations on the information
determined to be adversely affected by President’s major disaster declaration on collection(s) to the OMB Desk Officer
the disaster: 02/07/2017, Private Non-Profit and SSA Reports Clearance Officer at
Primary Counties: Forrest, Lamar, Perry. organizations that provide essential the following addresses or fax numbers.
The Interest Rates are: services of governmental nature may file (OMB) Office of Management and
disaster loan applications at the address Budget, Attn: Desk Officer for SSA,
Percent listed above or other locally announced Fax: 202–395–6974, Email address:
locations. OIRA_Submission@omb.eop.gov
For Physical Damage: The following areas have been (SSA) Social Security Administration,
sradovich on DSK3GMQ082PROD with NOTICES
Non-Profit Organizations With determined to be adversely affected by OLCA, Attn: Reports Clearance
Credit Available Elsewhere ... 2.500 the disaster: Director, 3100 West High Rise, 6401
Non-Profit Organizations With-
Primary Counties: Baker, Brooks, Security Blvd., Baltimore, MD 21235,
out Credit Available Else-
where ..................................... 2.500 Calhoun, Clay, Cook, Crisp, Fax: 410–966–2830, Email address:
For Economic Injury: Dougherty, Thomas, Turner, OR.Reports.Clearance@ssa.gov
Wilcox, Worth. Or you may submit your comments
27 17 CFR 200.30–3(a)(12). The Interest Rates are: online through www.regulations.gov,
VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 E:\FR\FM\14FEN1.SGM 14FEN1](https://thefederalregister.org/doc/82_FR_10644/page/9.svg)
Document Created: 2017-02-13 23:40:24
Document Modified: 2017-02-13 23:40:24
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 82 FR 10615 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR